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