The World Bank Group promotes small and medium-sized enterprise (SME) growth through both systemic and targeted interventions. In this evaluation the Independent Evaluation Group (IEG) focuses on four types of targeted interventions—those designed to deliver financing to SMEs, those providing advice and technical assistance to governments to improve conditions for SMEs, those delivering business development services and training to SMEs, and those seeking to integrate SMEs into larger networks of producers or “supply chains.”
A critical challenge is to root the many activities now undertaken in this broad space in a clear understanding of the characteristics and dynamics of SMEs their role in the broader economy; and their actual and potential contribution to jobs, growth, and shared prosperity. A closely related challenge is to formulate clear strategies that connect interventions to intended outcomes and are accompanied by solid measurement systems that provide evidence of results and allow learning.
As the World Bank Group continues to support SMEs, to help them realize their potential contribution to developing economies, the IEG evaluation concludes that, to make TSME support more effective, the Bank Group needs to do several things:
Clarify its approach to targeted support to SMEs. The International Finance Corporation, the Multilateral Investment Guarantee Agency (MIGA), and the World Bank should harmonize their SME approaches to make clear the objectives and analytic justification for TSME support, how it relates to systemic reform, where it is appropriate, what main forms it will take, and how it will be monitored and evaluated. Targeted support for SMEs needs to be firmly rooted in a clear, evidence-based understanding of how the proposed support will sustainably remove the problems that constrain SMEs' ability to contribute to employment, growth and economic opportunity.
Enhance relevance and additionality. Relevant World Bank Group management should refine its SME approaches to shift benefits from better-served firms and markets to frontier states (those with underdeveloped financial systems, especially low-income and fragile and conflict-affected countries), frontier regions, and underserved segments.
Institute a tailored research agenda. World Bank Group management should institute a tailored research agenda to support and assist these clarifications and refinements of its SME support approach, utilizing the best qualified researchers.
Strengthen guidance and quality control. World Bank Group management should provide guidance and quality control so that project documents for Bank Group projects targeting SMEs define and justify the specification of the beneficiary group, provide specific targeting mechanisms, and include impact indicators in its results and monitoring and evaluation frameworks.
Reform MIGA's Small Investment Program. MIGA should radically rethink its approach to providing guarantees for investments in SMEs through its Small Investment Program, considering either a merger with its regular program or a fundamental redesign to improve performance.
Watch the Video: The Big Business of Small Enterprise