micro, small & medium enterprises emerging opportunities in the wider economy an international...
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Small Business Inputs Product or Service Individual Customer Money Goods or servicesTRANSCRIPT
MICRO, SMALL & MEDIUM ENTERPRISES
Emerging opportunities in the wider economy
An international perspective
ANDY JEANS
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
Small Business
Inputs
Product or
Service
IndividualCustomer
Money
Goods or services
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
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
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
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
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
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
Customers and Trends• Poor individuals• Better-off individuals• Government• (Buyers for) Large firms• Other Small Businesses
IndividualsPoorer
• Limited purchasing power
• Increased access to factory goods, imports
Better off
• Looking for higher quality, new products
• Prefer convenience of supermarkets
Large FirmsGovernment
• 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
Other Small Businesses
Good opportunities for growth, diversity
• To bridge the gap between the growing markets of large firms
The “missing middle”
Legal, regulatoryFormal / official• Licenses• Import regulations• Taxation• Time consuming
procedures• Policing
Informal• Harassment• Corruption• Access to supplies
Changes / Trends …………….. ?
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 (?)
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
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
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 ?