Holistic interventions for MSME resilience
Holistic interventions for MSME resilienceApril 7, 2021 •
A guidebook using nine Asian countries (Cambodia, India, Laos, Mongolia, Myanmar, the Philippines and Vietnam) under the GIZ Integrated Climate and Disaster Risk Management Framework.
Micro-, small- and medium-sized enterprises (MSMEs) form the backbone of many economies globally. They contribute considerably to economic growth, employment and innovation. The IFC estimates that MSMEs account for 90% of businesses and are a source of more than 50% of employment worldwide.
The ongoing global COVID-19 crisis has, once again, highlighted the extreme vulnerability of MSMEs to external shocks and risks. However, the pandemic is just one infrequent and specific risk. For example, many Asian MSMEs frequently face substantive climate and natural catastrophe risk. Strengthening the link between access to finance, Climate and Disaster Risk Insurance (CDRI), and Disaster Risk Management demands urgency and focus from public and private sector stakeholders.
Building MSME Resilience: A guidebook for GIZ to a holistic approach in MSME resilience in Asia amalgamates the strategies, approaches and vital experiences of GIZ’s five initiatives on finance and CDRI in nine countries under the GIZ Integrated Climate and Disaster Risk Management Framework.
This guidebook proposes a four–step approach to designing holistic interventions for MSME resilience.
Step 1: Establish the objective and timeframe. When designing an intervention, it is important first to decide on the objective and the time horizon.
Step 2: MSME segmentation. Given the heterogeneous nature of MSMEs, segmentation is crucial to understanding the risks and existing risk management strategies employed by MSMEs. Once identified, the gap between risks and risk management effectively constitutes the risk management needs of the MSMEs – of which insurance, for example, is one important mechanism.
Step 3: Assess target market resilience and needs. Once the target market has been determined, it is critical to assess the existing resilience of the specific MSME segment and identify the specific risks that they face.
Step 4: Design interventions to build resilience. A critical aspect of designing interventions is to start with a systemic understanding of the value chains and ecosystems within which the target MSME segment operates.
If you would like to know more about our work on resilience and MSMEs, you can contact Jeremy Gray.
This collaborative work was done in partnership with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Inclusive Insurance Asia and Mutual Exchange Forum on Inclusive Insurance (Mefin)