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Micro, Small, Medium Enterprise (MSME) Definitions
Jeff Bloem (Calvin College)
Partners Worldwide, Summer 2012 This study was completed and compiled by Jeff Bloem while interning for Partners Worldwide during the summer of 2012.
Explanation Note The majority of the ideas and thoughts presented here are from Tom Gibson (SMEthink) and H.J. van der Vaart (Small Enterprise Assistance Funds) in a paper entitled “Defining SMEs: A Less Imperfect Way of Defining Small and Medium Enterprises in Developing Countries” for the Brookings Institute: Global Economy and Development. (http://www.brookings.edu/research/papers/2008/09/development-‐gibson) Summarized and adapted for the use of Partners Worldwide by Jeff Bloem (Calvin College), Summer 2012 Creating and implementing a worldwide, multilateral definition of micro, small, and medium enterprises (MSME) quickly becomes very technical and challenging. Definitions vary between multilateral institutions like the World Bank and United Nations Development Program. Definitions also vary between countries, largely depending on geographic location and the size and scope of a nation’s economy. However it is important to come up with some sort of working definition that can be applied to all countries and regions of the world for several reasons. SMEs have been called the backbone of the global economy, with some definitions showing SMEs accounting for 95% of the world’s GDP. Developing countries are often economically defined by a “missing middle” or a lack of small and medium business to provide jobs, innovation, and wealth. Partners Worldwide is an organization that works to use business as mission to restore a world without poverty. So we as an organization should have some agreement about what defines an SME. There are three criteria that organizations and countries use to define an SME. These criteria are number of employees, total assets, and annual revenue. The challenge lies in the fact that organizations and countries use a variety of combinations and definitions of these criteria. (For more detailed information on the diversity of definitions of SME within the countries that Partners Worldwide operates see the “Expanded Document”. There you will find a summary of how each country defines SME and a detailed definition for each country.) Problems with the current criteria Using the number of employees employed by an enterprise to define SME raises a number of difficulties. Paramount among them is the false idea that more employees leads to economic growth. A more accurate assumption would be a possible effect of economic growth is more jobs. Closely related is the idea is that a simple measurement of the number of employees within an enterprise does not indicate the efficiency of the employees. Also, many countries around the world have taxes in place that actually create a disincentive for the hiring of more
employees by entrepreneurs. Entrepreneurs looking to expand their business will hire a new employee if and only if the employee can produce more than they cost. Lastly, each country on our earth rests in a different location on the labor -‐ capital spectrum. Some countries use more labor for production because labor is cheaper than capital. Likewise in some other countries capital is cheaper than labor. In general as technology advances and access increases an economy tends to lean more heavily on capital rather than labor. Therefore growth in a technological sense is defined by a decrease in employment. Measuring assets to categorize an enterprise creates more difficulties. Chief among these challenges is the reality that the definition of an asset is not universally understood. Next, inflation causes an unknown understatement of the true value of an asset. Also, SMEs often minimize the total amount of assets reported for tax reasons. Furthermore, a measurement of assets does not indicate and potentially overlooks the importance of capital efficiency. Finally, as the use of technology increases assets tend to naturally depreciate in value with little or no relationship to the economic growth of the enterprise. The annual revenue of an enterprise is perhaps our best bet for accurately measuring an SME. After overcoming potential difficulties of obtaining this information and adjusting for the size of a given country’s economy, annual revenue shows us perhaps the most accurate indicator of an SME. Furthermore this criterion also may show which small enterprises are likely to grow into a medium enterprise and which medium enterprises are likely to grow into a large enterprise. About the proposed formula The proposed formula for defining SME ignores number of employees and total assets as variables in the definition and focuses on the annual revenue of the enterprise in question. It also attempts to create a universal process of categorizing enterprises in any country in the world. This formula creates a range for SMEs to dwell in parity no matter where they are geographically located. As noted in the MSME Definitions Summery page my proposed definition for and SME and in turn microenterprise is as follows: An SME is an enterprise with annual revenues, in U.S. dollar terms, between 10 and 1000 times the mean per capita gross national income (GNI) of the country in which it operates. With this definition the GNI of a given country is multiplied by 10 and by 1000 and we are given our country specific range for the annual revenue of an SME. This formula gives us not only a more specific but also a country sensitive definition of SME. The beauty of this formula is it is specifically vague in nature. This allows for the diversity of the countries and regions Partners Worldwide serves to be an indicator rather than a hurdle in defining SMEs.
