Unlocking MSMEs’ full potential

Two days ago, the world celebrated MSME Day, an important reminder of the significant and valuable contributions of our own Philippine micro, small, and medium-sized enterprises (MSMEs) to the country. Comprising over 99 percent of business establishments and employing roughly 63 percent of the workforce, MSMEs are critical drivers of the Philippine economy, and addressing their pain points will unlock the country’s growth.

I learned that MSMEs have many paths to success, and online platforms like Grab may significantly increase their competitiveness and productivity. Interactions with some of our MSME partners made us realize that having an online presence elevates an enterprise’s profile, and effectively expands their market reach. By being on a bigger playing field powered by technology, many MSMEs are able to innovate and improve their products and scale their services and operations. It has been rewarding to see enterprises graduate from micro to small, small to medium, and gain ground in the food and retail spaces. Equally important to note, many get inspired to contribute to a shared purpose such as sustainability and community development.

The challenge we pose to ourselves is: How can Grab enable more MSMEs to thrive online? Usual challenges, as noted by the Tech for Good Institute (TFGI), include poor internet infrastructure, low digital and financial literacy, and rural-urban divides. Moreover, the financing gap remains a perennial problem MSMEs face.

Understanding our MSME partners’ pain points and growth opportunities guides us in determining our focus areas and assistance programs. Through chat groups, regular consultative business reviews, and town halls, we foster an environment where our MSME partners actively participate in shaping Grab’s services. As a result, our merchant app has evolved to adapt to the needs of small businesses to support them where they need it most. Through Indie Eats, now on its third run, we provide visibility and demand generation support for new and up-and-coming merchants on GrabFood.

Involving our stakeholders is in our corporate DNA, and I have witnessed some of the positive impacts of this approach. In our recent GrabNext Conference, an annual knowledge-sharing event with our merchant partners, I met entrepreneurs whose businesses have flourished even during the pandemic because of the viability of our online marketplace. It warms my heart to hear how an MSME partner benefited from our quick loans program and how it served as a lifeline for them in a time of need, or how a micro-enterprise learned to utilize online advertising and data analysis in our platform to triple their sales.

Partnerships with national agencies and city governments have also been crucial in implementing our envisioned plans for our merchant partners. Business organizations, like the Makati Business Club, became key partners to create more livelihood opportunities and expand the knowledge of MSME suppliers, especially on evolving environmental and governance standards.

At this juncture, I would also highlight the incredible strength and grit of enterprising Filipino women, reportedly owning 45 percent of MSMEs in the country. Many are engaged in online business while providing family care, and there is a need to recognize the challenges that seem to be more prominent to them. For instance, Bangko Sentral ng Pilipinas shared that 58 percent of women-owned MSMEs cited a lack of access to funding against 37 percent of male-owned businesses. This points to the need for tailor-fit financial products and services to meet their needs.

Furthermore, a TFGI study in the Philippines finds that access to affordable childcare services can help women entrepreneurs balance their dual roles, but we should conduct more public conversations and education campaigns that mitigate the unequal gender-based division of family work, including childcare, that is prevalent in our country.

Truly, MSMEs are the “backbone of the Philippine economy,” and yet every day is a back-breaking, blood, sweat, and tears struggle for many of them. Rethinking business models, pursuing public-private initiatives, and implementing ease-of-doing-business rules to help mitigate MSME burdens are how we show our appreciation to Philippine MSMEs, and I am hopeful that our nation is on track to getting this right.

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Grace Vera Cruz is managing director of Grab Philippines.

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Business Matters is a project of the Makati Business Club ([email protected]).