- Fears significant proportion of MSMEs won’t be able to weather COVID-19 crisis
- Encourages governments to apply six best practice principles
- Stresses speed is of essence
The International Chamber of Commerce (ICC) has called on governments across the globe to prioritise micro, small and medium enterprises (MSMEs) and stressed the necessary efforts must be taken to fully tailor to support such entities, in the context of the COVID-19 pandemic.
With MSMEs acknowledged to play a crucial role in the functioning of the global economy, the ICC leadership pointed out they are among the most vulnerable to the effects of economic shocks, with cash reserves limited on average to less than one month.
“Without adequate and immediate fiscal interventions, we fear that a significant proportion of MSMEs will be unable to weather the COVID-19 crisis—with potential systemic implications for employment and the functioning of global supply chains,” ICC Secretary General John W.H. Denton AO said.
He added that the ICC believes that a further evolution of recently enacted support measures is urgently required in many economies, since there remains significant scope to scale pioneering MSME support schemes that could be adapted, as necessary, to the predominant modes of financial exchange used by small businesses in each country.
The ICC therefore encourages governments to apply six “best practice” principles that can ensure the maximum possible impact and reach of future interventions to safeguard the viability of MSMEs.
The best practice principles were listed as: extending full guarantee emergency loans up to pre-specified amounts at negligible interest, establishing a tiered approach for funding approvals, fast-tracking loans are of vital importance, making use of digital solutions to increase access to finance, adopting risk-based ‘Know Your Customer’ (KYC) rules to avoid funding backlogs, leveraging supply chains and engaging chambers of commerce as focal points within the business community. Furthermore, the ICC chief stressed that speed is of the essence when assisting MSMEs, since despite the commonly held view that most entrepreneurs get back on their feet after a company failure, the reality is not that. Available data indicates that some 60 percent of small businesses never reopen after a disaster.
“By tailoring the provision of financial support through the channels most used by MSMEs, governments can help to preserve the operations of these businesses and avert a worsening situation of bankruptcies and layoffs,” Denton said. (SAA)