Small Businesses, Big Impact: How SMEs Shape Our Global Economy

Small and medium-sized enterprises (SMEs) aren’t just cogs in the economic machine—they’re the engines driving global progress, particularly in developing countries. These businesses, typically employing 10 to 250 people, catalyze both economic growth and social advancement.

In emerging economies, SMEs contribute a staggering 33% of GDP and create 45% of formal jobs. With an estimated 25 million to 30 million formal SMEs worldwide—including 3 million to 4 million in Latin America alone—their impact is undeniable. However, women-owned SMEs, representing just 32.5% of formal businesses, still face significant hurdles.

‍

The Ripple Effect of Job Creation

Every formal job created by an SME sparks a chain reaction, boosting local productivity and circulating wages within communities. In crisis-affected regions like El Salvador and Guatemala, these businesses offer vital alternatives to gang involvement, illegal migration and persistent poverty, providing stability and hope.

SMEs don't just fill employment gaps—they actively shape a more inclusive workforce. By prioritizing diverse hiring practices, they empower marginalized groups, including youth, women, older workers and those with fewer skills. This approach not only reduces poverty and inequality but also taps into overlooked talent pools, driving innovation and sustainable development.

In many developing countries, SMEs are the primary source of jobs, driving both economic growth and innovation. Their reach extends beyond urban centers, fostering growth and prosperity in rural areas and contributing to more equitable income distribution. By recognizing and utilizing underappreciated skill sets, SMEs play a crucial role in building resilient, sustainable economies.

‍

Achieving Global Goals 

SMEs play a crucial role in achieving the United Nations’ Sustainable Development Goals (SDGs), particularly SDG 8, which focuses on inclusive and sustainable economic growth, full employment and decent work for all. Through their innovative approaches and commitment to equitable employment, these businesses are building a more inclusive global economy.

Bpeace specifically supports formal SMEs, which not only create jobs but also ensure essential legal and social protections for employees. By helping these businesses exceed basic standards, Bpeace fosters environments that prioritize decent work conditions and strengthen prosperous local communities.

‍

Overcoming Barriers to Growth

Yet these vital businesses face immense challenges that threaten their survival and growth—from limited access to capital and markets to political instability, corruption and safety concerns. 

In regions like Central America’s Northern Triangle—where Bpeace concentrates its efforts—these challenges are particularly acute. According to the World Economic Forum, 67% of SMEs report that survival is their top challenge. Barriers such as weak business environments, lack of entrepreneurship training, and underdeveloped sectors further impede their growth.

Organizations like Bpeace are instrumental in helping SMEs navigate these complex issues. Through comprehensive programming and strategic partnerships, Bpeace empowers businesses to overcome barriers and drive systemic change. Anne Cramer, a Bpeace volunteer expert, says,

“Each new business I help, even in the simplest capacity, truly benefits in growing their business, creating jobs and fostering economic stability for themselves, their families and their region.”

‍

Crafting a Brighter Future, One SME at a Time

In communities grappling with violence and lack of opportunities, thriving SMEs offer more than just jobs—they provide reasons to stay, build skills and invest in the future. Each successful small business strengthens the fabric of its community, boosting resilience and fueling innovation.

Empowering SMEs is about more than just economic development. It’s an investment in human potential, sustaining competitiveness in global markets and a more inclusive, sustainable future. 

Particularly in emerging markets where good jobs are scarce, when small businesses succeed, families and communities thrive. 

By supporting SMEs, we’re not just fostering economic growth—we are investing in a better, more inclusive and resilient future for all. These small businesses are proving that when it comes to global impact, size is no limitation.

—---

References:

1. World Economic Forum (2022), "Future Readiness: Here’s why smaller businesses’ success matters." 
2. International Labour Organization (ILO), (2018), "Small Matters: Global evidence on the contribution to employment by the self-employed, micro-enterprises and SMEs."
3. Argidius Foundation (n.d.), "Impact and Learning: When Impact Takes on a Life of Its Own."
4. OECD Development Matters (2019), "SMEs and SDGs: Challenges and Opportunities."
5. USAID (n.d.), "The Missing Middle."
6. Olafsen, E., and Cook, P. (2016), "Growth Entrepreneurship in Developing Countries: A Preliminary Literature Review," World Bank Group.
7. Center for Strategic and International Studies (n.d.), "Economic Opportunity in the Northern Triangle."
8. IMF (2021), "Five Things to Know About the Informal Economy."
9. OECD (2019), "Strengthening SMEs and Entrepreneurship for Productivity and Inclusive Growth."
10. World Bank (n.d.), "The Role of Informality in Mexico."
11. WIEGO (n.d.), "Informal Economy and Poverty Growth Linkages."
12. ANDE (2021), "Decent Work and Economic Growth in the SGB Sector."
13. Essential for Growth: Donor Support for Small- and Medium-Sized Enterprises.
14. ResearchGate (n.d.), "The Importance of SMEs on World Economies."
15. ILO (n.d.), "Employment Reports."

‍