By Prof. Dr.
Khawaja Amjad Saeed
April 08 - 14, 2002
Development and promotion of SMEs is the crying
need of today. There is an urgent requirement for planners and all
stakeholders to have a fresh look at the scope and spectrum of
services to be provided to SMEs. This will revitalize the economy of
various countries including developing countries. This piece looks at
the current world socio-economic systems, presents rationale for
services to be provided for SMEs, shares three categories of
experiences relating to services for SMEs in one selected corporate
sector, nine countries/areas and the World Bank and finally urges
South Asian Federation of Accountants (SAFA) to take the initiative of
embarking up a research in this area to develop a model for SAARC
World socio-economic system:
Despite various slogans struggling to drive the economies of the
world, poverty alleviation, if not elimination, continues as a serious
agenda. The public in the world is not happy with the obtaining
conditions. There is a search for high quality of life and equitable
distribution of wealth. Everyone is desirous of participation in the
socio-economic development in the world with sharing the fruits of
development in a fair and equitable manner.
Mike Moore, Director General of WTO, also expressed
his view about the failures of global institutions. An excerpt from
his speech is as under:
"The WTO seems to be coping the abuse for the
failures of every other institution in the world and for everything
that goes wrong".
[Source: The Financial
Times, October 11, 1999]
Box No. 1 summarises protests against globalization.
PROTESTS AGAINST GLOBALIZATION
Venue pf protest
40,000 rallied against the WTO.
At the World Economic Forum, a McDonald's
Washington DC, USA
A blockage delayed talks at the World Bank
A clash involving 12,000 at the World Bank
- IMF annual meeting.
Activists barricaded delegates to WEF
Disruption of a European Union Summit.
Davos - Zurich, Switzerland
The WEF was locked down, Zurich got trashed
Quebec City, Canada
At the Summit of the Americas, tear gas and
water cannons were used.
World Bank cancelled Conference; activists
held their own.
40,000 held a peaceful march. A core of
masked anarchists wielding cobblestones created bloody mayhem
at the EU Summit in the Swedish dry port.
15,000 police poured onto the streets -
armed with tear gas and water cannons. One was killed.
from TIME, July 23, 2001, PP 25-28.
In the foregoing background, there is a need to
strengthen frontiers of services to SMEs so that situation eases,
employment is generated, new era of prosperity for the teeming
millions may usher in.
Rationale for services to
SMEs: Under WTO influence, most countries are undergoing
reforms that are opening their economies to greater international
competition. SMEs need to be provided greater services to ensure
successful adaptation to this changing scenario. Larger firms have
capacity to absorb costs or quickly restructure their business
operations, while SMEs are not placed in such circumstances.
Consequently SMEs deserve special attention to receive services to
enable them to face the challenges and stay competitive. Besides SMEs
are labour intensive than larger firms. These have lower capital costs
and create jobs. They play a vital role in fostering income,
stability, growth and employment.
paper has been divided into the following parts:
PART I: CORPORATE SECTOR EXPERIENCE.
PART II: SELECTED COUNTRIES/AREAS EXPERIENCES.
PART III: WORLD BANK EXPERIENCE.
Corporate sector experience:
WESTBIC Services has a talent pool. It conducts training
programmes in an interactive manner. It shares experiences of
successful entrepreneurs. Its training programmes are industry
specific and also relating to various disciplines namely, marketing,
finance, business planning, etc. Provision of financial engineering
support and sourcing private and public enterprise capital, including
Irish BICS Seed Capital Fund Ltd.
Services are provided to an ISO 9002 Accredited
Standard and are delivered by a multi-in-house team, augmented by a
National and International Network and Talent Pool with a strong
private sector input. Scope of services include enterprise support and
technical support. Enterprise support covers start ups (a hand-holding
for innovative enterprises through the initial stages from concept to
commercialization and into early growth, focusing on product
development, marketing, human resources, IT and finance) and
established businesses which cover providing tailored support through
a multi skilled team and talent pool of experts to assist developing
businesses to reach targeted growth objective including new product
development, international markets and raising capital for expansion.
