June 14, 2024

Diversifying alternative financing options and enhancing their competitiveness are important to promote growth of micro, small and medium enterprises (MSMEs) after the pandemic, according to an Asian Development Bank (ADB) report. 

The report, titled “Asia Small and Medium-sized Enterprises Monitor 2021,” said working capital financing is a lifeline to continue business or maintain the status quo during the pandemic. 

“After the pandemic, more diversified financing options are needed for MSMEs to meet their financing needs. The assistance should include further promotion of digital financial services for MSMEs (such as mobile financing, peer-to-peer lending, and equity crowdfunding platforms) and developing MSME equity markets as a growth capital financing venue for growing MSMEs and emerging businesses,” it said. 

The ADB conducted a series of surveys during 2020 and 2021 to assess how Covid-19 affected MSMEs in several Asian countries – Indonesia, the Lao People’s Democratic Republic (Lao PDR), the Philippines, and Thailand. 

Finance was the top concern for MSMEs surveyed as they continued to struggle to reduce costs – including further layoffs – to continue operating. 

In the Philippines, the top three on the wish list were all about access to credit in both 2020 and 2021 which was 94.6 percent in 2020 and 78.2 percent in 2021 for zero-interest/collateral-free loans, 89.6 percent and 76.8 percent for faster loan approvals, and 89.5 percent and 74.7 percent for refinanced/low-interest loans. 

The report said other “post-pandemic” policies to advance the MSMEs are providing business development services and skills development training for workers, fostering incubators and accelerators for entrepreneurship development, and using more private sector resources for policy implementation. 

It said a drop in domestic demand over the years of the pandemic is an issue for MSMEs to improve. 

The report also underscored the important role business incubators and accelerators play in enhancing MSMEs’ competitiveness and developing entrepreneurship.

The report said governments need to attract private sector support to implement policy goals on MSME development. – Press release