Micro, small and medium enterprises (MSMEs) are a vehicle for development and generate almost half of jobs in the formal forest sector globally. They are key to local economies, generating significant livelihood and employment opportunities. Yet the recent economic crisis triggered by the COVID-19 pandemic has shown the vulnerability of MSMEs to sudden market developments.
A new brief describes the approach adopted by the European Forest Institute (EFI) over the last five years to support forest- and timber-based MSMEs in the Mekong region to operate legally and sustainably. The publication highlights the challenges and solutions tested, and lessons learnt from EFI’s interventions.
If MSMEs are encouraged to adopt legal and sustainable sourcing and processing practices, they can be part of the solution to reducing deforestation and forest degradation.
Growing their capacities, business performance and access to legal timber will allow these enterprises to participate in supply chains destined for regulated markets. This would in turn make them more resilient as businesses, with the potential to alleviate rural poverty and reduce impacts from crises such as COVID-19.
To this end, EFI has explored approaches that help forest- and timber-based MSMEs in the Mekong region to operate legally and sustainably. In six pilot projects in four countries – Laos, Myanmar, Thailand and Vietnam – EFI tested solutions to some of the key challenges that MSMEs face: low productivity and operational capacity, lack of formal registration and operating licences, and poor representation in policy processes.
This work, supported by the Swedish International Development Cooperation Agency, shows that specialised trainings can improve MSME’s operational capacity and regulatory compliance. The potential for FLEGT Voluntary Partnership Agreement (VPA) processes to trigger and accommodate legal reforms in support of MSMEs is also highlighted.
EFI’s pilots demonstrate the importance of regulatory revisions for resolving key challenges to MSMEs, and the need for interventions targeting these enterprises to integrate business continuity planning. Crucially, supporting MSMEs to access finance is critical to support them to rebuild after COVID-19, and to operate legally and sustainably.