 Good afternoon, everyone. Welcome to our session. Small is beautiful SMEs as the drivers of innovation and the employment. I'm Angela Hao. I'm the Europe Bureau Chief for Center Finance, which is a digital financial media platform in China. Now we have a great panelist here. We are going to discuss about SMEs, which is such an important topic. As we all know, SMEs accounts for 90% of business and provides half of the global employment. So their importance is nothing to mention even more. So how can governments, investors, and business ensure that SMEs have the right financing, talent, and wider ecosystem they need to innovate, expand, and create jobs? Now first, I'd like to introduce all our panelists here today. So now we have Professor Erica Crema Mboula. So she is a professor of economics from University of Johannesburg, South Africa. Her work focuses on alternative development paths for African economies, innovation systems, and inclusive development. Welcome Professor. So now we have Dr. Zhang Daniel Laroque. So he is the president and the CEO for NAFTI Network for Teaching Entrepreneurship. So he is a policy expert, scholar, teacher, and also focus on entrepreneurship and the future of work. And next, we also have Dr. Zhang Ka. And he is the executive director and the CEO for Global Innovation Exchange. He is an expert in innovation and entrepreneurship. And also as we know, Dr. Ka also did a lot of collaborations with China before. So maybe you could share with us some little stories. Okay. Now for starting the session, we'd like to ask all our panelists one open up question. So which is, what do you think is the biggest challenge now SMEs are facing? So Professor, I'd like to start from you. Great. Thanks for the question. And it's great to be in this panel. As you introduced already, micro and small enterprises account for a large share of income and employment. And that also applies for the case of Africa, which is where my reflections are going to be coming from. One of the distinct features of the entrepreneurial ecosystem in developing countries, and particularly in Africa, is that some of those players operate with different degrees of informality. And informality has many aspects to it. But some segments of the informal economy do work in close connection with formal businesses. Although we talk about it as a binary sort of status, formal or informal, there's usually an intersection of businesses operating with different degrees of formality, exchanging goods, knowledge, products, services and so on. So understanding the complexity of this entrepreneurial ecosystems in developing countries where actors of different degrees of formality and informality exchange ideas is one of the key challenges. We understand those connections insufficiently and therefore are insufficiently supported. And many have taken into account that many of these businesses are also highly innovative and also are increasingly using digital technologies. That's great. Maybe you could tell us more in the next question about how we can solve this problem and how we can get more SMEs more focused on this one. Okay, Dr. LaRogue, so what do you think? Angela, I think the problem is simply this. Despite the importance of SMEs to the global economy, there is a tendency to forget just how important they are for policymakers to forget, for the media to forget. Just think about the public discourse on business and industry right now. What is in that discourse? It's about layoffs at big tech companies. It's about threats of global recession. Now, of course, these are relevant issues to the SME world, but there is not coverage about how to support SMEs more robustly. We're coming out of a period where there has been comparatively higher support and awareness of the importance of SMEs to the global economy. And I think the signature problem that they face right now is the need for that attention of the past couple of years to be sustained. And for policymakers, the media and anybody who cares about the global economy and entrepreneurship not to be diverted and to forget just how important these enterprises are. Absolutely. I totally agree. So Dr. Shankar, what do you think? Thank you. When we think about small and medium-sized enterprises, entrepreneurial ventures, I think we sometimes, to your points, forget that it's a rather holistic approach we need to take. We need to be thinking in terms of not what can we invest in SMEs, but what can we invest in the ecosystems that support SMEs? The way I look at that in terms of a framework would be in terms of levers, enablers, and values. Levers, enablers, and values. Levers would be things like access to capital, access to talent, access to technology, access to markets and knowledge. The enablers are things like infrastructure, communications, education, healthcare. What supports all of this to happen? And then finally the values, like what runs through all of this to enable this ecosystem to thrive? A value such as inequality, the climate, the planet, people in general. All of that wrapped together then should guide us in terms of where we place our bets. It's not about placing bets on a particular company or a particular SME or even a particular place, but more societally, how do we approach this using this framework? Yes, so Dr. Kah, I'd like to start the first question from you. You just mentioned all these challenges we're facing and these