Micro, Small and Medium-sized Enterprises (MSMEs) are the lifeblood of many communities and a critical source of employment and livelihoods. Larger companies rely on their effective operation and success in their value chains as suppliers, distributors, retailers and customers. However, many MSMEs struggle on a daily basis for multiple reasons. They can find it difficult to access finance and market opportunities. They may lack business skills or be impacted by weak infrastructure and a poorly functioning regulatory environment.
With a clear business case, larger companies have traditionally supported MSMEs in their value chains through the provision of services, often delivered through an NGO partner, which address one or a small number of needs, most commonly business and technical skills. However, as understanding of MSME needs grows, it is increasingly clear that the challenges they face are interconnected and multiple, and often lie beyond a large company’s ability to influence directly on their own. For example, a large company’s efforts to build the skills of MSME partners can be undermined if they still have to contend with limited access to financial services or a burdensome policy environment.
For this reason, there is a growing recognition that the barriers limiting MSMEs cannot be tackled effectively in siloes. To fully unlock the business and social benefits that arise from thriving MSMEs, all those organisations with a stake in their success – large companies, governments, donors and civil society – need to move towards a more holistic and joined-up approach to enterprise support with the goal of strengthening the underlying ecosystem in which MSMEs operate.
In addition to piecemeal support, efforts can be undermined and resources wasted through a lack of coordination between stakeholders. Multiple large companies may offer skills development or financial services support to the same MSMEs, which in turn could be further duplicated by civil society and governments. This can limit the impact of interventions, lead to the inefficient use of scarce resources and create confusion among target MSMEs.
The need to adopt a more collaborative, ecosystem strengthening approach is increasingly understood, but there remains little in the way of practical guidance and examples to help large companies and their partners to make this shift. For this reason, Business Fights Poverty and advisory firm Endeva have brought together a group of companies and foundations with an interest in supporting MSMEs: Bayer, Small Foundation, Visa and Vitol Foundation to learn from their experience and to help fill this gap.
Through a process of research and engagement, these organisations will work together to generate:
- Real-world insights through a safe-space conversation with peers, policymakers and experts, the project will generate actionable insights that can be applied in a business context.
- Practical tools and business guidance on why, when and how to take an ecosystems approach to SME development.
- -Valuable partnerships that will enable potential partners, including peer companies, NGO, development organisations, and others, to explore specific on-the-ground partnering opportunities.
Alongside the research, working sessions timed around the Skoll World Forum and Business Fights Poverty Oxford will encourage active engagement and input of practitioners. As with all our Challenges, we would like to tap into the collective knowledge and experience within the Business Fights Poverty community and beyond. If you are interested in enhancing the effectiveness of how large businesses can support MSMEs, please join the Challenge here to get regulate updates and to learn about opportunities to engage online and in person.The outputs will be shared at an event at Business Fights Poverty New York, timed to coincide with UNGA in September.
If you are interested in this Challenge, you can participate by:
- Contributing an article on the subject
- Joining our online discussion on 16th May at 3pm UK time
- Applying to join our events at the Skoll World Forum on 9th April and Business Fights Poverty Oxford on 11th July, which will feature working sessions on MSME ecosystem strengthening.
For more information about the project and how to contribute, please make contact here.