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Is there a future for Micro-, Small-, and Medium-sized Enterprises (MSMEs) in Developing Countries after Covid-19? – Lessons from the SME Competitiveness Outlook 2021 – Raphaël Dard of the ITC SME Trade Academy

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Podcast

Businesses for the SDGs

21/07/2021

Raphaël Dard International Trade Centre - SME Trade Academy

Article summary

What lessons can we capture from the COVID-19 response to ensure that MSMEs are resilient to the looming climate crisis, and are drivers of an inclusive transition towards more sustainable economies? Listen to Raphaël Dard, Head of the SME Trade Academy of the International Trade Centre.

The International Trade Centre conducted a survey on Covid-19 impact among businesses in 136 countries and the survey has shown that 60% of micro and 57% of small businesses were strongly affected by the pandemic, compared with 43% of large firms. One of the factors that contributed to surviving the crisis was the resilience of businesses. For example, during COVID-19, only 16% of resilient companies reported laying off employees, compared to 76% of companies with a lower index of resilience. As SMEs account for about 90% of businesses and more than 50% of employment worldwide, their demise has disastrous social and economic consequences. What lessons can we capture from the COVID-19 response to ensure that MSMEs are resilient to the looming climate crisis, and are drivers of an inclusive transition towards more sustainable economies?

Listen to Raphaël Dard, Head of the SME Trade Academy of the International Trade Centre, as he shares important insights from his work at ITC, illustrating some of the recent SME Competitiveness Outlook 2021 findings: i.e. why women-led and youth-led businesses were the most impacted during the pandemic and what can we do about it. Hear about some lessons and resources that MSMEs can use to help build a more resilient and competitive business during the green recovery.

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The opinions expressed in the SDG Learncast podcasts are solely those of the authors. They do not reflect the opinions or views of UN SDG:Learn, its Joint Secretariat, and partners.

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[Transcript of the podcast]

Paulyn Duman: Welcome to the SDG Learncast with me, Paulyn Duman.

In every episode, I bring you insightful conversations around the subject of sustainable development and learning, helping us all to achieve a sustainable future. Today with us as our guest is Mr. Raphael Dard, the head of SME Trade Academy at the International Trade Centre.

Raphael, thank you so much for your time today.  Please introduce yourself and tell us a bit more about your work?

Raphael Dard: Yes. So, I started at ITC in 2004 (Note: In the audio, it says 2014, but it should be corrected as 2004). I started working in a section called E-Trade development. I started working on I was already a bit of a geek and I had studied business and I fell in love with the internet quite young. So, I looked at the potential of mobile phones in emerging economies and it was quite impressive already then. And so, for about eight years, I had a program called Trade at Hand. And then after that, a colleague of mine offered me to work on a corporate e-learning program and that’s when the SME Trade Academy started. I recruited very talented people and we’ve taken the platform to where it is now, we’ve reached almost 300,000 participants around the world, almost all countries, actually of the world.

Paulyn Duman: It’s so interesting to know that you are very interested in mobile technology and the internet. What I really like about the work of the International Trade Centre is that it is the leading agency of the UN in the response to COVID-19 to support the small-medium enterprises, where the particular focus is on those small businesses in developing countries. If you can give us a bit more background about this Trade at Hand or how you’re helping through technology, the small, medium enterprises, especially in developing countries and also the larger project that you have at the Trade Academy.

Raphael Dard: So, the program that was using mobile phones is now over, but I have been using this mode mainly to provide trade data to exporters and even growers and producers in Africa and mostly in west Africa. We were using this for market information so that we tackle the issue of lack of information for the exporters on destination markets, also enabling trade support institutions to reach small businesses across the country, even in rural areas. Because even in very remote areas, there are mobile phones and this is one way to connect to the people.

