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New Video: The Big Business of Small Enterprises

ieg_admin — Wed, 25 Feb 2015 15:26:47 +0000

New Video: The Big Business of Small Enterprises ieg_admin Wed, 02/25/2015 - 10:26

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I have a small scale enterprise namely it is an English Tuition class. With which my mother and I was conducting we were barely living with. So I found my self several jobs. Which pays high salaries. However the competition within peers and outside job seekers is immense. Trying overcome every bit of my problems in the best possible way. Shashika Wijesinha .S. Sri Lanka

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Promoting Inclusive Growth

ieg_admin — Tue, 21 Oct 2014 15:44:26 +0000

Promoting Inclusive Growth ieg_admin Tue, 10/21/2014 - 11:44

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Building on the bank's evaluation findings is the best entry point of what the bank should do. The conclusion could not have been even better "get the diagnostics of inclusion right"

Grace, many thanks for your feedback. Please "stay tuned" as we will be coming out with an evaluation called "Getting to Poverty" which looks at how poverty considerations are integrated from diagnostic, through strategy and design, to implementation and data collection. I hope the lessons will be, at least in part, transferable to diagnostics of inequality.

Private- public sector partnerships can generate inclusive growth *(People at grassroot levels) only if World Bank group designs interventions that breath sustainability directly to the economic activities that grassroot people are involved. I agree with Caroline that the distributional effects of the WBG interventions to end poverty may not automatically happen.

Roland, thank you for your comment. Please also have a look at our evaluation of Public-Private Partnerships, which highlights the importance of generating more information on when and how the poor or populations in the lowest 40% income-bracket benefit. We all have a lot to learn and do if we want to create a world free of poverty.

The public sector has two distinct roles, both equally important. The first is regulation and efficient enforcement of laws so that all economic agents play fairly by the rules; and the second is creating and maintaining a competitive business environment which is supportive of business, corrects market failures and provides incentives for commerce and industry to innovate, invest and grow. In the latter area, governments need to ensure through appropriate regulation and incentives that barriers to entry for newcomers in all legitimate activities is minimal and "the playing field is level". Access to finance on reasonable terms is a major barrier to entry and growth of new entrepreneurs and small businesses. And providing equal access to quality education is a basic function of government in collaboration with the private sector. The World Bank(WB) has been active for more than forty years in supporting small and medium scale enterprise development. It has achieved significant success in some countries and much less in others in growing efficient SMEs. But often, the reach of its interventions has been restricted to select partner institutions and broader spillover to the financial and business sectors has been quite limited. The Bank has not achieved much success in improving the first aspect of public sector governance in spite of major efforts through policy based lending. Improving government performance is a difficult task and the Bank has limited resources to deploy in this area. However, because of its importance in promoting inclusive and equitable growth, this is an area where the Bank needs to devote more attention and resources. The second area of public sector activity i.e.. improving the business environment which also includes many elements of the first has been a thrust area for the Bank's projects. The publication of annual performance indicators has contributed to raising awareness in governments and the private sector to implement reforms. These could be supplemented by indicators of inclusive growth disaggregated by regions, income classes and sectors, entrepreneurial activity, women's participation in business, access of poor to finance etc would sharpen the focus and attention of policy makers and private groups. Inclusive growth requires not only inclusive policies but also embracing inclusive and extensive institution building across a wider set of sectors and activities.

Shyamadas, thank you for your comment. You raise very good points about the roles of the public sector and how to better focus attention on the different roles and raise public awareness. IEG's recent evaluation of support to SMEs (The Big Business of Small Enterprises) makes similar arguments as regards the importance of leveling the playing field and ensuring appropriate regulation to minimize barriers to entry. It argues for the critical need to harmonize and clarify targeted support for SMEs while strengthening their relevance in countries where the field has historically not been well regulated of level, most obviously in fragile and conflict affected countries. Your suggestion of supplementing current tracking of performance indicators to include inclusive growth disaggregated to include, for example, regions, income level and sectors, is a compelling idea. IEG is currently preparing an evaluation of the Bank's work on poverty which identifies areas where better data and analysis could strengthen awareness and transparency in this area. However, such indicators are costly to produce and often of low priority for low income countries, which points to the important role the international community needs to play in supporting statistical capacity development; something we covered a couple of years ago in a review of three global programs dedicated to improving statistical capacities, namely Statcap, Paris 21, and Marrekesh Initiative.

the Bank Group needed a clearer vision of how to support client countries with a systemic approach that brings private and public actors together to facilitate and promote innovation in a way that ensures that those living in extreme poverty also benefit. I agree with that.

