Did you know that micro, small, and medium-sized enterprises (MSMEs) play an essential role in economic development, job creation, and poverty reduction worldwide? On one hand, they make up 90% of all businesses, and on the other, they generate between 60% and 70% of employment and represent up to 50% of the Gross Domestic Product (GDP).
In Mexico, for example, MSMEs represent more than 99.8% of all businesses, generate more than 52% of GDP, and create approximately 68% of formal employment. These figures highlight the vital role of MSMEs as the backbone of developing economies, sustaining livelihoods—especially for women, youth, and vulnerable communities.
Persistent Challenges for MSMEs
Despite their importance, MSMEs face significant obstacles:
- Limited access to financing, especially in low-income countries.
- Low digitalization and scarce technological adoption.
- Vulnerability to economic and health crises, as evidenced during the COVID-19 pandemic.
In fact, 41% of SMEs in developing countries consider access to financing a serious obstacle, compared to 15% in high-income countries. The challenges faced by women are even greater. Only 30% of formal SMEs worldwide are owned and led by women. Women entrepreneurs face numerous challenges in financing, owning, and growing their businesses, including legal and policy obstacles that hinder ownership and business development.
Women-owned SMEs in developing countries fail to access the capital they need; it is estimated that they face a credit gap of nearly 1.5 trillion dollars. Access to capital is virtually essential for starting or sustaining a business.
Recent data from the 2024 National Business Financing Survey (ENAFIN) in Mexico shows a gap of 5.1 percentage points in access to credit or financing between companies where a woman was the owner or majority partner (42.3%) compared to companies where a man was the owner or majority partner (47.4%).
Four Relevant Actions to Support MSMEs are:
- Highlight their impact on our communities.
- Promote inclusive public policies that facilitate their growth.
- Support local and responsible consumption.
- Foster innovation and sustainability as drivers of development.
The IDB’s Approach: Promoting Innovation and Supporting Women Entrepreneurs
The Inter-American Development Bank (IDB) has been a key ally in strengthening MSMEs in Latin America and the Caribbean. In collaboration with the Women Entrepreneurs Finance Initiative (We-Fi), the IDB supports women entrepreneurs by expanding access to financial products and services, strengthening capacities, expanding networks, offering mentorships, and providing opportunities to connect with national and international markets, in addition to generating evidence on solutions.
A recent report summarizes key findings on support for female entrepreneurship in four areas: financing, skills and networks, markets and technology, and enabling environment. It highlights that alternative credit assessment methods and digital financial services improve access to financing; that skills training is more effective when tailored to the type and size of the business; and that while digital training is growing rapidly, its effectiveness depends on participation and content relevance.
One of the IDB’s most recent approaches is to promote the digital transformation of MSMEs, helping them adopt technologies that improve their productivity, reduce costs, and expand their commercial reach. The Data Economy for SMEs initiative has been key in helping a group of companies make the leap to digitalization, strengthening their competitiveness and accelerating their development in an increasingly demanding market. For SMEs, this transition represents a unique opportunity to redefine their business models, optimize operations, and connect with their customers more efficiently.
Additionally, it is worth highlighting that the Gender Parity Initiatives (IPG) have played a key role in promoting programs and public policies aimed at closing gender gaps and eliminating barriers that prevent women and men in Latin America from working and engaging in entrepreneurship on equal terms. The IPGs stand out as a platform that connects leaders from the public and private sectors, creating strategic alliances that promote the employability and entrepreneurship of women. They allow countries to leverage the talent of 50% of their populations, boosting both their economic growth and the profitability of businesses. Moreover, the approach aims not only to frame its benefit in women but also in the multiplier effect they have on society.
MSMEs are not just small businesses: they are great engines of change. In a world seeking sustainable, inclusive, and resilient solutions, supporting micro, small, and medium-sized enterprises is betting on a fairer and more prosperous future for all.
Leave a Reply