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Making life better for small business

On 27 June each year we celebrate World Micro, Small and Medium-sized Enterprises (MSME) Day. This date was announced by the United Nations in 2017 as a way of raising public awareness of their contribution to sustainable development.

Making life better for small business
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  • Contributed by Vicki Stylianou
  • November 08, 2019
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This includes the importance of MSMEs in promoting innovation, creativity and ‘decent work’ for all, as well as achieving the goals of the 2030 Agenda for Sustainable Development.

The initiative to have a day declared by the United Nations as a world day to celebrate MSMEs was championed by the International Council for Small Business (ICSB), which is the global body representing small business.

The IPA is represented on the ICSB board and attended the United Nations in New York on 27 June 2019. It was indeed a day of great celebration to acknowledge and applaud the contribution made by MSMEs all over the world.

In Australia, as in many other countries, there is much to celebrate. For instance, small businesses contribute over 40 per cent of workers, over 44 per cent of new jobs, 30 per cent of GDP and over 97  per cent of all businesses are small businesses.

However, much more can be done to make small businesses improve productivity and become more prosperous. Becoming more innovative and focusing on exporting are two areas where small business can make a greater effort and reap more rewards.

Studies show that innovation and exporting do in fact lead to greater job creation and higher profitability. In general, this makes them more sustainable and more prosperous over the longer term. 

How do we achieve these goals?

A more enabling environment to assist the development of MSMEs and the achievement of these goals is the result of evidence-based policy and regulation. Many lessons can be learnt from other countries and global organisations such as the United Nations and the International Labour Organisation.

The International Labour Organisation states that a more enabling business environment will be created through a strengthened voice of MSMEs to influence policy making. This theory has great appeal to the IPA, which has been practising this for quite some time.

In many countries, such as Egypt, we are seeing these beliefs and practices being put into effect. What does a more enabling business environment entail?

It means that we must collaborate with other stakeholders which have a similar cause, such as employer organisations. Building strong relationships with government and other representative bodies is just as important if we are to strengthen MSMEs through advocacy and improved service delivery.

The results include an increased voice for MSMEs with representation at major national fora; improved access to relevant business development services; formulating evidence-based policy reform proposals on behalf of MSMEs; and strengthened dialogue with private sector counterparts based on more evidence based advocacy.

Continuing the theme from my last article on policy making around the world, it is interesting to review what evidence-based policy advocacy looks like and what methodologies are used to support the formulation and development of robust policy recommendations and advocacy.

The EU and UN use various methods that have been developed and applied. Two of these are noted below. 

The MSME Business Barometer looks at MSME barriers at a certain point in time and tracks all changes.  It is used to identify and propose solutions to reduce or remove major business barriers based on trend analysis. Surveys are used to collect relevant data.

The SME Test is used to assess the impact of proposed legislation on SMEs. In Australia, we use the Regulation Impact Statement with a specific small business impact statement. However, its rigour has been questioned over many years. In the SME Test, an assessment is made of the impact of new or amended regulations on SMEs before they are adopted.

It compares costs that SMEs incur as a result of the new regulations with the expected benefits. It also considers the possible mitigation measures for reducing the effect of new regulations on MSMEs. It focuses on reviewing policy proposals and extensive consultations with SMEs and their representatives. 

The end result should be robust and rigorous policy development. However, processes for implementation, monitoring, review and amendment where necessary, should also be applied.

We should always remain open to changing or abolishing regulation and legislation that is no longer fit for purpose. It is ironic that in a world of disposable consumer items, we seem to hold onto old laws a lot longer than we should. 

Vicki Stylianou executive general manager, advocacy and technical, IPA

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