UNDP Partnerships with the Business Sector
DRAFT
Supporting SME
Entrepreneurship for
Sustainable Development
CATEGORIES OF UNDP SUPPORT TO SMEs
• Non-financial business development services:
Direct
support to
entrepreneurs
– Business centres
– Business incubators
Activities can be
carried out on a
national or regional
level, with separate
initiatives or an
integrated approach
– Supply chain initiatives supporting business linkages
• Microfinance
Enabling
actions
Catalyzing
investments
• Enabling actions to support healthy business environment –
creating enabling policy environment
GSB
initiative
• Catalyzing and driving integration of investments in SME local
country development
1
A FEW EXAMPLES OF UNDP SUPPORT TO SMEs
• Atyrau Business Advisory Centre in Kazakhstan
• Supply Chain Project in Mexico
• “Enterprise Africa”
• Angola Enterprise Programme
• “Job Opportunities in Business Support” Project in Bulgaria
• Network of Small Business Development Centres in Egypt
2
KAZAKHSTAN - BUSINESS ADVISORY CENTRE AND MICRO-CREDIT
PROGRAMME THROUGH CORPORATE PARTNERSHIP
Description of
initiative:
Atyrau Business Advisory Centre and Micro-credit Programme, providing
Results achieved:
business training and lines of credit to SMEs
Location:
Kazakhstan
• Hundreds of local
Partners UNDP*
ChevronTexaco
Citibank
• Project management • Financial support (more • Financial
Role
and administration
than $900k overall)
for SME development
project formulation and
monitoring
Participation in and
support of local events
(graduations etc)
• Tested project model • Active participation in
• Financial support
• Credibility,
•
relationships with local
governments, trusted
link to local community
Local government
• Location for
support ($125k
over 2nd and 3rd
phase)
incubator
Role for private
sector:
Benefits • Realization of UNDP • Government obligation
mandate to help
countries promote
sustainable human
development, and
alignment with
MDG1 (Eradicate
Extreme Poverty)
•
•
• Guarantee of reliable •
fulfilled
utilization of community
Reputation and brand
development budget
image enhanced
• Enhanced reputation
New vendors gained
• Long-term commercial
through enterprise
advantage – early
development programme positioning of brand
(38% of goods and services with local enterprises
now procured locally)
Increased
employment
opportunities
and higher
local living
standards
Expansion to include
pilot micro-credit
scheme
• UNDP gets support of local • Non-collateral peer
•
•
governor
4 national counsellors
recruited and trained
Services provided: seminars,
trainings and workshops as •
well as drop-in services
* UN Volunteers also involved
• Financial support
• Active role in
developing model
and monitoring
implementation
Key lessons
learned:
• Convergence of
Main phases and activities
Establishment of
business development
centre
firms counselled
• 280 business plans
created, 25% financed
• $2 million+ disbursed
in loans
• 530+ jobs created
• 1000+ on-going
credit clients (in 2002)
lending offered to young
adults and unemployed
(all graduates of centre’s
training seminar)
Involvement of Citibank
Business
incubator
Future
plans
• Provision of space
• Micro-credit
(and business
supplies) and
professional services
(secretary,
accountant, lawyer) to
start-ups
scheme to be
registered with
government as an
independent microcredit organisation
project goals and
partners’ interests is
key
• Long-term
perspective is critical
• Need to include
local government to
ensure support
• Centre should be
encouraged to
generate own income
3
MEXICO - DEVELOPMENT OF SUPPLIER CAPACITIES AND BUSINESS
LINKAGES
Description of
initiative:
“Mexico Supply Chain Project: Suppliers Training and Promotion of Chains” development of network of Supply Chain Consultants, to be followed with provision of
technical assistance to large enterprises with clusters of SME suppliers
Location:
Mexico
Partners* UNDP**
• Project currently
Private partners: Bimbo, Cementos Apasco, Canacintra (National entering actual rollFirestone, 3M, Corporacion Internacional del
Color, Cerveceria Cuauhtemoc Moctezuma
Role • Development of approach,
•
•
content and scope through
technical assistance since
1998
Financial sponsor
Monitoring of methodology,
quality control
Benefits
• Realization of UNDP mandate
to help countries promote
sustainable development and
alleviate poverty
• Testing of developed methodology
Association of
Manufacturers)
• Contribution to
with own groups of SME suppliers
promotion through local
network of associations
• Integrating SMEs into supply chain
• Productivity increases, improvements in
• Higher standards among
purchasing volumes, optimized delivery,
quality improvements, timely payments
• Gathering of
•
national and
international best
practices on how to
develop providers
(1998-2002)
•
Certification of
Development of
