The World Bank has estimated that about 600 million jobs will be needed by 2030 to absorb a growing global workforce.
According to the World Bank, Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries. SMEs, it said, account for the majority of businesses worldwide and are important contributors to job creation and global economic development. They represent about 90 per cent of businesses and more than 50 per cent of employment worldwide, it said.
The bank further said that formal SMEs contribute up to 40 per cent of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included.
In a document obtained by Daily Sun, to close this gap, SMEs development should be a high priority for many governments around the world because most formal jobs are generated by SMEs, which create seven out of 10 jobs.
However, access to finance is a key constraint to SME growth because it is the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries.
“SMEs are less likely to be able to obtain bank loans than large firms; instead, they rely on internal funds, or cash from friends and family, to launch and initially run their enterprises. The International Finance Corporation (IFC) estimates that 65 million firms, or 40 per cent of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year, which is equivalent to 1.4 times the current level of the global MSME lending. East Asia and Pacific accounts for the largest share (46 per cent) of the total global finance gap and is followed by Latin America and the Caribbean (23 per cent) and Europe and Central Asia (15 per cent). The gap volume varies considerably region to region.
