Developing the small-business ecosystem in CEE
Impact studies have shown that more than half faced severe losses in revenues, and up to one third feared going out of business without further support within one month, according to the OECD.
The World Bank, however, estimates that SMEs comprise about 90% of all businesses and more than 50% of employment worldwide. The effects of the pandemic, therefore, present a serious risk for society.
SMEs are especially critical to our region’s economic stability and future prosperity. In Georgia, for example, 99.7% of all firms were SMEs in 2017, accounting for 62% of total employment and 56% of total business sector turnover, says the OECD. Similarly, 98.7% of all firms in Moldova in 2018 were SMEs, accounting for 59.8% of business sector employment. We also see substantial economic contribution from SMEs in larger countries, such as Poland, where the European Commission says over 99% of companies are SMEs and SMEs accounted for over half (52.9%) of the overall value added by the economy.
We spoke with Charlotte Ruhe, Managing Director for Central and South Eastern Europe at the European Bank for Reconstruction and Development, on the future of SMEs in our region.
This is why SME support should be at the top of governments’ agendas.
Focusing on innovation, digitalisation and entrepreneurship, governments can support SME development and build their global competitiveness. In addition to their vast employment numbers, SMEs play a key role in responding to societal challenges and often add innovative solutions. By fostering an innovation ecosystem where SMEs can prosper, governments can also accelerate their country’s digital and sustainable transformation. Beyond putting the region on the global map, SME development can enhance countries’ overall resilience.
Resilience is imperative during the current crisis, and SMEs could be the key.
SMEs are at the core of our region’s economy, but the COVID-19 pandemic highlighted the fragility of many enterprises. So it is now more crucial than ever that governments prioritise support to help all businesses and entrepreneurs to become more agile and resilient to future shocks.