Investing in MSMEs in Mexico

In recent weeks, I wrote about the opportunities to be a social entrepreneur in Mexico. International reviews about economic stability in Mexico gave support to that exercise. This week, I would like to write about why investing in the sector of the micro, small and medium size enterprises (MSMEs) could be a great opportunity. Recent news in Mexico has taken my attention regarding this point.

A few days ago a well-recognized think thank in Mexico – aregional – published a report about Mexican MSMEs. This report started a debate among specialists due to its conclusions. It concludes that only two of every ten MSMEs start-ups surpass the two years old line to be considered successful. The main problem is the lack of credit from development and commercial banks required to develop the MSMEs. Additionally, it sustains that poor management and lack of innovation in processes are two other issues for the low productivity of MSMEs, and their low rate of success.

In consequence, specialists from development and commercial banks react to the report by arguing that the problem is not the lack of credit itself, but the poor conditions of MSMEs to acquire these credits. They affirm that the poor management is linked to the lack of opportunities from government to support MSMEs. They believe that by giving advise to the MSMEs on how to save money and reinvest it in production and management technologies, MSMEs will have the opportunity to be more productive, and therefore have access to more credits.

Current debate on MSMEs describes the problems that these are facing in Mexico. It is clear that poor management and the inability of MSMEs to use technologies and innovate are two key factors to the low rate of success and productivity of this sector. However, government, banks, or other organizations are not advising MSMEs on how to do it.

Any entrepreneur that takes advantage of this crisis could ensure a big market. MSMEs in Mexico represent almost 30% of the GDP, every three of 4 workers are employed by MSMEs, which represent 99.6% of all economic units in Mexico. Investing in ways to improve productivity and success of MSMEs seems to be a great opportunity for social entrepreneurs, especially now that the debate is on the table.