This article is part of the World Economic Forum’s Intelligence Map on Sustainable Development, which was co-curated by Southern Voice. Explore the map here. 

Achieving the United Nations’ Sustainable Development Goals will rely on successfully sustaining small- and medium-sized enterprises (SMEs) – and fostering their contributions to the healthy economic growth. SMEs will play an integral role in achieving SDG 2, for example, which aims to create a world free of hunger, to SDG 11, which aims to make cities resilient and sustainable, and to the general SDG agenda of leaving no one behind. SMEs are economic growth engines for both developing and developed countries, and serve as bridgeheads between the formal and informal economies in these places. They tend to provide relatively low-cost employment (the unit cost of labour employed in SMEs is comparatively low), they aid local and regional development while creating rural-urban links, they help to equitably distribute wealth by dispersing economic activity, and they promote resilience in the face of economic upheaval. In South Asia, for example, home to an expansive informal economy, SMEs are key to employment and income distribution – and crucial for the local achievement of the SDGs (80% of the region’s workers are employed informally, and 90% of the businesses are small and informal).

Even before and (to a greater extent) during the pandemic, economies suffered from a worsening of conditions for businesses generally, and for small businesses particularly. Pre-existing gaps were exacerbated by greater financial, social, and technological exclusion of workers traditionally employed by SMEs – and research suggests there will be persistent, negative related effects on achieving SDG 8 (“decent work”), SDG 1 (ending poverty in all forms), and SDG 5 (gender equality). A greater focus must be placed on helping SMEs fulfil their role as substantial sources of gainful employment, poverty alleviation, and overall sustained economic growth. This can be done by developing holistic databases of SMEs to enable more evidence-based and informed policies for the sector. Governments must also provide better support by enacting much-needed policies that address the disproportionate damage done to small businesses during the pandemic; these must be part of broader, macro development frameworks. In order to facilitate truly fair and inclusive recoveries, the Global South especially must focus on supporting job creation and sustaining businesses. Ultimately, it may be necessary to enlist innovators from other sectors of an economy, not least social entrepreneurs, in focused efforts to strengthen SMEs.

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