SMEs - are African governments doing it right
SMEs - are African governments doing it right
The question that must be considered is whether or not the desired outcomes are being achieved ie increased employment and poverty alleviation. I am beginning to believe that the reverse is true. Why?
Firstly they are creating large numbers of new businesses. However the new businesses are not establishing themselves because of increased demand. They are simply being shoehorned into the market. The nett result I believe is that they, together with the incumbent SMEs, are now having to share a pie that is not growing fast enough to accommodate the new entrants. The result is business failure for firstly the new SMEs and a while later the existing SMEs. The market is suffering from excess supply and in current times poor to no growth in demand. This is stimulating decreases in prices which in turn is exacerbating the situation.
I believe the current efforts are in fact counterproductive and we need to think counterintuitively. I believe we should be focusing on growing our bigger businesses so that we can develop our supporting industries (Porter)and also work at bringing in FDI so that we increase the base of large businesses in the country. This will stimulate demand for SMEs in supportive industries and lead to the creation of sustainable businesses and employment.
This requires urgent attention, because sustained efforts at SME creation without the underlying demand can only result in economic failure at the SME level with knock on effects at the large business level.
SMEs are African governments doing it right - To learn more about this author, visit Dr. Rob Smorfitt's Website.
Like this article? Share it with your friends
The current trend in many developing countries is to spend vast amounts of money increasing the the start up rate of SMEs. Many of these efforts are furthermore focused on providing start up finance.
The question that must be considered is whether or not the desired outcomes are being achieved ie increased employment and poverty alleviation. I am beginning to believe that the reverse is true. Why?
Firstly they are creating large numbers of new businesses. However the new businesses are not establishing themselves because of increased demand. They are simply being shoehorned into the market. The nett result I believe is that they, together with the incumbent SMEs, are now having to share a pie that is not growing fast enough to accommodate the new entrants. The result is business failure for firstly the new SMEs and a while later the existing SMEs. The market is suffering from excess supply and in current times poor to no growth in demand. This is stimulating decreases in prices which in turn is exacerbating the situation.
I believe the current efforts are in fact counterproductive and we need to think counterintuitively. I believe we should be focusing on growing our bigger businesses so that we can develop our supporting industries (Porter)and also work at bringing in FDI so that we increase the base of large businesses in the country. This will stimulate demand for SMEs in supportive industries and lead to the creation of sustainable businesses and employment.
This requires urgent attention, because sustained efforts at SME creation without the underlying demand can only result in economic failure at the SME level with knock on effects at the large business level.
SMEs are African governments doing it right - To learn more about this author, visit Dr. Rob Smorfitt's Website.
Like this article? Share it with your friends
| |||
 |
No article feedback found. | ||
|
Leave Your Feedback | ||
|
|||
 SMEs - surviving the recession in Africa
| |||
| How can SMEs survive the recession in the African context |
|||
|
SMEs in Africa - do interventions help SMEs
| |||
| A brief look at a few African interventions and their impact |
|||
|
5.5 Energy access as market failure: Enterprise solutions to poverty
| |||
| In sub-Saharan African countries as in other poor
regions, development of the SME sector in energy
and other segments is constrained by market failure. |
|||
|
Facts about SMEs in Africa
| |||
| Very few countries have working definitions of SMEs, except some members of UEMOA/WAEMU and Mauritius and
Morocco. So data on this is hard to compare, though patterns can be seen and countries can be ranked by exte... |
|||
|
Restricted Access to Finance
| |||
| Africa’s SMEs have little access to finance, which thus
hampers their emergence and eventual growth. Their
main sources of capital are their retained earnings and
informal savings and loan associations (tontines)... |
|||
| |||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 |
|
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
 |
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
 |
 | ||
 |
||
 |
||
 |
||
|
| ||
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 |
 Leadership Assessment Startegic Plan Creation English ACES Research Report Managing Growth |
|
 | ||
 |
Write The PR
Press Release Builder | |
 |
The Top 10 Guy Kawasaki Posts
Best Posts for Entrepreneurs | |
| ||
 |
|
|
|
|
|||||||||||||||||||||
|
|
|
||||||||||||