Now more recently I’ve been developing my capacities in sustainable development because of my deep interest in it. And that’s how today as part of some projects that we do at the SME Trade Academy, we work currently with Guinea Conakry and Senegal. And we’re looking at Guinea in particular ways by looking at sustainable business models that make the best out of nature really and rely more on the capacity of life to sustain itself and enable owners of small businesses to have flourishing businesses and resilient ones because of the climate challenges that are ahead of us.

Paulyn Duman: My grandparents and my family, they were also were part of a farm. They were tilling the land. And I think this was one of the problems that I saw growing up. They don’t have access to information. They don’t have access to data and of course, let alone access to trade, right?  How do you access international markets or even just the market in the city? That is so interesting how you are providing this data and information to the people in different areas like agriculture, but also small businesses in different parts of the countries that you mentioned. And I would like to ask you how do you make the data and information accessible? What type of support do you provide them to be able to understand? Because I can imagine it’s going to be technical information. And what have you learned? 

Raphael Dard: As small businesses start to address the national domestic markets usually, so there, the information is less scarce because the counterparts are closer. And also, you were mentioning your family, it starts with feeding the family actually. The food we grow around us now that when the business starts growing, that’s when you can start running business and trades nationally and provided the business grows sufficiently. Then we can start talking about cross-border trade and international trade. So, in Burkina Faso and Senegal, we were working with producers of mangoes and tomato, cherry tomato. And we would enable the growers and the exporters to access trade information from Paris market so that they could know the variations and the market prices and maybe negotiate better prices with their importers. The price fluctuations are important for the exporters and the growers and that is certainly a way to empower them.

This is a project I’ve stopped running some time ago since I moved to e-learning. Now in the learning area on the training and capacity building area, we are now looking specifically to the resilient aspects of businesses. And that means that we have to look at the whole business concept and what the business relies on. And if you rely on markets that are fragile, or if you rely too much on markets that are prone to be disrupted during a pandemic, you are less resilient. So those are elements that we now train our beneficiaries on so that they consider the pros and cons, and that they analyze their business in a way to see where they would have possible vulnerabilities and avoid relying too much on those aspects of their business. It’s a sort of business analysis that one has to make in order to see where are the potential areas that are fragile, and be conscious of them so that they can pivot quickly in case there’s a problem.

Paulyn Duman: In June, we celebrated MSME day. It was also very important that the ITC has published the SME Competitive Outlook 20 21, which focused on the impacts of COVID-19. Central to the report is resilience. Can you share with us a bit more about the resilience aspect of business? 

Raphael Dard: So just as a background the international trade Centre was created by the UN Conference on Trade and Development, UNCTAD and the WTO. So UNCTAD works mainly with government-level institutions and WTO works at the rules and regulations in the global trade. ITC has the mandate to work more with businesses also through the business support organizations. And so, we work indeed at improving the international competitiveness of SMEs and one of our flagship reports is the SME Competitiveness Outlook. And this year the topic is empowering the green recovery. And I think it’s a recognition that although COVID-19 was a big hit to the world, I don’t know if you’ve seen the little drawing that shows waves coming at us. There’s a small wave which shows COVID-19, and a much bigger wave behind it that shows climate change. So, we have a short-term issue that we’re dealing with and tackling as best as we can. But there’s a bigger one, which we are already getting some signs of through meteorological events. And these are serious issues for businesses around the world. And more so in developing countries. Small businesses were generally more affected by the pandemic than large businesses having the capacity to be a bit more resilient and also in industrialized countries, the governments are able to sustain, to subsidize businesses during the crisis, which is not the case for developing economies most of the time.  To give you an example, my wife has opened a small food shop three years ago. And that was a bit tough to start a business right before the COVID hit. And so, it was critical for her to have the Swiss government being able to provide a bit of money and ensure that there would be enough to bring food to the table during that crisis, which is often not the case in many countries around the world. So that’s a resilience capacity of the country itself and the infrastructure is important. Now I was saying empowering the green recovery is recognizing the fact that during this pandemic we’ve had to deal with a short-term crisis where the big issue and the climate crisis is a long-term one and some on one that not everyone can see the urgency to do something about it. However scientists around the world raise the alarm, we take forever to react and it’s a good thing that this Competitiveness Outlook Report is saying take this opportunity of the COVID to think again about your business model and look at the green, the potential of sustainable development for setting up a new business, maybe that is more resilient or adapt your current business, to make it more sound and able to cope with future issues and actually be maybe an engine to the solution. So, you can do two things. You help yourself, by addressing the issue, lowering carbon emissions through your business, encouraging your clients to do the same, encouraging your providers to do the same, be yourself in a supply chain that is low on carbon emissions. You’re making your organization, your business more competitive.

