Can MSMEs Be A Pathway To Attain SDGS For Low Income Small States? – The Standard Newspaper

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By Almami Fanding Taal

Necessity is the mother of invention: a saying which is universally accepted as the leitmotif of all human progress and the bedrock of all civilisations.
As human societies evolve so have knowledge of the external world and how to adapt to the environment followed by the invention of tools such as the plough and tidal irrigation.
Out of the cave and huts human beings needed more sophisticated structures to cope with the harsh elements of the natural world. Therefore, human development is synonymous with innovation.
In the age of global value chains, it is feasible regardless of the size of an enterprise to be a profitable link in the value creation chain and to participate effectively in the global exchange of goods and services based on the specific needs/demands and comparative advantages of a particular geographic area.
For this reason, The Gambia must position herself so that the nation can participate effectively in the Africa Continental Free Trade Area and through cooperative ventures, PPP structures and investments incentive packages restructure its national economy and take advantage of its strategic location to positively benefit Gambians from the globalisation forces that are shaping the 21st Century as small states like Singapore Mauritius etcetera have successfully done in half a century.
However, the Gambian economy have significant structural defects which only public policy can adequately address by making Gambia a more developmental state as the private sector continues to be shallow, fragmented, and minuscule.
Venture promoters and aggregators are absent from the sustainable development ecosystem-with little domestic savings due to low-income jobs from a largely informal and unproductive economic base, capital formation is impossible.
The absence of stock exchange, bonds market or capital market investments opportunities that exist are not pursued by a critical mass of entrepreneurs. Therefore, the Gambia Government Treasury Bills Sukuk and commercial papers remain the safest investment instruments even with lower rates of returns for investors.
The above situation is compounded by the extreme informality of enterprises in The Gambia, both in their structures and operations, medium and small businesses are not designed to outlive their founder-owner. Mbye Njie & Sons, Sankung Sillah & Sons etcetera did not survive the founding entrepreneurs nor did the state owned enterprises such as the Gambia Commercial and Development Bank-GCDB and the National Trading Corporation-NTC.
The so-called informal economy appears to be larger than the formal sector meaning registered businesses with brick-and-mortar offices and a payroll of more than ten staffs. This dichotomy has resulted in narrowing the tax base of economy with the knock-on effect of higher taxes on formal businesses with all the other costs passed on to the consumers making the prices of basic goods expensive for the vast majority of the people.
The above scenario looked at through a PPP lens is a great opportunity for the Gambian Private Sector to design a vibrant sustainable development ecosystem that will support a partnership economic development model. Such a circular economy ecosystem will have well-regulated markets, efficient and effective frameworks for joint ventures, cooperative ventures, and PPPs all these will in turn enhance private sector participation in nation building.
The foregoing discussion makes the Sustainable Development Goals-SDGs an extremely attractive development framework for small low-income small states like The Gambia.
What is urgently necessary is for The Gambia to localise the SDGs with the appropriate national imperatives and the imprimatur official public policy of The Gambia Government.
Small, Medium & Micro Enterprises may be linked together for mutual benefits in such an ecosystem to achieve economies of scale that can profitably undertake transformational projects to set The Gambia firmly on the road to modernisation and sustainable economic development.
However, innovation and SMEs are two economic drivers rarely addressed simultaneously in the literature on the SDGs or on social and economic development. Innovation and SMEs concern almost all the SDGs, although only the following two Goals focus specifically on those drivers:
1. SDG 8: Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
2. SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation.
Innovation as a driver is mentioned in the following targets:
a) Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation, including through a focus on high-value added and labour-intensive sectors.
b) Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries acting in accordance with their respective capabilities.
c) Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries, including, by 2030, encouraging innovation and substantially increasing the number of research and development workers per 1 million people and public and private research and development spending.
d) Target 9.B: Support domestic technology development, research, and innovation in developing countries, including by ensuring a conducive policy environment for, inter alia, industrial diversification and value addition to commodities.
e) Target 9.C: Significantly increase access to information and communications technology and strive to provide universal and affordable access to the Internet in least developed countries by 2020.
SMEs as a driver are mentioned in the following target:
I. Target 9.3: Increase the access of small scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets.
II. Target 8.3 is the only one that mentions both innovation and SMEs, as follows:
Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity, and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.
