SMEs as a Platform For Inclusive Economies

B20 has been a strong supporter of the SME agenda since Turkey 2015, continuing in China 2016 and Germany 2017, with the introduction of the SME Task Forces and Working Group and the creation of the World SME Forum. G20 Governments have also started recognizing the crucial role of Small and Medium Enterprises (SMEs) as a recipe for inclusive, healthier economic growth, but more needs to be done: if SMEs cannot realize their full potential and adapt to new ways of doing business, they will lag behind, with growing socio-economic pains. SMEs need public-private support now. With the right support from G20 governments, SMEs can put globalization and trade under a different light and can help G20 and non-G20 countries in achieving inclusive growth in increasingly unequal societies.

We live in a period of radical transformation in the political and business landscapes, with growing inequality triggering a backlash against globalization and trade. As globalization proceeds, the need for inclusive and sustainable development has risen. Leaders of the G20 and other multilaterals are finally explicitly recognizing inclusiveness and sustainability as top policy priorities, and the crucial role of small businesses in achieving them. This new focus by the G20 is welcome and much-needed.

SMEs today are more important than ever to achieving inclusive growth in increasingly unequal societies. In most countries, SMEs contribute over 50 percent to gross domestic product (GDP) and two-thirds to formal employment. In developing countries, they account for a third of GDP but a whopping 95 percent of job creation. SMEs are crucial for social stability and equitable growth, and they form the backbone of the working middle class.

Despite their importance, SMEs suffer disproportionately from limited access to markets, finance, talent, skills, and innovative capacity. In addition, rigid regulations also often put them at a disadvantage. By supporting SME development, countries can tackle inequality and foster a healthier economic growth.

Business leaders in the last three B20 processes – starting in Turkey in 2015, and continuing throughout China 2016 and Germany 2017 leaderships- recognized that SMEs’ potential has not been fully realized and took concrete steps to support the SMEs, such as the introduction of the SME Taskforce and Working Group, and the creation of the World SME Forum.

Although various positive developments took place in the past 3 years, until recently, SMEs lacked an organization solely dedicated to supporting them globally and would champion their cause. Through the deliberations and support of B20 and G20 leaders – the World SME Forum (WSF) was created in 2015 to help strengthen the growth and impact of SMEs globally. As “the new kid on the block”, the WSF has already scored major achievements:

  • WSF has been a steering committee team member of Turkey-2015, China-2016, and Germany-2017 B20 SME Taskforces / Groups – effectively becoming a “bridge” across presidencies, ensuring continuity of the SME agenda, and helping maintain momentum in each cycle’s recommendations.
  • The World Bank (WB), the International Trade Center (ITC) and the OECD have joined the WSF as institutional partners. Discussions are underway with the WTO, UNCTAD and the World Trade Board to support SMEs in capturing the opportunities offered by the digital revolution.
  • SME associations from three continents are already affiliated or in the process of affiliating with the WSF, increasing its representation and its capacity to deliver results on the ground.
  • The WSF is starting hands-on advising in pilot countries to enable SMEs to more effectively link to national and Global Value Chains (GVCs). It is creating an SME-focused online platform, which aims to become a “one-stop shop” for SMEs – to increase their access to markets, networks, skills, knowledge, innovative capacity, and Information.

We stand at a societal and technological juncture, where the impact of new technologies is very high and inclusive growth is not happening. For example, digital economy is growing and digital technologies are becoming key contributors to global trade and economic development. However, the benefits of these developments are not distributed equally across various segments of economic life. Although developed economies have benefitted from digital technologies through expanding opportunities, enhancing market access, and service delivery, many of the developing economies have lagged behind. This situation is also true for large companies versus the SMEs in some developed countries, and has already led to an uneven global distribution of benefits from the digital economy.

In order to help address this growing problem, WSF is using technology as the main communication and delivery point for offering services to SMEs. If we can help SMEs to access and utilize new technologies, we can make a change in narrowing the gap between SMEs and large companies, and developing and developed countries. We believe that this is a necessary step in addressing the issue of the growing development gap, and the resulting economic, social, and political polarization among various social segments in a country, as well as addressing the uneven distribution of benefits of the digital economy between developed and developing countries.

While there is a lot of work to be done, opportunities for unleashing SMEs already exist; they just need to be unlocked. Policy needs to help SMEs to help themselves. And WSF exists to make sure that doors for SMEs’ growth are finally opened, in collaboration with our partners, affiliates and G20 Governments.

Published on: https://www.b20germany.org/news/news/article/smes-as-a-platform-for-inclusive-economies-by-ece-idil-kasap-director-of-online-solutions-at-the/