A new report highlighted that finance is a major barrier to SME involvement in global trade. SMEs in developing countries face an annual funding gap exceeding $5.2 trillion, with women-owned businesses being particularly affected. Additionally, many SMEs operate in the informal economy and lack access to technology, logistics, certification programs, and skilled job seekers.
During the 13th Ministerial Conference (MC13) of the World Trade Organisation (WTO) in Abu Dhabi, a new report emphasizing the significance of empowering small and medium-sized enterprises (SMEs) to participate more effectively in international trade was revealed. The report, titled “Inclusive Global Trade: Enabling SMEs,” was a collaborative effort between the Emirates Center for Strategic Studies and Research and the UAE Ministry of Economy. Moreover, it addresses the obstacles faced by SMEs in accessing global supply chains and proposes a range of policies and programs that governments worldwide can adopt to overcome these challenges.
Read more: Dubai launches $136 million initiative to boost SMEs’ global expansion
Three proposals to close the financing gap
Given that formal SMEs contribute 40 percent of national income and generate approximately 70 percent of jobs, addressing these challenges could lead to tangible growth and job creation. To tackle these issues, the report presents three proposals:
- Closing the SME financing gap through a global effort involving the international community. This effort would focus on several key areas. These include sharing best practices, coordinating policies, advocating for change, conducting outreach, and building the capacity of officials. The goal is to address the challenges related to limited access to trade finance and investment capital. In addition to the aforementioned objectives, there would be a focus on promoting financial technology (fintech) solutions. Furthermore, efforts would be made to develop guidelines and best practices. These guidelines and best practices would aim to create an environment that is conducive to the growth of small and medium-sized enterprises (SMEs).
- Globally supporting SMEs through an informal network of business incubators that link and mutually assist local, national, and regional SME incubators. This network would have several objectives. It would enhance existing incubation programs through various means. These include knowledge sharing, technology transfer, and business networking. Furthermore, there would be a particular emphasis on improving women’s economic participation.
- Establishing an SME Academy that adopts a train-the-trainers approach to support individuals already working to assist SMEs in developing countries. Also, the academy would provide capacity building, resources, knowledge sharing, mentoring, and guidance.
The 13th Ministerial Conference of the World Trade Organization is currently underway in Abu Dhabi from February 26 to 29. Ministerial Conferences serve as the highest-level decision-making platform for the WTO, which is entrusted with overseeing and negotiating the rules governing international commerce.
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