SME sector key in economic development

The SME (small to medium enterprise) sector has an important role to play in economic development, poverty reduction and employment creation in developing economies.
The SME sector largely exceeds the average economic growth of national economies in many countries and contributes significantly to employment creation.
Accordingly, governments and donors alike have recognised the important role of the SME sector for overall development.
As a result, many government policies are geared toward supporting SME sector growth through a variety of programmes that range from tax incentives to technical assistance, from regulatory provisions to policy interventions, training and other types of business development services.
Here in PNG, there is also the informal sector which is also part of an economy that is neither taxed nor monitored by any form of government.
Unlike the formal economy, activities of the informal economy are not included in a country’s gross national product (GNP) or gross domestic product (GDP).
Informal or unorganised sectors are the ones where the employees or the workers do not have regular working hours and wages and are exempted from taxes.
Based on a national audit of the informal economy survey conducted last year by the Department of Community Development, Youth and Religion, the informal economy is the biggest generator of income for families in the country.
Figures released during Apec Business Advisor Council (Abac) Micro to Small Medium Enterprise and Innovation Summit last year say the informal sector is worth around 20 per cent of the country’s GDP.
And the figure can increase through the use of utilising some form of Information and Communication Technology (ICT).
To achieve these targets, and since SMEs are an important factor in the PNG economy, especially with respect to production and employment, the Government is planning to establish several key interventions, including ICT support systems and tools for SME business development and growth.
ICTs are becoming increasingly important in running successful businesses, achieving development goals and promoting citizen participation in the development of the country.
Investments in ICTs give businesses a competitive advantage.
A survey conducted by NRI of SME owners or managers in remote, rural, and urban areas of PNG provides evidence on the potential impact of such an ICT support strategy.
The research find that, in urban areas, SMEs using mobile phones are more likely to have growth in business profits or develop new products or services than those not using mobile phones.
In both remote and rural areas, SMEs using landline telephones and websites are more likely to develop new products or services.
On the other hand those using computers are more likely to have their business profits grow.
Those using website and internet are, however, less likely to increase product sales and develop new products or services.
So in general, the number of SMEs using various ICT resources other than mobile phones is very low in rural and remote places across the country.
Therefore, investing in ICT infrastructure and targeted entrepreneurial training are, critical factors that could lead to more PNG SMEs accessing, and understanding the benefits of, and employing, ICT resources in their businesses.
The same can be applied to informal sector.