H.M. Queen Máxima of the Netherlands delivered this speech at a side event during the G20 Summit on 30 October 2021, in her capacity as the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA) and as Honorary Patron of the G20 Global Partnership for Financial Inclusion (GPFI). The Special Advocate co-hosted the event with Prime Minister of Italy Mario Draghi to examine how to best support micro-, small, and medium-sized enterprises (MSMEs) and women-led businesses recover from the impacts of the COVID-19 pandemic.
Meeting small and medium-sized enterprises entrepreneurs around the world, I am very often filled with admiration. Their commitment, perseverance and passion inspire me greatly.
We all acknowledge the tremendous contribution that SMEs make to our societies and economies, providing millions of families with an income. We depend on them for more equitable and sustainable growth. They are also the main drivers of innovation.
SMEs contribute two thirds of national income and more than half of employment worldwide. Yet, about half of them do not have access to credit, and their access to markets and infrastructure continues to be a challenge. And these are just the formal ones.
Unsurprisingly, SME’s are among the worst hit by Covid-19. The effects vary of course depending on sector and size, but women-owned SMEs and smaller and informal enterprises suffered the most.
We are united in our efforts to prevent poverty, inequality and strengthen sustainability. And it is the SMEs that can help us most in this endeavor. But are we doing enough to support them? Do we consider women-specific needs? Do we provide them with the right tools that enable them to increase their productivity and build back stronger? Not only for their sake, but for the sake of us all.
I could say that more could be done. While we know that SMEs are diverse and should not be treated just as one group, I would like to point out three areas of action that apply to all.
SMEs lag in the adoption of digital technologies. This results in the loss of opportunities. And this is a challenge for both advanced economies and developing economies.
Experience shows that digitization makes businesses more efficient and helps them to cope with the growing problem of labor shortages in many countries. It also opens up new markets. One of the many inspiring examples I saw, was in Indonesia. It is called Gojek.
Gojek is a ride-hailing app which uses its digital ecosystem to help small businesses digitize their inventory management, marketing, payments, credit, and sales. Now, suddenly, these SMEs are connected to the larger world. Many of them make a leap forward and expand their business beyond their brick-and-mortar presence.
Of course, innovations like this require widespread access to digital public goods and the development of digital skills.
This brings me to the second area of action: investment in skills and capabilities.
Everywhere, entrepreneurs, employees and the education sector have to adapt to new technologies and market conditions. Matching supply and demand on the labor market is a dire necessity. And it does not stop at schools. Everyone needs to continuously develop and learn.
This is easier said than done. Therefore, it is essential that we reflect on the best way to support lifelong development among the workforce.
In the Netherlands, we are starting to work towards a Lifelong Development Program. It encourages lifelong learning and development during one's career by providing training, budgets and advice. Of course, this requires investments. But the cost of measures like these is a fraction of the added value we can generate.
And this brings me to the third area of action: access to finance.
This is one of the most cited obstacles facing SMEs to grow their businesses.
SMEs need a range of financial services—payments, equity, short- and long-term debt, savings and insurance—especially for start-ups and firms with large growth prospects. This could be from a bank, cooperative, lending platform, or a fintech.
But to get there, we need to improve the whole finance ecosystem, such as credit reporting systems and insolvency regimes, and of course seize the opportunities of technology. The British fintech CreditEnable helps SMEs by reducing the hassle and cost it takes to get a loan. Using data analytics it matches small businesses with the most appropriate loan product and at the best rate—we have to have more of these examples.
In conclusion: strong SMEs are essential for inclusive, equitable and sustainable growth.
The COP26 climate ambitions and the UN SDGs (Sustainable Development Goals) urgently need resilient and productive SMEs to support these challenges.
Therefore, we need to boost SMEs capabilities and prospects. We must help them thrive—by embracing digitization, investing in skills, and improving the finance ecosystem. It is more than worth its while.
Thank you so much.