Small and medium-sized enterprises (SMEs) are often described as the backbone of the economy — and in Malta, that’s no exaggeration. Over 98% of all businesses in the country fall into this category, contributing substantially to local employment, innovation, and sectoral resilience.

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Across the EU, the numbers are even more striking. SMEs account for 99% of all businesses, employ around 100 million people, and generate more than half of Europe’s GDP, according to the European Commission. Malta fits squarely into that pattern — but faces its own unique challenges and opportunities as global economic pressures evolve.

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At a time when the EU is doubling down on digitalisation, sustainability, and competitiveness, SMEs are under pressure to modernise. But unlike large corporations, they often lack the buffers — financial, technological, or administrative — to adapt quickly.

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In Malta, access to finance remains a key obstacle. The 2024 SME Barometer, issued by the Malta Chamber of SMEs, found that four in ten small businesses have struggled to access the capital they need to invest or expand. That’s in line with EU-wide figures, where nearly 30% of SMEs report difficulty securing funding — particularly in southern European countries.

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Institutions like Malta Enterprise and the Malta Development Bank have responded with a series of funding schemes, grant matching initiatives, and EU-backed loan facilities. But uptake has varied, often depending on a business’s administrative capacity or awareness of what’s available.

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The digital divide is another critical hurdle. While 60% of EU SMEs ramped up their digital efforts in the wake of the pandemic, only 27% consider themselves digitally advanced. Malta has taken steps to close that gap, most notably through the MITA Digital Innovation Hub, which offers businesses access to cloud infrastructure, cybersecurity support, and digital skills training.

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Still, progress is uneven. Many micro-enterprises — which make up the bulk of Maltese SMEs — remain reliant on manual processes, legacy systems, and paper-based workflows. This not only limits productivity but also weakens competitiveness in export markets.

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Where some see challenges, others see opportunity. The EU’s Green Deal Industrial Plan and Digital Europe Programme both offer funding routes and policy frameworks designed to help SMEs transform. Locally, businesses that embrace sustainability reporting, automation, and digital marketing are already outperforming their peers — particularly in tourism, manufacturing, and niche services.

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One standout example is Malta’s growing number of small tech and fintech startups, which, supported by programmes like Start in Malta, have attracted international clients without relying on scale. Elsewhere, family-run firms in retail and construction are turning to solar power, AI-driven stock management, and smart logistics to cut costs and improve efficiency.

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For the thousands of SMEs operating in Malta today, the message is clear: adapting to the new economic reality is no longer optional. Those who can align with digital, green, and export-oriented priorities — and take full advantage of the support systems available — will be best placed to thrive in the next chapter of Malta’s growth story.