This is Jan Van de Poel from Eurodad 'speaking'.
One important way to support domestic micro and small enterprise sector is through pro-poor procurement practices. A report we did in 2011 found that about 20% of bilateral aid was still formally tied and a majority of formally untied aid contracts from bilateral agencies were going to donor country firms.
A long-term and predictable commitment to purchase from governments and donors can boost investment in productive capacities of SMEs. Most common targeted procurement practices are:
- granting price preferences to local bidders,
- setting aside a share of contracts in particular for SMEs
- debarring firms involved in fraud or corruption cases, and firms registered in tax havens or involved in human rights violations.
Promoting SME development is usual practice in most developed countries and targeted procurement practices should also be applied in developing countries. Coordination between SMEs and the public sector is crucial in order to assess existing constraints and determine sustainable and effective strategies that enhance capacities and promote practices aligned to development objectives.