Food & Business Knowledge PlatformSmall and medium enterprises - Food & Business Knowledge Platform

Drivers of household food availability in sub-Saharan Africa based on big data from small farms

Nynke — Mon, 15 Feb 2016 15:24:13 +0000

The analysis in this article (PDF) in PNAS uncovers the drivers for the variation in household food availability in sub-Saharan Africa. It suggest that targeting poverty through improving market access and off-farm opportunities is a better strategy to increase food security than focusing on agricultural production and closing the yield gaps. The analysis builds on data from 93 sites in 17 countries in sub-Saharan Africa, across contrasting agro-ecologies and calculated a simple indicator of food availability. The authors found that crop production was the major source of energy, contributing 60% of food availability. The off-farm income contribution to food availability ranged from 12% for households without enough food available (18% of the total sample) to 27% for the 58% of households with sufficient food available. Using only three explanatory variables (household size, number of livestock, and land area), the authors could predict correctly the agricultural determined status of food availability for 72% of the households, but the relationships were strongly influenced by the degree of market access. The authors state that their findings call for multi-sectoral policy harmonization, incentives, and diversification of employment sources rather than a singular focus on agricultural development. Recognizing and understanding diversity among smallholder farm households in sub-Saharan Africa is key for the design of policies that aim to improve food security.

Strengthening the first mile: Enabling small and medium agribusinesses to unlock development in East Africa

Babs — Tue, 08 Dec 2015 14:53:56 +0000

This report (PDF) by Farm Africa, highlights how support to small and medium agriculture businesses is key to driving rural economic development in East Africa. These ‘first mile’ businesses play a vital role in connecting small-scale farming to wider markets by buying their produce or supplying goods to them. However, the first mile market is failing due to a lack of appropriate financial products for agricultural small and medium-sized enterprises (SMEs). Without the finance they need to invest, professionalise or develop, the growth of agricultural SMEs is being stifled, as is the productivity and profitability of smallholders who depend on their services. Agricultural SMEs are being held back by a ‘missing middle’ of suitable financial products. This report maps the various financial instruments that should be provided for agricultural SMEs’ needs, enabling them to grow.

Integrating SMEs into Global Value Chains: challenges and policy actions in Asia

Babs — Tue, 24 Nov 2015 13:41:11 +0000

This study (PDF) by the Asian Development Bank and the Asian Development Bank Institute examines ways of encouraging SME participation in value chains, and explores policy solutions to address the financial and nonfinancial barriers faced by SMEs in global value chains. The authors highlight that two main factors require attention: 1) enterprise competitiveness and 2) enterprise connectivity. A survey of enterprises in four countries (Kazakhstan, Papua New Guinea, the Philippines, and Sri Lanka) was carried out as part of this study project (Chapter 2 and Chapter 3). Enterprises were asked to indicate the five most critical success factors for integrating into value chains. Their responses focused on both competitiveness and connectivity. Enterprises felt that the quality of their products or services was the most critical success factor. The second factor for success in value chains was skilled labor, a key ingredient for product quality and crucial to achieving high productivity and efficiency. The third factor nominated was strength of customer relations. The fourth most critical factor was specified as the ambition of the owner. The fifth factor was the education, experience, and international exposure of the owner. Besides these nonfinancial issues, access to finance is also a key success factor for SMEs to participate in global value chains. Public policies that can support SMEs should closely link to the dual objectives of enterprise competitiveness and connectivity.

Inclusive global value chains : policy options in trade and complementary areas for GVC integration by small and medium enterprises and low-income developing countries

Babs — Thu, 29 Oct 2015 13:29:07 +0000

This report (PDF) from the OECD and the World Bank focuses on making global value chains (GVCs) more inclusive. This is achieved by overcoming participation constraints for Small and Medium Enterprises (SMEs) and facilitation access for Low Income Developing Countries (LIDCs).The two major points of this report are 1) participation in GVCs is heterogeneous and uneven, across and within countries and 2) available data and survey-based evidence suggest that SME participation in GVCs is mostly taking place through indirect contribution to exports, rather than through exporting directly. The report makes the case that policy action, at the national and multilateral level, can make a difference in achieving more inclusive GVCs through: a holistic approach to reform spanning trade, investment and domestic policies; and, investment in expanding the statistical basis and analysis of GVCs and in sharing knowledge on best practices on enabling policies and programs.

SME Internationalization through global value chains and free trade agreements: Malaysian evidence

Babs — Thu, 18 Jun 2015 13:45:24 +0000

This paper (PDF) by the Asian Development Bank Institute examines the characteristics of SMEs in in global value chains (GVCs) and free trade agreements (FTAs) and explores the policy implications. It finds that among SMEs, firm size matters for participation in GVCs and FTAs. But size is not the whole story for SME internationalization. Licensing of foreign technology and investment in research and development are also positively associated with SMEs joining GVCs. Furthermore, increased exposure to international trade, knowledge of FTA provisions and central location positively affects the use of FTAs by SMEs. More business support for SMEs can help them to engage in GVCs and FTAs. For more information, this study by APEC suggests some policy principles and best practices to increase the chances for SMEs to play an important role in GVCs.

