Importance of SMEs to Development

The SME sector is the largest provider of employment in most countries, especially of new jobs; SMEs are a major source of technological innovation and new products. They are essential for a competitive and efficient market.

SMEs with high turnover and adaptability play a major role in removing regional and sector imbalances in the economy. Easy entry and exit of SMEs make economies more flexible and more competitive. They create a competitive pressure as they act as subcontractors in the downsizing, privatization and restructuring of large companies.

SMEs are important for poverty reduction; they tend to employ poor and low income workers. These businesses are sometimes the only source of employment in poor regions and rural areas and SMEs play an important role in developing countries where poverty is most severe.

The establishment of a Small Business Administration under the office of the president to provide financing and incentives for SMEs and monitor the implementation of the policies and legislations to promote SMEs will go a long way towards achievement of this goal.

SMEs have the potential to contribute substantially to the economy and can provide a strong foundation for the growth of new industries as well as strengthening existing ones; they are drivers of wealth creation and productivity in the economy.  We also know from research that high-growth firms, many of which are small businesses, are crucial in terms of driving innovation.