SMEs face challenges joining global value chains, KOBIA chief says

Small and medium-sized businesses (SMEs) face difficulties integrating into global value chains.

Report informs that Orkhan Mammadov, Chairman of the Board of the Small and Medium Business Development Agency (KOBIA) under Azerbaijan's Ministry of Economy, said this during the 51st Annual Meetings of the Islamic Development Bank (IsDB) Group in Baku.

According to him, micro, small and medium-sized enterprises form the backbone of economic development in all countries.

"They play a decisive role in creating jobs, promoting innovation and making an important contribution to overall economic growth. However, many SMEs still face serious difficulties in accessing regional and global markets, as well as in becoming part of larger value and supply chains," he said.

Mammadov noted that the main problem is often not related to the quality of their products or services, nor can it be explained by weak business potential.

"In most cases, SMEs struggle to meet the growing requirements of modern supply chains in terms of speed, reliability, transparency and compliance. At the same time, many enterprises face limited access to finance, high logistics costs, complex procedures and inefficient documentation processes," he said.

He added that these challenges significantly limit the ability of micro, small and medium-sized enterprises to fulfill orders on time and efficiently, expand their businesses and build sustainable, long-term partnerships with large companies.

Mammadov said all stakeholders have important responsibilities in addressing these problems.

"Governments must continue to further improve the business and trade environment. Financial institutions should provide more accessible solutions that are better suited to the needs of SMEs. Technology can serve as one of the key tools for simplifying processes and increasing efficiency. Development partners and business support organizations should help strengthen the capacity of enterprises and facilitate their access to new markets," he said.