contacts we're facing. So how can we encourage the collaborations between SMEs and big larger corporations and to help them to get more mutual benefits? What do you think will be the best solution for this? Well, there are many approaches. I don't think anyone is correct. So let me just say that first. In terms of a set of principles, I think in terms of let's calibrate and collaborate. Calibrate in the sense of there's no one-size-fits-all approach. There's, you know, different ecosystems vary in terms of their size, maturity, areas of focus and the like. Let's calibrate the nature of these collaborations to the context matters globally, context matters locally. And then second of all, so let's calibrate and let's collaborate. But easier said than done, right? What are the mechanisms that make that happen? You know, JD's organization, Nifty, is one that enables that collaboration to happen at the educational level across several educational, you know, from the very young to more mature. I'm at a university. I'm at the University of Washington. Our global innovation exchange at the University of Washington, which is in Seattle in the United States, was created to enable collaboration between large academic institutions around the world and large enterprises, large companies, technology companies largely around the world to inspire, support and hopefully enact the creation of new SMEs. But it's these mechanisms that I think matter a lot and being deliberate about what those are appropriate to the context where they might exist. Just follow up your answer and how can the regulatory environment to help to improve, to facilitate all these SMEs for them to get better growth and innovation? Well, the regulatory environment is complex, so let me just take it in one way. I think we're seeing, if we look back in history, certain countries, Taiwan for example, Finland would be another where big bets were made, bold bets were made in a particular domain, a particular technology, Taiwan and semiconductors 40, 50 years ago. Finland coming out of the Second World War, really energizing its innovation economy. Those were big bets. We're seeing some of that today, certainly in the United States. The CHIPS Act, which many have talked about here at the Gross Summit already, is an example of a big bet. And that's one component of the regulatory environment where it's not placing a bet on a particular company or even a particular region, but saying, all right, this is important to our society. We're going to invest in that. I think guiding that in the context of these other factors is very important. Yeah, guiding is very important. So now I'd like to ask Erika about those guiding things. So what kind of insensitive you think could put in place to better encourage investment in SMEs in general and especially particularly all these factors that are traditionally underfunded? Ultimately, and following on the earlier intervention, which I fully agree on, ultimately what we want to create is inclusive entrepreneurial ecosystems. And that means looking not only at the types of support that individual companies or individual sectors may need, but looking at how do we start understanding the constellation of actors and stakeholders that play a role and start connecting the dots, as you said. Just to give you an example, for instance, as at the University of Johannesburg, we're working on a project with a university in Kenya where we were trying to support that matching of skills and knowledge that is generated in the systems through universities or tertiary education with the needs of small climate innovators. That matching led us to a real understanding of the vast need that exists to make those connections, even though it seems intuitively like, oh, but that must surely happen. When you look at reality, it means that those organizations are not connected. And the same with investors. I think the same point about values, how do you attract or make those connections of the needs of small entrepreneurs with investors that have embedded these values of transformative change? And I think sustainable investment is something that needs to be encouraged. And that requires a lot of policy support and intervention and vision. So it means taking a holistic approach on how to support inclusive entrepreneurial and innovation systems. Yeah, it's really a comprehensive kind of question. So now I'd like to turn to Dr. LaRocque. So all these panelists, they are talking about collaborations, talking about the guiding ecosystem. But we know that in this perfect storm, so as we say, the party crisis, all these SMEs are facing real challenges and the problems, such as labor shortage and the training and the right talent pool and finance and all these kind of things. So what do you think could help them to get to the right talent, the skills and the training for the future innovation? And what solution do you have? Well, first of all, I'm so glad that we're all lifting up the importance of inclusive entrepreneurship because even though small and micro enterprises are such a driver of the economy, even they are not fully inclusive. And that's work that we all have to do all around the world. You know, our organization works with, as Sean mentioned, younger learners, secondary school age learners, tertiary school age learners to educate them on the basic process to take an idea and form a business plan and to launch a