The small and medium-sized enterprise (SME) sector has often been underestimated as a vehicle for growth and sustainability in emerging markets. Yet, across the world the backbone of national economies is made up of such businesses. SMEs are the driving force of local business throughout the four corners of the world, responsible for driving innovation and competition in many economic sectors.

Despite the recognized importance of the SME sector as set out in the SME Finance Task Group Work Plan for 2011 (included as part of the G20 Principals for Innovative Financial Inclusion), studies show that SMEs, particularly those in the "Missing Middle" in developing low and middle-income countries, have historically lacked access to financial products and services critical to their growth. A concerted effort of the global community is taking place to address the financial and non-financial needs of this target group.

In 2012 there are growing trends to support SMEs worldwide. The current British Government is aligning its aid policies in parallel with the growing belief that boosting the SME sectors of developing countries is key for the near and long-term future of millions of people. The UK's international development secretary, Andrew Mitchell announced to the World Bank in spring 2012 that the UK intends to provide funds for a seven-year program of financial support for banks designed to help 250,000 businesses create almost 1 million jobs.

Bobby Pittman, Vice President of the African Development Bank (AfDB), stated that support for SMEs had been a trigger mechanism, since SMEs also play a key role in the OECD countries, given they are at the origin of at least 50 percent of job creation each year. SMEs are faced with two major challenges, namely the lack of infrastructure and the deficit they have in terms of access to financing. In order to help them meet with these challenges, the AfDB has focused its attention on microfinance, a mechanism that can help to tip the balance in favor of SMEs (by providing small loans to provide equipment, for example).

The UK minister's words are clear, "We have no chance of defeating global poverty unless we unblock commercial lending and allow entrepreneurs the chance to thrive in some of the most neglected parts of the world."

This reasoning is also viewed by African leaders. Evelyn Oputo, Managing Director and CEO, Bank of Industry of Nigeria, pointed to the absence of the middle class in Africa as the major cause of the problems faced by SMEs. "Although SMEs are the main source of job creation, unfortunately they do not have sufficient access to bank loans. Some of the main constraints relate to the issues of guarantees and management."

In Rwanda, Kampeta Sayinzoga, Permanent Secretary and Secretary to the Treasury, Ministry of Finance and Economic Planning, stressed that the country is moving in the right direction due to key reforms in good governance for a business enabling environment. As a result of these reforms, an average of 6,000 enterprises are being registered each year, compared to an annual figure of only 1,200 in the past.  

These figures tend to speak for themselves. There is no doubt that the past approach of providing large loans for large companies which benefits an important yet select group of entrepreneurs is not financially sustainable for populations which are in need of jobs and cash. Allowing for small scale business to start up and for those already established to grow, concerted efforts from a broad range of actors need to be made. International organizations, financial institutions, governments, local governments and leading business representatives must provide a favorable environment. To stall the growth of this sector is to stall job opportunities and a much needed strengthened private sector.

To bring African economies to the next level is to bring local businesses to the next level. In order to achieve this, financial tools must be established to give SMEs access to much needed money. Bringing in the informal economy in all African countries into the fold is a top priority, which world leaders are today acknowledging.

The writer is Communications Manager of EMRC – an internationally renowned organization providing a platform for Africa's private and public sector to come together and discuss partnership opportunities - www.emrc.be