RESOLUTION SDC 313

FORUM: SUSTAINABLE DEVELOPMENT COMMITTEE

QUESTION OF: Measures to increase access of small-scale enterprises (SSEs) to financial services, including affordable credits following the COVID-19 crisis

SUBMITTED BY: Ecuador

CO-SUBMITTERS:Estonia, Ethiopia, Gabon, Kuwait, Netherlands, South Africa, Tunisia, Sri Lanka, Slovakia, Romania.

STATUSApproved

Recalling goal 8 of the sustainable development goals (SDG), which aims to promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all, 

Acknowledging that small enterprises are among the world’s most powerful job creators and are crucial for the success of an economy,

Further acknowledging that although on a global level the rate of unemployment has increased by 0.02% many developing and developed countries have seen considerable increases in unemployment, 

Further concerned that 41% of the world’s population is not online, therefore unable to utilize an Small Scale Enterprise’s (SSE’s) fundamental asset as well as being unable to access online financial services, 

Observing that many SSE’s are regularly excluded from financially lucrative government and inward investment procurement projects due to their scale, 

Further observing that SSE’s struggling with financial stability are in a much-weakened position to negotiate favourable and practical commercial payment terms with larger organisations,

Concerned that SSEs in developing countries face strong impediments of supply and demands, which is exacerbated by their inability to receive loans, guarantees and venture capital crucial for them to operate in the unprecedented times, noting that developing world governments are facing hardship fully financing SMEs while reimbursing past debts,

Aware that big creditor countries, including China, have failed to include all state-owned institutions, such as the China Development Bank, in responding to the relief of debts.

Further recognizing the world bank interest rates at 6 months average for 2018 was 2.487%. The interest rate on regular IDA loans was 3.125% with 38 years maturity, and 6 years grade period.

Recognizing that world bank and International Monetary Fund (IMF) are capable of changing the government’s inferior position by partially reimbursing the defaults on its bonds, offering more favorable deals for bondholders,

 

  1. Calls for the creation of a regulated COVID-19 crisis support scheme for SSEs under the International Monetary Fund (IMF) and international aid agencies supporting local governments to protect SSEs in member nations by awarding grants to SSEs who are experiencing a state assessed percentage disruption to their turnover due to the Covid-19 crisis: 
    1. the grants will be valued at 80% of additional costs incurred directly in implementing new safety and other direct responses to COVID-19 
    2. the grants will be up to the value of 80% of gross salary to a maximum of the national average industrial wage in order to retain low-paid employees who might otherwise be made redundant due to reduced economic performance 
    3. these grants will subsidise up to 80% of gross salary to a maximum of the national average industrial wage of those employees who have become ill and for other Covid-19 related reasons are unable to attend work for periods of up to 4 weeks;
  2. Recommends the creation of a Trading Online Vouchers scheme funded by national aid agencies and The World Bank to give SSE’s the support to establish a successful online presence while working with third party companies who are already knowledgeable in technology and building digital platforms by: 
    1. supplying SSE’s grants to give them the ability and resources to build an online presence and access to a new market 
    2. giving SSE’s who have already established an online presence further funding to improve their online trading
    3. providing professionally made instructional videos which would help achieve online success in these industries, with the production of these videos to be incentivised by The World Bank and that these videos would be updated when there are significant technological advances that affect these digital online platforms
    4. providing digital hubs to SSE’s in LEDCs, less fortunate parts of MEDCs, and to employees who are working at home who do not have access to the internet or devices on which these platforms can be accessed  
    5. recommending countries create job-seeking platforms accessible to SSE’s and other job-seeking citizens where SSE’s would publish detailed job advertisements allowing SSEs and the unemployed to match each others requirements;
  3. Urges the creation of a policy supervised by the United Nations Economic and Social Council (ECOSOC) to support SSE’s in government contracts by:
    1. encouraging that SSE’s are included in a minimum of 20% of all public procurement contracts 
    2. further encouraging shortened payment terms in contracts from government bodies towards SSE’s by reducing the standard payment time if available; 
  4. Emphasizes the importance of the creation of an inward investment screening programme supervised by the ECOSOC to ensure SSEs are adequately included and treated fairly in private contracts by:
    1. adding social clauses to contracts recommending large enterprises and aid agencies operating in foreign countries to include local SSE’s in a minimum of 20% by value of procurement contracts
    2. strongly recommending the use of local SSE’s in a minimum of 30% by value of procurement contracts when operating in a foreign country
    3. encouraging shortened payment terms towards SSE’s, reducing the standard payment times to ensure SSE’s have sufficient cash flow; 
  5. Encourages the creation of a credit and loan scheme under the World Bank to make loans and credits more accessible and affordable by:
    1. removing interest from loans and credits to SSE’s facing full lockdowns and reducing the interest by 50% to SSE’s under all other COVID-19 restrictions
    2. reducing the World Bank threshold needed to be met to access loans and credits for SSE’s facing any economic restrictions due to the COVID-19 crisis
    3. anticipate the promulgation of international laws which encourages low-interest rate;
  6. Requests that member nations who implement mandatory lockdowns create member-specific plans keeping SSEs in mind using the following guidelines:
    1. mandatory business lockdowns are replaced by a system of alternating lockdowns of four week periods in which there is a two week rotations of hard lockdowns and soft lockdowns where:
      1. hard lockdowns imply that no enterprises that are not essential services are to be opened in this period, the classification of essential enterprises to be left to each member nation
      2. soft lockdowns imply that non-essential enterprises can provide their services during this time allowing for SSEs to flourish
    2. the mangement of social lockdowns is left to the discretion of each country who would take into account their own Covid-19 situation.