7-8 JUNE 2017 / Tour & Taxis / Brussels

Small businesses giant players in pursuit of SDGs

Small businesses giant players in pursuit of SDGs

EDD17 - Replay - Small businesses giant players in pursuit of SDGs

auditorium
A3
Thursday, June 8, 2017 -
11:00 to 12:30

Key points

  • Development assistance alone will not deliver the SDGs. We need private sector innovation and investment. But don’t let governments off the hook of financing universal healthcare, education and infrastructure.
     
  • While much global economic growth is driven by SMEs, this is not the case in Africa, where SMEs face a $155 billion funding gap.
     
  • Conventional banks are not structured to lend to the poor and are unlikely to change. We need more revolutionary lenders, such as Grameen Bank, designed to lend small amounts of capital to the unbanked and unemployed.
     
  • The private sector will not automatically create inclusive, decent jobs. As smart global citizens, we need to embrace ethical consumption. 

Synopsis

The Sustainable Development Goals (SDGs) of 2030 will not be achieved through development assistance alone: we need private sector innovation and investment. While small businesses have an important role to play, medium and large businesses are equally significant. But we should not be naïve. The private sector does not care much about poor people or universal coverage. The best way to provide healthcare, education and infrastructure remains the public financing model, and we should not let governments off the hook.

The major obstacle to the growth of start-ups and SMEs remains access to finance. In the US, half a century of venture capital has helped not only deliver finance to new businesses but also provide oversight of how that money is spent. However, venture capital is rare in other parts of the world. In Africa, SMEs are starved of capital by a financing gap estimated at $155 billion. Banks do not understand the realities on the ground, especially in sectors such as agribusiness, which provide work for 70-80% of the workforce in African, Caribbean and Pacific countries. Conventional banks need educating to understand better the perceived risks around investing in micro, small and medium sized businesses. Another approach is to leverage the resources of the public sector to create a lower risk environment in which banks can lend.

However, conventional banks will find it hard to adapt. They are structured to lend to the rich, not the poor; to men, not women. Bangladesh’s Grameen Bank is a celebrated exception, flying in the face of convention by lending $2.5 billion annually to poor women with no collateral and no legal paperwork. Grameen, whose founder calls finance the “economic oxygen for people”, has followed this model successfully for over 40 years. Without that oxygen, people cannot contribute to society. By investing in individuals, Grameen enables poor people to escape from a system that exploits workers with criminally low wages and dangerous working conditions.

Meanwhile, Grameen itself has invested in joint venture social businesses – non-dividend companies set up to solve social problems. For example, in partnership with Danone, a global food giant, Grameen has created a low-cost, fortified yoghurt drink packed with vitamins and minerals which can lift children out of malnutrition within seven or eight months.

Just as important is the role that consumers play. Bangladesh has long been a centre for low-cost garment manufacturing. The tragic human cost of that industry was embodied by the 2013 collapse of the Rana Plaza garment factory, with the deaths of 1,134 low-paid workers. A new start-up in Bangladesh is lifting garment makers out of poverty by connecting them with ethical fashion brands, a $48 billion global market that pays a fair price for clothes. As smart global citizens, we can help improve lives by embracing ethical consumerism. 

Insight

People without education and the skills that come from education are not going to make it out of poverty, no matter what kind of structure or invention one has.

Organised by

  • Moderator
    Marjeta Jager
    Deputy Director General
    European Commission - DG for International Cooperation and Development
  • Tasneem Ava
    EDD Young Leader, Bangladesh
  • Felix A. Bikpo
    Chief Executive Officer
    African Guarantee Fund
  • Viwanou Gnassounou
    Assistant Secretary General
    African, Caribbean and Pacific Secretariat
  • Barbara Pesce Monteiro
    Director
    United Nations Representation Office Brussels
  • Jeffrey Sachs
    Sustainable Development Goals Advocate and Professor Columbia University
  • Professor Muhammad Yunus
    2006 Nobel Peace Prize Laureate
Photo gallery

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