Why consider small-scale, local enterprises in Private Sector Development?

I think opportunity entreprenuers need support that will help them take off. They are likely to know and appreciate why they are in business and what they wwant to achieve in business. So their training must help them grow from where they are. On the other hand, survival entreprenuers need to be helped to appreciate the importancce of being an entrepreneur. That being an entrepreneur is not just a matter of survival but that entrepreneurship is the root to economic independce and poverty emancipation. Their training therefore might be more basic than that of the opportunist entrepreneur.

Poverty reduction is at the heart of our economic development strategic framwork. The evidence tells us that no country has been able to eradicate poverty without sustained economic growth. But it is not growth alone. Policies and investments are needed that encourage inclusive, broad-based growth and are focussed on sustainable use of natural resources. Further steps are needed to remove the structural barriers that limit economic opportunities for poor women and men and keep certain groups in persistent and chronic poverty.

I see it as less a question of firm size than a question of finding solutions that will create long term opportunities for poor people to improve incomes. That may involve working with MSMEs to access local markets or alternatively working with larger SMEs to help access higher value export markets and support the development of outgrower programmes (for instance) that then provide income earning opportunities for a greater number .

I agree that there may be differeneces beyween the needs of 'survivalist' and 'opportunity' entrepreneurs.... but all too often the very small-scale or survivalist businsses are written off as hopeless and unproductive and therefore not the types of businesses that should be the focus of economic or private sector development strategies. Evidence however highlights just how important these ‘survivalist’ businesses are – ensuring survival in the face of limited other options, massive unemployment and rising levels of inequality.

Further, in stark contrast to these ‘survivalist’ businesses being dead-end and hopeless many of the small business owners we spoke to in our research were optimistic about the future and their business’ ability to grow or diversify. What is needed are strategies and support programmes targeted at these enterprises which support them in providing decent work and increasing their productivity so as to increase incomes and thereby take a step towards poverty alleviation and contribution to national development.

A measure of impact that MSMEs have brought would be number of people or entrepreneurs in this case that have improved their livelihood over the programme or project period: could be the microentrepreneur was living in a grass thatched house before the intervention but noe they are living in a house well roofed with iron sheets. Besides the entrepreneur is able send their children to school something that they couldn’t do then. Further more issues like transport modes used before and after the intervention: then they used to walk on foot to town now they ride a bicycle or drive a car to town. In addition to meeting basic needs like food, shelter and housing.

Zunaed, i agree with you. Government should not be left out as it has the overall responsibility of developin the private sector. But i think it is also important to bring on board other players if we have to be more effective.

... and the process of recognising onself as an entrepreneur can itself be empowering. One of our partners in Myanmar is doing some fascinating work with small-scale farmers and has given them the option of moving into organic farming and then supporting them to access markets. Talking to these farmers was so interesting - especially when we compared what they were saying to what others in the group who were not a part of the project were saying. Generally, the farmers in the project viewed themselves as 'entrepreneurs' and even 'scientists' who were actively choosing their own path. Their level of empowerment and self-confidence was in stark contrast to other farmers we spoke to and it highlighted for me Geoffrey's point above...

To all of those who have commented and contributed here I would like to thank you for your time and input.

Micro-economic reform and gender equality are important in the work that we undertake in Zimbabwe.

It is difficult to attract funding from donors because of the current political and economic climate.

One has to source funding through various government programmes and initiatives.

The rural development programmes that work tend to be ones that have a local ownership component and that are conducted with a consultative and collaborative approach.

I would be interested in other NGO/business initiatives in Africa to look at their models for success, especially those that are based on the empowerment of women and gender equality.

The paper Sarah refers to is a good one and well worth a look!

We've also had experiences where we have needed to 'invest' in MSE capacity prior to them being considered as a potential partner for a larger business. For example we worked with a tomato processing company and farmers under this program http://businessinnovationfacility.org/ . But prior to this we'd had an EU Food Secuirty program that had helped the farmers 'step up' and be a more attractive proposition for commercial engagement.

This kind of early stage investment in helping MSEs to get market and business literacy, get organised etc is the bit that is hard to fund from the resources that are within the system (e.g. getting the company to fund it). But if the analysis has been done, there is a vision for change, and some local 'energy' to work with then subsidy from donors and/or govt can be justified.


