Increasing annual investments in small and medium-sized enterprises by $1 trillion would yield disproportionate dividends in terms of progress towards the Sustainable Development Goals. These investments also have the potential to deliver healthy returns for investors. To boost investment in developing country small firms, this report finds that stronger investment facilitators (actors which connect firms to investors) are key. Other major findings: bundling investments for small firms into large packages helps scale up financing; disseminating information on small business credit performance improves risk assessments; and helping these firms to be investor-ready improves their commercial viability.
The SME Competitiveness Outlook 2019 explains how best to scale up private sector investment in developing country SMEs for sustainable development impact. According to the report, lack of scalable SME investment projects and knowledge about enterprise capacities, as well as challenges in matching SMEs and investors, are holding investors back from channelling more funding into otherwise profitable investment opportunities in developing countries. The key questions addressed in this report include:
- How important is SME finance to achieving the 2030 Agenda for Sustainable Development?
- Why is finance for SMEs in developing countries considered a risky investment, and what can be done to reduce risk and risk perceptions?
- Who are the international investors financing start-ups and SMEs, and what are their approaches?
- What can policymakers do to bridge the gap between the supply of finance from international investors and the demand for finance from developing country SMEs?