supplier development Supply Chain
Consultants
methodology
Development of
• Virtual training of •
methodology and testing
112 consultants from
in 6 large companies (see 22 different states of
above) and 34 SMEs
Mexico (July-Nov
(1998-2002)
2003)
Finalization of training
• Certification of
tools (CD-rom supplier
consultants –
development manual for
endorsed by
virtual training) (2003Canacintra, NAFIN,
2004)
Ministry of Economy
and UNDP
out phase
Role for private
sector:
• Development of
methodology
• Active
participation through
own business
linkages with SME
suppliers
SME suppliers benefiting
larger manufacturers
Main phases and activities
Assembly of best
practices
Results
achieved:
Second
phase
Pilot
Pilot
•
diagnosis
performed
in 112
SMEs
•
Practical application of
methodology – consultants
provide technical
assistance to 24 leading
enterprises along with their
respective SMEs, in total
more than 260 enterprises
will be covered
Phase planned to last 10
months beginning Feb 2004
* Ministry of Economy main financial sponsor
**NAFIN (Nacional Financiera, Mexico’s largest government-controlled development bank) as executing agency
Key lessons
learned:
• Variety of partners
needed to achieve
results (large
private companies,
entrepreneur
associations,
governmental
backing)
• Importance of
institutional support
4
“ENTERPRISE AFRICA” – REPLICATION OF PROVEN ENTERPRISE
DEVELOPMENT MODEL
Results achieved:
Description Pan-African not-for-profit consortium dedicated to establishing national programmes for
• Over 4300 entrepreneurs
of initiative: entrepreneurship and enterprise development in Africa; Builds on Empretec model: integrated benefited from EA skills
capacity-building programme promoting the creation of sustainable SME support structures to
development services
help promising entrepreneurs build innovative and internationally competitive SMEs
• 750+ enterprises
Location: 14 countries*
restructured and expanded
20+ donors (MNC, private
National counterparts
Partners UNDP
• 725+ business plans
foundations, business
• Take-over of model
Role • Installed the Empretec
associations, multilateral and
prepared and access to credit
• Requires excellent network of public and
model in 14 African
facilitated
bilateral donors)
private sector contacts, profound undercountries through the
• Financial sponsors
standing of SME constraints in given country • Accounting and financial
“Enterprise Africa” initiative
• Design of key policies,
• National Advisory Board set up to establish management systems
strategies, systems
developed for 250+ SMEs
policy and oversee implementation
Benefits
• Advisory Board role
• Innovative programmes/
• Realization of UNDP
• Improvements in general
• Enhanced job creation, income generation,
services introduced
mandate to help countries
private sector environment
promote sustainable human
development, and alignment
with MDG1 (Eradicate
Extreme Poverty)
• More reliable SME input
export development, skill levels of
population
Role for private sector:
suppliers
• Financial donors
• Expanded customer base for
• Involvement in Executive
goods and services
Placement Scheme
Direct support of entrepreneurs
• Design of key policies,
Future plans:
Follow-up
Main phases and activities
marketing strategy,
•
Roll-out
to
11
ETW
support
other countries
management systems
•
Two-week
•
Differs per country, but typical • Introduction of
Enterprise
Origins
Africa set-up
Entrepreneurship range of fee-based services
Key lessons learned:
new
Training
includes: diagnostic studies,
• Empretec model • Roll-out in
products/services • Ability to adapt programme
Workshop held
business plan preparation,
each country
(coordinated
: e.g. Corporate
to local conditions is critical
for
successful
business counselling and
follows
internationally by
Village Enterprise • Key success factors include:
applicants (local advisory services, industrial
UNCTAD) rolled out standard
model (COVE)
identification and selection of
entrepreneurs)
consultancy, accounting
process
successfully in 27
• Introduction of
local entrepreneurs with the
assistance, credit sourcing
• Programme
countries
Export RoundBuilding capacity within
highest potential for success;
• Regional programmes becomes fully
table Initiative
institutional context
establishing strategic
operational
instituted (other
• Introduction of
Transfer of
Capacity
partnerships to reinforce
and
examples: “Med
upstream policymethodology
strengthening
UNDP’s delivery capacity
sustainable in
2000”, IDB
related
services
• To ensure continuation of • Assistance in
given country
Partnership for
•
Promotion
of
• Key challenges/risks include
strengthening
training and follow-up
Central America and within 3-5
regional
long gestation period for
operations and
support, transfer of
years
Panama)
economic
service structure of
mobilizing resources, thus