Technical support covers specialized support to public and private
organizations including project management or regional, national and
international basis, appraisal and evaluation of projects, feasibility
studies, R&D, business planning and monitoring and mentoring for
SMEs. Besides offering tailored business training and mentoring
programmes with support organizations, entrepreneurial skills
development programme is offered as per following components:
Box No. 2
- 1. PERSONAL DEVELOPMENT
- A) GOAL SETTING
- B) TIME MANAGEMENT
- C) TEAM BUILDING
- 2. BUSINESS DEVELOPMENT
- A) SETTING OUT THE CRITICAL PATH
- B) MANAGING THE PROCESS
- C) REDUCING RISK
- D) BUSINESS STRUCTURES
- 3. MARKETING PRINCIPLES
- 4. FINANCE
- A) CALCULATING START-UP NEEDS
- B) EVALUATING SOURCES OF CAPITAL
- C) MANAGING MONEY AND TAXATION
- 5. TECHNOLOGY AND QUALITY
- A) INTRODUCTION TO E-BUSINESS
- B) IT FOR START-UPS
- C) QUALITY STANDARDS
- 6. COMPLIANCE WITH CENTRAL AND LOCAL
- A) BUSINESS STRUCTURES
- B) TAXATION AND RETURNS
- C) ENVIRONMENT/HEALTH AND SAFETY
Source: Extracted from:
Selected countries/areas experiences
Experiences of service for SMEs are now shared in
respect of the following countries/areas:
On the net Director of Resources for Small, Medium,
and Micro Enterprises in the Americas is available. Information for
services in Guatemala, Nicaragua and Honduras for SMEs has been
provided. Types of organizations extending services to SMEs include,
NGOs, financial institutions, government agency and private business.
Services provided include developing activities relating to
production, industrial commercialization and Coffee exports, offering
financial solutions for progress, growth and strengthening of people
and businesses with emphasis towards the micro, small and medium
enterprises, integrating the informal sector entrepreneurs in the
economic and social development through collaboration with the public
sector, international organizations, NGOs and banks, promoting the
enterprise development of their affiliates, establishing systems to
elevate integrated productivity of different processes of production,
improving the development of the small and medium enterprises through
representation and the provision of management services, contributing
to the economic and social development of the country with emphasis on
incorporating the women in the nation's development, elevating the
income level of the entrepreneurs, generate jobs, improve the
productivity through administrative training, financial lending for
production of goods and services promoting social development in the
informal sector, support productive activities through financial
assistance and training, promoting, the economic and social
development in specific under developed area and providing key
services — lines of credit, management training, enterprise
consulting and others to those sectors of the population economically
active with lower income.
The E-Commerce BC. Net project was contracted by
the British Columbia Chamber of Commerce (BCCC) to derive from an
"Electronic Business Network" for its membership under the
credibility of the BC Chamber logo. Three core e-commerce services for
both BCCC members and other SMEs include: firstly, commerce-link, an
online, searchable membership database where members list their
businesses with descriptive information, company logo and contact
information, secondly, Commerce Mall, where the BCCC lays out benefits
and discounts and the new E-Market place where e-commercebc net
members can offer their goods and services with optional secure credit
card processes, thirdly, commerce-talk, a communication server in a
secure 128 bit environment with online conferencing capabilities for
members. Besides, the BCC Electronic Business Network Project also
offers news, business resource links and productivity tips as well as
in-house editorials produced by two columnists for SME-specific
topics. Moreover, there are continuous online surveys regarding BC's
business climate and economic outlook.
Traffic expanded by over 80% per month between
September 1998 and March 1999. This has been a leading e-commerce
initiative in Western Canada to build e-commerce SME awareness.
Iris Braun, Robert Hess, Alexandar Schill, Chair
for Computer network, Dresden University of Technology, Dresden,
Germany contributed a paper entitled "Teleworking Support for
Small and Medium-Sized Enterprises". The paper describes
scenarios and support facilities for teleworking in SMEs. It states
that solutions can be used in the fields of all businesses using
information and communication technology for performing working tasks.
The following sections will enjoy value-added services:
- A) COMPUTER ENGINEERING AND
- B) COMMERCIAL SERVICES FOR BUSINESSES.
- C) CONSULT-ENGINEERING, INDUSTRIAL DESIGN.
- D) GRAPHICAL DESIGN, PUBLISHING, MEDIA.
- E) FINANCIAL SERVICES - ACCOUNTING, DEBT
- F) ADMINISTRATIVE SUB-CONTRACTING.