I appreciate how hard it is in your context and would like to put you in touch with our team who are taking a systemic approach that mobilises actors (big, small, public, private, pwoerful and marginalised) to identify blockages and opportunities and jointoly development strategies to tackle the key issues. Please feel free to contact me alison.griffith@practicalaction.org.uk

I quite agree with Alexander, in that the private sector alone cannot provide all the financial resources needed. However, corporations can review their value chains and pick out opportunities that can be the medium of engagement with a chosen community. As for the government, laws must be enacted not only to grant tax benefits in full to partnerships that register successes in poverty reduction, but should also provide generous incentives to the new enterprises that are created by these partnerships. It should easier for government to grant incentives than pay the cost of unemployment. Government must make it profitable for the poor to get out of poverty.

A measure: I mrant more than basic needs( food, shelter & clothing) would mean improved livelihoods for example if the microentrepreneur couldn’t afford medical insurance then but they can do so now.

Engaging small-scale enterprises is important to lift them out of poverty. By understanding value chains of their products, ones (government, donor) can help to upgrade their position in the value chains.For example one of CIFOR' project in Central Java Indonesia helping small-scale furniture producers who in the value chains are located in the bottom and far from market because there are brokers in between. The approach taken were to improve their knowledge on market situation and facilitate them to present their products in several trade exhibitions domestic and internationally. As there are a lot of small-scale enterprises in this area, an association of small producers was also introduced. Having this association work for representing voice of small producers, it was able to negotiate better local government in an equal situation, even they started to get assistance and facilitation by local government. The project also conducted trainings for small-scale producers in order to get loan from the bank. further information related the success of the approach engaging small-scale producers can be seen at http://www.cifor.org/furniture

It's all about good and bad governance to entertain the crucial issue and sustain. Most of the governments depend on populism to grab their votes only through small subsidies even to MSMEs. We all know that there is the only option left to in MSMEs, thus to eradicate poverty through employment generation.

Entrepreneurs need to build appropriate capacities for their business success not subsidy. They need money to run the business is obvious, and therefore governments and donor agencies should intervene in the context of competitive small business environment in the area of operation. MSMEs have to know that their business assets first to work for. Most of the MSMEs round the globe underestimate the value of their vital asset the IP asset like business name, business idea, business model, strategic planning .and many more to design the business for compete in the current knowledge driven market economy.

The World Intellectual Property Organization (WIPO) in mid-November 2011 reported that the Global Intellectual Property (IP) market which is now worth $180 billion a year and the changing face of innovation, royalty and licensing fee revenue rose from $2.8 billion in 1970 to $27 billion in 1990, and became $180 billion in 2009. This is faster than the rise in global gross domestic product during a similar period. In fact, it is possible that two years hence the total revenue may touch the $200 billion mark.

The values of an asset whether it is intangible or tangible are the potential elements for economic benefits in competitive businesses; whether they are big or small. It is imperative to foster creation of innovative products, processes and services so that intellectual property (IP) assets give their holders confidence and cash, exchange new technologies through joint ventures and licensing agreements. The profits of every business today come from a mixture of tangible and intangible asset values.

Moreover, most of the entrepreneurs do not have any motivation to become a social entrepreneur serving for the development of the society. We should intend to intervene right on these scores to create a large contingent of social entrepreneurs and engage their workers, delivering innovative products/services ideas that enjoying the benefits of innovation and IP assets.

Private sector development should look like appropriate pro-poor human business model to be implemented by MSMEs not by the multinational companies where employment opportunity is limited.

In my not so wildest dreams, I still envision mega businesses for the poor. MSMEs have their rightful place in the relentless fight against poverty. But my gut feel tells me there is major business group out there capable of making a huge dent in the poverty indexes. A shared value approach makes this more viable because of the value chain approach that is geared towards socioeconomic sustainability for partners and benficiaries.

Mopping up wealth & power is a basic human instinct.

So, only the businesses with meagre profitability or logistic issue laden ones or last mile service providers would always be left for the small entrepreneurs. IPR based business is different but then it would also be gobbled up later. Many small businesses have gone out of business. IT solutions have made it easier. 'Franchisees' are now small businesses. Bus is it bad?

Said all this, small businesses ensures employment. But the scope is becoming smaller and smaller every day.

Small businesses would be supported only in a country that has large population or is underdeveloped and poor.

I feel trying to artificially boost small businesses in developed countries is waste of the resources. Large businesses do offer cost and quality advantages provided they are controlled well by consumer protection and anti-trust laws.

In my view, capital & infra support for small businesses is more for social welfare and to ensure peace by keeping people engaged. And, can be justified only in such circumstances and as a cost of ensuring social peace.

Yes, the meaning of full collaboration is needed. They ( private sector, SMEs) are the one who can leverage resources to the country’s economic growth and sustained impacts

We will be picking up this topic again on Thursday 4th June, 3.00pm – 4.00pm GMT / 10am-11am EDT here: How to Ensure MSMEs Thrive Post COVID-19? hope you can all join us!