business. And over the years what we've found is that ultimately our learners who come from underserved communities in 30 states in the U.S. and 25 countries around the world, ultimately they need more. And in terms of your question, what they need are further education and exposure to the questions and topics that come about when you move from being a solo entrepreneur, a one or two person shop to a more established business. So at Nifty, we have leveraged our partnerships with corporate partners around the world who are really quite willing to provide those services. So for example, SAP, the software company, has focused on helping our learners and alumni, small business owners, learn about procurement because it's not something that they will necessarily will have encountered up to that point in building their business. We have a partnership with EY, the consulting and auditing firm, an accounting firm. Why? Our young early stage alumni need education and support in incorporating their business, in learning how to put together an actual P&L and financial statements. They need legal support of various kinds. And so corporate partners can provide that. We also have philanthropic partners like the Mickelson Foundation which provides support on what intellectual property is and how to protect it. So, you know, it's not really rocket science. As entrepreneurs establish their businesses, they're going to face these very critical topics that come up in the context of any business. The challenge is that they may or may not have had the education, experience and support. And just like my fellow panelists are saying, I think a key to the solution here is to leverage the real interest that we see from the corporate community in larger businesses to support those smaller businesses. We're seeing that in our organization. I think it's making a big and positive difference. Oh, that's great. You just answered the same question. I asked Dr. Carr as well how we could promote more collaborations between the SMEs and the bigger corporations. So do you think that lack of, maybe a little bit lack of awareness in terms of the collaboration between bigger corporations and SMEs in terms of this kind of complex financial environment we're facing? Maybe the big corporations are getting lost of the interest of collaborating with smaller business. Did you see that trend? It may be, but I think what we all need to do is to lift up the positive examples where companies have shown interest so that we can show everyone else who may not be interested or may be unwilling that there actually is a positive benefit. As I mentioned one last example, City is a fantastic partner of ours. They provide critically special access to credit for solo entrepreneurs and early-stage entrepreneurs that go beyond the normal rules of their banking relationships. This is critical because small entrepreneurs often don't realize that their personal credit may affect their ability to get credit for their business. And so again, lifting up these simple examples, lifting up the positive examples of larger companies that are doing well in this space I think is a key to cut past those companies that may not be interested or active just yet. May I add on to that point? Yeah. That's a great point. You know, one of the challenges I think that large corporations have in terms of engaging, supporting, in the ways that you just described, supporting SMEs, you know, entrepreneurial ventures, they don't know how. They're not structured to do that very well. What they often need are organizations like Nifty, universities, where we both have homes, as almost like brokers in a way, but in a way, knowledge brokers, relationship brokers. You know, universities can play the role, here we are in Geneva, can play the role of Switzerland, you know, across these different constituencies to get them together, to get them connected, to help them understand one another. That's what we do at the Global Innovation Exchange. You know, we're a corporate-sponsored, supported entity with deep ties with major tech companies like Microsoft and Meta and T-Mobile, but they work, not with the SMEs, they're kind of pre-SMEs potentially, working with their students, working with them on big projects, you know, tech-driven projects, such that some of them get exposure, or the students that is, get exposure to what corporations do, the technologies that they have, and maybe then fire their imagination and their access to what corporations can offer. Yeah, you just mentioned about tech. So how about we talk a little bit about digitalization. It's now, it's still the trend, ongoing trend, although in China, maybe it's a bit, in China and the US, maybe a bit forward, and maybe in Europe, we're still discussing about the solutions. So what do you think the digitalization is played? What kind of role they are playing in terms of the growth and innovations of SMEs? Digitalization is driving the future of every single company, no matter what size. The benefits that SMEs, small enterprises, have is that they can be born digital. So it's less of a challenge in developed economies. So in other parts of the world where the resources aren't as strong, that's where I think we need to focus. Cool, if I may add to that. It's interesting that in the context of Africa, many of the African unicorns are in the space of fintech. They have been developing, and many of them have