1. MICRO, SMALL & MEDIUM ENTERPRISES Emerging opportunities in the wider economy An international perspective ANDY JEANS

2. What is a small enterprise? A process by which products or services are traded An enterprise generates income for its owner and workers by selling to customers

3. Small Business Inputs Product or Service Individual Customer Money Goods or services

4. Traditional Small Businesses Farmers, petty traders, artisans, tailors, etc Products – small quantities, little value addition, low / inconsistent quality Customers – generally poor people from neighbourhood, some middlemen Low income, saturated markets, insecure Available Support? - very little from either private or public sources

5. Typical Large Business Mining, construction, manufacturing, retailing (private or state owned) Products: High volumes, quality, value- added, diverse Customers – wide range Available Support? – good access to inputs and services

6. Constraints facing Small Businesses Supply side – skills, raw materials, tools, capital, information Infrastructure – roads, premises, power, water, communications Demand side – markets, customers Policy environment – legal, regulatory

7. Supply side changes Improved access to –basic education –a wider range of material inputs –transport and communication facilities –financial and business services Enhanced capacity for collective action

8. Development Programmes Most interventions have addressed supply side constraints: –Credit, skills training (technical and business) and infrastructure development Leading to improved: –Access to technology, tools, working premises –Capacity to produce better quality, alternative products –Capacity to produce more efficiently

9. Market problems Having the capacity to produce does not mean a small business can sell at a reasonable profit, for the effort Nor does it mean that sufficient quantities can be sold to sustain the business

10. Customers and Trends Poor individuals Better-off individuals Government (Buyers for) Large firms Other Small Businesses

11. Individuals Poorer Limited purchasing power Increased access to factory goods, imports Better off Looking for higher quality, new products Prefer convenience of supermarkets

12. Large Firms Government Tendering systems Trends to privatise and decentralise Can import Private Need large range of supplies Demand high quality, consistency, timeliness, invoicing Trend to outsource Can import and export Opportunities for Small businesses

13. Other Small Businesses Good opportunities for growth, diversity To bridge the gap between the growing markets of large firms The “missing middle”

15. Legal, regulatory Formal / official Licenses Import regulations Taxation Time consuming procedures Policing Informal Harassment Corruption Access to supplies Changes / Trends …………….. ?

16. Most Promising Opportunities Production and processing for onward sale to other businesses Service businesses – wide range: –Conventional – trading, repair, packaging, transport, printing, accountancy etc. –Other - Skills training, information, Q/A, business planning, consultancy (?)

18. How to promote a thriving network? Tackle demand-side constraints – forge links through which goods can be sold: –Facilitate sub-contracts, forward contracts –Assist intermediaries –Build capacity of groups / associations / clusters – to access markets –Forge commercial links through trade fairs, catalogues

20. How to tackle policy constraints? Educate / inform policy makers – ‘best practice’? Stimulate greater dialogue with SMEs or their representatives Increased capacity to identify and articulate needs can also enable negotiations with private firms

21. CONCLUSIONS Emerging opportunities for MSEs - better linked and integrated into wider economy SED interventions need to adapt: –Informed by better understanding of market demand and channels –More emphasis on market (rather than input) constraints –Strengthen capacity of MSEs to forge and sustain links Who? - Business, NGOs, Government ?