Micro, Small and Medium Sized Enterprises (MSMEs) are key drivers of job creation, economic diversification and innovation, especially in developing countries whose economies are frequently based on natural resources. Despite their critical role, MSMEs face a broad range of constraints that smother their potential. These include poor hard and soft infrastructure, unhelpful environments, as well as a lack of skills, experienced mentors and easily accessible markets. Of primary importance, however, is that access to finance for MSMEs is severely restricted in many developing countries. The total unmet need for credit by all formal and informal MSMEs in emerging markets today is significant – in the range of $2.1 trillion to $2.5 trillion, according to the IFC and McKinsey.
One area for focus is building the capacity of local financial institutions to provide finance for SMEs. CDC, the UK’s development finance institution (DFI), whose mission is building businesses in Africa and Asia and creating jobs, works with over 200 financial institutions in 30+ countries to make SME finance more easily available. In Uganda, CDC is this year celebrating the 50th anniversary of DFCU, which it co-founded with the Government of Uganda in 1964. DFCU has grown to become one of the country’s largest banks and a leading provider of finance to small businesses.
To coincide with this anniversary, Business Fights Poverty in partnership with CDC is leading a discussion on how best to help small businesses to grow.
Key questions for the discussion include:
Matthew, Can I have the link to your blog?
Hi Miebi - I think this is the link Matthew is referring to: http://smefinanceforum.org/322200/blog
Thank you Zahid
18 hours late, here is my take. A business model should already up and running and to a certain extent profitable before committing or involving a community. Too much risk in starting up an SME when a community has a lot of adjustments to make, e.g. values formation, capacity building, objectives setting, etc. The probability to success and sustainability is increased if less time is spent in experimenting with a business model. Governments and private investors must recognize the need for hand holding until the program can run profitably. I have seen a program or two collapse due to the "plug and play" manner of implementation. As I posted many moons ago, SMEs need all the incentives and tax breaks from government until the business is highly profitable. Private investors need to make time to professionalize the SME. Latly for private companies, value chain partnering is the way to go.