Supporting Entrepreneurship in Developing Countries: Survey of the Field and Inventory of Initiatives

introduction

"It is increasingly recognised that effective and sustainable development assistance must be tailored to country circumstances and built upon a foundation of private sector investment and the participation of the nation's poor. Entrepreneurship support offers a new model for fighting poverty and ensuring economic growth in developing countries and it has come to the forefront of activities to bridge the digital divide and deliver development aid. From the G8 to the United Nations to a wide range of ground-level initiatives, many efforts are underway aimed at stimulating the growth of small, micro and medium-sized enterprises (SMMEs) to bring economic opportunity to those who need it most.

Small businesses are often the backbone of the private sector in the developing world, creating jobs and providing a tax base for local government, which provides revenue for things like improving basic infrastructure, schools, and hospitals. And frequently SMMEs offer the only employment available to millions of poor people throughout the world. But potential entrepreneurs and many existing companies in developing countries need help to execute on their ideas and build successful businesses. In a new twist on the old adage, it is not a question of whether to give a man a fish or teach him to fish: what is needed to make a real difference is "fishing schools".

A significant number of initiatives support entrepreneurship and foster the potential SMME sector in developing countries; however, the services provided and the geographic areas served vary widely. For example, Trickle Up helps small and micro businesses in 32 countries around the world with planning support and small seed funds, while Endeavor works in four South American countries to assist medium sized high-growth companies to connect with angel investors and finance institutions. And the Cape IT Initiative (CITI) is an example of a locally driven effort; it aims to foster the growth of an information and communications technology (ICT) sector in the Western Cape region of South Africa with its Bandwidth Barn business incubator.

There are also several high-level initiatives in planning that may result in considerable resources being devoted to entrepreneurship support during the year ahead. Following the G8 Digital Opportunity Task Force (DOT Force) report issued in May 2001 a public and private sector group was tasked with devising a concrete outcome under Action Point #4 which calls for G8 Governments to "foster enterprise and entrepreneurship for sustainable economic development", and that effort is soon coming to a conclusion.

The Enterprise Steering Committee of the World Economic Forum (WEF) has created the Enterprise Channelling Organisation (ECHO) as a new model for delivering development aid at ground level that offers support to entrepreneurs through donations of human and other resources instead of money, and it is currently being piloted in two countries. The Business Enterprise and Entrepreneurship Working Group (WG #6) of the UN ICT Task Force has a mission to "foster enterprise and entrepreneurship for sustainable economic development, including poverty alleviation with an emphasis on women and youth employment", and it offers hope as a forum where a number of leading efforts could come together under one umbrella. And the Global Digital Opportunity Initiative (GDOI) being driven by the Markle Foundation, UNDP and an illustrious steering group is also expected to weigh in on the matter.

This survey of the field and inventory of initiatives aims to spur thinking about facilitating SMME development by looking at the various kinds of entrepreneurship support initiatives (ESIs) that are available and what they provide. It is intended as a resource for connecting like-minded ground-level initiatives, so they can exchange information, learn from one another and avoid duplication of effort. It is also intended as a report to the various international planning efforts currently underway; to inform their deliberations about the value-added they can bring to this area.

This report starts with a brief overview considering why entrepreneurship is important in developing countries and the needs that ESIs seek to fill. The second section describes sixteen leading and/or representative initiatives that we have selected to illustrate the scope and variety of entrepreneurship support services available. The third section looks more broadly at the trends in the field of entrepreneurship support. Finally, two Annexes to this report list ESIs in developing countries, categorised by geographic area, level of support, and type of services provided."