developed online solutions like online payment systems that are not largely used by those very small players, often informal. You can go to an informal trader and not use cash for your payment. So it's very interesting that building this, cementing those collaborations between large businesses, particularly tech businesses, and the smaller players can be truly leveraged for transformative change. May I add on to this as well? I love this idea of leveraging the opportunity to be born digital. We see that at Nifty with our early-stage entrepreneurs. It used to be that our entrepreneurs would take our program and they would go into two tracks, mainly. Traditional products, goods and services, and maybe social enterprise. Now there is a robust and maybe the primary track, which is app and platform-based businesses. And so we're talking about high school age students, college age students who naturally gravitate toward that and see all that can be done as an entrepreneur by leveraging the infrastructure that's now built. The interesting challenge for all of us in this space now is how to understand AI and what's coming on board and how to incorporate that, both in how we educate entrepreneurs and support them for capacity building. And I think that's going to be a huge topic for all of us. Let's move forward. That's brilliant. The framing typically is what can corporations, large enterprises, multinationals do for SMEs? They have all the resources, right? What can they do for SMEs? How can they help the ecosystem? It's not a bad question, but it shouldn't be the only question. What can the SMEs, in effect, do for large companies? What you just described, particularly in Thinsack, right, coming out of Africa, or born digital companies, no matter where they're from, big companies are learning from that, especially those that have legacy systems. They're trying to reinvent themselves and where do the ideas for reinvention come from, but these new smaller enterprises. Again, that gets back to, well, then how do you broker that, you know, the relationships such that it becomes truly symbiotic between these two important constituencies? Exactly. And some of these small businesses have a deep understanding of the demand and the social needs, so therefore they become extremely important in providing that context to the use and adaptation of technologies that may be coming from large businesses as well. Erika, you just talked about all this robust kind of trend of tech companies and tech unicorns developing in Africa. So how the government are doing to encourage all these developments of these tech companies in Africa? Right. So there are examples of cities and locations where this is happening in a very vibrant way. So we talk about the digital savannah in Nairobi. You have all of these small entrepreneurs that are often collaborating with big tech players and many developing apps and software and many of them are youth-based sort of businesses. So it's very interesting and a very vibrant environment where incentives can be created in terms of developing the knowledge infrastructure and the digital infrastructure to support those collaborations to happen. But you can find that in Nairobi. You find it in Lagos. You find it in Johannesburg. So it's a very bubbly environment that we are experiencing with digital transformation at the moment. Thank you so much. So we are talking about the collaborations between public and private sectors and also big corporations and SMEs and also these tech unicorns in Africa and also tech companies and how the smaller companies are going to help bigger corporations in this way. So now I'd like to open the floor to all this audience we are in the studio. So do you have any questions? Please raise your hand. Sir, please stand up. So the camera could see you. Yes. My name is Shekma Walaw. I run the Action Committee for the African Continental Free Trade in Nigeria. Yes. I just wanted to pick up on the calibration and collaboration issue and that is really between the big companies and the SMEs. How do we get the big companies to really understand that part of the global value chain is working with SMEs and they shouldn't take it as a charity. It's not a charity they are doing but it's really for the growth of their own companies because if those SMEs do not grow, then they get to a crux where they no longer move forward. So they must carry SMEs along. So how do we really get that message across to the big companies, for instance a company in Nigeria like Dangote, how do we get him in your cement business? You need the SMEs to work. You also need to work with women inclusive, not as a foundation, not as a charity but as a business. So I think we should try that to really help. Thank you. I'll try that one. It's so interesting so that you frame your question in terms of the charity motivation. As a matter of fact, at Nifty, the reason why we work with so many corporations is because of the charitable motive. The partnerships that we have are largely coming from the corporate social responsibility arms of companies. But I would say that's not a bad thing. Instead, I would say that's the open door that can help companies understand the greater value that such partnerships with SMEs can provide. I'll give you an example. At Nifty we run a program called the World Series of Innovation. It's an opportunity for companies to put up challenges that are related to one