MSMEs (micro, small and medium-sized enterprises) are known to play a critical role in countries’ economies, both as sources of employment and as suppliers of diverse goods and services. Yet they receive little attention at policy level, with many failing to achieve their economic potential.

This is particularly evident in developing countries. Policies and regulations tend to be geared towards large enterprises with significant financial resources and market power, for example, which allows them to grow and compete at local and international level.

MSMEs, in contrast, generally lack the necessary capital, capacity and market knowledge to expand and become meaningful sources of value.

This was one of the core messages in an opinion piece written by three trade experts from the North-West University (NWU), which was published in the recently released flagship publication of the World Trade Organisation (WTO), World Trade Report 2019.

However, authors Prof Sonja Grater (an associate professor), Ali Parry (an extraordinary research scientist) and Prof Wilma Viviers (a research professor and WTO Chair holder) emphasise that the services sector – and services trade – could open the door to more plentiful and more sustainable business opportunities for MSMEs.

The exponential growth in global services trade could be a game changer for MSME communities in developing countries, particularly as many services are more accessible to entrepreneurs and small firms than are manufacturing, mining or agriculture, which generally require considerable investment.

According to the authors, MSMEs have a great deal going for them in the services arena, which in some cases gives them an advantage over larger firms. For example, they are more flexible and adaptable to changes in the market place, and have a more streamlined approach to decision-making. In many cases, too, their entrepreneurial character allows them to push the boundaries where innovation is concerned, which is one of the keys to competitiveness and sustainability.

Adaptability and innovation are becoming increasingly important in the digital era or Fourth Industrial Revolution (4IR), which is characterised by rapid technology-induced change across all economic sectors. While automation/robotics is replacing many traditional jobs, the fact that so many services these days are digitally enabled opens up new economic opportunities – provided education and training are geared towards making people employable in an increasingly tech-savvy world. The rapid spread of mobile banking services in eastern and southern Africa, for example, shows how innovation can still flourish against the backdrop of generally low levels of development.

However, whether agriculture- or mining-dependent countries can “leapfrog” the manufacturing stage and excel in the services arena is a subject of much debate. It is true that services are becoming increasingly important components of regional and global value chains. Yet, even an up-and-coming services sector cannot thrive in a vacuum, devoid of a supportive policy environment and regulatory framework and well-functioning infrastructure, notably in the telecommunications and energy spheres.

The World Trade Report 2019 was launched on 9 October 2019 at a special session of the WTO Public Forum in Geneva, Switzerland.

To access the opinion piece, click here: https://www.wto.org/english/res_e/booksp_e/10_opinionpiece_by_grater_parry_viviers_e.pdf

To access the full World Trade Report 2019: The future of services trade, click here: https://www.wto.org/english/res_e/booksp_e/00_wtr19_e.pdf

Prof Sonja Grater

 Ms Ali Parry

Prof Wilma Viviers