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SME Small and Medium Enterprises are Heart of Healthy Communities
The key to poverty alleviation is economic growth that is inclusive and reaches the majority of people.
Small business is human scale. And human scale is often green or at the least, sustainable. Small and medium size businesses are the backbone of communities and often generations of families. But small and micro businesses that are starting up often face economies of non-scale that large businesses don't face. Large businesses receive preferential treatment, quantity discounts and other perks that size provides. Yet both large and small are part of our ecosystem of human productivity, and "green" is a process that can bring them together.
Sports metaphors are a staple in the business and political world, and a metaphor of size is also appropriate. Just as Peewee and cubs and high school and college sports infrastructures bring up players and supporters for sports, small and medium enterprises are the springboard and proving grounds for large businesses.
For that reason alone, businesses of all sizes thrive when a healthy small and startup business environment is fostered and nurtured. But there are many more reasons -- innovation, workforce preparation, local sourcing, revenue flow in a community...and the preservation of our way of life.
The key to poverty alleviation is economic growth that is inclusive and reaches the majority of people. Improving the performance and sustainability of local entrepreneurs and small and medium enterprises (SMEs), which represent the backbone of global economic activity, can help achieve this type of growth.
Both business and governments can promote the growth of SMEs
Key messages to business in view of promoting SMEs:
- Localizing value creation through engagement with SMEs is a key contribution that large corporations can make to economic development. This underpins their license to operate by creating a positive local impact, can reduce supplier costs and can be an important source of innovation to develop new products and reach new consumers.
- Building SME capacity through the localization of supply chains requires leadership from the top, both at the strategic and at the operational level.
- However, leadership cannot be overprescriptive; each initiative needs to adapt to local conditions and find its own way to maturation and success.
- Facilitating access to finance is critical: this requires business to look to what it can do on its own, as well as put pressure both on its peers in the business community (particularly the banking sector) and governments to engage.
- Consider partnering across segments and with other development actors to facilitate SME development and access to finance.
- Business planning skills, including training in financial management, are essential for successful SMEs.
- Large corporations can also build capacity and encourage environmental stewardship in the SME sector.
Key messages to government in view of promoting SMEs: