Small and medium size enterprises (SMEs) may have received unprecedented levels of support and relief measures by governments during the COVID-19 pandemic, however, as these are phased out, they face increasing risks of default and bankruptcy. The rescue packages proved effective, as seen by declining levels of bankruptcies among SMEs in 2020 in most countries, according to a paper issued by the World Alliance of International Financial Centers (WAIFC), entitled "Supporting Ecosystem for Sustained Recovery and Growth of SMEs".
The paper is part of the WAIFC's work to support the recovery and growth of SMEs.
It also looked at the rising cost of commodities during COVID-19, the recent geopolitical situation and more frequent extreme weather conditions, saying that the resulting growing levels of inflation and market volatility added to the scale and complexity of global challenges.
The paper calls for innovative solutions to drive a faster shift to alternative sources of energy and to tackle climate change risks. The WAIFC said that international financial centres have a crucial role to play in developing such innovative solutions through partnerships with governments, policy makers, multilateral financial institutions, other IFCs, investment community, the industry and private sector. The paper also stressed that a well-functioning SME ecosystem requires alternative financing to provide both capital and strategic direction required for the launch and growth of start-ups. During COVID-19, financing through venture capital and business angels declined, while fintech and other online alternative financing gained popularity – with both still having significant potential to grow.
Read the full report here: WAIFC Report on "Supporting Ecosystem for Sustained Recovery and Growth of SMEs" – World Alliance of International Financial Centers
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