Analyzing Micro, Small and Medium Enterprises (MSMEs) through the Sustainable Development Goals | truCSR

 

The role of private finance, especially domestic commercial investment, in achieving sustainable development goals is critical. The degree to which small businesses build employment, develop skills, treat the environment, drive innovation, and promote growth is a key determinant of the development paths that countries eventually take. 

Countries will not be able to meet their sustainable development goals unless small businesses collaborate. Small, micro, and medium-sized businesses, which employ fewer than 250 people on average, are the backbone of ASEAN economies and a key source of the innovation and development needed to achieve the SDGs. Their participation has the potential to be transformative, offering a once-in-a-lifetime opportunity to move the world toward inclusive, sustainable, and resilient growth.

Hence, it's critical to understand the role of MSMEs in economic activity, in creating jobs and incomes, particularly for the most vulnerable sections of the society, as service providers, and as entities with environmental footprints. After which it is possible to create direct and indirect links between MSMEs and the seventeen goals using these lenses. Through the blog, we explore the growth in MSME and its consequent impact on 17 sustainable development goals. 

Micro, Small and Medium Enterprises

Micro, Small, and Medium Enterprises (MSMEs) are described as having 1–9 employees, small having 10–49 employees, and medium having 50–249 employees, according to the World Bank. Local definitions of MSMEs, on the other hand, differ from country to country and are dependent not only on the number of workers, but also on other factors such as turnover time and assets.

MSMEs play an important role in the larger business ecosystem. In many countries, start-ups and young companies, which are typically small or micro businesses, are the primary source of net job growth and the driving force of creativity and sustainability in the private sector.

Sustainable Development Goals and MSMEs

GOAL 1: END POVERTY 

• MSMEs have employment that helps people get through poverty. According to the most recent global survey, 11 percent of the world's population, or 783 million people, lived in severe poverty. Job creation is one of the biggest benefits of supporting the growth of MSMEs.

• More than 70% of the population in developing countries is expected to work in the informal economy, either as self-employed individuals or in companies that are not officially registered. Because of the informal economy's versatility, it allows the vulnerable, including women and youth, to earn money.

• They can develop and implement strict policies and practises that are non-discriminatory against the poor. MSMEs may also hire, train, and employ members of the local community, including those who are poor, as part of the MSME value chain.

• The ambitious drive to end poverty through the SDGs has opened up a new set of business models and opportunities for the private sector, like MSMEs. Despite an economically backward person’s limited buying power, the cumulative impact is important.

GOAL 2: END HUNGER

• MSMEs can promote and encourage small-scale farming, ensuring as often as possible that office supplies are sourced from local agencies and small-scale farmers, and demonstrating accountability in the agricultural supply chain, especially when sourcing food.

• Climate-smart agricultural approaches will help with many aspects of the target, including ensuring the long-term viability of the agricultural value chain while also increasing farmer productivity.

GOAL 3: GOOD HEALTH AND WELLBEING

• MSMEs are filling in the gaps in healthcare by providing higher-quality treatments and a broader range of basic laboratory and imaging facilities. Furthermore, as a result of intensified competition for the same customer base, MSMEs are increasingly taking the lead as innovators of low-cost, high-volume distribution models.

• In developing countries, the health sector faces a variety of challenges, including medication ineffectiveness, communicable diseases, rising non-communicable diseases, an ageing population and needs, and skills and supply shortages. These obstacles must be overcome in order to achieve the objective.

GOAL 4: QUALITY EDUCATION

• MSMEs could become informal educational service providers through sharing technical and competency skills required by employers through work-based learning programmes (e.g. apprenticeship, professional preparation, and internship).

• In many developing countries, public schools are inadequate to provide the inclusiveness of education services needed to meet the SDG 4 goals. In several countries, MSMEs in the education sector could provide complementary education services, allowing the general public greater access to educational services.

• The SDG agenda offers an ambitious roadmap for addressing issues in the education sector. MSMEs will contribute to the development and innovation for expanding the reach of inclusive education, and innovation will help bring about the change required to fulfil this ambitious agenda.

GOAL 5: GENDER EQUALITY 

• According to a report, women make up a fifth of the total workforce in the MSME industry. According to available data, women make up 20.45 percent of registered MSMEs and 13.02 percent of unregistered businesses. Women's jobs, like ownership, is highest in micro enterprises, followed by small and then medium enterprises, according to disaggregated data across MSMEs.

• Women entrepreneurs, especially those from rural poor communities, face significant challenges in expanding their businesses due to a lack of land deeds and/or collateral required to obtain formal credit. Financial inclusion has the potential to be a strong force for gender equality.

• MSMEs, like major corporations, should be motivated to implement gender-inclusive strategies in their corporate practices and value chains.

GOAL 6: CLEAN WATER AND SANITATION

• MSMEs fill the gap where the public sector fails to reach communities, especially low-income families, in many developed countries. MSMEs in Asia, Africa, and Latin America are providing water and building sanitation facilities in rural-remote and dense urban areas, either with their own funds or loans and some equity.

• MSMEs in the agricultural value chain can help save water by increasing food crop production, improving water management practices and technology, adopting sustainable agricultural practices, and growing less water-intensive crops. Changing these practices requires agribusinesses and farmers to develop capacity and raise awareness.

