Mr Obi said SMEs were emerging as the undisputed engine of rapid economic expansion and growth globally.
The presidential candidate of Labour Party (LP) in the 2023 elections, Peter Obi, has urged the Commonwealth nations to pay special attention to small businesses.
This, he said, will enable them to achieve sustainable growth and development across its countries.
Mr Obi, a former governor of Anambra State, underscored the importance of Small and Medium Enterprises (SMEs) to global economic growth and rapid expansion.
He made the remarks in a statement in Lagos on Monday.He said this at a global conference organised by the Bangladesh Government in conjunction with the Commonwealth Enterprise and Investment Council, in Dhaka, Bangladesh.
Mr Obi also explained why small businesses were the engine of growth across the globe, especially in areas of job creation, innovation, and domestic investment.
"If we enhance the functionality and impacts of SMEs across Commonwealth countries through formalisation and internationalisation, we would have done it across the world with lives, communities, and economies positively impacted.
"Endowed with a population of about 2.5 billion people, a home to over a billion young consumers and exports of over $1 trillion, the need for better support for SMEs cannot be over-emphasised."The small businesses, especially in developing and emerging markets, face many challenges arising from a lack of formalisation and internationalization.
"Therefore, many small businesses are not registered and licensed and lack international affiliations and barely exploit the benefits of international trade, which limits the growth opportunities of both the SMEs and the countries.
"To harness the full contributions and impacts of SMEs, proper reforms such as formalisation and internationalization are needed to address the identified challenges," he said.
Mr Obi explained that formalisation involved bringing SMEs into the formal economy through registration of their businesses and complying with legal and regulatory requirements.
He said expectedly, the process of formalisation would be beneficial not only to the SMEs but the overall business environment and economic stability.
The former governor added that such significant segments of SMEs operated in the informal sector due to a lack of resources or awareness of the formalization benefits.
The LP presidential candidate argued in his address at the international conference that SMEs were emerging as the undisputed engine of rapid economic expansion and growth globally.
Mr Obi noted that "World Bank records (2020) showed that SMEs account for roughly 90 per cent of businesses and more than 50 per cent of jobs created globally."
He said while the formal SMEs contributed up to 40 per cent of national income (GDP) in Developing and Emerging Markets (DEMs) their impact and contribution were significantly higher when informal ones were included.
According to him, in Bangladesh, SMEs contribute about 40 per cent to GDP, in Nigeria 48 per cent and China 60 per cent with about seven out of every 10 formal jobs created by SMEs.
The former Anambra governor said the same immense impact in India where SMEs accounted for over 40 per cent of the total workforce.
Mr Obi noted that this limited their access to credit, markets, and government support which consequently results in reduced investment, innovation, and growth opportunities.
The former governor further explained that this was critical, especially to commonwealth nations, as the commonwealth controlled a combined wealth of about $150 trillion.
He said: "This is over 10 times their combined GDP of about $14.5 trillion today, and over 30 times the global trade and export value of about $4.8 trillion.
"Hence, these untapped benefits the Commonwealth despite controlling one-third of the global population only contributes below 15 per cent of the World GDP of $100 trillion and with a global GDP per capita of $10,700."While that of the commonwealth is 3,500 dollars, this shows a huge growth potential, which can be enhanced by investment in SMEs where the bulk of the youths are domiciled, especially within the commonwealth family.
"SMEs in Commonwealth countries are essential drivers of economic development and poverty reduction. Formalisation and internationalization are crucial pathways to unlocking their potential, fostering innovation, and increasing competitiveness.
"Even though challenges are many supportive policies, capacity-building initiatives, and strategic partnerships can empower SMEs to thrive in the global economy.
"And by investing in the formalisation and internationalization of SMEs, the sustainable socio-economic growth and development of Commonwealth Organisation and Countries can be significantly enhanced."
Mr Obi said to achieve this, it would require a high level of involvement of all stakeholders particularly the Commonwealth organisation and the governments of Commonwealth countries.