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This Issue Brief, published by the World Business Council for Sustainable Development (WBCSD) in collaboration with SNV Netherlands Development Organization, explains how governments can help alleviate poverty by focusing on SMEs and how larger corporations can help themselves by including SMEs in their value chains. It describes some of the comparative advantages of SMEs and the challenges they face in developing countries. The publication is also available in Spanish.
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Promoting SMEs for Sustainable Development
– An Issue Brief
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Wealth creation: vital to poverty allevation
The key to poverty alleviation is economic growth that is inclusive and reaches the majority of people
Local entrepreneurs and SMEs represent the backbone of global economic activity
Improving the performance and sustainability of SMEs can help achieve this type of economic growth
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Why are SMEs so important to a country’s economy?
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Importance of SMEs to large corporations
Important source of local supply and service provision to larger corporations
Extensive local knowledge of resources, supply patterns and purchasing trends
By working closely with SMEs, large corporations can develop a new customer base that may not be accessible to the traditional distribution networks of these corporations.
Important source of innovation – SMEs tend to occupy specialized market “niches” and follow competitive strategies that set them apart from other companies
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Anglo American: Anglo Zimele investing in SMEs
Go-Awaste Management Services
Specialised Rubber
Bambanani Health & Safety
Specialized Rubber
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Other examples of SME engagement
DaimlerChrysler: local and sustainable sourcing of raw materials for automobile production (Brazil and South Africa)
Unilever: employing women entrepreneurs to distribute health and hygiene products locally (India)
BP: enterprise center to build capacity and create employment among local companies (Azerbaijan)
Vodafone: co-investing with local entrepreneurs t o establish phone kiosk franchises in South Africa
ABN Amro and GE: providing microcredit and finance to SMEs
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Formal vs. informal economy
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Regulatory framework for SMEs – the role of governments
high low
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SMEs: key messages to government
A thriving SME sector is key to economic growth and job creation
An enabling regulatory requirement is critical – particularly SME registration and monitoring
Governments can engage (incentives) to address the need for start-up funds
Governments play an essential role in capacity building, e.g.Promoting the need for more entrepreneurs and
SMEsSetting up municipal level agencies for advice
and training on starting SMEs
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SMEs: key messages to business
Localizing value creation through SME engagement is a key contribution to economic development wherever “big business” operates
Leadership from the top is key to success - both strategically and operationally
Facilitating access to finance is critical Consider partnering across segments to facilitate
SME development and access to finance Business planning skills, incl. raining in financial
management, are crucial Capacity building help is essential
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WBCSD-SNV Issue Brief on SMEs – published in July 2007
Download the brief at
http://www.wbcsd.org/web/publications/sme.pdf
Also available in Spanish at
http://www.wbcsd.org/web/publications/pymes.pdf