Paulyn Duman: Can give us a bit more insights into why women-led and youth-led businesses were impacted the most.

Raphael Dard: Sure. It is now known that businesses or startups that exceed two years of existence are usually created by a person of, on average, 43 years old. Now we know that youth definition is 18 to 35. But for a more logical reason, young people are less experienced. And so, they’ve probably faced fewer challenges and there they’ve built the capacity to cope with tough changes while older people have been young and faced business issues and maybe created companies that failed many times. And you learn by doing, therefore unfortunately youth is more affected and at the same time, youth can also pivot faster because they often don’t have yet a big family to support. And therefore, they have the energy also to change and create a business, a new business, and they will be crumb eventually older and savvier and be less prone to suffering from issues like the pandemic.

Now women-owned businesses of a certain size are also usually more affected you too. I would say traditional social structures. They have households’ responsibilities, which are still not shared enough with their male counterparts themselves, or often also struggling with their own business. And I’ve seen it firsthand. I was stuck at home during the pandemic. My wife had to steal a steal at the right to be at her business because she was sending food and I could see she couldn’t cope with two things. So maybe our own balance in task-sharing at home, as it evolves in the right way. Me being less at the office and more at home capable to do some more cooking. I’ve learned quite a few recipes and I’m pretty proud when I can cook. And so now that the balance is probably better, actually, I should recognize.

Paulyn Duman: How can we avoid this problem? And you have already alluded to some of those competitiveness solutions about green recovery, but in more concrete terms, how can the small businesses balance the cost of complying with environmental regulations? Because they’re also very expensive, but at the same time, knowing that if they invest in these things in the long-term, they will reap the benefit of being a resilient business.

 

Raphael Dard: The Green recovery is a very broad term. And resilience is the key word and still new to many businesses and businesses need to see a holistic way and they have to analyze themselves so that they can see where their areas of potential weaknesses are as I said earlier. I think it’s a very important question in the sense that the COVID crisis, by being global, is asking deep questions to humanity as a whole. It so happens that our development model has led to the crisis we’re in. An Einstein quote, says that you don’t solve a problem by remaining in the same referential. You need to think a bit out of the box. In here, one thing that ITC has taken a clear stance on is saying, you want to be green to support that trend, that’s going to the wall, that’s generating the climate change itself. Therefore, you want your business to go green and by going green, you are not only harnessing the potential of an economy, a wave that goes strong, but you’re also ensuring that your future is not going to be dark and difficult. Therefore, the direction we need to follow is towards greening businesses. And there’s luckily a strong demand for this from people themselves, the market. And also, it’s exciting because it’s a promise. It’s a promise for better days. Right now, imagine youth, my boy who 12-year-old is a bit worried about all he hears about climate change and he’s not responsible for it. But if I depict to him a future that’s greener and actions that he can take that are greener, it is motivating because you can suddenly say you are not a victim of the environment, but you’re rather an actor of the solution and you are actually addressing a problem, which can be very exciting.