methodology to local
integration
local institution
institution
delaying roll-out
5
* Botswana, Benin, Cameroun, Congo DRC, Ethiopia, Ghana, Mauritius, Mozambique, Namibia, Nigeria, Senegal, South Africa, Uganda, Zimbabwe
ANGOLA - PUBLIC-PRIVATE PARTNERSHIP: ANGOLA ENTERPRISE
FUND
Establishment of Angola Enterprise Fund as public-private partnership for promotion
of SME development in Angola and local capacity-building; key components:
business support centres, business incubators, microfinance and vocational training
Angola
Description of
initiative:
Location:
Partners
Role
UNDP*
ChevronTexaco
• Financial co-sponsor
• Financial sponsor – up to $5
•
•
•
Benefits
– target contribution
of $1 million
Project formulation
Project management/
coordination
Technical capacity
• Realization of UNDP
•
Government of Angola
• Co-governor of the AEF
million, with the intent to mobilize
additional funding from other
private donors towards initial
target of $10 million
Organizational capacity to
integrate expertise of international
public and private sector
organizations
•
• Reduction of high cost of
• Proven model allowing
mandate to help countries
promote sustainable human
development
Alignment with MDG1
(Eradicate Extreme Poverty)
– role in Management
Committee and Advisory
Panel
ChevronTexaco to fulfill mission
of its $50 million Angola
Partnership Initiative, helping
Angola with post-conflict
reconstruction
•
•
domestic production (reduced
dependency on imports)
Increased employment
opportunities
Higher incomes
Launch of pilot projects
18-month
review
Expansion
• Timing: 6-12 months
• Timing: 6 months (approx)
• Based on
• Hiring and training of project staff
• Launch of 4 pilot projects: 2 Business
availability of
• Selection of local institute to establish research
Centres, local NGO to pilot downscaling
resources,
•
•
unit to build SME sector knowledge base
Launch of national market studies to assess a)
capacity of vocational training providers and b)
demand for business development services
Negotiations to set up microfinance
development unit together with Banco Nacional
de Angola
2002, results not known
prior to review
• Targets for 18-month
review: functional research
unit, micro-finance unit in
Central bank, increase in
number of SMEs with
access to credit (from 8 to
20 thousand by June 2005),
1000 clients of vocational
courses, 1000 clients of 2
established Business
Centres, 200
microentrepreneurs taught
business skills by selected
NGO, support to 30
enterprises from 2
incubators
Role for private sector:
• Financial sponsor
• Organizational
Main phases and activities
Start-up
Results achieved:
• Project launched at end
•
•
business services to microentrepreneurs, and incubator to support
young graduate enterprises
Launch of vocational training pilots to
assess different delivery mechanisms
Launch of micro-finance pilots
replication and
increase of
successful pilot
projects
throughout
Angola
responsibility
Key lessons learned:
• Avoid duplication of effort
– risk if vast network of
NGOs, donors etc working
in given country
• Watch out for little
coordination of activities
and proliferation of
opportunity-driven activities
(as opposed to
strategically planned)
6
BULGARIA - BUSINESS ADVISORY CENTRE AND BUSINESS INCUBATORS
Description of “Job Opportunities through Business Support” (JOBS) - network of 24 Business
Centres, including 11 Business Incubators and 3 Business Information Centres,
initiative:
aimed at stimulation and creation of SMEs
Location:
Bulgaria
UNDP
Partners
Role
Benefits
Ministry of Labour and Social
Policy
• Financial donor
• Development and testing of concept
• Support in roll-out
• Financial donor* (96% of funding, total funding
• Realization of UNDP mandate to
• Enhanced economic development of regions
help countries promote
sustainable human development
•
close to $15 million)
Implementation responsibility
with high unemployment levels – strengthened
and developed local businesses
Main phases and activities
• Launched in Oct
•
2000
Based on previous
experience of
UNDP/ILO testing
different tools for
local SME
promotion in
remote
communities over
1995-2000,
resulting in set-up
of 5 Business
Centres
Geographic
expansion
Roll-out
Start-up
• Development of Business Incubators,
•
•
•
• May 2003
offering premises for rent at below-market •
rates, shared business services, start-up
and business planning support and training
Strategic focus on 6 priority sectors
•
(apparel and textile, wood processing and
furniture, handicrafts, herbs and spices,
tourism, alternative agriculture)
Set-up of IT Centres in each Business
Centre, providing internet access,
developing computer skills and supporting
e-commerce
Financial leasing scheme – for maximum
of $10,000, repayment period up to 36
months
Future
plans
Results achieved:
• Over 2000-2003, JOBS
has created approx.
