Basic Structures and Focus Points of Different Strategies: MSE Development or Poverty Alleviation?

What are the approaches to overcome poverty in the micro and small enterprise sector?
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This paper argues that to successfully promote micro and small enterprises (MSE), the promoters and donors should be able to make a strategic choice between the two primary objectives of MSE promotion:

  • Aim at MSE sector development through improved promotion strategies and instruments, with positive side effects on poverty alleviation;
  • Aim at broad scale poverty reduction through employment and income generation in the MSE sector.

For the MSE sector, the paper identifies:

  • Essential steps for its development;
  • Causes of poverty;
  • Factors responsible for the causes of poverty;
  • Approaches needed to overcome poverty.

Further, the paper suggests taking action at four levels in order to overcome poverty in the MSE sector:

  • At Meta level: The public’s values, customs, attitudes;
  • At Macro level: National policies and overall macro and regulatory framework;
  • At Meso level: Sector policies and strategies;
  • At Micro level: Owners and employees of MSEs, self-employed, commercial service providers.

Finally, the paper observes that MSEs can contribute to poverty alleviation if their environment is improved and more unemployed/ under-employed people are able to enter the MSE sector. The paper recommends that:

  • The adaptation of the enabling environment for MSEs should be done in negotiations with MSEs and authorities and service providers;
  • Donors should concentrate funding to a few countries and sectors.

About this Publication

By Schneider-Barthold, W.