Understanding informal SMEs

It is estimated that about 80% of all enterprises globally, roughly 280 to 340 million, fall under the informal SME category. The statement raises one common question, what is an informal SME? The definition of "informality" may vary based on different legislative frameworks, but as a whole, it can be understood in three different ways. One school of thought argues that informal SMEs result from formal organizations incapable of producing sufficient jobs to meet the workforce demands. This understanding criticizes…

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SMEs’ role in job creation

SMEs face a shortfall of over $2 trillion in financing gap, derailing their prospects to move past stagnation and into the growth phase. This shortfall impacts one-half to two-thirds of the SMEs globally, and legislative efforts worldwide often overlook the contribution of SMEs towards GDP and job growth to the economy. Despite the financing troubles, SMEs' contribution to employment has increased in the last few years, employing roughly 50% of the working population in high-income countries and significantly higher in…

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Understanding the SME Credit Gap

Over the past few years, job creation and economic growth through incentivizing private sector development have become primary objectives for legislators worldwide. This concise global effort to generate employment and job opportunities is not a recent trend. Since the 2008 financial crisis, policymakers have placed work and job creation as critical platforms in their political endeavors, especially in many developing and developed nations. However, many legislative efforts have not considered SMEs' employment generation potential. This devastating global trend has seen…

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State of SME Financing

With over 90% of the businesses in the world falling under the “small and medium enterprises (SME),” these businesses play a significant role in most economies. SMEs’ contribution to the economy is vital for many emerging markets, with over 50% employment generation and 40% of the GDP in these markets. As per research by the World Bank, it is estimated that SMEs are in a place to generate roughly 600 million jobs by 2030, making it a vital sector with…

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