Beyond Recovery of SMEs through Digitalization (Digital Way)

What is the project about?

Digitalization is long seen as a key for competitiveness for both manufacturing and service sectors. Global pandemic of COVID-19 realized that this process is not only necessary for competitiveness, but also an important tool for resilience and business contingency.  

In that respect, the project fosters the potential of business digitalization and innovation as drivers of change, modernizing traditional industries and labour market, and offering new growth prospects for companies. Furthermore, the project ensures women to take place in the design and implementation of the platform and incentive support programmes as well as to involve in decision-making processes and to benefit from the project. With the partnership of UNDP in Turkey and Director General of Development Agencies of the Ministry of Industry and Technology, the Project is designed as a pilot tool for gender-sensitive digitalization of SMEs in manufacturing and tourism sectors. 

What has been the situation?

SMEs that have faced severe disruptions and concerns are at higher risk of temporarily shut down due to COVID-19 than larger firms, across all sectors in Turkey. Some 30% of businesses were closed temporarily due to containment measures or demand shortages, with important variations depending on the line of business. SMEs have been struggling to sustain employment and payments with limited working capital. Investment and growth plans have been postponed with possible implications also for potential growth.

According to the several surveys conducted by Business for Goals (B4G) Platform, founded by TURKONFED, TUSIAD and UNDP, it is assessed that while the practice of remote working (telecommuting) was adopted by some firms, it remained impossible for most of the companies, with striking differences between sectors and regions. The UN SEIA of the COVID-19 in Turkey, finalized in August 2020, underscores these specific country challenges, and suggests that the ongoing crisis should be understood as an opportunity by the authorities in Turkey to deal with structural issues and support the industry to diversify, modernize, digitalize, and become more innovation-intensive.

Nevertheless, SMEs are facing several barriers to ensure digital transformation such as access to knowledge, limited technical capacities and lacking financial resources. 

What is our mission?

Through the project, UNDP in Turkey intends to prioritize the gender equality and women empowerment while engaging institutional partners and other relevant actors to design and pilot incentive measures to steer SMEs in Turkey towards the digital economy. Furthermore, the action aims to help positioning UNDP in Turkey as the advisor of choice for development practitioners and policymakers in terms of digital transformation in the private sector with a specific focus on SMEs. 

How are we doing this?

To boost digitalization among SMEs, a matchmaking and knowledge sharing web-based platform is to be prepared. A detailed roadmap will be prepared for the platform with the involvement of experts to ensure operationality and sustainability. The results of the pilot web-based match making and learning platform on digitalization that will be co-managed by Development Agencies, which will enable UNDP to contribute to the broader digitalization agenda of Turkey, mobilize strategic partnerships and mobilize resources. In the following phases, pilot financial support mechanisms will be drafted with selected Development Agencies and for pilot sectors, namely manufacturing and tourism and are to be implemented and monitored. The platform will be the base and a tool for implementation of tailor-made financial support and incentive mechanisms.  

An ongoing UNDP’s project with the DG Development Agencies, “COVID-19 Resilience and Response Project”, funded by the Government of Japan, enabled detailed assessments of 5 fragile sectors which are fit for use for the aimed digital transformation processes of SMEs. Gender sensitiveness will be taken into consideration within the Project by providing specific supports and incentives for the women in digitalization ecosystem. The Project also covers, provision of technical assistance for financial support phase, ensuring monitoring mechanisms based on KPIs, activities for capacity development as well as 

process of dissemination.  

How will Turkey Benefit?

Project will accelerate digitalization of production and services in Turkey by ensuring awareness, increasing capacities as well as providing resources. As another key aspect, the Project will develop digitalization capacities of development agencies which will provide further development and sustainability of digitalization and best practices from the pilot regions will be disseminated countrywide via Development Agencies. Moreover, the key institution for digitalization, the Ministry of Industry and Technology, will be increasing its capacity for policymaking and implementation of policies. Supporting digital economy policies and support schemes, improvements in regulatory environment and digital literacy is highly relevant to strategic priorities of Turkey and would contribute to the implementation of the 11th National Development Plan.