How to make small businesses in developing countries more competitive

27 June 2023

On Micro, Small and Medium-sized Enterprises Day marked on 27 June, UNCTAD renews calls for a level playing field to help tackle the challenges facing women and youth entrepreneurs in emerging markets.

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© Adobe Stock/ Wazkkii | Policies that support small enterprise development and entrepreneurship for women and youth are crucial to promoting competition, driving economic efficiency and fostering sustainable development.

Sitshengisiwe Ndlovu found her calling in supporting women small traders during her previous work as a customs officer in her native Zimbabwe.

She met many women who made a living out of small-scale cross-border trade and came to understand their challenges first-hand.

For example, they often lack knowledge in trade procedures and applicable duties and taxes, exposing them to fines and confiscation of goods. Such barriers, if left unaddressed, risk the survival of these micro, small and medium-sized enterprises (MSMEs).

Wanting to make a difference, Ms. Ndlovu set out in 2019 to establish the Zimbabwe chapter of the Organization of Women in International Trade, a non-profit global association focusing on empowering female traders.

There, Ms. Ndlovu and her team conduct research and advocate on issues related to women and trade.

The Zimbabwe chapter also trains women entrepreneurs, particularly those in MSME settings, on topics such as taxation and registration to bridge the knowledge gap in regulatory compliance, while helping them formalize their businesses for better visibility and access to finance.

In late 2022, Ms. Ndlovu took an online course offered by UNCTAD on the interface between smaller business development and competition policy, equipping herself with new knowledge and tools to educate and advocate.

“I can marry the information I got from the course with what’s happening on the ground,” Ms. Ndlovu said. “Let MSMEs know they should not fear competition and let our policymakers know how their decisions affect MSMEs.”

Competition policy matters amid recovery from COVID-19 crisis

The online course, held between November and December 2022, raised awareness on the impact of competition policies on MSMEs and ways to help them overcome regulatory barriers.

It brought to the fore the application of competition policy and law interventions that can further the entry, growth and sustainable development of MSMEs, both during and after a major crisis such as the COVID-19 pandemic.

“The pandemic hit MSMEs heavily all over the world, which justifies more policy attention to MSMEs from competition authorities,” said Teresa Moreira, head of competition and consumer policies at UNCTAD.

“For small enterprises to compete better in the market, there’s a need for governments to strengthen policies that support MSME access to finance and commensurate digital infrastructure,” Ms. Moreira added.

UNCTAD trained 141 policymakers, university professors, researchers and civil society representatives from 41 countries, almost half of them women from developing economies.

Trainees said the course equipped them to better enact, enforce and advocate for pro-MSME competition policy in their countries.

“The course provided me with the knowledge I can use when drafting materials to promote competition law to MSMEs,” said Lea Marie Dino, a technical writer at the competition commission in the Philippines.

“I hope the course becomes an ongoing initiative by UNCTAD, as it bolsters efforts by competition and regulatory authorities,” said Barry Headley, a senior economist at the competition commission of the Caribbean Community.

Pro-competition policy support from UNCTAD

UNCTAD is the focal point within the United Nations on competition issues.

Additionally, it has conducted national studies for Brazil, Thailand and South Africa, with recommendations on improving MSMEs’ access to more open and fairer digital markets.

It also followed up on the implementation of recommendations from a guidance document for the competition authority of Thailand, and the voluntary peer review of competition law and policy in Bangladesh.

Joint efforts to bolster small businesses

The annual MSME Day marked on 27 June spotlights the contributions of small businesses to achieve the 2030 Agenda and the UN’s Sustainable Development Goals.

According to the World Bank, these enterprises represent about 90% of businesses globally and create 70% of formal jobs in emerging economies.

This year, the focus is on galvanizing MSMEs worldwide by supporting women and youth entrepreneurship and resilient supply chains.

The UNCTAD course Ms. Ndlovu attended is part of a joint UN project entitled “Global initiative towards post-COVID-19 resurgence of the MSME sector” implemented since 2020.

Through this project, UNCTAD provided technical assistance on competition policy and overall coordination, leading clusters on MSME entrepreneurship policies, skills facilitation and e-registration, while contributing to the work on improving MSME access to finance and markets.

Small businesses need more support to cope with crises

“In today’s world of cascading crises, MSMEs are under high pressure to constantly adapt their business plans, so they need a supportive regulatory environment,” said Arlette Verploegh, who leads the entrepreneurship development work at UNCTAD.

She said regulations should be transparent, easily accessible online and with a clear, long-term vision to allow MSMEs to plan and invest in innovation and scaling up.

UNCTAD supports MSMEs by – through a dedicated policy framework – helping governments design effective national entrepreneurship strategies and highlighting the need for tailored policies for different type of entrepreneurs – women, youth, rural and urban.

It also supports capacity-building for entrepreneurs, MSMEs and start-ups through its Empretec programme, which has trained more than half a million entrepreneurs in developing countries through its 41 business development centres, 600 national certified trainers and 40 international trainers.