DIPLOMATIC ECONOMY

Small Business, Blue Economy Critical For Small Island States- DDG Zhang

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By Cyber Era NG Special Correspondent

Small businesses and the ocean economy can help small island developing states (SIDS) recover from COVID-19 and achieve Sustainable Development Goals, WTO Deputy Director-General Xiangchen Zhang said at a workshop on 9 December.

DDG Zhang made the remark while delivering a keynote at a workshop with the theme Impact of COVID-19 on MSMEs in Mauritius under a Special Theme: COVID-19 and the Sustainability of Blue Entrepreneurship, at the University of Mauritius.

He encouraged SIDS to use the policy tools for small businesses developed at the WTO and highlighted how domestic reforms could allow SIDS to tap into the full potential of the ocean economy. The workshop was hosted by the University of Mauritius, a member of the WTO Chairs Programme. DDG Zhang’s full remarks are below.

Impact of COVID-19 on MSMEs in Mauritius — Special Theme: COVID-19 and the Sustainability of Blue Entrepreneurship

His address reads in part: “It is my great pleasure to join you for this international conference under the auspice of the WTO Chairs Programme dedicated to advancing our understanding of the “Impact of COVID-19 on micro, small and medium-sized enterprises (MSMEs)” as well as the opportunities and challenges arising from a shift to an inclusive and sustainable blue economy for all.

I would like to start by thanking the organizers, our Mauritius Chair, and the research team, for the effort of bringing together stakeholders from the ministries, private sector, business institutions and entrepreneurs to discuss this important topic. And of course, special thanks to our WTO Chairs teams who have co-organized this high-profile webinar.

Let me offer a few thoughts on the impact of COVID-19 pandemic on MSMEs and the sustainability of blue entrepreneurship in the recovery strategy.

The COVID-19 pandemic is having unprecedented impacts across the globe, especially on human health and economic activities. Governments are intensifying their efforts to combat the global spread of COVID-19 variants by enacting various measures to support public health systems, safeguard the economy and to ensure public safety. However, many developing and least developed countries are in lack of financial means to sustain their economies and protect the most vulnerable. Numerous micro, small and medium-sized enterprises succumbed to the shock and this had severe impact on the jobs situation and people welfare.

For MSMEs, with their scarce resources, surviving the crisis has been daunting. According to a survey conducted by the International Trade Centre, MSMEs suffered the most from the pandemic, with 60 per cent of micro and 57 per cent of small businesses strongly affected, compared to 43% of large firms. The majority of the MSMEs either had to close operations or face significant falls in revenue. As MSMEs account for about 90 per cent of businesses and more than 70% of employment worldwide, and these businesses are often the main source of employment and livelihood for the world’s most vulnerable people, their demise has disastrous socio-economic consequences. More evidence shows that the self-employed, women and minority entrepreneurs have been disproportionately affected during the crisis, with higher risks of unemployment and income loss than other categories.

Small Island Developing States (SIDS) such as Mauritius have been facing the same challenges as other developing countries, if not more than others. The sanitary measures during the pandemic entailed a very high cost for the economy. According to the African Development Bank, Mauritius lost 18 percent points of growth in 2020, largely due to the disruption to tourism and hospitality industry in the country. While the economy recovered in 2021, the risk remains if new waves of COVID-19 lead to another temporary interruption of air links between Mauritius and Europe, the country’s main tourists source region.

In addition, the country still faces great challenges in employment, especially those of women and young people, and household and business incomes. In terms of businesses, MSMEs were undoubtedly hit hard and the outcome of the survey undertaken by the Chair of Mauritius to analyse the impact of Covid19 in 400 MSMES will certainly provide insightful contributions to identify the challenges and propose evidence-based policy recommendations.

Excellencies, Ladies and Gentlemen,

MSMEs contributes to the economic development of every country as sources of job creation, innovation, entrepreneurship, and economic growth. Promotion of the participation of MSMEs in international trade is, therefore, an important issue in the WTO agenda. Having a better understanding of how MSMEs can participate in international trade as a path to recovery is important for trade policy making. We note that both national authorities and international communities are taking actions to protect and support MSMEs.