SDG 8, where both drivers converge, concerns inclusive growth and decent work, thus linking both drivers to informal employment, which refers to activities not covered or insufficiently covered by formal arrangements, leading to greater worker vulnerability and poverty.
Most people enter informal employment because of a lack of formal opportunities. Innovation could create opportunities to tackle the challenges posed by informal employment; however, the disruptive nature of innovation could also contribute to the expansion of the informal sector.
Practice and research have shown the implications of innovation and technology for improving human welfare, economic growth, industrial efficiency, and environmental protection. Innovation and technology have become key to finding solutions to the most pressing and persistent social, economic, and environmental needs and challenges communities face in the 21st century.
To find solutions, innovation is applied in product design, processes, services, marketing, and institutional structures. The rapid advancement of technology is providing numerous solutions that support innovative activities and initiatives.
The 2030 Agenda for Sustainable Development includes the Sustainable Development Goals (SDGs) that affirm the importance of innovation and technology. The 2030 Agenda acknowledges the importance of involving various stakeholders in achieving the SDGs, and the responsibility of all actors in contributing to their fulfilment.
Consequently, it calls on the private sector, including micro, small, and medium enterprises (MSMEs), to actively engage in this global movement. Several SDGs and targets address these issues directly or indirectly, revealing an overlap between innovation and technology and SMEs (SDGs 8 and 9).
Although ambitious, the SDGs have opened doors for new business opportunities. SMEs can now embark on new endeavours to address goals in different sectors. Tackling climate change problems, for example, requires innovation in products and processes that consume water, energy, and other environmental resources to reduce the negative impact on the environment.
Integrating innovative technologies in food production or agri-food production is also on option for improving food security and more affordable access to food products with a longer shelf life.
The health sector has seen notable growth in innovations that integrate technologies and human wellbeing into wearables and mobile applications, as well as pro-poor innovations that make healthcare products more affordable to rural and impoverished communities.
The rapid development and production of vaccines to combat the Covid19 pandemic is an inspiring testament that globalisation can work for all particularly in the face of a existential threat and further proof of human ingenuity and innovation using Artificial Intelligence.
To better understand the potential impact of MSMEs in achieving the SDGs, it is necessary to know the size and role of such enterprises in The Gambia. An important component to consider in the study of MSMEs is the informal sector, comprising enterprises that are considered outside of formal arrangements that apply to organisations.
Many MSMEs fall into this category, so it is essential to consider the impact that the informal sector could have on technological innovation and economic growth. Another important element to consider is that MSMEs in rural areas require different development approaches than those in urban areas.
The creation and growth of MSMEs support economic growth and results in decent employment opportunities, especially in The Gambia that suffers from one of the highest youth unemployment rate globally. The uptake of new technologies and the integration of innovation into enterprises’ operations can enhance competitiveness, improve efficiency, reduce costs, and enhance product and service quality.
However, for innovation to thrive, a conducive business environment is needed. Unfortunately, MSMEs in The Gambia continue to face business and regulatory barriers and difficulties in accessing competitive finance. Consequently, most are reluctant to allocate resources to innovation and to formalise employment.
A suitable business ecosystem is necessary to ensure that MSMEs contribute effectively to economic growth and social development. Such ecosystems should be adaptable to the type and size of enterprises and include policies, strategies, plans, initiatives, programmes and organisations to support MSME development. Examples of countries with such initiatives include Senegal, Ghana, Cape Verde and Cote D’Ivoire.
However, despite the formulation of strategies and supportive initiatives, MSMEs in The Gambia still experience challenges in effectively contributing to economic growth, sustainable development, and SDG achievement. Those challenges must be addressed to ensure that MSMEs develop effectively, and to give informal MSMEs a chance to formalise.
In this regard it is imperative to analyse and understand the real cost of formality to small businesses with a view to reduce the cost of doing business generally and in particular for MSMEs. At the same time study and understand the true cost of informality of small businesses and its impacts on the national economy.
To this end Gambian policy makers must give serious attention to localising the SDGs especially in areas where the Gambia has clear comparative advantages such as the SME subsector in the Creative and Cultural Industry–where financial capital is not as critical as human capital, which The Gambia has an abundant source in its youthful population.
One area ripe for partnership and aggregation is the cooking utensils fabrication small industry that will partner the highly skilled craftsmen Tega/Numo with the Foundry at the GTTI. Tega/Numo are engaged in almost all the main markets in The Gambia using local foundries fed by scrap aluminum from disused car parts chairs and now empty cans: a sustainable way to recycle and reuse cans instead of throwing them away as garbage.

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