Investment crucial for digital evolution of SMEs: GMIS

Small and Medium Enterprises (SMEs) are also under immense pressure to digitalise to keep up with the pace of change and become resilient against the effects of the current and future pandemics, according to experts convened at the Global Manufacturing and Industrialisation Summit #GMIS2020 Digital Series.

Experts from government and international development organisations, including the United Nations Industrial Development Organization (UNIDO), the Arab Bank for Economic Development in Africa (BADEA), the Union of Arab Chambers and the Confederation of Indian Industry convened at the Global Manufacturing and Industrialisation Summit #GMIS2020 Digital Series to discuss how innovation is being nurtured in their countries and within their organisations, and to share best practices in supporting and encouraging the Small and Medium Enterprises (SMEs) to join the technological revolution against the backdrop of the global pandemic.

Playing a critical role in the global economy, SMEs are also under immense pressure to digitalise to keep up with the pace of change and become resilient against the effects of the current and future pandemics, according to experts from global development organisations. Government support alone is not enough to facilitate this change; instead, entire ecosystems that include the public sector, private financial institutions, universities and small and micro firms must be developed in order to facilitate digital transformation and create sustainable resilience and development, they said.

The experts agreed that multi-stakeholder partnerships were central to facilitating innovation and creating resilience in SMEs. They also emphasised the need to channel investment into the SME sector globally, in order to help them develop world-changing innovations and digitise their processes and services in order to be ready to participate in the economy of tomorrow.

Dr. Bernardo Calzadilla-Sarmiento, Managing Director, Directorate of Digitalization, Technology and Agribusiness, United Nations Industrial Development Organization (UNIDO), said that investment in bolstering the digital capability of SMEs was crucial to local, regional and global economic recovery. “Covid-19 has put a lot of strain on our society and the economies around the globe. To help SME businesses continue to recover from the pandemic, they need proper access to finance and investment to help them foster digital capabilities. We need to ensure that SMEs are part of the digital transformation if we want to build a sustainable future - allowing progress that enhances the opportunities for all.”

Dr. Hashim S. Hussein, Head of the United Nations Industrial Development Organization, Investment and Technology Promotion Office in the Kingdom of Bahrain (ITPO Bahrain) shared best practice from the last 20 years in supporting ecosystems that encourage both the domestic investment and mobilise foreign direct investment that can facilitate technological progress in 52 Countries around the world.

“We must support SMEs around the world to become more engaged with technology and ensure entrepreneurial resilience. In Bahrain, we have long-running programs that support start-ups, micro, small and medium businesses through the creation of ecosystems that encourage investment and outside of the country, we are focused on supporting the industrialisation process of developing countries by helping to attract investment into SME programs that embrace technological change.”

Veronika Peshkova, UNIDO Goodwill Ambassador, agreed that helping SMEs develop digital capability is central to creating a sustainable future.

“The world is becoming more and more automated with digital industry already representing 30% of the world's GDP whilst productivity annual growth rate is four times that of so-called ‘physical industries’. 70% of all investment is attracted to ICT, and yet Covid-19 is likely to drive this rapid growth even faster, transforming all industries. However, the speed of this change brings the risk of widening and increasing inequality between those who have the skills to adapt to the digital revolution, and those who don't.”

She outlined the issue of gender balance in economic development, and how the digital revolution may exacerbate the problem. Peshkova said: “Many of the roles that could be automated by digital technology are currently occupied by women. Therefore, we need to work to empower women to upskill and progress into managerial roles that require human thinking. To do this, it is essential to ensure women's voices are heard, and their role in decision making and leadership are increased. We not only need to remove barriers that prevent the development of technical knowledge, but we must also work to engage men in the discussion and challenge societal norms that are currently holding women back. This is not really an issue of human rights, it is an issue of economic growth and welfare.”

Dr. Khaled Hanafy, Secretary-General of the Union of Arab Chambers agreed that partnership was vital to nurturing SMEs and facilitating digital transformation, said: “You need to have a system that works on every level of the economy to support entrepreneurialism. For example, not only do you need public-private partnership, but you also need to create partnerships with universities as this is often where the ideas originate. We are currently developing an innovation program that will be run across the Arab world creating training sites and mentor opportunities that will allow R&D to thrive.”

Safia Boly, Former Minister for the promotion of private investment, small and medium enterprises and national entrepreneurship, Government of Mali said partnerships that facilitate economic resilience all levels are vital for building economic resilience, particular when discussing SMEs. “One of the key ingredients for building resilience and sustainability in Mali, is to ensure access to finance for small and medium enterprises. Have difficulty meeting the requirement of conventional financing with commercial banks means entrepreneurs often resort to institutions of microfinance. Therefore, our effort to foster entrepreneurship leadership relies on our programs that promote domestic investment and leverage and obtain foreign direct investment. However, foreign investors need very strong layers of domestic investment to give them assurance Therefore, by building resilient, small and medium enterprises we facilitate confidence in their investment.”

The panel, entitled ‘Impact Investment through the Enterprise Development & Investment Promotion Programme’ was moderated by Nejib Friji, MENA Director of the International Peace Institute, and brought together leading experts from around the world to discuss ways in which investment can best be channelled to drive international development and drive prosperity. The panel discussed the type of support needed to sustain start-ups and the growth of SMEs and how entrepreneurs can embrace technological opportunities and be at the forefront of digitalisation and the Fourth Industrial Revolution. They also discussed the requirements needed to achieve Sustainable Impact Investment - all against the backdrop of the current global pandemic.

The panel offered views and approaches from around the world, highlighting regional differences and highlighting opportunities for collaboration. Friji, was joined by Dr. Bernardo Calzadilla-Sarmiento, Managing Directorate of Digitalization, Technology and Agribusiness, UNIDO; H.E. Veronika Peshkova, UNIDO Goodwill Ambassador; Dr. Hashim S. Hussein, Head of the UNIDO’s Investment and Technology Promotion Office in the Kingdom of Bahrain (ITPO Bahrain); H.E. Safia Boly, Former Minister for the promotion of private investment, small and medium enterprises and national entrepreneurship, Government of Mali; Dr. Khaled Hanafy, Secretary-General of the Union of Arab Chambers; Anjan Das, Executive Director, Confederation of Indian Industry and Director of Technology and Innovation; and Dr. Sidi Ould Tah, Director-General, Arab Bank for Economic Development in Africa (BADEA).

The virtual panel discussion was the latest in a new sequence of weekly sessions held by the #GMIS2020 Digital Series, following the Virtual Summit that was held on September 4-5, 2020. –TradeArabia News Service