Agribusiness SMEs in Malawi: assessment of small and medium enterprises in the agriculture sector and improved access to finance in Malawi

Babs — Tue, 19 May 2015 10:28:22 +0000

This report by USAID and ACDI/VOCA (PDF) presents an assessment of agri-business small and medium enterprises (ASMEs) in Malawi. It was found that this is a sector with diversified business ownership, in which owners commonly operate multiple businesses and can be classed as ‘portfolio’ owner-managers spanning both agri-business and non-agri-businesses. A portfolio enables them to move resources to address cashflow shortages and seasonality in each business, manage uncontrollable downside risks by moving resources from businesses affected by such a risk, and manage growth opportunities by investing in businesses that are making most progress. A key implication is that it is difficult for public sector and donors to invest in specific value chains, as owners move resources within a portfolio of businesses that span more than one value chain and may include non-agri-businesses. The analysis is particularly focused on ASME access to finance, use of business development services, use of information and communication technology, collaborating and clustering and the enabling environment. For Malawian ASMEs, the way forward depends on tailored, common sense approaches that are key to increasing their competitiveness.

Small and medium enterprises in agriculture value chain: opportunities and recommendations

Babs — Thu, 14 May 2015 12:48:55 +0000

This report by Shujog, commissioned by Oxfam, analyses the effectiveness of development programs in addressing challenges faced by Small and Medium Enterprises (SMEs) in the agriculture sector in Asia. The purpose of this report is to inform the decision-making of development programs that aim to catalyze the growth of Social Enterprises (SEs) in agriculture and attract impact investment capital to fuel the growth of the food and agriculture sector in Asia. Access to timely, affordable, and appropriate type of finance, and consistent access to stable and high-value markets remain the most daunting challenges faced by SMEs in agriculture. It was found that most of the development interventions targeting these challenges were relevant and effective when they were tailored for the specific geography and market conditions they targeted. Social Enterprises in agriculture face unique challenges in addition to those faced by SMEs in agriculture. Several recommendations are made for existing and new interventions for addressing these challenges.

Lessons learned from sustainable agricultural value chain financing in Zimbabwe

Babs — Thu, 23 Apr 2015 09:56:21 +0000

This case study highlights how SNV helped create an enabling ecosystem for small and medium enterprises (SMEs) through access to finance and business development services. SNV, with support from Hivos and other partners, established the Zimbabwe Agricultural Development Trust (ZADT) in the pursuit of their common objective of providing sustainable financial support to value chain actors. SNV also provided capacity development services to the banks to enable them provide development-friendly and sustainable financial products targeted at agricultural value chain actors. Despite some limiting factors, banks were able to generate business by developing the previously neglected segments such as agro dealers. Also, companies were able to do business with increased number of SMEs. Due to the success of this programme, SNV has handed over the Secretariat and is no longer playing a prominent role in the Zimbabwe Agricultural Development Trust.

Small and growing: entrepreneurship in African agriculture

Ine — Thu, 02 Apr 2015 16:03:32 +0000

This report (PDF) from the Montpellier Panel argues that investment in rural and food sector entrepreneurship, particularly amongst Africa’s growing youth population, can do more than achieve sustainable food and nutrition security for the continent: it can create jobs, wealth and robust livelihoods. The report’s recommendations include: (i) the establishment of programmes in order to support the development of rural and food sector enterprises (RFSEs), (ii) making microfinance and credit more accessible to higher-risk groups such as women and (iii) the development of financial products for those SMEs who grow beyond microfinance.

Sustainable matchmaking between SMEs: in emerging economies and the Netherlands

Ine — Tue, 03 Mar 2015 16:19:42 +0000

Sustainable Match is an initiative of six complementary Dutch parties (Agri-ProFocus, BBO, MVO Nederland, Oxfam Novib, PeopleConnector, ProPortion) that has been executed between 2012 and 2013 on innovating trade and investment missions in anticipation of the new policy for international cooperation of the Dutch Ministry of Foreign Affairs (PDF). By means of two pilots in Uganda and Bangladesh, an innovative approach for sustainable “matchmaking” was developed. Their publication (PDF) highlights lessons learned in sustainable matchmaking between small and medium enterprises in emerging economies and the Netherlands. An important lesson learned is that local knowledge and presence and cooperation with local partners are essential to match entrepreneurs in sustainable and inclusive international business partnerships.

Non-farm entrepreneurship in rural Africa: patterns and determinants

Ine — Tue, 03 Mar 2015 16:17:21 +0000

This paper (PDF) published by Dare provides an empirical description of the patterns and determinants of non-farm entrepreneurship in rural Africa, using the World Bank’s unique LSMSISA dataset on six countries: Ethiopia, Niger, Nigeria, Malawi, Tanzania and Uganda. The research finds that non-farm entrepreneurship predominantly creates informal jobs and mostly for family members; that these jobs tend to be transient and influenced by seasonality in agriculture; and that there is substantial heterogeneity across countries in the determinants of rural non-farm entrepreneurship. The researchers conclude that Africa’s non-farm economy continues to fulfil mainly a risk-diversifying role and has therefore a limited impact on poverty and growth.