Cover Image
close this bookJobs for Africa - Towards a Programme of Action - Report of the ILO/UNDP Programme on Employment Generation and Poverty Reduction (ILO - UNDP, 1997, 107 p.)
close this folderChapter 2: Technical assistance for the generation of employment and reduction of poverty
close this folder2.2 Technical Assistance at the National Level
close this folder2.2.2 Small and medium enterprise development
View the documenti. Local Economic Development and Employment creation through Micro and Small Enterprise Promotion
View the documentii. Access to Financial Services
View the documentiii. Support to the development of the Informal economy

i. Local Economic Development and Employment creation through Micro and Small Enterprise Promotion

In Africa, unemployment, under-employment, international competition and failed development initiatives have heightened the importance of entrepreneurship and small enterprise development. Decentralised decision making has increased the need for endogenous development, “controlled development from within” which focuses on local resources, institutions and economic activities. Controlled development from within increases the importance of small firms as generators of employment. Thus small enterprises, local communities and their surrounding regions are key units of development and job creation.

Local Economic Development (LED) Approach

Taking into consideration the full advantage of existing assets and the potential for economic development potential in a given area, the promotion of SME constitutes a means of generating employment. This, however, has to be done in a balanced and comprehensive way, following the logic of the market and according to common guidelines and recommendations for local and regional development.

The main elements of the LED Methodology are:

· consensus building;
· bottom-up approach;
· human and institutional capacity building;
· search for synergy and catalyst effects;
· globalisation of the local level; and
· public awareness raising.

True to the LED methodology, 'Consensus Building' has to be done through an active participation of the relevant socio-economic and political actors at the local level. This means that a process which unites and creates collaborative linkages amongst local actors across political and cultural differences has to be created, ensuring a constructive exchange of ideas and opinions aiming at designing policies for sustainable development of the project area.

The 'bottom-up' approach mobilises to the utmost the local human potential making them part of and responsible for the local economic development process. As these activities are conceived as endogenous rather than exogenous processes, the sustainability of initiated project and programme activities is ensured.

Synergy and catalytic effects must be used in order to create trust and co-responsibility amongst the local actors the long-term goals of programmes. Therefore, it is of extreme importance to make sure that short-term, concrete and visible results (impacts) are achieved. Setting of 'good examples' contributes to raise the level of motivation and awareness of the target population. These examples though, must have such characteristics that they can be easily repeated.

'Globalisation of the Local Level' refers to the incorporation of the local experiences into a wider frame work of laws and regulations at the national level. The LED methodology wants to prevent the creation of isolated technical exercises which can not be repeated or united in overall strategic development policies.

In the context of the actual project 'Public Awareness Raising' will lead to the creation of a more appropriate entrepreneurial culture and a low-risk atmosphere. It is one of the most difficult aspects of the LED as it is dealing with the mentality of the people at all levels. It is exactly there that the major changes have to be established in order to guarantee sustainability of development. It is also at this point that the major obstacles and problems are to be found.

In order to attain the global sustainable development of the local economy, consensus and discussion are the main requirements among different local actors in the private and public sector, between the members of these sectors and at the local and national level. This consensus should lead to the provision of a supportive policy framework, the development of financial schemes to enable entrepreneurs to take up small enterprises and the provision of training to develop entrepreneurial and technical skills, which are considered necessary conditions to develop the local community.


The target group consists of representatives and decision makers of local public bodies responsible for local economic and social development, potential business starters, entrepreneurs of all branches (men and women) and business associations.

Small and medium enterprises are characterised by their flexibility which permits them to evolve even in small markets. Beginning with the regional market's potential by using their regional comparative advantage, the SMEs have the possibility to grow and expand their markets in the regions. Branches with high potential of development based on local resources, food processing, textile, repair and services offer good possibilities for growth. Tourism (in a broad sense) also offers a great opportunity of allowing the development of family-owned and managed enterprises that can provide income-generating work for many, including women and young people.

SME support and promotion through Business Promotion and Support Centres (BPSC)

An enabling political environment, the development of financial schemes to enable entrepreneurs to take up small enterprises and the provision of training to develop entrepreneurial (mentality) and technical skills are considered to be three basic conditions to guarantee a sustainable development of the local economy. In order to attain this, consensus and thus discussion are one of the main requirements; consensus and discussion among different local actors in the private and public sector, between the private and public sector and between the local and the national level.

In this context Business Promotion and Support Centres will be promoting and supporting SME's, with a view to maximizing employment growth and improving the standards of competitiveness of the SME's in the given area. This will be done by:

1. Promoting an entrepreneurial culture, where potential business men become aware of what is means to have a proper business, learn about the responsibilities, risks and possibilities. The lack of a market oriented 'Business Mentality' can partly be overcome by introducing very practically oriented training material, introducing the basics of entrepreneurship on a step-by-step basis. In the context of the Action Plan training material will be further developed and up-graded. The process to develop the practical oriented training material will be based on a constant dialogue with and feedback from the target group, the business starters. Apart from the development of new training material, and the introduction of participatory training activities, an effective monitoring and follow-up mechanism will have to be established in order to guarantee to the most the success of the business starters;

2. Providing locally-based comprehensive support to potential or actual small and medium entrepreneurs, introducing information, new management techniques, as well as new technologies. These services will facilitate guidance and assistance in formulating business ideas and selecting feasible business projects, implementing new enterprises or rehabilitating existing ones, following up and counselling on the entrepreneurs' operations with a view to consolidating their sustainability and assisting in the promotion and marketing of the product on an international level;

3. Mobilising opportunities and resources, setting up guidelines and procedures to facilitate access to credit and incentives for employment generation and training. As there are several special credit schemes for micro and small entrepreneurs in the pipeline with different international programmes and organisations, a special credit fund or financial mechanisms are foreseen in the context of this proposal;

4. Stimulating and supporting a 'dialogue' at the local level, between public and private sector aimed at promoting private entrepreneurship, in order to create a relation of confidence between the local public organisations and the private sector; and

5. Contributing to and facilitation of a more appropriate environment at the national level by creating Association of Development Agencies and Business Centres, through which the interests of the SME's will be regulated, protected and represented at the national - political - level.

The basic orientation of BPSC's activities will be towards the identification and implementation of profitable, efficient and organised entrepreneurial activities, that contribute to a local economic and employment development. It will support those activities or projects which associate best with the economic potential of the area, utilising endogenous resources, stimulating multiplier effects towards the local economy.

In other words, the main tasks of the BPSC's will be:

· orientation and motivation to stimulate local economic initiatives;
· assist in the preparation of business plans for private enterprises;
· intermediate in the provision of credit;
· support and strengthen already existing enterprises;
· stimulate product diversification;
· provide training and technical assistance; and
· maintain relations with national and international institutions for technical and/or financial support.

These tasks will have to be performed within a by-all parties agreed logical frame work for the development of the local economy. The BPSC's will operate as a catalyst in a discussion forum or as a Local Planning mechanism, operating as a canal, from the bottom up, for the interests of the local entrepreneurs (maximising the utilisation of local resources and potentials and aiming at the satisfaction of local economic needs, always on the basis of consensus).

The BPSC's will though only be capable of entering into a valuable partnership with national and international partners and can only contribute to the increasing problems of unemployment, underemployment, poverty and the deterioration of living and working standards, if they receive the appropriate technical and financial assistance in local capacity building. This means that assistance is required to up-grade and develop the institutional, human, managerial and financial capacities and skills at a local level which will lead to an “empowerment” of the local societies as a whole.