Small and Medium-Sized Enterprises (SMEs) and Sustainable Development Goals (SDGs)
Introduction
In September 2015, World Leaders adopted a sustainable development plan for 2030, and in early 2017, they set 17 goals for sustainable development, which will officially come into effect over the next 15 years. All countries set their sights on those new goals and mobilize efforts to overcome all shapes of poverty and forester well-being. They agree that ending poverty must go hand in hand with all strategies that could help in increasing economic growth and meeting a wide range of social needs, including educational needs, health insurance, social protection, and new job opportunities. At the same time, they should address change impacts on the climate and work for environmental protection. Governments should take the lead and establish national frameworks for the achievement of those goals.
The goals can be summarized as follows: overcoming poverty everywhere, achieving food security, ending hunger, guaranteeing healthy lives for all at all ages, providing sustainable and modern energy for all, offering good education for all, equality, offering sustainable water and sanitation supply for all, limiting external and internal conflicts in all countries, making safe cities, ensuring sustainable patterns of production and consumption, increasing employment opportunities, increasing economic growth rate, developing all marine resources, fostering peaceful societies, reducing the impact of climate change, taking fast actions, and so on.
Studies point out that small and medium enterprises (SMEs) account for the majority of private sector business and economic activity in both developed and developing countries. Hence, it is necessary to go through and further understand the importance and potential contribution to sustainable development goals (SDGs). Those goals aim to boost the access to small-scale businesses and other enterprises, especially in the newly developing countries.
Referring to the World Bank and the OECD, many reasons could explain how SME/MSME development is playing a critical role for achieving SDGs:
MSMEs play a crucial role in most of local economies, especially in developing countries as formal MSMEs may cover up to 45 percent of the total employment needs and up to 33 percent of gross domestic product (GDP) in emerging market economies. These figures would be significantly increased if informal MSMEs were included. MSMEs are major creators of new opportunities for employment. For example, in emerging markets, four out of five new opportunities of the formal sector were created by MSMEs, which is almost 90 percent of total opportunities. The World Bank reported that 600 million new opportunities will be required in the next 15 years to absorb the highly growing global workforce, mainly in Asian countries and Sub-Saharan Africa.
MSMEs are significantly vital in reducing poverty, especially in countryside areas and between women and others disadvantaged groups. Because of their role and place in local economies, MSMEs are helping to meet SDGs, mostly economic-related goals. These goals include promoting inclusive and sustainable economic growth rate, increasing job opportunities and decent work, especially for the poor, advancing sustainable industrialization and innovation, and creating a good push for a higher quality of life, better education level, and good health for all. Given that MSMEs take part in achieving most of the economic related goals of SDGs, the Action Agenda of Addis-Ababa on Financing for Development highlighted the vital role of MSMEs with regard to providing job opportunities and innovation for sustainable development in developing countries. That agenda also encouraged national governments, financial institutions, and development banks to give support for MSME growth by providing a conducive regulatory framework, innovative financial solutions, and systematic entrepreneurship training programs.
For example, in Singapore, there are more than 100,000 SMEs, representing 70 percent of the total SMEs in the country that use business support programs organized by governmental agencies and centers for enterprise developing. It is becoming increasingly necessary for governments to provide all needed resources, services, and funds for the worthy SMEs and start-ups. It is equally important to provide these MSMEs and start-ups with opportunities to share and transfer their knowledge across the business ecosystem with other investors, research centers, and stakeholders through a platform.
One of the multi aspects of MSME development is the social entrepreneurship concept. Solving most environmental and social challenges using business is gaining momentum in west and east African countries, especially in agriculture and telecommunication problems. However, despite the rise in global commitment to their growth, SMEs are still facing many challenges such as the lack of funds, limited access to finances, lack of training and knowledge, particularly regarding business development aspects, and insufficiency of strategic management skills.
Given the potential of MSMEs for SDGs, there is a need for more systematic changes in policies and in the ways of operation at financial markets and institutions. This would be able to reduce the challenges MSMEs face in accessing financial resources and encourage the development of informal SMEs to formal ones. This, in turn, would result in additional economic growth and the generation of more job opportunities. The SDG Compass is the way to translate the 17 UN SDGs into management objectives. The SDG Compass mainly highlights large corporations and offers them the framework and methods to transform the SDGs into business. Those implementation methods for SDGs and the framework with goals can meet the criteria of a hands-on and an actionable tool. More attention is paid to other motivators instead of highlighting tangible business impact. Currently, it is not possible to prioritize the topics of greatest interest to European SMEs. There are no tools to link the SDGs to the business operations of SMEs. SMEs lack resources, expertise, and incentives to implement sustainability in their day-to-day management, but their potential contribution to sustainable development is substantial.
While the SME sector makes a significant contribution to the economies of countries, high failure rates in these small businesses and enterprises is a matter of major concern. Studies on small enterprises in various areas of the world show that the most cited problems of small enterprises are related to lack of management, business development, and marketing skills. Brand personality is an innovative marketing potential for SMEs to compete with larger, more established firms more effectively. Thus, building brand personalities could assist in achieving SDGs 8 and 9 by enhancing sustainability and inequality between small, medium, and large-sized enterprises, which will be beneficial to growth in developing countries and in economic productivity.
Conclusion
SDGs will be the most important driving force with regard to laws, directives, and policies for stakeholder and investors in the next 15 years. This will lead to proper allocation of private and public resources to achieve more SDGs—economic related projects—which result in increasing the growth rate of markets. Therefore, markets at the bottom will be closer to those companies with high technologies, thus providing new solutions for most problems. Moreover, integrating business strategies with the SDGs will help companies to overcome the unexpected legal and market changes. Eventually, SDGs compliance will result in reducing legal and other business risks.