Mapping and Analyzing Actors in the Space of Small and Growing Businesses
Anybody working towards market-based approaches to poverty reduction has at least tangentially experienced the challenges of securing access to finance for small and growing businesses (SGB) or complementary services (does the phrase “missing middle” ring a bell?). But aside from troubleshooting the specific challenges faced in one program or by one institution, little has been done to address this issue on a macro level to provide a path to clear methodology for sustained SGB support. The Aspen Network of Development Entrepreneurs (ANDE) has begun to tackle this issue by commissioning a report that maps activities of three camps of actors engaged in this space and suggests ways to improve the interrelationships of these actors and ultimately the efficiency and effectiveness of SGB support.
Estera Barbarasa of Harvard Kennedy School recently produced a report for ANDE that summarizes the environment of SGB financing through research and interviews with donor agencies and intermediary actors. The report, titled “Catalyzing Support for Small and Growing Businesses in Developing Countries: Mapping the Policies of International Development Donors & Investors,” considers the impact of multilateral development banks, bilateral donor agencies, and development finance institutions on SGB growth, ultimately concluding that multilateral development banks have the “most specialized and innovative SGB programs and are the leading funders for SGBs.” To reach this conclusion, the report clearly spells out the comparative advantages and limitations of the three camps of development actors considered for this study.
The ANDE report includes a deep dive into four development organizations: two multilateral development banks (Inernational Finance Corporation and Iner-American Development Bank), one bilateral agency (USAID), and one development finance institution (the Netherlands entrepreneurial development bank, FMO), as well as intelligence from interviews with representatives of OPIC, Donor Ccommittee for Enterprise Development, European Development Finance Institutions, and ANDE members TechnoServe, Marmanie and the Small Enterprise Assistance Funds (SEAF). The deep dives include a synopsis of the background, activities strategy and impact of each of the four actors reviewed. This SGB-framed insight is valuable to actors in this space and an interesting 30,000 foot overview of the scene.
The recommendations Barbarasa makes for ANDE are in the areas of advocacy, coordination, direct support, and monitoring and evaluation (M&E). Barbarasa suggests that ANDE harp the impact SGB growth has upon the economy, something that is still in question amongst the investor community (no doubt a surprise to those of you engaged in this industry). Specifically, Barbarasa points to a recent study by SEAF which demonstrates that every dollar invested in SGBs generates an additional $12 for the local economy. Jenny Evert, Program Manager of ANDE, offered her reaction to the report to NextBillion.
Kevin Keepper, NextBillion.net: ANDE has just been given a number of actionable recommendations. What is your reaction and how will you prioritize your next steps?
Jenny Everett, ANDE: We are pleased to see that most of the recommendations are on track with things we are already doing or have planned to do. In terms of priorities, first and foremost we will continue to advocate the case for SGBs. One way in which we will do this is with our Impact Report that we released for the first time this spring and will continue to produce annually. This is the first effort of its kind to track the overall impact of ANDE members, and the sector as a whole. We see it to be a powerful tool when trying to make the case for more support in this space.
NextBillion.net: How does this report fit in to ANDE’s strategy? And can we expect similar reports going forward? If so, do you have any topics in mind?
Jenny Everett: One of the five pillars for ANDE is around knowledge sharing and networking, so this type of work will always be part of our strategy. Will we always be the ones creating the knowledge? Sometimes yes, and sometimes no. What I mean by this, is while there may be times that we will commission new research, much of our value-add will be leveraging other reports and facilitating the sharing of this new information. That said, we are currently discussing a couple of new research initiatives, but they’re very much in the early stages.
My personal reaction to this report is that Barbarasa rightly identifies ANDE as being in a unique and important role in the conversation around SGBs and validates their already robust and still-growing position as a networking institution. ANDE has an ability and responsibility to leverage the effectiveness of members and grow the scale of this industry. By stepping back from the thick of the industry to see how actors such as multilaterals, bilaterals and DFIs fit into this equation, ANDE is taking an invaluable leadership role in this conversation that will ultimately boost the impact of actors in this space.