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MSMEs 2021: Why We Must Strengthen Micro-, Small and Medium-sized Enterprises

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3 years ago

Jun 28, 2021.

MSMEs 2021: Why We Must Strengthen Micro-, Small and Medium-sized Enterprises

Today is Micro-, Small and Medium-sized Enterprises Day, celebrated every year on June 27. The day is set aside to recognize and celebrate the contributions of MSMEs in the implementation of the Sustainable Development Goals (SDGs).

The day was designated by a United Nations General Assembly resolution in April 2017, recognizing the importance of these industries. This year’s theme is: “key to an inclusive and sustainable recovery.”

MSMEs have been identified as a major player especially in the economies of developing nations as they account for the majority of businesses and hugely contribute to job creation and global economic development. According to a World Bank report, MSMEs account for about 90% of businesses and over 50% of employment globally. “Formal SMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included,” states the World Bank report.

The report notes further that an estimated in order to absorb the bourgeoning global workforce, about 600 million jobs will be needed by 2030, hence the urgent need to put on the front burner for governments around the world, the development of the MSMEs sector. The reasons are not hard to find, according to the World Bank:

“In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs. However, access to finance is a key constraint to SME growth, it is the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries.”

Access to finance has been a major undoing of the MSMEs sector as they are less likely to be able to access bank loans than large firms, relying instead on personal savings, loans or financial help from friends and family, to start and run their enterprises in the early stages. Diamond Development Initiatives (DDI), in recognizing the importance of this sector, has constantly focused on, among other things, Business Support and Enterprise Management, as well as Youth/Women-led Enterprise Support since inception.

DDI provides technical support and enterprise management services to MSMEs through business planning, design and marketing of products, identification of marketing channels, etc. DDI, with funding from the United States African Development Foundation (USADF), also facilitates support for youth, women and social entrepreneurs in Nigeria, providing them access to grant funding to launch and expand their businesses/social enterprises.

With the disruptive impact of the COVID-19 crisis in 2020, DDI provided business support and enterprise management services for women-led businesses under a USADF-funded Enterprise Expansion Grant. DDI also supported the implementation of C.A.R.E.S, a special COVID-19 intervention program of the USADF that provided immediate relief and capital assistance, and resilience building for 27 off-grid energy enterprises, four (4) youth and women-led social entrepreneurs, 19 farmers and producer groups/cooperatives, and 752 youth for employability enhancement and skills training.