Goal 1: End poverty in all its forms everywhere

Amongst the very poor, MSMEs are typically large providers of income, employment, and may constitute an important vehicle for the savings of families. In this regard, improving MSME productivity has the potential to lead to higher wages, inclusive growth and reductions in poverty.

With most poor in developing countries not employed and not earning enough to lift themselves out of poverty, job creation in the private sector has proven to be a main driver in the fight against poverty. Over the past 30 years, the private sector has contributed to a sharp decline in the share of the population in the developing world living below the poverty line from 52 per cent to 22 per cent.¹⁹ MSMEs contribute significantly to the employment creation process of the private sector. In emerging markets, 4 out of 5 new positions in the formal sector were created by MSMEs, which is about 90 per cent of total employment.²⁰

Informal enterprises engage poor and marginalized populations. In lower income economies, a large share of MSMEs are informal enterprises and serve as a source of livelihood for the base of the pyramid population, made up of 4 billion people that earn less than US $3000 a year.²¹ It is estimated that more than 70 per cent of the workforce in developing countries operates in the informal economy either through self-employment or from work in enterprises that are not legally registered businesses.²² Given the flexibility of the informal economy, it provides opportunities for the poor, including women and youth, to earn money. Given the scale of informal employment, particularly in developing economies, support in formalizing MSMEs would be a step to achieving Goal 1.

Policy measures to support Goal 1:
MSMEs are taking a lead in helping to meet most of the economic-related SDGs. Thus, policymakers can:

• Ensure that labour markets and regulations for small employers are straightforward, and present no impediment to recruiting, training and employing workers from poor, disadvantaged or rural backgrounds.
• Through education and outreach programmes, provide the tools and training necessary to support entrepreneurship among rural, poor and underserved populations.
• While seeking to integrate businesses into the formal economy, so that they benefit from a wider variety of government supports and legal protections, ensure that policies adequately recognize the contributions to poverty alleviation made by the informal economy and do not unnecessarily penalize informal MSMEs.