or more of the UN's sustainable development goals where students in our programs around the world can put up business ideas that speak to those challenges. As part of that competition, employees of different corporations provide advice and support to the learners along the way and they get very involved and they're very proud of their involvement. Once we get employees rank and file to become involved so that they understand firsthand that budding entrepreneurs exist all around the world, that they understand the types of support that they need. This builds the constituency of support within the company to do more. We don't always see it in every case, but we see it in a lot of cases. And so I would say that corporate philanthropy is a very helpful and positive open door to the larger relationship that you suggest we need, which I agree is also needed. I'd love to add to that. Yes, I am. Companies have motivations to be philanthropic. And those are very good. They do things like, as you just described, as JD just described, they also need talent. Around the world, there is a dearth of talent and companies are looking for where to find them. And we spoke earlier about, well, they're looking for ideas, they're looking for technology, they're looking to reinvent themselves, but they're also looking for the people. And it's in identifying the SMEs, they may learn from them, they may fund them, they may do something philanthropic to support them, or they may see them as a new pool of talent that they can tap into. Maybe to hire them, maybe to acquire them. There's a whole other, back to your question, of, well, you know, reframing the value proposition for big companies around the world, not just in any one country or region. To see in SMEs different forms of value might be one mechanism. Yeah. We've been talking a lot about building systems and how does one build a system. So one of the ways of doing that is connecting organizations that exist. But it may be that building some of those connections could be the task of actors that are not yet there. There could be a need to establish organizations that do that role of brokering and intermediary that are able to capture the value of those connections and be able to present it to the key players in the appropriate forum. But I think that sort of thinking about what kind of intermediaries that we need to set up to make those connections happen. Yeah. One of the themes of the summit has been the return of the industrial policies on a global scale. And many of the discussions that I've followed have also noted that the industrial policies that are being pursued have also a bit of a tint of protectionist policies in them as well. It doesn't take much to understand that some of the big beneficiaries of these industrial policies might very well be large corporations. How do we make sure that with the return of the industrial state with the return of the industrial policies the beneficiaries are also small and medium enterprises which are so vital to entrepreneurship and to growth all over the world? Well, I mean, as a start I would say to the extent that those policies are driven by formal legislative policymaking in many ways. It's incumbent on policy makers, again, not to forget that SMEs are the most important part of the business building ecosystem. So, you know, as I said at the start we have a tendency to forget. Policy makers have a tendency to forget. They need to remember. That's my simple answer. Comprehensives matter. So, you know, I mentioned earlier the CHIPS Act here in the United States. You know, it's a fairly comprehensive, that's just one example, a fairly comprehensive approach to supporting the industrial state, as you've described it, but also the sub-industrial state. You know, the SMEs and other enterprises and organizations all baked into that. So, you know, to JD's point it's encouraging legislators to take that comprehensive and holistic view. I think some of the approaches to industrial policy that we've utilized in the past need to be also rethought. Some of them are leading to some outcomes related to exclusion and not very sustainable outcomes. So, I think there's that need of rethinking the orientation of industrial policies and also a new way of doing policy that is more participatory, that involves the beneficiaries and the key stakeholders as a bottom-up process of policy development. It's much easier said than done. I think that is the way forward. Yeah, so it's a great discussion we're having here, but unfortunately we're running out of time. So, I'd like to ask all our panelists to give one single sentence of your advice, either to be corporations or to governments and how to promote and how to encourage the development of SMEs. So, I'd like to start with Erica. Great, I think learning from good experiences but not be afraid of policy experimentation. That's a great advice. I'd say to the companies that are not involved in supporting SMEs, your peers are involved in this and they're seeing the benefits. So, come on board, we want you. Be bold and be patient. Wow. Take a risk, have courage to try new things to your points. Be patient because these things don't happen overnight. That is very encouraging, yeah. Okay, now I'd like to thank you, all the audience here in the studio and all the audience joining us online and also of course our great panelists. And see you next time. Thank you so much.