MSME Definitions Summary – By Country Original study completed by Khrystyna Kushnir, Companion Note for the MSME Country Indicators. The World Bank, 2010. Adapted for use by Partners Worldwide by Jeff Bloem (Calvin Colege), Summer 2012 Country # of
Employees Industry Assets/
Turnover/ Capital/ Investment
Definition distinguishes between micro, small and medium enterprises
Asia Cambodia x x X China* x x x Hong Kong x X India x x X Philippines x x X Caribbean Haiti Trinidad x x X East Africa Kenya x x X Uganda x x X Ethiopia x x x X Rwanda x X Tanzania x x x x Latin America Ecuador Honduras x x X Nicaragua x x X Bolivia X Guatemala Mexico x x X Southern Africa Malawi Mozambique x X South Africa** x x x X Swaziland Zambia Zimbabwe
North America United States*** x x x X Canada**** x x x X Eastern Europe Romania West Africa Cote d’Ivoire Ghana Liberia Nigeria x x X Sierra Leone * Definition distinguishes between small and medium enterprises only ** Definition distinguishes between micro, very small, small or medium enterprises. Some reports also distinguish the 'survivalist' business, which is generally defined as providing income only below the poverty line. "survivalist enterprises… involves activities by people unable to find a paid job or get into an economic sector of their choice, that is, people whose activities cannot be viewed as sustainable micro enterprises, even though many of them may eventually achieve such a position. *** To be considered an MSME an enterprise must be independently owned and operated, and not be dominant in its field of operation. **** Definitions by different agencies e.g. Canadian Bankers Association, Export Development Corporation and Industry Canada have different turnover limits. Crossed Out Country was not included in World Bank study. Country Breakdown
Cambodia Agency: Cambodia SME sub-‐committee. Legal definition: N/A Interpretation:
Source: Peter Baily, "CAMBODIAN SMALL AND MEDIUM SIZED:ENTERPRISES: CONSTRAINTS, POLICIES AND PROPOSALS FOR THEIR DEVELOPMENT," Economic Research Institute for ASEAN and East Asia, Research project No. 5, 2007, p. 6, http://www.eria.org/research/images/pdf/PDF%20No.5/No,5-‐1-‐Cambodian.pdf (accessed on July 21, 2010). China Agency: NDRC (National Development and Reform Commission).
Legal Definition: “Interim Categorizing Criteria on Small and Medium-‐sized Enterprises (SMEs), published in 2003 and based on the SME Promotion Law of China, sets the guidelines for classifying SMEs. Interpretation:
Source: LIU Xiangfeng, “SME Development in China: a Policy Perspective on SME Industrial Clustering,” Economic Research Institute for ASEAN and East Asia, Chapter 2, pp. 38-‐40, http://www.eria.org/research/images/pdf/PDF%20No.5/No,5-‐2-‐China.pdf (accessed on May 12, 2010).
Hong Kong Agency: The Government of the Hong Kong Special Administrative Region, China/Trade and Industry Department -‐ Support and Consultation Centre for SMEs. Legal Definition: N/A Interpretation: “Manufacturing enterprises with fewer than 100 employees and non-‐manufacturing enterprises with fewer than 50 employees are regarded as small and medium enterprises (SMEs) in Hong Kong.” Source:“ What are SMEs?” SMEs in HK, Useful Statistics, Market Information, Service & Facilities, The Government of the Hong Kong Special Administrative Region, China/Trade and Industry Department -‐ Support and Consultation Centre for SMEs, http://www.success.tid.gov.hk/english/lin_sup_org/gov_dep/service_detail_6863.html (accessed on June 21, 2010). India Agency: MINISTRY OF LAW AND JUSTICE (Legislative Department).
Legal Definition: Too long to include Interpretation: “In the Indian context, micro, small and medium enterprises as per the MSME Development Act, 2006 are defined based on their investment in plant and machinery (for manufacturing enterprise) and on equipments for enterprises providing or rendering services. According to the Micro, Small and Medium Enterprises (MSME) Development Act of 2006, (India) a micro enterprise is where the investment in plant and machinery does not exceed twenty five lakh rupees. A medium enterprise is where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees. A small enterprise is where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed five crore rupees. In the case of the enterprises engaged in providing or rendering of services, as (a) a micro enterprise is where the investment in equipment does not exceed ten lakh rupees. (b) a small enterprise is where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees. (c) a medium enterprise is where the investment in equipment is more than two crore rupees but does not exceed five crore rupees. According to the Ministry of Micro, Small and Medium Enterprises, recent ceilings on investment for enterprises to be classified as micro, small and medium enterprises are as follows:”
Source: The Micro, Small and Medium Enterprises Development Act, 2006, No. 27 OF 2006, PART II -‐ Section 1, The Gazette of India, No. 311 NEW DELHI, FRIDAY, JUNE 16, 2006/JYAISTHA 26, 1928, MINISTRY OF LAW AND JUSTICE, http://www.msme.gov.in/MSME_Development_Gazette.htm (accessed on May 14, 2010). Philippines Agency: Small and Medium Enterprise Development (SMED) Council.
