Current Trends in Pro-Poor Small and Micro Enterprise Development

Core elements of innovative pro-poor strategies
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This paper is the final report of a workshop conducted on pro-poor oriented small enterprise development. It synthesizes the key issues and points out some topics specially related to micro and small enterprise development in the perspective of poverty alleviation.

The key issues that the paper presents include:

  • Income enhancement and employment of the marginalized is not the priority for SMEs. Therefore focusing on SMEs does not necessarily lead to competitive, effective economic structures for the poor;
  • Broad scale poverty reduction strategy strengthens the entrepreneurial and negotiation capacities of the poor. This may hinder effects on income and employment creation;
  • Subsidies are necessary for awareness creation, business development and market development, but not for production and operational costs.

The paper also presents the approach followed by USAID, DFID and other donor agencies. However, the core elements of their intervention strategies are:

  • Support to the marginalized must integrate the characteristics of family businesses since business activity is only one of several survival strategies of poor families;
  • Delivery should happen through a 'group approach' (client groups, clusters, networks) for facilitating the market development;
  • Though the marginalized do not have a coherent business strategy, yet they have to be considered as clients with a range of different business needs.

The paper concludes by highlighting the results from the panel discussions and summarizing the lessons learnt.

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