GOAL 7: AFFORDABLE AND CLEAN ENERGY

• Multinational corporations may set a precedent by showing the importance of a "sustainability premium," or a higher price for a commodity made in a sustainable manner, using their market power. They may be able to persuade smaller companies in their supply chains to concentrate on environmental standards. They can also gain access to new markets through investing in small businesses.

GOAL 8: DECENT GROWTH AND WORK

• MSMEs account for up to 33% of GDP in emerging economies. Taking into account the contribution of informal enterprises, MSMEs account for more than half of GDP in most countries, regardless of income levels.

• In emerging market economies, MSMEs account for up to 45 percent of total jobs. MSMEs have consistently increased jobs at a global level in recent decades.

GOAL 9: INDUSTRY, INNOVATION AND INFRASTRUCTURE

• MSMEs account for roughly 60% of manufacturing jobs and 75% of service jobs in OECD countries, with MSMEs producing between 50% and 60% of value added on average.

• Despite the fact that small-scale businesses play an important role in economic growth in developed countries, one of the most significant obstacles they face is gaining access to financial services. Small-scale businesses need financial access to grow because it helps them to innovate, increase productivity, expand into new markets, and create new jobs.

• Although not all MSMEs are creative, they are often the driving force behind important economic growth developments because they can operate outside of dominant paradigms, leverage technical or commercial opportunities that larger corporations have overlooked, or allow the commercialization of information that would otherwise go uncommercialized.

GOAL 10: REDUCED INEQUALITIES

• Smaller companies, according to research, appear to invest more of the money they earn in a given region within that area, demonstrating their ability to revitalise economically distressed areas.

• MSMEs are labor-intensive, employing a diverse range of people, including low-skilled and less trained workers, as well as rural and urban poor.

• Small companies can be a powerful vehicle for addressing social needs in the marketplace. Social enterprises provide creative solutions to poverty issues and fill service delivery gaps. Social enterprises are becoming more common in many countries, particularly in the aftermath of the global financial crisis.

GOAL 11: SUSTAINABLE CITIES AND COMMUNITIES

• It helps in job creation. 

• They can work together to create and/or enter a sustainable forum that brings together interested stakeholders on a common and neutral platform to analyse, debate, and act on urban functionality, resilience, and sustainable development; and they can promote and use public transportation.

• Affordable housing, road safety devices, office sharing, municipal water leakage, public transportation in urban areas, electric and hybrid cars, automobile fuel efficiency, stable and modular buildings, smart metering, energy efficiency in buildings, autonomous vehicles, timber buildings, cultural tourism, and car sharing are among the opportunities.

GOAL 12: RESPONSIBLE CONSUMPTION AND PRODUCTION

• MSMEs are the backbone of national economies and major corporations' global supply chains. MSMEs have a small individual environmental and social impact, but as a group, they have a much larger impact.

• MSMEs, on average, are more versatile than large corporations, making them more likely to follow environmentally friendly business practises. MSMEs must be rewarded for adopting sustainable business practises and reporting on what is helpful to them.

• In a variety of fields, the promotion of sustainable practises can provide fresh or successful market opportunities for MSMEs: Market information (such as eco-labelling and certification), sustainable tourism, lifestyle education, retrofitting buildings and renovation, and food systems are all examples of public procurement.

GOAL 13: CLIMATE ACTION

• Given that MSMEs provide jobs and entrepreneurship to a large proportion of the population in developing countries, MSMEs can help households withstand the effects of climate-related shocks and stressors by providing stable and diversified incomes.

• MSMEs' mitigation efforts include reducing energy usage by promoting energy efficient lighting, homes, and refrigeration, reducing emissions by promoting renewable energy sources, and improving water conservation by promoting behavioural change against pollution and water use.

• Strengthening the adaptive ability of key economic sectors such as agriculture, manufacturing, food processing, tourism, and others requires addressing the capacities of MSMEs.

GOAL 14: LIFE BELOW WATER

• The target is directly related to small-scale fishing and marine-based businesses.

• Given the increased demand from customers for fair trade, organic, and BioTrade goods, sustainable practises such as ecolabelling and wild catch traceability systems can help MSMEs become more competitive.

GOAL 15: LIFE ON LAND 

• Smallholder farmers and agribusinesses play a vital role in the conservation of land-based habitats.

GOAL 16: PEACE, JUSTICE AND STRONG INSTITUTIONS 

• Adopting ethical business practices and standards and promoting integration of these standards within value chains of MSMEs can be beneficial for their growth and profitability

• MSMEs provide incomes to poor families, women and youth through employment and entrepreneurship opportunities. Supporting women and youth-led enterprises is therefore considered an effective strategy for violence prevention as incomes from entrepreneurship can motivate young people not to take up arms or to participate in crime. Supporting youth and women-led businesses, particularly those who are marginalized, can contribute to a more inclusive society which in turn promotes peace

GOAL 17: PARTNERSHIP FOR THE GOAL

• Small businesses address societal needs through market solutions as demonstrated by social enterprises. MSMEs also play a role in public-private partnerships (PPP) to provide services to address various developmental challenges. They can participate in dialogues with governments and communities to find solutions to development problems as they work closely with communities. They can contribute to society through Corporate Social Responsibility (CSR) practices. 

• They can take a collaborative initiative and seek a local charity that the organisation is close to and have a conversation on how the business can support their work

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