And I think the message to the young generation is that there is no other way than to think about competitiveness. Competitive businesses are competitive because they are working in the green economy and active in the green economy and, by doing so, they become more resilient to future crises. Of course, to do this, you need to have a few things to know. And so, for that, there are courses to take. There’s learning to happen. Today we hear about corporate social responsibility, which is actually businesses that were probably not designed to be sustainable, but they have to consider those aspects. Today CSR as such is no more a thing on top of businesses, but it’s more part of the DNA of the organizations. So, we don’t even talk about it. And that’s what the younger generation needs to learn; I think. Now it doesn’t take out the responsibility of the governments, on the contrary. And for this ITC is also active at working to support good governance, also provide incentives for businesses. You need to also work in collaboration with partners on global value chains and it’s super important to innovate. In fact, by shifting the economy, from a more oil-based economy to a greener one, you cannot do it without innovation.

 

Paulyn Duman: You already mentioned some of the materials and some of the support that ITC provides, not only for the SMEs, but also how you’re supporting governments.  If I am a business that survived the pandemic or is still thriving during this time, where can I find information to make my business resilient, but also for those who are thinking of establishing a new entrepreneur?

 

Raphael Dard: I would start with the sources of information, of course, the ITC website https://www.intracen.org is an important channel. Twitter, our Twitter feed, which is called ITCnews is a great source of information and that also offers links to various resources. We at ITC work a lot on SDGs 2, 8, 12, and 13. So it’s zero hunger, decent work and economic growth, and responsible consumption as well as climate action. And ITC supports green entrepreneurship and innovation. I’m happy to be a co-founder of our innovation lab, turning  10-year-old, soon.  ITC also uses a market-led approach to value chains to deliver a premium to eco-friendly production. That’s very important to support what we call eco-friendly sustainable businesses because the old paradigm needs to become passé and it’s very important to show the direction that we should be taking. ITC also builds knowledge and advocates for policymakers and planners. In the same chain of thought, ITC maintains sustainability in business support organizations. We are probably the only UN organization that works so much with business support organizations. We also call them trade support and investment institutions. And ITC improves the transparency of voluntary standards. We have a great program that’s called T4SD, Trade for Sustainable Development. And that has amazing tools to figure out which standards are relevant for your business. A lot of them are private-led standards. That’s important because it’s the big buyer that explains what are the criteria for your business to being able to supply those big businesses, to sell to these ones. And last ITC supports businesses to implement sustainable practices.

 

Paulyn Duman: Raphael, thank you so much for your time. And I would like to ask you if you have any other last words that you would like to share with our listeners.

 

Raphael Dard: I actually liked a lot the sentence of our executive director, Pamela Coke-Hamilton, who said “going green is both a survival imperative and a business opportunity”.  It should not be associated with heavy regulations. If regulations on green sound heavy, it’s probably because your business does not have the right business model. You cannot run a business, which is not sustainable and feel-good today. It’s impossible.

Paulyn Duman: And that was Raphael Dard from the International Trade Centre. We learned that we can make micro, small, and medium enterprises in developing countries competitive by helping them become resilient. To do so, we need economic infrastructure that makes governments help sustain or subsidize businesses during crises, such as the Covid-19 pandemic. Businesses can also help themselves become more resilient by helping address issues such as climate change through lowering carbon emissions in their business and encouraging clients and providers to do the same. Climate change affects all businesses and they can do something to address the issue. Lastly, Raphael shared the message to young people that there is no other way to think about business competitiveness than working in the green economy because by doing so they become more resilient to future crises. Sustainable development should be part of any business’s DNA and governments should create incentives for businesses to shift to the green economy.

 

 

You may find out more information about the work of the International Trade Centre SME Academy at the UN SDG:Learn website. For now, I’m Paulyn Duman. Thanks for listening.  

Paulyn Duman is the Knowledge Management, Communications, and Reporting Officer at the UNSSC Knowledge Centre for Sustainable Development and is a coordinator for the Joint Secretariat of UN SDG:Learn, together with UNITAR.  

The opinions expressed in the SDG Learncast podcasts are solely those of the authors. They do not reflect the opinions or views of UN SDG:Learn, its Joint Secretariat, and partners.