- G) SHARED SECRETARIAL SERVICES,
Importance of SMEs in Japanese Economy can be seen
through the following figures:
Importance of SMEs in Japanese economy
Number of Enterprises
99.7% (5,089 thousand)
Number of persons engaged
72.7% (4.678 million)
42.5% (366.819 billion Yen)
Productivity Index (whole industry) - value
56.6% (153.15 billion Yen)
Value of Shipment in Manufacturing
51.6% (15.840 billion Yen)
Computed and downloaded on November 03, 2001 from http://www.chusho.metic.go.jp/english/basic/japanese_sme1.html
Recognising SMEs as source of vitality for Japanese
economy and realizing three basic problems facing SMEs namely,
capital, technical capability and ability to gather information, Japan
Small and Medium Enterprise Corporation (JASMEC) was established in
1980 by Japan Small Business Corporation Law. Its focus has been to
enable SMEs to adapt to recent rapid changes in business environment,
ensure continued management with a potential for growth and modernize
and improve structure of SMEs.
Broad based activities can essentially be divided
into five categories namely, guidance and training for upgrading
projects, personnel training at the Institute to Small Business
Management and Technology, information service, technical upgrading
and support for internationalization for SMEs, the Mutual Relief
System for Small-Scale Enterprises and the Mutual Relief System for
the prevention of Bankruptcies in SMEs, Besides, JASMEC provides the
following services for SMEs:
consultation services: Assisting in upgrading project by offering the
small business management diagnosis and in all phases from planning to
implementation of upgrading projects and by suggesting remedies for
advisors: Experts advise retailers and other small scale entrepreneurs
for facilitating their upgrading projects or helping to promote
revitalize local shopping districts.
c) Loan system:
JASMEC works with prefectural governments to provide special loans to
cooperative associations of SMEs formed for the purpose of business
upgrading, Funds are made available on very favourable terms to enable
them to acquire the necessary land, building, equipments, etc.
investment: It provides third-sector companies with the necessary
funds through capital investment for project that support SMEs in
their efforts, make structural improvement or adapt to environmental
change e.g. establishing the foundation for the creation of regional
e) Support for
creative SMEs: It fosters the development of 'Creative SMEs' which are
thrilled with entrepreneurial spirit and are engaged in creatives e.g.
development of new products and services, As an institutional measure
'Venture Plaza' is sponsored. It is place where creative SMEs can meet
investors to finalize the deals e.g. providing support for direct
financing. There are nine training institutes located throughout
The following two institutions provide lot of
services to SMEs:
a) Hong Kong
chamber of small and medium business: It is a non-profit private
organization which represents and protects the interests of SMEs. Site
includes its profile, activities, member directory, etc.
b) Hong Kong
Small and Medium Enterprise Association: This is the voice of many
SMEs in Hong Kong. Sites includes its news, events calendar, a
directory of member companies and products, plus industry information.
SME Net made its debut in April 1997 and was
collaboratively developed, managed and operated by CMA and Hong Kong
productivity Council. SME Net of the Chinese Manufacturers'
Association of Hong Kong (CMA) is primarily aimed to provide necessary
business information and related services to facilitate smooth daily
operations and promising business development of industrial and
commercial enterprises particularly SMEs, both in Hong Kong and
The SMEs development in South Korea has been
triggered by a guiding principle i.e. in order to make Korea "a
good Country in which to do business, it is necessary to change old
business norms and practices to confirm to international standards and
to remove unnecessary controls and regulations".
The Women-owned Business Promotion Act has been
drafted for legislation with the objective of giving priority to women
proprietors in SME support programmes and of helping business women
start or improve their own businesses.
A monitoring system is in effect to collect
opinions and suggestions at SME job sites for reflection in policies
aimed at assisting SMEs which do not have sufficient computerization
and information capabilities. Conditions for obtaining loans are being
made easier and the scope of unsecured loans is being expanded for
SMEs in financial difficulty. Besides, due measures are taken to
relieve manpower shortage at SMEs and to expand the market for their
products by means of improving distribution systems and otherwise.
Services in this respect include financial assistance, credit
guarantees for SMEs, support for manpower development, support for
marketing, support for infomatization and improvement in distribution
Philippine Business Bank Inc. started its
operations on February 12, 1997 as TOTAL SAVINGS BANK. It primarily
targets business clients (SMEs and large companies) with strong
logistics, it is helping enterprises to succeed in their endeavours
through high quality, professional and responsive banking services at
par with global standards. Its focus is to build a broad economic base
by helping SMEs to succeed in their business and making banking
services accessible to them.
