- General Coordinator, ASCAME
This article was originally posted in Atalayar.
Once again, SMEs are victims of a global economic crisis caused by the COVID-19 pandemic, which poses a great threat to their continued operation and to the livelihoods of workers. The role of SMEs as the backbone of the global economy and their current difficult situation makes it urgent to launch specific plans that provide concrete tools to help rescue them.
Tens of thousands of SMEs could go bankrupt, or are on the verge of doing so, due to this new crisis. We are certainly experiencing one of the most difficult periods in the history of small and medium-sized enterprises. Entrepreneurs are finding it difficult to withstand the shock and access financing on reasonable terms for their operations or expansion.
Of those thousands of entrepreneurs who could lose their businesses, it is not known how many will embark on new adventures. There are no reliable statistics, but very few are likely to do so for the simple reason that they would lose not only their investment, but perhaps also their personal savings and loans. How can we create the right environment for SMEs to grow and prosper even during the crisis? What are the responses and policy measures that have been put in place to support SME development? What needs to be done to help them grow?
SMEs are a key impact factor. They are the ones that generate most employment. As an example, it is estimated that for every million euro invested from an SME, 14.7 jobs are created compared to 3.1 jobs generated if the investment comes from a large company. SMEs contribute more than 40% to GDP in emerging economies. The private sector provides 9 out of 10 jobs in developing countries, plays a key role in creating new jobs, promotes growth and has enormous potential. SMEs in the Mediterranean are an inseparable part of its economy.
The region has 25 million SMEs. All administrations recognise their importance and impact in creating wealth and diversifying economies, taking into account that these and informal companies represent 90% of the business fabric, 60% of GDP and 70% of employment in the region. But SMEs only receive 8% of total bank loans. This recognition, however, has not led to effective solutions to the endemic problems suffered by these enterprises, but rather manifests itself tragically in every crisis.
The government measures or financing programmes put in place are neither sufficient nor satisfactory. The asymmetry of information and the structure of the financial system, the demands for guarantees and the high rates, are impossible to accept.
Despite a growing number of startup accelerators and funds for the region, job creation, competitiveness, higher productivity and economic growth help to reduce poverty. Therefore, SMEs are the key to inclusive growth in the Mediterranean and are essential, especially for the emergence of the regional middle class and access to employment.06/27/2022