Yes, there is hope for MSMEs, in the region and beyond

June 27, 2024

In Latin America, micro, small, and medium enterprises represent more than 99.5% of the business fabric and are responsible for approximately 60% of formal productive employment.

When I see Zamy Marah's Facebook page selling shoes, I think there is hope. In 2011, during the earthquake in Haiti, Marah lost everything. It was then, with the support of Korea, that we launched the first “In Motion,” or “Ann Ale” in Creole.

We conducted a market analysis and, after the earthquake, visualized an opportunity to create and strengthen craft stores, specifically jewelry ones. We supported 600 businesses. Marah's still stands today. She now sells shoes embellished with beads, using the same technique she learned to make necklaces back in 2011.

Beginning with Marah, “In Motion” was born, and along with other methodologies from our SDG Value Chains program, we have reached more than 11 countries in the region, tirelessly supporting more than 40,000 micro, small, and medium enterprises (MSMEs).

In Latin America, micro, small, and medium enterprises represent more than 99.5% of the business fabric and are responsible for approximately 60% of formal productive employment. However, they are characterized by low productivity, competitiveness, and efficiency. In the region, there are 17,217,911 small and medium enterprises, and half of them are founded and led by women (according to the GEM Global Report - Global Entrepreneurship Monitor 2021, published on October 10, 2022). When we launched the methodologies of the SDG Value Chains Program, we entered the heart of these women's lives. Diagnosing a business often means diagnosing their lives.

Often, they embarked on entrepreneurship knowing very little about accounting, marketing, hygiene, and sales. After receiving support and technical assistance through the Program, we measured the results and found that, on average, sales had increased between 15% and 30%. This is also a diagnosis of how their lives have improved. Understanding how to separate household and business accounting allows them to manage both better; selling more enables them to create job opportunities for others; knowing how to better treat customers can even influence how they relate to their children. These are the testimonials we received when conducting evaluations and analyzing the results of months of work and support. Regardless of the country or the size of the business, often the problems of these lives, businesses, and women are the same, from country to country, from region to region.

The SDG Value Chains program has different methodologies for acceleration and incubation. It began with the “Suppliers Development” program more than 20 years ago in Mexico, when UNDP signed a project with NAFIN (Nacional Financiera) to compile private sector’s best practices in supplier development at the international and national levels.

Afterward, we initiated the systematization and implementation in large companies such as Nestlé – Mexico, with the support of the Ministry of Economy, aiming to enhance the value chains and productivity of Mexican companies, increase local production, and ensure product quality for export. We supported 62 productive chains in 22 states, integrating more than 650 SMEs suppliers, resulting in an average employment growth rate of 5.8% and a 15% increase in sales.

Since then, we have continued to support and innovate with the aim of strengthening a more resilient business ecosystem for MSMEs, which includes and produces more effectively, creating jobs and fostering investments. We have kept these methodologies updated and, thanks to monitoring and the results obtained, we have been able to collect and transfer best practices.

The COVID-19 pandemic was undoubtedly a great challenge, but also an opportunity. After the closure of thousands of businesses, Ecuador launched “Digital In Motion” to support local commerce through innovation. We began generating capacities through digital platforms. In coordination with public-private institutions, companies learned to sell via WhatsApp, deliver products to consumers, and implement health protocols. It was a success. Within months, thousands of companies resumed selling their products. “Digital In Motion” expanded to more than 9 countries in the region and continues to be implemented with adaptations to different contexts.

Another methodology that has crossed borders is “Growing your business.” Albanian SMEs have been able to access the European market and export olive oil to Italy, significantly increasing their sales.

In 2023, we supported 19 SMEs, with 12 of them led by women, achieving an average sales increase of 30%. Additionally, the “Supplier’s Development” methodology has reached Botswana, along with our work with the “ACP-EU Development Minerals Programme.”

In 20 years, we have built capacities and helped businesses, predominantly led by women, in enhancing their productivity, becoming trusted suppliers for large multinational companies, increasing their sales, and facilitating inclusion, supporting their formalization.

In the current complex global context, which includes high inflation and significant increases in raw material prices, along with disruptions in global supply chains, business challenges are increasing. That is why the SDG Value Chains Program adapts, innovates, and responds to these challenges and opportunities. Resilience is key, exemplified by our provision of financial inclusion solutions.

The journey has been long and exciting; we have grown and supported the beating heart of the region's economy and other regions. Connecting small businesses to new markets, from local to global, increasing their productivity and, at the same time, including the most vulnerable with a vision of resilience, is the future. And that is where we find ourselves.