Blog: Accessible and timely information: The cornerstone of SME recovery
Small and medium-sized enterprises (SMEs) are the building blocks and together form the foundation of our global economy, accounting for 90% of businesses and over half of employment around the globe. In Switzerland, they represent the overwhelming majority of companies (99%) and provide two thirds of the country's jobs. Swiss SMEs also play a key role in our export industry, as they account for almost 45% of total export volume.
As many economies reopen after months of isolating containment policies, the foundation is crumbling under the extraordinary pressure. Results from the ITC COVID-19 Business Impact Survey indicate that micro and small firms are particularly vulnerable during this crisis, with nearly one in four smaller firms reporting being at risk of shutting down in the next three months. The Swiss State Secretariat for Economic Affairs also identified that the corporate debt ratio of SMEs is rising sharply, with increased risk of credit default and insolvency.
This vulnerability underscores the need for prompt and strategic action to provide lifeline resources and enhance the resilience of those firms that are most exposed. SME resilience and adaptability in the face of COVID-inspired challenges will have profound implications for the likelihood of a rapid and inclusive global recovery.
Transparency at the heart of domestic and international efforts
To help small firms forge their path through the crisis, access to timely and relevant trade and market information is paramount. The WTO Informal Working Group on Micro, Small and Medium sized Enterprises (MSMEs) plays a key role in this context. It offers a platform to notify MSME-specific measures and allows members to share best practices.
Paving the path towards recovery also requires a concerted effort to create the necessary tools and policy environment. Recently, 78 group members pledged their support to finding solutions for small firms facing the unprecedented challenges that COVID-19 brought on. Members vowed to work together to facilitate trade, accelerate efforts towards trade digitalization, including access to digital tools, as well as improve MSMEs' access to trade finance and to trade-related information through online platforms⁴. They further encouraged WTO Members to inform and update the WTO about any trade-related Covid-19 measures to improve transparency. Switzerland has already communicated its measures to the Secretariat as part of this monitoring exercise.
On the domestic side, the first line of policy action taken by the Swiss federal authorities aspired to protect the financial viability of small firms. Switzerland acted swiftly to secure financial stability for SMEs with liquidity relief in the form of bank credits guaranteed by the federal government, which reached more firms than other programmes across Europe⁵. The Swiss Confederation also broadened access to short-time working compensation, a wage support scheme incentivizing SMEs to maintain employment ties with their workers during the crisis⁶. Finally, innovative start-ups, which are an important factor in the success of the Swiss economy, received additional federal support⁷. Telephone and e-mail hotlines supported these measures, answering SMEs' various questions and explaining where and how to get help. These efficient and exemplary policy responses have been crucial for ensuring that firms have the resources they need to survive the crisis and adapt effectively.
A practical tool for planning COVID-19 adaptation
While small firms are eager to resume their economic activities, market conditions and trade policy responses still fluctuate, resulting in continuing uncertainty. Many firms recognize that recovery will force them to step outside of their comfort zones to look beyond their traditional markets and spread their risks to weather the storm. Diversification is crucial for diminishing market risks and adapting to volatility in demand driven by containment efforts.
To thrive, firms need to be able to efficiently compare opportunities across potential target markets and stay abreast of evolving trade policies to adjust their sourcing and export strategies. The Informal Working Group on MSMEs has been working with the International Trade Centre, the UN Conference on Trade and Development and the WTO since the launch of the Global Trade Helpdesk Initiative in Buenos Aires at the 11th WTO Ministerial Conference for an accessible and centralized digital information platform for MSMEs. Over the last two years, initiative partners have been diligently working to centralize their information and join their efforts to simplify market research for small businesses.
The beta version of the platform - accessible at www.GlobalTradeHelpdesk.org - brings together information from ten partner organizations into a single search. This allows firms to stay updated on changing trade policies in response to COVID-19, identify and compare export opportunities, compare market access conditions, and connect with buyers, trade finance providers and other partners to put their export plans into action. The platform provides information in English, French, Spanish, Arabic and Russian.
During the past eight weeks, the 40% increase in the use of the platform signals the growing relevance of the tool and the surge in demand for timely information. With the support of the Informal Working Group on MSMEs, the platform continues to evolve by integrating new information and enhancing data coverage, expand its features and cover additional languages to ensure the information reaches those who need it most. Being a strong supporter of this initiative Switzerland encourages other WTO Members to provide trade-related information and relevant updates to continuously increase the quality and coverage of the Global Trade Helpdesk. As the Informal Working Group works towards a plurilateral declaration on MSMEs, we encourage governments to support and promote this integrated platform as it makes its way to the final version rollout this year.
Rebuilding a robust and inclusive global economy will take time. Nevertheless, empowering the very building blocks of our societies and economies marks an important step towards recovery. SME recovery starts now, one firm and one informed business decision at a time.
⁴ https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm Statement on highlighting the importance of MSMEs in the time of COVID