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A Smart Investment in SMEs

Insights from Ethical Markets  Correspondent, Tim Nash at the G-20 – Ed.

The big debate at the G20 so far seems to be a conflict of opinion about fiscal policy.  On the one hand, you have countries who are worried that government deficits are creating debt overloads that are swarming budgets with interest payments.  On the other hand, you have countries who are chiefly concerned with the possibility of a “double-dip recession” scenario, and are advocating continued stimulus spending.  

Regardless of where people lie on the saving vs. spending spectrum, the one thing everyone agrees on is the importance of Small and Medium Enterprises (SMEs).  The success of micro-lending initiatives in poor communities has been astounding, and is a source of much optimism for job creation and sustainable economic growth.  To this end, G-20 leaders today launched the G-20 Small and Medium Enterprise (SME) Finance Challenge, seeking innovative proposals to attract private investment for SMEs in low-income countries.  Entries must be submitted online before August 25th at http://www.changemakers.com/SME-Finance.

Financing for SMEs is a smart way of both saving AND spending, as it contributes to economic development in a long-term manner.  Since the loans will be repaid, the funds are not simply a one-time expenditure, but can be continually reinvested.  Moreover, it empowers entrepreneurs to become community leaders that promote financial self-sufficiency.  “Small and medium enterprises are the single largest contributor to employment and job creation in the world,” said Canadian Prime Minister Stephen Harper.  “This G-20 initiative will help provide developing countries with the access to financing they need to get their small businesses up and running.”  Canada is contributing $20 million in support of this initiative, which it committed to launching at the G-20 Leaders Summit last year in Pittsburgh.

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