The Importance of Small and Medium Enterprises (SMEs) in the Global Economy

SMEs contribute significantly to global GDP, accounting for 50% of it. They also provide two out of three jobs worldwide, making a substantial contribution to employment and economic stability. Despite their importance, SMEs face challenges accessing finance, with the majority being out of coverage for lending by financial institutions. This disparity in lending leads to a lopsided distribution of funds, with large corporates receiving the majority share. The lack of access to finance hinders SMEs' growth potential and their ability to pay employees, vendors, and pursue growth opportunities. Furthermore, discrimination against certain groups, such as women entrepreneurs, exacerbates the challenges they face. However, if better access to finance is provided to SMEs, it can have a positive impact on the global economy by fostering frictionless transactions, fostering trust, and allowing SMEs to thrive and innovate.