Commemorating inaugural MSMEs Day on 27 June
by Associate Professor Dr Pauline Ho
On 6 April this year, the United Nations General Assembly adopted a resolution recognising the crucial role Micro- Small and Medium Enterprises (MSMEs) play in achieving the 2030 Agenda for Sustainable Development. Resolution (A/71/L.60) designated 27 June as MSMEs Day globally. This special designation acknowledges the vital role small businesses play as the global engine for job creation, innovation, economic growth and sustainable development.
The United Nation’s 2030 Agenda for Sustainable Development is a plan of action for people, planet and prosperity. It also seeks to strengthen universal peace in larger freedom. It recognises that eradicating poverty in all its forms and dimensions is the greatest global challenge and an indispensable requirement for sustainable development.
This new universal agenda consists of 17 Sustainable Development Goals (SDG) and 169 targets. These are integrated, indivisible and balance the three dimensions of sustainable development -economic, social and environmental. The goals and targets will stimulate action over the next 13 years in areas of critical importance, centering around 5Ps: People, Planet, Prosperity, Peace and Partnership.
The strength of a nation’s economy is usually a direct reflection of the viability of the MSMEs sector. The impact of MSMEs on the Gross Domestic Product cannot be over-emphasised. MSMEs in most countries, especially developing countries, account for approximately 35 per cent of the total GDP. They represent around 90 per cent of global economic activity and account for up to 45 per cent of total employment.
The World Bank estimates about 600 million jobs would be lost globally over the next 15 years due to automation, especially artificial intelligence. The United Nations is calling upon MSMEs and other entrepreneurs throughout the world to fill the void. Levelling the playing field is vital to job creation, and inclusive entrepreneurship must be promoted, especially support for women-owned businesses.
The current competitive digitalised business landscape implies that the new jobs created must be green and sustainable. This means they must be created not just to increase profitability but also to have minimum impact on the environment, local communities, society or the economy. Ayman El Tarabishy, Executive Director of International Council for Small Business (ICSB), said “If you cannot create enough sustainable quality jobs, nations can have a problem with instability and that timeline has actually moved up now with artificial intelligence.”
By the same token, Winslow Sargeant, ICSB Senior Vice-President for Development, highlighted that the focus on sustainable ‘humane’ jobs to offset those lost to artificial intelligence also create a higher bar for entrepreneurs. He used the analogy of the intersection of two different rings: human and enterprise. The human cycle involves building a company and sustainability that is focused on people, and there is the enterprise side entailing a company that makes money and does good to the people and community.
MSMEs are in a unique position to fill the gap created by rising population and a decreasing number of jobs. MSMEs have great potential to contribute significantly to product innovation in the marketplace as well as about two-thirds of all new jobs in the workforce. They are on the frontlines of embracing transformative technologies and new business models.
The growth of MSMEs can be a catalyst to achieve the United Nation’s Sustainable Development Goals that are designed to end poverty and promote prosperity. Hence, by designating June 27 as the annual MSMEs Day, the UN General Assembly has recognised the importance of these enterprises in achieving the SDGs especially by promoting innovation, creativity and decent work for all (Sustainable Development Goal 8).
MSMEs are at the heart of the UN Global Compact, the world’s largest corporate sustainability initiative. MSMEs can have tremendous impact in embedding responsible business practices and sustainability in today’s complex global value chains. However, MSMEs face the challenges of remaining relevant and sustainable in a competitive market. Some of these challenges include cash flow management; information overload; and lack of capacity, knowledge and skills, to name a few.
To ensure sustainability, MSMEs must be given the appropriate platform for growth such as forging partnerships for capacity-building, ensuring equal access for small business to international markets, expanding export opportunities, reducing or eliminating trade and investment barriers that disproportionately impact small businesses, integrating into the formal economy, and ensuring greater access to financial services, microfinance and credit.
Higher education institutions can play an important role in the SDGs and humanity via nurturing entrepreneurship. Academia should be generating supportive pathways for entrepreneurs that range from mentoring programmes that help level the playing field by removing barriers to success to teaching an entrepreneurial mindset. Supporting the entrepreneurial spirit must be a central part of any plan that seeks to empower global citizens and ensure their prosperity. Professor Kerry Healey, Vice-President of Babson College, commented that it is crucial for strong partnerships to be developed between higher education institutions and MSMEs. Such partnerships will allow the latter to capitalise on much-needed state-of-the-art resources.
Universities in Malaysia have been instrumental in providing human talent to MSMEs as well as enabling ‘knowledge transfer’ in the commercialisation of research. MSMEs stand to gain more through direct involvement with university incubators and student internships. Hence, leaders in higher education institutions must be committed to foster an innovative ecosystem to nurture entrepreneurial qualities and ventures towards ensuring the success of MSMEs.
Spearheading the advancement of small business and entrepreneurship is the International Council for SMEs and Entrepreneurship, Malaysia (ICSMEE Malaysia). ICMSEE Malaysia, a not-for-profit organization and affiliate of International Council of Small Business (ICSB). It is aimed at advancing entrepreneurship and accelerating the growth and development of small businesses in Malaysia through sharing of updated knowledge and the comprehensive experience of ICSB’s global networks.
Associate Professor Dr Pauline Ho is Deputy Dean of the Faculty of Business at Curtin Malaysia and Council Member of the International Council for SMEs and Entrepreneurship, Malaysia. She can be contacted by email to firstname.lastname@example.org.