Small Business Enterprise Development in Southern Africa. Aisling O Broin

Transcription

1 Small Business Enterprise Development in Southern Africa Aisling O Broin

2 Micro, Small & Medium Enterprises Enterprise Category Headcount Turnover Balance Sheet Total Medium sized < million 43 million Small <50 10 million 10 million Micro <10 2 million 2 million The Missing Middle (Centre for International Development, Harvard University)

3 Where are MSMEs Most Common? In the 132 economies covered, there are 125 million formal MSMEs of which 89 million operate in emerging markets (World Bank/IFC MSME Country Indicators) 3

4 MSME Growth and Regional Distribution The regional distribution of MSME density is in line with income level distribution. (World Bank/IFC MSME Country Indicators) (World Bank/IFC MSME Country Indicators) 4

5 MSME Growth and the Shadow Economy Where the shadow economy is larger, there are fewer MSMEs participating in the formal economy (World Bank/IFC MSME Country Indicators)

6 Why is gorta in this field and what role can an NGO play Shift in thinking and experience Building on nearly 50 years of experience in the areas of food and agriculture gorta has evolved its development thinking Level of engagement Filling a gap

7 Strategies for Small Scale Enterprise Development in Africa 1. Providing accurate and accessible sectoral data 2. Clusters and small scale enterprise development 3. Local content and its impact on small scale enterprise development 4. Skills development and capacity building for global competitiveness 5. SME linkages and their impact on small scale enterprise development 6. Meeting global standards: preparedness of African SMEs for participation in global value chains Prevent shocks from negating growth Fundraising Benefits for gorta

8 Case Study: AFARD Large Scale Commercial Farming 7 year Development Programme Food & Nutrition Security - Eat nutritious foods, at least 3x a day; Economic Security - Live in decent homes and accumulate adequate financial and material assets; Health Security - Suffer less from preventable morbidity and mortality; Education security - Attain literacy and skills; Good Governance - Exhibit voice and choice in the governance of their groups and communities.

9 Agriculture Good governance KEY APPROACH Community Health Education Production for the Market & Assets Social Development Resilient Livelihoods Microenterprises development Community Microfinance Market-led Development Key strategies: Participatory Research; Resource Mobilization; Awareness and Skills Training; Networking; Advocacy; Information Dissemination

10 Basic Support to Households Enterprise Development P4MA Exit Support Motivation for P4MA Micro enterprise would not deliver long-term goals of BOs BOs wanted more Available labour and land Access to group loan scheme Available local and regional market Oil Seeds - Soya Production and Sesame

11 P4MA Strategic Areas 1. BO Transformation to Business Entities -Enterprise analysis -Investment planning -Leadership development -Financial management 2. Increased Smallholder Productivity -Zonation of specific crop production -Access to improved technologies -Family factor inputs reliance -On- + off-field quality control -Internal GLS financing Market-driven routes to Resilient Livelihoods 4. Access to Model Home s Assets - Asset needs planning - Supplier sourcing and contracting 3. Effective Marketing System -BO-based PMC strengthening -Produce bulking -Market surveillance -Price negotiations

12 Challenges Extremely low (58%) yields for soya beans Weak marketing strategy Opportunistic tendencies High transaction cost especially on transport (UGX /Kg) Macroeconomic instability and price volatility High BoMs expectations Vs production capacity Charity mindset of field staffs Political interference

13 Lessons Beware: The market is an unkind arena of hyenas Monopoly buyers are not transparent Collective marketing helps bypass middlemen Farmers are unwilling to wait for good prices Working with local leaders reduce conflicts Social and business development are complementary. NGOs need a mindset change Well designed market engagement facilitates change in social gender norms

14 Case Study: EDZ Honey 1,500 farming families Conservation farming & bee keeping EDZ provide training, support and marketing Local and regional markets Current production 170 tons Additional 113 per farmer Future growth

15 Case Study: Keringet, Kenya Micro Enterprise Development Programme in initial stages Enterprise development as main driver 17 week Global Management Approach (GMA) training over a 2 year period Representatives from farmers, youths, women, business community leaders, key government ministries Formed a Trust with 22 members Council of 44 members established Keringet Foods

16 Fresh Yoghurt and Milk Production

17 Crisp Production and Bottled Water

18 What has happened so far Provision of capital Piloted yoghurt Skills development and capacity building Training in manufacturing Exposure visits, business planning Mentoring Research regulations / quality standards Feasibility studies, surveys Will pay for initial staff and start-up of operation Linking them to Irish businesses for mentoring & support

19 Ready for Foreign Direct Investment Ireland has strong background in agribusiness Funds available from Govt. Project funded through gorta (capital in place), group lack technical know-how & experience Changes in regulations and policies in Kenya which facilitate engagement Ideal programme and time for engaging with an Irish private enterprise such as Glenisk or other agri-food producers

20 Conclusion