Experts Discuss SMEs Lending Market & Alternate Sources of Funding
SMEs make a significant contribution to the socio-economic infrastructure in both developed and developing countries, especially in the countries in transition from planned to market-oriented economies. However, the access to capital by small and medium-scale enterprises is still severely restricted, with a huge gap in funding widening globally between SMEs and large firms. Therefore, SMEs are increasingly turning to alternative funding sources, and thus, the world is witnessing an imperative need for a collaborative effort to help SMEs address the challenge.
This is the gist of the session that will be hosted by the Annual Investment Meeting 2022 on March 30th, 2022 at Dubai Exhibition Centre, EXPO 2020 Dubai, under the title of “SME Lending Market – Alternate Sources of Funding”.
With this in mind, let’s ask: What will the eminent panelists discuss at this high-level gathering?
SMEs & Global Economic Growth
At the AIM 2022’s 2nd SMEs Pillar Session, the panelists will highlight how SMEs were, are, and will always be critical to the growth of the world economy, noting that small and medium-sized enterprises account for the majority of businesses worldwide and are important contributors to job creation and global economic development. SMEs represent about 90% of businesses and more than 50% of employment worldwide.
When it comes to the vital role that Small and Medium Enterprises (SMEs) play in developing countries, the panelists will explain that formal SMEs contribute up to 40% of national income (GDP) in emerging economies, with the percentage getting significantly higher when informal SMEs are counted in. Plus, according to many estimates, more than 500 million jobs will be needed by 2030 to absorb the growing global workforce – which makes SMEs development a high priority for many governments across the globe. In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs.
Well, that said, let’s ask again: Are SMEs doing business all over the world like a hot knife through butter?
SMEs & the Funding Gap!
The speakers at the AIM 2022’s 2nd SME Pillar Session will shed light upon the fact that small and medium-scale enterprises’ access to capital is still severely restricted. Access to finance is a key constraint to SME growth and is considered the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries. SMEs are less likely to be able to obtain bank loans than large firms. Instead, they rely on internal funds, or cash from friends and family, to launch and initially run their enterprises.
As per the International Finance Corporation (IFC), the global gap in funding between SMEs and big companies is around USD 5.2 trillion. Furthermore, the IFC estimates that 65 million firms – or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries – have an unmet financing need of USD 5.2 trillion every year, which is equivalent to 1.4 times the current level of the global MSME lending.
So, what does this funding gap lead to?
AIM 2022 FDI & FPI Pillar Session
The AIM 2022’s 2nd SME Pillar Session panelists are Tania Kruger, Vice President, Product Development, and SME lead in the EEMEA region, Mastercard – Norlela Suhailee, Head of Business Development & Support, Darussalam Enterprise (DARe), and Chair of APEC SME Working Group (SMEWG) - Tomas Matola, President & CEO, Banco Nacional de Investimento (BNI) - Craig Moore, Founder & CEO, Beehive - Luca Lazzaroli, Director General & Deputy Head of Operations, European Investment Bank – EIB.
At the session, they will stress that as a result of this funding gap, SMEs are increasingly turning to alternative funding sources such as manufacturers, crowdfunding, and direct lenders.
What’s more, the session panelists will emphasize the dire need for a carefully orchestrated global effort to improve SMEs’ access to finance and find innovative solutions to unlock sources of capital - focusing on the need for banks and other incumbent lenders to align their loan models to the needs of SMEs.
That being the case, if you’re the founder, owner, CEO, or manager of a small or medium-sized business, you have to …
