Small and Medium Enterprises in the region recognize the potential of working with public-private partnerships, and 63 percent of them think private sector initiatives and partnerships will benefit businesses and the markets in which they operate.
This has been revealed in a study conducted by Mastercard dubbed MEA SME Confidence Index.
The study also reveals that one in three SMEs or 32 percent think that collaborating with governments and businesses outside their markets could impact their growth. In Southern Africa this was especially pronounced, with over half at 56 percent agreeing.
The research also highlights the important role of government support in helping small and medium enterprises across the region to recover, position for growth, and contribute to economic prosperity.
As such, government support and implementation of effective policies has been highlighted as important by 88 percent of the region’s SMEs, 50 percent of which rated this point as a must-have essential.
This sentiment was especially pronounced in the Middle East and North Africa (MENA) at 92 percent and Sub-Saharan Africa at 90 percent.
Multitude of opportunities
Another 92 percent of SMEs in MEA said they are also looking for support in upskilling of their teams, and 88 percent highlighted the importance of improved telco infrastructure – pointing to opportunities to effect positive change in wide-ranging areas from education and skills development to systems and infrastructural progress.
“Public-private partnerships are crucial for effective development and implementation of initiatives that advance financial inclusion and inclusive growth. To achieve this, governments and the private sector must play a joint role in enabling a safe and secure operating environment,” the research says.
Government-led initiatives key to positive growth
Across MEA, 51 percent of SMEs say government-led initiatives could have a positive impact in supporting their businesses.
These include the UAE, where Dubai Government launched a third stimulus package to support small and medium enterprises maintain business continuity by reducing operational costs, while the Abu Dhabi Executive Council allocated AED 3 billion to the SME Credit Guarantee Scheme.
According to the research, the Central Bank of Egypt made it easier for SMEs to access capital by encouraging banks to raise their share of loans to MSMEs. A six-month debt relief finance scheme for SMMEs was launched by the South African government, along with a spaza support scheme and an agricultural disaster support fund for smallholder and communal farmers.
Valerio Murta, Senior Vice President, Core Products Middle East and Africa, Mastercard said the collaboration is the key to developing a commercial landscape that is fit for future growth, adding that through effective partnerships, the public and private sectors can together create a supportive environment where SMEs can thrive.
“The contribution of small businesses to regional economies is ultimately about much more than the immediate gains to livelihoods – it’s also about the sustainable development of an ecosystem that can advance inclusive growth and prosperity for all.”
“This is why it’s so important that we prioritize public-private partnerships for SME growth, and why we’re putting our technology, expertise and global network to work, helping to develop the infrastructure to connect more people – and more small businesses.”
Data by World Bank states that SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development.
As such, SMEs represent about 90 percent of businesses and more than 50 percent of employment worldwide.
Additional data indicates that formal SMEs contribute up to 40 percent of national income (GDP) in emerging economies.
Further estimates by the bank say that 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world.
“In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs. However, access to finance is a key constraint to SME growth, it is the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries,” World Bank says.