Small Businesses, Fragility, and Conflict: Solving the SME Puzzle
INVESTORS
[Geneva, 06 March 2024]
The International Trade Centre (ITC), the Geneva Peace Platform and the Geneva Trade Platform organised a high-level session to launch the 2023 edition of the SME Competitiveness Outlook (SMECO)1 and share their research on small and medium-sized enterprises (SMEs) in fragile and conflict affected settings (FCS). The session focused on policy responses to support SMEs in FCS and aimed to bridge the conversation gap between humanitarian and development agencies, state institutions and the private sector and foster more effective collaboration.
TrustWorks CEO and founder, Josie Lianna Kaye, was invited to take part in the ITC-led panel discussion to share some insights and lessons learned from TrustWorks’ experience of working on responsible business in FCS, particularly through the lens of conflict-sensitivity. The discussion also looked at impacts of conflict and fragility on business performance, competitiveness and trade opportunities. Josie was joined on the panel by ITC Executive Director, Pamela Coke-Hamilton, Timor-Leste Ambassador, Maria de Lurdes Martins de Sousa Bessa, social entrepreneur Daniel Stein. The Geneva Trade Platform Executive Director, Dmitry Grouzobinksi, moderated the session and ITC Chief of Research and Strategies for Export, Barbara Ramos, gave a few opening remarks to set the stage together with ICRC Diplomatic Advisor, Omar Dia.
Josie’s intervention focused on the misconception around job creation and peace. There is no empirical evidence that supports the claim by many international development actors that jobs contribute to peace in FCS. A few important points in this regard include:
- It is the quality and distribution not the number of jobs that may contribute to peace.
- Job creation is of course – generally speaking – a good thing but the extent to which it may contribute to peace is context-dependent.
- If the same company creating the jobs is – through its operations, supply and value chains – contributing to conflict through the use of land, water resources, security companies etc., then the investment itself is linked to conflict, not peace.
Many investors are unaware that beyond this common assumption that providing jobs will inherently contribute to peace are far more complex dynamics at work that prevent SMEs from growing to their full potential and can create circumstances in which investments inadvertently contribute to conflict. To learn more about these critical dynamics and how to overcome the challenges they prove to actors investing in SMEs, check out our study on the role of SMEs in FCS through the lens of peace and conflict issues.
1 The SME Competitiveness Outlook (SMECO) is ITC’s flagship report, published annually since 2015. Each report provides an in-depth analysis on a particular topic related to the competitiveness of small and medium-sized enterprises (SMEs), from their contribution to inclusive growth to their participation in regional value chains. The reports combine data analysis, academic insights, thought leader opinions, and case studies to provide guidance for policymakers, business managers, and trade and investment support institutions.
The 2023 edition of SME Competitiveness Outlook (SMECO) assessed the impact of conflict and fragility on business performance. It argues, based on novel firm-level data collected in eight countries, that direct support to firms is helpful and must be complemented by reforms to promote peace and stability and improve the business environment. This means that humanitarian organizations, development agencies and capable state institutions must collaborate, coordinate and have a deep understanding of the context to maximize positive outcomes and avoid reinforcing the drivers of fragility.
