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Small and Medium Enterprises

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The International Council for Small Business (ICSB) defines small and medium enterprises (SMEs) as those with fewer than 250 people and micro enterprises as those with fewer than 10 people. Such enterprises account for 90 percent of the total number of global enterprises, provide 60 to 70 percent of all job opportunities, and create 50 percent of the gross domestic product. The statistics show that small and medium enterprises are important pillars of the global economy.

The Organisation for Economic Co-operation and Development (OECD) has specified important factors for the development of SMEs, including the government's capacity to implement robust economic policies; creation of an environment suitable for business development; a diverse and accessible lending system; sound legal and supervisory mechanisms; abundant infrastructure and skills training systems; healthy and professional employees; and competitive technologies, operating practices, and business strategies. In addition, SMEs play a key role in global goals to reduce poverty and drive economic development as they promote the values of Sustainable Development Goal (SDG) 8, "promote sustained, inclusive and sustainable economic growth."

SMEs are an important cornerstone of Taiwan's economic development. With unique business strengths such as high mobility, flexibility, and resilience, Taiwan has gained a foothold in the international market in various industries, and continues to actively participate in the global economy as one of the Four Asian Tigers. The TaiwanICDF is the premier organization responsible for Taiwan's official development assistance. In recent years, we have utilized the wealth of resources and experience gained from our own development process to assist partner countries through aid programs aimed at increasing the output and efficiency of their SMEs. Our methods include providing financial services and technical cooperation that help incorporate SMEs into the value chain and the market. In addition to connecting related government agencies and stakeholders, we also collaborate with international development institutions to help partner countries establish a sound ecosystem that promotes inclusive and sustainable economic growth.

While SMEs can agilely respond to a world that is constantly changing, they are also constrained by their small size and inadequate access to lending. The structure of Paraguay's economy is similar to that of Taiwan's. However, due to limitations of its divided guidance system and resources not being fully integrated and utilized, micro and small enterprises in Paraguay have not developed the same resilience and flexibility as their counterparts in Taiwan. Paraguayan financial institutions have also been unable to provide financial services catered to the unique characteristics of micro and small enterprises. Therefore, the TaiwanICDF began a partnership with a local social enterprise, Fundación Paraguaya de Cooperación y Desarrollo (FP), to launch the MSEs Re-lending Project (Paraguay) in 2020. We use FP's abundant experience in small loans and its nationwide network to help micro and small enterprises in Paraguay obtain funding. The program supports SDG Target 9.3, "increase the access of small-scale industrial and other enterprises, particularly in developing countries, to financial services including affordable credit and their integration into value chains and markets." The TaiwanICDF also implemented the FINCORP MSME Re-lending Project (Eswatini) in Africa, providing a stable, long-term source of funding to the Eswatini Development Finance Corporation (FINCORP). The financial institution re-lends the funds to micro, small, and medium enterprises (MSMEs) in Eswatini that specialize in agriculture, forestry, irrigation engineering, and other agricultural activities to invigorate agricultural development.

In rural areas of most developing countries, women and youths play important roles as generators of family income. Establishing independent micro or small enterprises or being employed by SMEs are common job opportunities and sources of income for these groups. To help increase the economic capabilities of these groups, the TaiwanICDF launched the Women and Youth Entrepreneurs and MSMEs Re-lending Project (Palau) in 2020 to provide loans for strengthening the capital structure of the National Development Bank of Palau (NDBP). We enhance the bank's lending business to provide services to more women, youths, and SMEs in Palau and fulfill SDG Target 5.a, "undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws"; and Target 8.10, "strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all." In St. Kitts and Nevis, the TaiwanICDF worked with the Small Enterprise Development Unit (SEDU) in 2019 to jointly implement the Nevis Small Enterprises Re-Lending Project. The project provides financing support for small enterprises owned by women and youths under the age of 35 to help them achieve formalized development, as well as guidance to help them convert business ideas into concrete actions and gain access to funding.

In addition to providing loans, the TaiwanICDF aims to create an ecosystem suitable for the development of MSMEs to meet SDG Target 8.3, "promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage formalization and growth of micro-, small- and medium-sized enterprises including through access to financial services." In 2019, the TaiwanICDF and Paraguay's Ministry of Industry and Commerce jointly implemented the Project to Strengthen Capacity to Support Development of MSMEs. The project leverages Taiwan's SME guidance system development and business management consulting experience to gradually increase the output and management efficiency of MSMEs in Paraguay and enhance the competitiveness of key industries. Furthermore, we use the TaiwanICDF's financing resources to improve the overall effects of guidance and facilitate more comprehensive development of MSMEs.

To help SMEs of partner countries improve operations and actively develop new products and markets, the TaiwanICDF and the Ministry of Economy of Guatemala launched the SME Development Project (Guatemala) and Project for the Capacity Strengthening to Support the Incubation and Entrepreneurship for MIPYMEs (Guatemala) in 2015 and 2019, respectively. By establishing a guidance system for entrepreneurship, incubation, and investment matching with a partnership between industry, government, and academia, the programs help increase the competitiveness of local MSMEs and create job opportunities.

In 2019, the TaiwanICDF implemented the One Town, One Product Project (Nicaragua); Creative Economy Accompaniment Project (Nicaragua); and Project for the Revitalization of Crafts and Youth Entrepreneurship in Antigua Guatemala and Surrounding Municipalities in Sacatepéquez (Guatemala) to help SMEs of partner countries design local cultural products to expand business opportunities. We introduced the One Town, One Product (OTOP) model adopted in Taiwan and established a guidance platform for the local cultural industry to provide the country with innovative ideas and technical support for their traditional handicrafts and products. The programs aim to enhance the quality of local specialty products and revitalize distinctive industries and the local economy so that they may benefit SMEs, youths, and industry professionals, and disseminate the intricate handicrafts and culture of our allies across the world.

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  • Date:2021/8/19