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The Big Business of Small Enterprise

ieg_admin — Fri, 28 Mar 2014 20:45:18 +0000

The Big Business of Small Enterprise ieg_admin Fri, 03/28/2014 - 16:45

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Andrew, this article clearly articulates my experience in the field. Too often, not enough attention is paid to the circumstances of a particular region, and a cookie cutter approach is used with the excuse, it worked this way in another country / continent, so it will work here as well. No, not so! As development professionals, we must study our target beneficiaries, as each country / region has its peculiar quirks. Collaboration with other group institutions would certainly help here. But is it just me, or do I detect a jostle for who should "own" the project and get the kudos if / when successful? Institutional rivalry, perhaps? With regard to the data collection, many times the persons setting the indicators, (the analyst, perhaps) have just a nodding acquaintance with M&E, and sometimes the indicators are superficial. How many times are the beneficiaries checked post project to actually determine the success of the initiative? Or do we take the reports of the institutions with which we liaise, without questioning? I could go on and on, but will stop here. It's just enough for me to reiterate that you report has resonated with me. The question remains....as an internal market failure, how do we correct this?

Well, I have worked with SMEs development programs for over 10 years and have found that even with technical assistance going to beneficiaries the main issue is "quality" or effectiveness of the assistance provided. Also I have observed that there is no that huge demand for business development service -SMEs are not willing to pay 100% of assistance not even a small protion of the cost. These comments are based on my experience in El Salvador. In recent years I've seen a slightly improvement in demand for BDSs given an improvement in the quality of assistance.

I am a consultant - an Investment Advisor / Investment Banker and many SMEs approach me for funding requirements. Normally we guide them through local banks. What are the criteria / benchmark of funding to SMEs? which sectors are eligible for funding and what is the minimum & maximum amount / ticket size? How to approach world bank for SME financing? what are the terms of financing (tenure / Interest rates / profitability parameters required etc.)?

Thank you very much for these comments. Carmen Gomez-Trigg -- thank you for confirming some of our observations based on your experience. Typically after a major evaluation, IEG agrees with the Management of the World Bank Group on actions to address the major recommendations a few months after the evaluation is issued, so efforts to address the identified problems will be committed to and monitored over the next three years. Mario Martinez -- thank you for sharing your experience in El Salvador. Certainly there are questions whether some services are "supply driven" or reflective of genuine demand by SMEs. And your point about quality is key. Ketan Mandani -- We are evaluators rather than service providers, but typically the World Bank Group works through intermediary institutions and does not directly finance individual SMEs. Thus eligibility for an IFC-funded private intermediary (e.g. a bank or equity investment fund), for example, would be specific to that instiution.

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I found this so helpful especially meeting the needs not only for an individual but nations world wide especially in the area of education (early childhood development) and agriculture (food production). I believed this will be helpful also for my country (Namibia) in the area of community project and small business interprises when it come to financial support. Thank you for making impact and changing the lives of many nations.

Thank you for sharing the situation in Namibia. Certainly, a wide combination of factors affect the success of small enterprises, including education, linkages to key value chains such as agriculture, and the availability of essential financial and business services. As we note in the report, many of these challenges need to be approached systemically, and targeted programs need to focus on building sustainable systems that can provide services over the long term. IEG is currently discussing with World Bank Group management steps that can make its support to SMEs more strategic and effective, in accordance with the recommendations in our recent evaluation, "The Big Business of Small Enterprises."