Services provided to SMEs after the 1997 Asian
a) Fund for
venture capital investment in SMEs toward management and financing
capability of SMEs.
Guarantee Schemes to encourage lending sufficient collateral.
c) The 8th
National Economic and Social Development establishment of industrial
estates and export pollution establishment of research industrial
reforms were introduced to complement reforms including revisions to
Acts of Parliament, encourage capital inflows, business developments
realization of pledged assets.
e) The World
Bank directed US $ 300 million for unemployed, expand training for the
unemployment insurance schemes.
Small business service launching and mission: Small
Business Service was launched in April 2000 in UK to provide single
organization in Government dedicated to helping small firms and
representing them within Government. Its mission is to build an
enterprise society in which small firms of all kinds thrive and
achieve their potential.
Help all small businesses realize their potential.
World Class business support services to enhance the performance of
small businesses with growth potential.
enterprise across society and particularly in under-represented and
d) It is
responsible for the network of Business Links which provide
information, advice and access to experts on all issues relating to
running ones own business.
national services to help small firms such as the Benchmarking
service, the Small Firms Loan Guarantee Scheme, the High Technology
Fund and Smart grants for technology transfer.
Statistical services: Small Business Service is an
agency within the Government and Champions small businesses. It sprung
into prominence by publishing headline statistics for the year 2000 in
respect of SMEs in U.K. Three principles guided the performance of the
above service. Firstly, quality assurance reviews were ensured.
Secondly, customer needs were carefully considered. Thirdly,
statistics in respect of SMEs were produced free from any political
Statistics were released
in respect of the following:
a) Sizes: Breakdown of number of businesses in UK relating
to small traders with no employees to 500 or more employees.
sectors: Contribution to employment and turnover of different sizes:
Data in respect of all industries with share of employment in various
industries such as agriculture & fishing, mining, utilities,
manufacturing, wholesale, retail, hotels, restaurants, transport,
finance, business services, education, health and other services. The
top six ranks included:
- I) AGRICULTURE & FISHING
- II) CONSTRUCTION
- III) EDUCATION
- IV) BUSINESS SERVICES
- V) HOTELS AND RESTAURANTS
- VI) WHOLESALE & RETAIL
A research based profile in respect of number of SMEs based on size
was also included. The size was defined to consider less than 50
employees belonging to small size, 50 to 249 employees classified as
medium size and 250 and above employees categorized as large size. The
total number of SMEs for 2000 was 3.7 million. Exact number was
3,722,610 with the following breakup:
Box No. 4
Number of SMEs
Self Employed (no employee)
1 - 49: Small
50 - 249: Medium
250 and above: Large
Employment: Total number of persons employed in SMEs was 22.14
million with the following breakup:
Box No. 5
Employment in SMEs
Turnover: Total turnover was £ 2.03 billion with the
Box No. 6
Turnover of SMEs
UNITED STATES OF AMERICA
On April 23, 2001, Alvaro Ramirez contributed
guidelines for good practice relating to business development services
for micro, small and medium scale enterprises. Four areas of services
were identified namely (i) improving the business environment through
institutional and regulatory strengthening (improve judicial system
and regulatory frameworks), (ii) providing business development
services through strengthening competitive advantage of SMEs (improve
quality of offered services, productive chains improvement, training
and technical assistance, (iii) financial services (instruments that
improve access to long term financing and cost reductions for SMEs)
and (iv) Strategy Development (advising governments on political
topics, policy debates and national strategies for enterprise
THE WORLD BANK
The Small and Medium Enterprises Department is a
joint operational group of the World Bank and IFC. It delivers
business solutions that create better business opportunities for SMEs
throughout the world. The above Department can extend service in
expanding access to capital for SMEs, in building capacity (specially
locally-based institutions that support SMEs), in improving access to
information and technology to SMEs and in improving the business
enabling environment. Project facilities which exist for offering
regional facilities to help entrepreneurs promote and set up viable
SMEs, addressing the needs for capacity building, information and
technology, access to capital and strengthening of the business
are available to assist entrepreneurs in developing business proposals
and in raising financing for projects. The programmes catalyse funds
from local and foreign banks, private investors and investment funds.
