Thriving instead of surviving: Small businesses in fragile settings
Why small businesses and trade matter in conflict-led fragile settings, and ITC’s tailored approach
Small businesses are the pillars of resilience and prosperity across the globe. In regions plagued by fragility and conflict, small businesses play an even greater role as they are the ones providing essential goods, services, and employment. Whereas large companies typically suspend operations or relocate, small local businesses remain active, attracting much needed private-sector investment, and laying the foundation for long-term economic and social stability.
Trade plays an important role in sustaining economies and the livelihoods of vulnerable populations and others affected by fragility and conflict.
Why? In most protracted crises, markets remain functional, even if conditions are not ideal.
In addition, while domestic markets may be distorted or restricted, neighbouring ones often become more dynamic with an inflow of people and business.
Supporting and promoting small businesses and their participation in international trade can, therefore, help stabilize regions and foster peaceful coexistence. However, given the various drivers of fragility, and of how firms experience it, deploying a one-size-fits-all approach to supporting businesses is not only impractical but can be counterproductive.
The critical intersection of fragility, conflict, and trade—spanning the Humanitarian-Development-Peace (HDP) nexus—receives insufficient attention. Traditional security and development measures, in isolation, are not enough to help societies recover and build resilience. New solutions must connect public-private partnerships and allow the business sector to play a proactive role.
The global community often remains trapped in a binary mindset, viewing short-term, life-saving humanitarian aid and long-term, complex development interventions as opposing forces.
The HDP nexus – calling for strengthening coherence between humanitarian, development and peace efforts – requires structural shifts when it comes to what, where, how, and by whom aid is delivered.
Without innovative approaches to tackle fragility, conflict and violence, the global community cannot hope to achieve the United Nations Sustainable Development Goals (SDGs).
The International Trade Centre (ITC) is uniquely placed to contribute to the HDP nexus and address context-specific constraints in conflict-affected fragile settings as we enable small businesses to thrive, rather than just survive.
ITC has long been engaged in conflict-led fragile settings, addressing both the root causes and the consequences of conflict through several initiatives in countries ranging from Iraq and Afghanistan to Kenya and Pakistan, Rwanda and South Sudan to Ukraine, and many more. Among these, the Trade for Refugees initiative stands out as a key effort to empower displaced communities and promote economic resilience in some of the most challenging environments
Building on the successes of these initiatives, ITC is now addressing the complex challenges of trade in fragile and conflict-affected regions through a new specialized unit, the Conflict-Responsive Market Development Unit.
The role of this new unit is to structure the lessons learned, and to ensure ITC remains fit for purpose – technically and operationally – when it comes to supporting small business trading internationally despite a conflict-affected fragile setting. The following approach will help us in designing activities tailored to each unique context:
1. Addressing fragility at multiple levels
Interventions at the macro and micro levels must go together, as shown ITC’s flagship report, the SME Competitiveness Outlook 2023. It is fundamental to restore the ability of the state and business ecosystem to perform their functions and cope with risks while strengthening firms’ capacity to cope with the prevailing state of fragility.
To build or restore state capacity, efforts should focus on creating a more conducive environment for trade and investment, fostering long-term economic stability and growth. This includes advocating for and supporting trade facilitation, investment facilitation, and a conducive business environment through advisory services to governments and trade-related international initiatives, such as the Trade for Peace Programme.
Small businesses also require targeted assistance to become more resilient to the many shocks that fragility and conflict engender. Support programmes should address their unique challenges in operating, building strong connections in the business ecosystem and adapting to sudden market changes.
This support should include access to finance, technical assistance, and capacity building, focusing on sectors resilient to conflict with strong growth potential, such as agriculture, renewable energy, and digital services.
2. Enhancing opportunities for women and youth
Gender inequality, conflict and fragility are inextricably linked. In conflict-affected settings, gender-related issues demand particular attention. Youth on the other hand are crucial for peacebuilding and reconstruction. Inclusive interventions must be guided by a "do no harm" approach, ensuring there is no exacerbation of existing tensions or inequalities.
3. Leveraging digital solutions to overcome physical challenges
Investing in and promoting digital trade solutions can enable small businesses in fragile regions to access markets, even in the face of damaged infrastructure and movement restrictions. This includes supporting e-commerce platforms, digital financial services, and remote learning opportunities, all within a framework that is conflict-sensitive and contextually appropriate. Agile project support and flexible funding instruments are essential to adapt these solutions to rapidly changing environments.
4. Strengthening partnerships across the Humanitarian-Development-Peace nexus
The Humanitarian-Development-Peace nexus calls for enhanced collaboration with international organizations, local governments, and NGOs, who create integrated strategies that combine immediate humanitarian relief with long-term trade and development goals. Participating in UN Country Teams, UN Sustainable Development Cooperation Frameworks, and other national frameworks is crucial.
Effective private-sector support will rely on leveraging market system development and adaptive management approaches, informed by strong local knowledge, field offices, and operational capacity, either directly or through partnerships with relevant international actors.
ITC is proud to be leading the design of an essential toolkit for inter-agency collaboration to support trade and small business-led growth in fragile and conflict affected settings. Join the conversation, by registering to the upcoming Geneva Peace Week.
