The SME Competitiveness Outlook 2022, released by the International Trade Centre (ITC), puts the spotlight on four types of services – known as connected services – that drive transformation, regardless of economic level.
The four – transport and logistics, financial services, information and communication technologies, and business and professional services – contribute directly to economic growth, with an increasing share of output, trade and jobs. They also contribute indirectly, by making all firms more competitive, ITC said in a statement.
Connected services assist firms to join the global economy through trade, ITC survey research shows.
For example, in regions with high-quality connected services, 44% of all companies export, compared with 19% of firms where such services are weaker.
Inclusive growth: Small firms, women, youth
The report also finds that connected services spur inclusive growth favourable to small businesses, including those led by women and young people.
‘Connected services make our societies more equal. As we rebuild from the pandemic, this services-led approach to development can help countries leapfrog and transform their economies,’ said Pamela Coke-Hamilton, Executive Director of the International Trade Centre.
‘These services link various parts of a supply chain, and spearhead digital innovation,’ added Coke Hamilton.
Yet most small firms in developing countries do not access these services easily.
The report sets out how companies, governments and business support organizations can improve connected services. The Connected Services, Competitive Businesses Plan entails action for firms to:
• Grow networks and manage relationships
• Innovate to deliver quality services
• Deepen staff skills
• Use finance to diversify products and markets
Among the report’s findings:
• Connected services’ jobs are growing faster in low-income countries. Employment in connected services grew by about 8% a year in low-income countries in 2007–2019, compared with 4% in manufacturing and 2% in agriculture.
• Strong logistics services improve inventory management and timely delivery. ITC business surveys reveal that 78% with access to high-quality services have good inventory management – compared with 36% depending on low-quality services.
• High-quality financial services support innovation. Surveys show that 46% of companies with access to high-quality services often create new products or processes, compared with 31% of companies depending on low-quality services.
• ICT services help connect to buyers and suppliers. Surveys show that 58% of companies with access to high-quality services have a website, compared with 35% that depend on low-quality services.
The report draws on ITC SME Competitiveness Surveys of firms in 16 countries. These show that while all small firms are less likely to export than larger companies, this export gap in services is half that of manufacturing.
Thought Leader contributions in the report are from: Chipoka Mulenga, Zambian Minister of Commerce, Trade and Industry; Doreen Bogdan Martin of the International Telecommunication Union; Shamina Singh of the Mastercard Center for Inclusive Growth; Kanayo Awani of Afreximbank; and Indermit Gill of the World Bank. Six Business Voices recount experiences of entrepreneurs from Costa Rica, Uganda, Sierra Leone, Bangladesh, Viet Nam and Nigeria.--TradeArabia News Service