Globally, micro, small, and medium enterprises (MSMEs) account for over 90% of businesses and more than 60%-70% of employment, and 50% of the world’s gross domestic product (GDP). In the Philippines, based on the most recent statistics from the Department of Trade and Industry, MSMEs comprise 99.5% of business establishments, 63% of the country’s workforce, and 40% of the country’s GDP in the past years.

These numbers show that MSMEs, for their large share among businesses, definitely have a large and significant role in helping the economy recover from the impacts of the coronavirus disease 2019 (COVID-19) pandemic, as long as they are given appropriate support.

International organizations and thought leaders recognize the importance of MSMEs in post-pandemic economic recovery.

The United Nations (UN) is at the forefront of recognizing MSMEs’ key role during the celebration of the MSME Day last June 27, with the theme “MSMEs: Key to an inclusive and sustainable recovery” this year. For the organization, this observance serves to “raise awareness of the contribution that small businesses make to sustainable, inclusive and resilient economic growth and, shared prosperity and decent work for all.”

This was echoed by the United Nations Conference on Trade and Development (UNCTAD) during a global summit back in April.

Due to their innovative and opportunity-seeking nature, UNCTAD wrote on its website, MSMEs can power a stronger recovery from the pandemic; but they need more support, especially through long-term structural policies.

“MSMEs’ smaller size allows them to be flexible and adapt to new environments such as the one created by COVID-19,” the organization noted. “Not only can they help overcome previous constraints related to lack of productive capacities and economic diversification in many low-income countries but also enhance a strong and sustainable recovery.”

MSMEs’ significant role in recovery is also seen within Southeast Asia (SEA) by the Asian Development Bank (ADB) as it released its Asia Small and Medium-Sized Enterprise Monitor 2020 last October.

“MSMEs in Southeast Asian economies mainly focus on domestic markets and their level of entrepreneurship remain suboptimal. Supporting the development of MSMEs, particularly in technology adoption and participation in global supply chains, will contribute to inclusive growth and aid in recovery efforts from COVID-19,” ADB Chief Economist Yasuyuki Sawada was quoted as saying in a statement.

ADB’s report highlighted that while the pandemic “exacerbated already growing global trade tensions and economic uncertainty” within the region, small businesses “hold the key to economic recovery in developing Asia” in many ways.

For instance, MSMEs are seen to have the potential to create more jobs. “In Southeast Asia, 72%-85% of MSMEs operate in rural areas. They absorb 70%-84% of MSME employees in their countries. Thus, their growth is crucial for providing jobs for the unemployed or informal workforces,” the report read.

The report also pointed out that inclusive growth will happen in developing Asia through entrepreneurship development, especially within the services segment of MSMEs, which are found to be “low-technology and domestically focused,” as well as start-ups and technology-based businesses which remain a fraction of MSMEs in SEA.

“It is crucial to foster this MSME segment to ignite resilient and inclusive growth at both national and regional levels,” the ADB wrote. — Adrian Paul B. Conoza