Extracted 06OCT2011 from http://www.qfinance.com/business-strategy-best-practice/assessing-opportuniti...
by Montague Lord
- The density of micro, small, and medium-size enterprises (MSMEs) is a good indication of positive or negative changes that are occurring in an economy, as high and upper-middle-income countries have a greater proportion of these types of enterprises than do low-income countries.
- Value chains are widely considered to be the main engine for MSME growth in developing countries, because they can provide access to markets and technology, encourage business linkages, facilitate the upgrading of skills, and create links with international companies.
- Value chains should not, however, be viewed as a panacea for MSME development, as linkages to large companies are easily broken during periods of sluggish growth and market contractions, and, more generally, MSMEs are often unable to integrate into large-scale business relationships because they lack international standards, and quality controls.
- Business development service (BDS) centers have proven successful in upgrading MSMEs, and facilitating their entry into value chains. As such, they should become an integral part of the MSME development process; the challenge is to make BDS centers self-sustainable. A model that combines a cost-sharing facility (CSF) with a credit guarantee facility (CGF) can provide a means of ensuring that sustainability.