At the WTO, Members have been considering MSMEs-related issues through policy dialogues and outreach events like this one organised under the auspices of the Chairs Programme. There are also focused discussions within the Informal Working Group on MSMEs. Just last Thursday, the Group launched its Trade4MSMEs online platform. It links to trade-related information to guide MSMEs through the complex process of trading internationally and to improve policy makers’ understanding of challenges faced by small businesses. I strongly encourage the authorities, businesspeople and relevant stakeholders of Mauritius to make use of the information there to promote the recovery and development of MSMEs in the country.

Despite the last-minute postponement of the WTO’s 12th Ministerial Conference due to health concerns, the Informal Working Group on MSMEs has also finalized its draft ministerial declaration. It recognizes that the COVID-19 pandemic has had significant negative impacts on MSMEs and that a coordinated global response is necessary to recover and support efforts to build forward better. Some WTO Members, including members of the MSMEs Group, also issued a “Statement on highlighting the importance of MSMEs in the time of COVID 19” in May 2020. This statement called for further actions to foster the involvement of MSMEs in international trade and to ensure that supply chains remain open and connected.

Excellencies, ladies and gentlemen, let me say a few words about the blue economy strategy. Through my work and travel experience, I have seen how reliant developing countries are on the ocean for food, transport, tourism and the flow of goods. This is especially true for small island developing states. Blue economy represents an important potential to support resilient recovery and sustainable growth objectives in line with the Sustainable Development Goals of the 2030 United Nations Development Agenda. Let me reemphasise that the ocean economy represents an important, and sometimes untapping, asset for countries like SIDS. Covid19 has drastically impacted key sectors in these countries such as fishing and aquaculture, tourism, and other marine and fishing related activities. It is important to identify ways and strategy to build forward better. At the WTO for instance, negotiations on fisheries subsidies were launched in 2001 with a mandate to “clarify and improve” existing WTO disciplines on fisheries subsidies. We expect the forthcoming Ministerial Conference to deliver on this aspect to protect the wellbeing of millions of fishers who directly rely on the fish to secure their incomes sources and build resilient economy less vulnerable to any conjunctural or structural shocks.

During this pandemic, we have seen the challenges faced by those countries very much exposed to exogenous shocks. We also see resilience in how entrepreneurs navigated the crisis through being agile and adaptive. They are exploring new opportunities by using ICT tools to access digital markets and harbouring growth ambitions beyond the pandemic. I applaud for all the efforts that have been made. Meanwhile, we know how big the challenge is ahead.

In my view, there are two important things for SIDS to consider in combating the crises caused by this pandemic. The first one is confidence. The shock of the pandemic does not mean that the blue economy strategy is fragile.  It is just that we have not made it strong enough and specificities of SIDS could be reinforced into their national development strategies. The blue economy remains an important approach to drive sustainable and inclusive development of these states. Let me recall a few findings in this regard — if managed properly, the ocean could help produce as much as 6 times more food, generate 40 times more renewable energy, lift millions of people out of poverty, and contribute to one-fifth of the greenhouse gas emissions  reductions. Blue economy thus can help to lift up our economic and environmental resilience. These potentials would not change because of the pandemic. Instead, they are the ways and means for small island developing states to walk out from the pandemic.

The second point I want to highlight is the necessity of domestic reforms for more sustainable development. The pandemic is changing customers’ behaviours and business models. The crisis makes us rethink about our business practices and economic policies coherence. I believe that your international conference today will also serve an important opportunity for the authorities, academia and entrepreneurs to exchange ideas on how trade policies in the country could respond to the pandemic in short, medium and long terms and mitigate the negative impacts. I would particularly emphasize the role of entrepreneurs in this process and policy coherence in the formulation of trade but also sectorial policies.

Excellencies, ladies and gentlemen, the WTO is working to foster a transparent, inclusive, non-discriminatory, and predictable global trade environment that supports and enhances MSMEs’ involvement in international trade to generate growth and create jobs. In cooperation with other international organizations and stakeholders, we will seek to explore solutions and share good practices to facilitate trade with the aim to empower MSMEs to develop sustainable and gender-inclusive businesses to support shared prosperity. Today’s workshop is a part of the efforts.

I wish the event a great success. Thank you very much.”

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