UN ECONOMIC COMMISSION FOR AFRICA SME BUSINESS LINKAGES: KEY LEARNINGS FROM UGANDA ADDIS, ETHIOPIA, NOV. 2011

THE CONCEPT A supplier development program that upgrades MSME suppliers and increases their competitiveness and sustainability; A pro-poor business model that creates mutually beneficial business linkages between MSME producers and large local and TNCs; Piloted on 5 sectors ; Agribusiness, Real estate, Telecom, Services, and Manufacturing with National BDS Agency and Investment Centre and joint implementers.

APPROACH Target large companies and TNCs of repute; Together with TNC, Identify SME suppliers; Carry out Business Health Check (BHC) on SMEs; Basing on BHC, offer tailored BDS to the SMEs; Basing on TNC’s strategy, produce SMEs business plans to assist TNC achieve their Strategies; Let TNC coach and mentor SME partners and develop them to meet required standards. Identify policy issues that need to be addressed to enhance robustness of BL.

PROJECT IMPACT Behavioral transformation of SMEs reflected in adherence to contracts; Improved business management control systems; Increased sales turnover of 100% to 300% within two years; Two to three fold rise in employment; Increased access to financing; market information; technical assistance and markets.

CHALLENGES Internal – operational challenges. External – Inadequate policies. Local content - outsourcing; Taxation; Infrastructure; Capacity Building.

CRITICAL SUCCESS FACTORS Significance of the economic sectors selected; Involvement of a credible BDS provider; Existence of reputable corporates that value ethical way of doing business and respect canons of corporate governance; Conducive business environment that allows investment in and nurturing of long-term business partnerships; Robustness of the banking and financial sector; A well managed publicity campaign.

KEY LEARNINGS Importance of harmonisation of private sector development policies, programmes and institutional framework; In LDCs business linkages are can be long and painful, requiring a strong institutional support mechanism to address multifaceted dimensions necessary for their success; The cost of and expertise required for creating linkage-ready SMEs in developing countries cannot be wholly found in or accommodated by TNCs in today’s global village.

KEY LEARNINGS SMEs are capable of learning best practice in standards and business management but just need a strong reason to do so on long-term basis; Business Linkages can be a fast truck way of introducing SMEs into mainstream banking and keeping them there; There are many TNCs that are willing to work with SMEs but just do not understand what it takes to make SMEs dependable partners.

Thank You