A match for resilience: The public sector and small and medium enterprises

by Sophia Rettberg, student at University College Maastricht and Resilient Cities 2018 volunteer

For cities to advance resilient development strategies, it is critical to pool together and leverage all available resources. To facilitate long-term and future-oriented change, experts and researchers have initiated collaboration projects that combine the efforts of both the private and public sectors. The hope is that they will have a greater reach and impact due to the multitude of accessible resources at hand.

However, the connection between these sectors can be strengthened to advance resilience and urban adaptation strategies. How can we make this happen?

Intuitively, one may think that the public sector should collaborate with multinational companies, as they have the knowledge and capacity to create much needed strategies for urban adaptation and resilience. However, particularly in developing countries, small and medium sized enterprises make up 90 percent of the national economy, and therefore represent valuable interest groups for local and regional governments to engage with proactively.

Small and medium sized enterprises – or SMSEs – which often form part of the informal economy, are exposed to higher risks due to climate changing and will be affected more severely. Therefore, tackling climate change in developing countries should include the voices of SMSEs in dialogue with the public sector. Hence, bearing the interests of SMSEs in mind, climate change could be targeted as an opportunity for new economic development where innovation and value changes are possible, and where new products and services can respond to newly emerging market needs.

Currently, many small or medium sized entrepreneurs in developing countries do not combat risk and disaster situations with long-term, coordinated solutions. For instance, to combat flooding, SMSEs focus on their own survival and well-being, thereby shifting the problem to their neighbor. Hence, barriers such as unawareness of risks costs and business rationales, and the reactive approach to risk only perpetuate risk adaptation or mitigation strategies, and perpetuate existing challenges.

This could be counteracted by adaptation capacity trainings led by the public sector, through which new business objectives can also be effectively defined and realized. They can come to opportunities in climate action – looking at the problem in a new light.

To further expand the knowledge exchange of SMSEs and the public sector, sustainable commercial models should be offered, and climate data should be accessible for SMSEs. That way, relevant context-specific information and data can be obtained by SMSE owners. When the national level cannot provide sufficient services or products, SMSE actors can provide that data for suitable adaptation at the local level.

Access to tailored financial support mechanisms should also be more approachable. SMSEs with insurance can plan ahead and take positive business risks, focusing on how risk reduction can be achieved in the long run. To demonstrate and unlock opportunities, a clear articulation of how funds can be accessed and implemented by the public sector along with pro-MSMEs policies and investment frameworks catered toward the informal sector, such like alternative credit worthiness.

This posted is based on the Brokering new partnerships and stimulating private sector engagement session at Resilient Cities 2018.