Micro-, small and medium enterprises (MSMEs) are the backbone of the economy in the UNECE region and have been hard hit by the COVID-19 economic crisis. This stress in turn impacted the supply chains of many industries, especially those involved in supporting essential services required for the society such as food, water, energy, and health care.
MSMEs support the supply chains of critical raw materials required for many primary sectors. In the subsequent economic recovery, MSMEs can play a significant role in building the resiliency of the raw material supply chains. The role of MSMEs is especially significant for the UNECE region, which is one of the largest producers and consumers of raw materials. Progressing towards the circular economy will be one of the key features for opening up new opportunities.
UNECE is implementing the UN Development Account project “Global Initiative towards post-COVID-19 resurgence of the MSME sector” jointly with other partners from the UN system. The overall goal of the project is to strengthen the capacity and resilience of MSMEs in developing countries and countries with economies in transition to mitigate the economic and social impact of the global COVID-19 crisis. As part of its contribution to the project, UNECE has developed Guidelines and best practices for MSMEs to assure resiliency and progress towards a circular economy in sustainable resource management and critical raw material supply chain solutions.
The study highlights that MSMEs can benefit from the opportunities that arise from assuring critical raw materials supply, which will be crucial in the post-COVID-19 recovery. The pandemic has put the critical raw material supply chains under severe pressure. MSMEs can step in and make significant contributions to sustainable resource management, building resiliency and the progress towards the circular economy.
However, the economic disruptions have also brought in new challenges, which will require innovative solutions. Application of UNECE’s United Nations Framework Classification for Resources (UNFC) and United Nations Resource Management System (UNRMS) in sustainable resource management could be useful for MSMEs to build innovative business models and gain from the new avenues.
This could be particularly valuable, the study suggests, as the region aims to reduce single-source dependencies, and to establish flexible and adaptable supply chains. Today, electronic equipment manufacturers source about 40 per cent of their parts from China, while the pharmaceutical industry in Europe imports 80 per cent of the active components for its drug supply from China and India.
The study shows how countries can support MSMEs in developing alternate business models by optimizing policies and regulations. These changes could allow MSMEs to have better access to data, information and knowledge, enhanced market access, access to technology and finance. Entrepreneurial skill facilitation and training of employees are other key challenges that need to be addressed by companies and governments.
However, the UNECE region still lacks a comprehensive platform to bring together MSMEs, policymakers and financial institutions to support raw material supply chain resiliency. Hence, the establishment of “MSME Raw Material Alliance for Circular Economy (MRM-ACE)” is recommended in this study.
Online training workshop based on the study will be organized on 8 October 2020. The Guidelines will also be customized for pilot implementation in Ukraine and Tajikistan.