Digital Technologies for MENAP SMEs and Inclusive Growth: IMF Analysis

This IMF Working Paper, authored by Inutu Lukonga, examines the potential of digital technologies to promote the growth of small and medium-sized enterprises (SMEs) and foster inclusive growth in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region. The paper highlights the challenges faced by MENAP SMEs, including barriers to growth, limited access to finance, and an unfavorable business environment, which has led to a concentration of microenterprises and low employment contributions. The study assesses the current state of digitalization among MENAP SMEs, identifying opportunities and trends, as well as constraints to digital transformation. It investigates policy options to create an enabling environment for digitalization, including financial sector and business environment reforms. The analysis underscores the need for a strategic shift that prioritizes SMEs' digital transformation to enhance productivity, competitiveness, and ultimately, inclusive growth, offering insights into how policymakers can leverage digital technologies to address high unemployment rates, economic diversification, and income disparities across the region. The report covers 21 of the 24 countries in the MENAP region and draws on primary and secondary data sources including central bank reports and World Bank enterprise surveys.