How Digitization is Benefiting SMEs’ Access to Trade Finance
The digital era is empowering small and medium-sized enterprises by helping them to adopt facilitated payment methods for international transactions and use financial instruments to export and import goods and services. Improved trade access through digitalization enables SMEs to engage forcefully in international activities, and, in turn, creates new jobs and firms, boosts innovation, and, ultimately, fosters inclusive economic growth. Therefore, SMEs all over the world must make the best use of trade instruments to reap the benefits of digitalization and, thus, participate in the global value chain.
This is the gist of the session that will be hosted by the Annual Investment Meeting 2022 on March 30th, 2022, in partnership with WEIF 2022, at Dubai Exhibition Centre, EXPO 2020 Dubai, under the title of “Digitalizing the Trade Route for SMEs – Trade and Heritage”
With this in mind, let’s ask: What will this high-level gathering discuss? This leads us, however, to another question.
What’s SMEs’ Share in Global Trade?
The prominent panelists at AIM 2022’s 3rd SMEs Pillar Session will shed light upon the fact that, compared to their larger counterparts, SMEs are relatively small players in the global trade arena. Only a small proportion of SMEs is engaged in international trade, including exports and imports.
Taking the Organization for Economic Co-operation and Development (OECD) countries as a typical example, almost all large industrial firms export, compared to only between 5%-40% of industrial SMEs. Remarkably, the intergovernmental economic organization stats illustrate that small firms (with 0 to 9 employees) account for only 10% of total trade, whereas about 57% of total trade value is generated by the group of largest firms (with 250 or more employees).
So, is there a way to increase SMEs’ engagement in international trade? Let’s take a glance.
Will SMEs Benefit from Digitalization?
The panelists at AIM 2022’s 3rd SMEs Pillar Session will demonstrate that digitalization in trade and trade finance will do good to SMEs in particular. Technological solutions are likely to increase process efficiencies and address costly regulatory compliance alongside information asymmetry issues, and SMEs may be well-positioned to be the beneficiaries of ongoing digitization.
The majority of banks are increasing their efforts to harness technology to cater to more SMEs. Further, digitalization is expected to improve engagement with SMEs in terms of its potential to improve the data available for SMEs, enable the development of new products, and, overall, may reduce the rejection rate of proposals by SMEs.
Additionally, demand-driven digitalization by SMEs - for instance by digitizing internal processes or trading on dedicated platforms - can enable a stronger position in accessing trade and supply chain finance.
AIM 2022’s 3rd SMEs Pillar Session
The AIM 2022’s 3rd SMEs Pillar Session’s keynote speaker is Professor Pierro Laureano, Director IPOGEA Traditional Knowledge Research Center. The Panelists are Dr. Oliver Grün, President, Federal Association of IT-SMEs of Germany (BITMI), CEO - Grün software and, president - European Digital SME - Giovani Oliva, CEO Matera 2019 Foundation, Italy - Dr. Azza Fahmy, Chairman, Azza Fahmy -Khadija Al Bastaki, Executive Director, Dubai Design District - Krunoslav Ris, Chief Executive Officer, Lumen Spei LTD -Ahmed Yehia, Founder & CEO, Eco Nubia, Egypt.
The well-known speakers will emphasize that with governments and policymakers viewing digitalization as a major policy priority, a diversity of various approaches is now being applied to enable SMEs to harness the impact of digitalization.
Moreover, the panelists will provide new insights on how policymakers worldwide can address such challenges as SMEs’ limited technology adoption, financial hurdles, and skills shortages.
A small or medium-sized business that aspires to embrace the digital era?
