Some Asian Experiences with the Development of Small and Medium Enterprises and their Relevance for Africa

Lim, C.P. (1994). Some Asian Experiences with the Development of Small and Medium Enterprises and their Relevance for Africa. International Small Business Series (No. 20). Göttingen.

SME promotion has been extensive in several Asian countries. However, not all programmes have been successful, East Asian countries achieved better results than South and Southeast Asian countries. The differences in performance may be attributed to variations in four major elements of SME promotion: objectives, institutional framework, development programmes and policy environment. Referring to various Asian examples, Chee Peng Lim displays convincingly the numerous pitfalls for the creation of a conducive framework for SME promotion.

Conceding the differences in resources and conditions in Africa, the author tries to draw some universally applicable principles from the Asian experiences in SME promotion. First of all, a consistent set of objectives which does not pursue too many or even conflicting aims is of major importance. Successful SME development policies incorporate interrelated, focused and efficiency-enhancing targets. Second, the author stresses the need for a institutional framework which assigns the resources and expertise to a single agency and works closely with the private sector by SME associations. Third, having in mind the limited resources for promotion, development programmes should focus more on the enhancement of activities of an elite group of SME rather than on supply-side support of the whole universe of SMEs. Furthermore, SME development will have little progress unless situated within an overall enabling policy environment which encourages entrepreneurs to establish their own businesses. This task includes the review of tax policies, administrative procedures, tariffs and quotas as well as other regulations in order to create a competitive environment. Finally, African countries should benefit from an exchange of information and experience in SME development by a regional co-operation with other African countries to develop innovative approaches. (The abstract was contributed by Mr Roland Strohmeyer, research assistant at the Institute of Small Business, Goettingen).

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