Like it? PLEASE +1 it! Thanks! Evan Signature
Evan Carmichael Top Header about About

SMEs - are African governments doing it right



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.


Related Articles

  SMEs - surviving the recession in Africa
  5.5 Energy access as market failure: Enterprise solutions to poverty
  SMEs in Africa - do interventions help SMEs
  Facts about SMEs in Africa
  Restricted Access to Finance
  SMEs - my PhD topic and African context
  What can business and governments do to promote SMEs?
  SMEs - SMEs and labour rigidity
  Helping SMEs meet the requirements of formal financing - Increasing SME Access to Finance: A Four Pronged Approach
  SMEs - African confusion with entrepreneurship
  18.0 Conclusion: Entrepreneurs and entrepreneurship in Africa
  Expanding the supply of finance through the non-financial private sector - Increasing SME Access to Finance: A Four Pronged Approach
  SMEs oil prices globalisation and SMEs
  Improving business conditions - Increasing SME Access to Finance: A Four Pronged Approach
  SMEs SMEs struggling in South Africa. Why?
  SMEs - opportunities in Africa
  A New Framework of Economic Development in African Countries PART III Access to Finance for SMEs
  SMEs - a challenge for African countries
  SME's - why business from government is a challenge
  Leverage Subject Matter Experts

Home > African-Accounts > Dr. Rob Smorfitt > SMEs are African governments doing it right >

PDF
Free PDF Download
SMEs and entrepreneurs in Africa
By Dr. Rob Smorfitt

About the Author: Dr. Rob Smorfitt

RSS for Dr. Rob's articles - Visit Dr. Rob's website
Have an MBA and a PhD in entrepreneurship. Three key areas of ongoing research are entrepreneurship and innovation in large business strategy, the impact of legislation on SME development and SME finance. Run my own SME blog at http://sme-smb-smme.blogspot.com as well as an entrepreneurship and innovation for large businesses blog at http://innoveur.blogspot.com. I have been self-employed since 1982. I have started or purchased in excess of 50 businesses since then. Most were sold again and a few were shut down because of a lack of profitability. Many were run by staff or family while I worked full time in my bigger businesses. Author of 6 books. Written articles for various magazines, newspapers and websites. Experienced in research within developing countries.
Click here to visit Dr. Rob's website.
Dashed Line

More from Dr. Rob Smorfitt
SMEs African confusion with entrepreneurship
SMEs Does colonialism impact on entrepreneurialism
SMEs the importance of communications for SMEs in Africa
SMEs my PhD topic and African context
SMEs entrepreneurs with no skills

Related Forum Posts

Re: In-House or Outsource? Re: In-House or Outsource?
Re: Will North America make carbon taxes anytime soon? Re: Will North America make carbon taxes anytime soon?
What do you do to give back? What do you do to give back?
Re: How will an african make money truely on the net? Re: How will an african make money truely on the net?
Re: How will an african make money truely on the net? Re: How will an african make money truely on the net?

Share this article. Fund someone's dream.

Share this post and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
Share for a Cause
Featured Article

Worksheets
By: Evan Carmichael

8 Powerful Steps to Finding Your Passion

Create your own Mastermind Group

Does your pitch suck?

Do you have what it takes to be an entrepreneur?

Guide to closing bigger deals

Like this page? PLEASE +1 it! Evan Signature

 

Name:
Email:
Subscriber Counter
  Supporters: Thank you Sharon Galor of Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs! 
Connect with Evan google plus facebook Twitter YouTube Contact