SMEs want government support, effective policies to grow

Small and Medium scale Enterprises (SMEs) have called for government support and effective policies to grow and contribute significantly to Gross Domestic Products (GDPs).

The plea was contained in a new research by Mastercard, which highlighted the important role of SMEs across the Middle East and Africa (MEA) to recover, position for growth, and contribute to economic prosperity.

In the inaugural Mastercard MEA SME Confidence Index, government support and implementation of effective policies was highlighted as ‘important’ by 88 per cent of the region’s SMEs, 50 per cent of which rated this point as a ‘must-have’ essential.

This sentiment was especially pronounced in the Middle East and North Africa (MENA) (92 per cent) and Sub-Saharan Africa (90 per cent) regions.

In addition to looking for effective regulatory support from governments, 92 per cent of SMEs in MEA, said they are also looking for support in upskilling of their teams, and 88 per cent highlighted the importance of improved telco infrastructure – pointing to opportunities to effect positive change in wide-ranging areas from education and skills development to systems and infrastructural progress.

The research revealed that public-private partnerships (PPPs) are crucial for effective development and implementation of initiatives that advance financial inclusion and inclusive growth. To achieve this, it stressed the need for governments and the private sector to play a joint role in enabling a safe and secure operating environment.

Mastercard said it works closely with governments and the wider business community to advance SME inclusion into the digital economy through tailor-made digitization strategies, cutting-edge technologies, insights, and policy advice.

Further, Mastercard said government-led initiatives are key to positive growth. It stressed that across MEA, 51 per cent of SMEs said government-led initiatives could have a positive impact in supporting their businesses.

According to the research, SMEs in the region recognised the great potential of PPP, and 63 per cent think private sector initiatives and partnerships will benefit businesses and the markets in which they operate.

“One in three SMEs (32 per cent) think that collaborating with governments and businesses outside their markets could impact their growth. In Southern Africa this was especially pronounced, with over half (56 per cent) agreeing,” it stated.

The need for the public and private sectors to work together to create a better environment for small businesses has been outlined in a public policy paper* titled Reimagining Support for Small Businesses, released by the Mastercard Policy Center for the Digital Economy in partnership with global consulting firm Kearney. The paper outlines a number of strategic recommendations, which highlight how effective policy and innovation can address many of the challenges faced by business-to business SMEs.

The key recommendations include ensure ongoing working capital stability for SMEs by driving solutions that ease cash flow burdens; removing barriers that hinder women-owned businesses’ ability to receive capital by making IDs more accessible, and allowing different types of collateral; make funding and resources available for B2B SMEs to build their digital capabilities by offering digitalization support for SMEs buying and selling internationally; ensure a safe and secure operating environment for SMEs, in terms of cybersecurity, trust and transparency, as SMEs become increasingly digital; build B2B SMEs’ knowledge of the financial and digital tools and resources available to them; facilitate partnerships in which private entities, non-banking financial institutions (NBFIs), development finance institutions (DFIs) and non-governmental organizations (NGOs) are incentivized appropriately to provide cash flow management support, capital or digital services to B2B SMEs.

Others are to improve the collection, analysis and availability of B2B SME data for use by governments and B2B SMEs and model best practices by buying goods and services directly from SMEs, adopting payment and invoice digitalisation and increasing the credibility of emerging businesses.

Senior Vice President, Core Products Middle East and Africa, Mastercard, Valerio Murta, said: “Collaboration is the key to developing a commercial landscape that is fit for future growth. Through effective partnerships, the public and private sectors can together create a supportive environment where SMEs can thrive. The contribution of small businesses to regional economies is ultimately about much more than the immediate gains to livelihoods – it’s also about the sustainable development of an ecosystem that can advance inclusive growth and prosperity for all. This is why it’s so important that we prioritize public-private partnerships for SME growth, and why we’re putting our technology, expertise and global network to work, helping to develop the infrastructure to connect more people – and more small businesses.”

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