Complimentary financing mechanisms are also available for seed capital
For Africa, South Pacific, Mekong and South East
Europe institutional support is available with the following:
Project Development Facility Offices (APDF)
Offices exist in Cameroon, Cote d'lvore, Ghana,
Kenya, South Africa and Zimbabwe.
Management Services Company (AMSCO)
Offices exist in Ghana, Kenya and Zimbabwe. It
assists African Companies to become more competitive by seconding
managers and training services. SMEs are typical clients which look
for professional management and capacity building.
Support Services for Africa (ESSA)
Its office exists in Ghana. It also caters to South
Pacific covering Fiji, Kirbati, Marshall Islands, Federated States of
Micronesia, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga and
Vanuatu. Offices exist in Australia and Papa New Guinea for the above
support. It assists SMEs in developing their potential for achieving
success by helping businessmen and women to better manage their
businesses by providing managerial and technical assistance.
4. For Mekong
(Vietnam, Cambodia and LoaPDR) offices exist in the above countries.
5. Offices also
exist for South Europe in Albania, Bosnia and Herzegovina, Kosovo, FYR
Macedonia. Institutional support is available through South East
Europe Enterprise Development (SEED).
Through a logistical support, IFC, through its SME
Department, offers the facility of providing funding for innovative
approaches to strengthening small businesses throughout the developing
world. The above Department brings together advice, programmes,
policies and best practice standards through strategic partnerships
with other organizations involved in SME support.
The World Bank has set up Consultative Group to
Assist the Poorest (CGAP). This is a consortium of 27 bilateral and
multilateral donor agencies which support micro finance. Its mission
is to improve the capacity of micro finance institutions to deliver
flexible, high quality services to the very poor on a sustainable
basis. Technical assistance and strategic advice is provided by
developing and disseminating technical guides and services by
delivering training and by performing field research on innovations.
The CGAP Secretariat which is housed in the World Bank is responsible
for implementing the group's mandate.
John A. Daly prepared a Draft entitled
"Improving Technology Performance in SMEs" for World Bank in
1997. This identifies nine topics as a set of facets through which one
can examine the issues of technological improvements in SMEs. These
include the following:
The basis for action: Interventions to strengthen
technological performance on SMEs are based on theory and on a body of
evidence. How adequate is the evidence on which to base programmes?
The policy framework: What host country
macro-policies are conducive to or antithetical to good SME
technological performance? What is the minimum level of policy support
needed to justify donor intervention? What policy advice should be
suggested to the host governments?
Strengthening technology services and technology
information services: What interventions to strengthen these service
organizations (specifically to improve SME technological performance
in host countries) should be considered?
Financial, educational and infrastructure services
to improve SME technology performance: A set of institutions are
identified which provide financial services, human resource
development services, and sites and services to SMEs for the purpose
of improving their technological performance. This article should
focus on the lessons learned in the previous programmes with such
Strengthening markets and associations in order to
improve SME technology performance
New and emerging technologies and industries:
Strengthening SME performance in "critical" technologies,
specially in the areas of information and communications technology,
electronics, biotechnology, and new and emerging materials
technologies is important in developing new industries and assuring
that the benefits of these technologies will be available in existing
ENHANCING CLEAN TECHNOLOGY
PERFORMANCE BY SMES
This topic includes the development of industries
in the region to supply the needs for environmentally friendly
technologies of SMEs, and the improvement of technology performance in
terms of environmental impact of the overall SME community in the
Assuring that women and disadvantaged groups
participate: How programmes to enhance technological performance in
SMEs be most equitable, given historical difficulties faced by women
and other groups in equitable access to technology.
SME technology approaches for middle versus low
income countries: How should donors differentially address technology
in SMEs in countries according to income level?
Based on one corporate experience, nine
countries/areas experiences and the World Bank experience in respect
of services to SMEs, it would be appropriate for SAARC Countries to
initiate a research by SAFA to develop a suggested model highlighting
model services to be provided in the above region. Every SAARC country
has many services for SMEs which at present are being rendered.
Institutional arrangements also exist. However a revitalized model
could possibly be developed as a result of initiative to be unleashed
by SAFA. The earlier this is done the better. New vistas of prosperity
will be identified. A high quality of life will emerge for the