8000 long-term jobs;
trained 7000+
entrepreneurs/
companies
• Financial leasing
scheme has disbursed
$1.5 million to almost
300 companies,
including 40% start-ups
Role for private
sector:
• Support of local
economic development
projects
• NBDN to offer
11 more Business
Centres, achieving
national coverage
Set-up of National
Business
•
Development Network
(NBDN) associating all
JOBS BIs and BCs –
exit strategy for JOBS
Project, support for
entrepreneurship
promotion policies
support for
private sector to
prepare for EU
accession
Planned
increased focus
on specific target
groups (e.g.
military officers
pending
separation)
* Other financial donors include governments of Norway, Belgium and the Municipality of Torrevieja-Spain
Key lessons
learned:
• Business Centre
model must be adapted
to local realities
• Self-sustainability
needs to be focused on
from the start, but will
take time to achieve
• Selection of priority
sectors enables focus
7
ROLES FOR [LARGE] COMPANIES IN SUPPORTING SMEs
Details
Role
• Financial sponsor
• Support for programme/project allowing company to fulfill CSR mission or
demonstrate commitment to the development of country in which it is
operating
• Programme/ project design
• Involvement in preparation of concept, for example development of
methodology
• Monitoring and execution
• Application of own resources and management attention to ensure
adequate implementation process
• Promotion/ convening
stakeholders
• Transfer of expertise to SMEs
• Support for initiative by bringing in other private companies – for example
•
•
to provide financial support or other resources
Support by leveraging existing media contacts
Support in awareness raising initiatives or participation in discussions with
policy makers
• Dedication of resources to build skill and knowledge base of SMEs
through methods such as mentoring, coaching or training sessions – for
instance suppliers to ensure timely and high quality deliveries
• Access to finance/ credit
guarantees
• Integration of business
partners/ suppliers etc.
• Development of new
commercial business models/
Provider of new business ideas
• For example, providing guarantees to enable small suppliers to improve
performance by equipment purchase
• Development of linkages typically will start with non-core product and
service supplies, and transition to suppliers more critical to the company’s
core production processes
• Development of initiative which will support core business needs, for
example enabling access to new markets. Development of new
appropriate and affordable products and services for developing countries8
GOOD PRACTICE THAT GUIDE UNDP’S WORK IN SME SUPPORT
 To have impact, interventions must be of long enough duration (5-10 years) to establish
credibility and strategic partnerships with key policy makers and private sector leaders
 Make use of qualified local staff (provide training if necessary)
 Select counterpart organizations and local service providers in a transparent way
 Identify key champions in the public and private sectors to support, lead, drive
 Use an integrated approach for high impact (combine different services, including
non-financial an finance)
 Direct firm-level assistance is the quickest and best approach in conflict areas, or where
government is weak / ineffective
 Willingness of enterprise customers to pay fee for services is crucial for development of
appropriate services that help improve productivity
 Governments and donors are bureaucrats that do not understand commercial incentives well –
channeling enterprise assistance through purely public agencies normally does not work
(public-private cooperation is sometimes effective)
Successful projects broker commercial relationships between local service providers and
client enterprises
9