Legal Definition: Small and Medium Enterprise Development (SMED) Council Resolution No. 01 Series of 2003 dated 16 January 2003. Interpretation: “MSMEs Defined Micro, small, and medium enterprises (MSMEs) are defined as any business activity/enterprise engaged in industry, agri-‐business/services, whether single proprietorship, cooperative, partnership, or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, must have value falling under the following categories: By Asset Size* Micro: Up to P3,000,000 Small: P3,000,001 -‐ P15,000,000 Medium: P15,000,001 -‐ P100,000,000 Large: above P100,000,000 Alternatively, MSMEs may also be categorized based on the number of employees: Micro: 1 -‐ 9 employees Small: 10 -‐-‐ 99 employees Medium: 100 -‐-‐ 199 employees Large: More than 200 employees”85 Source: “MSMEs Defined,” Department of Trade and Industry of Philippines, http://www.dti.gov.ph/dti/index.php?p=532 (accessed on May 25, 2010). Trinidad Agency: National Legislature.
Legal definition: Following the recommendations of the 1998 Task Force, the following definitions are adopted: 1. Micro enterprise – employs 1 to 5 persons, with less than $250,000 in assets and less than $250,000 in sales; 2. Small enterprise – employs 6 to 25 persons, with assets valued between $250,000 and $1,500,000 and sales between $250,000 and $5,000,000; 3. Medium-‐sized enterprise – employs 26 to 50 employees, with assets exceeding $1,500,000 but not exceeding $5,000,000 and sales amounting to $5,000,000 but less than $10,000,000. “102 102 “Enterprise Development Policy and Strategic Plan 2001 – 2005,”Ministry of Enterprise Development and Foreign Affairs, July 2001, p. 35, http://www.sice.oas.org/ctyindex/TTO/INDPolicy_e.pdf (accessed on June 19. 2010). Interpretation: N/A Source: “Enterprise Development Policy and Strategic Plan 2001 – 2005,”Ministry of Enterprise Development and Foreign Affairs, July 2001, p. 35, http://www.sice.oas.org/ctyindex/TTO/INDPolicy_e.pdf (accessed on June 19. 2010). Kenya Agency: National Legislature.
Legal Definition: MSME bill 2009. Interpretation: “In Kenya, the MSME bill 2009 has used 2 criteria to define SMEs in general: Number of people/employees and the company’s annual turnover. For enterprises in the manufacturing sector, the definition takes into account the investment in plant and machinery as well as the registered capital. This SME definition is therefore as follows:”
Source: “MARKET ACCESS FOR SMES THROUGH PRIVATE AND PUBLIC PROCUREMENT IN KENYA,” Kenya Association of Manufacturers, pp. 1-‐2, http://www.esabmonetwork.org/fileadmin/esabmo_uploads/Kenya_Position_Paper_on_SME_Market_Access_09.pdf (accessed on June 15, 2010). Uganda Agency: Uganda revenue Authority and Uganda Investment Authority.
Legal definition: N/A Interpretation: “Uganda defines and classifies SMEs into micro businesses with less than five employees and small business as having less than 100,000 pounds in turnover and capital, and the same applies to mid-‐sized businesses with less than 250 employees (Uganda revenue Authority; Uganda Investment Authority; Uganda’s Top 100 mid-‐sized companies survey, 2009)”1 “One of the key challenges of MSEPU was develop a working definition of MSMEs. Accordingly, the following definition was adopted: -‐ Micro enterprises are defined as business undertakings employing less than 5 people, often family members; value of assets excluding land, buildings and working capital is below Ush2,5 million; annual turn over is below Ush10 million, which is the threshold for business related tax. Qualitative characteristics of micro enterprises are that they operate seasonally, usually they are not registered formally and hence have no access to formal services. They do not pay enterprise-‐related taxes and their management is rather weak in terms of both education and administrative capabilities. -‐ Small enterprises on the other hand were defined as enterprises employing a maximum 50 people; the value of assets excluding land, buildings and working capital is less than Ush 50 million; annual turn over is between Ush10 –50 million which is the tax bracket for 1% business tax on annual turn over. Other qualitative characteristics of such enterprises are that they operate the whole year round, are formally registered and taxed and owners/managers are educated and/or trained.”2 Source 1: “BRAND EQUITY AND PERFORMANCE OF SMALL-‐MEDIUM SIZED ENTERPRISES (SMEs) IN UGANDA,” Enterprise Uganda, Whitman School of Management, Syracuse University, http://whitman.syr.edu/ABP/Conference/Papers/Brand%20Equity%20and%20Performance%20of%20SME%E2%80%99s%20in%20Uganda.pdf (accessed on June 16, 2010). Source 2: HENRY MBAGUTA, “GOVERNMENT OF UGANDA INITIATIVES FOR MSME POLICY DEVELOPMENT,” Enterprise Uganda, http://www.enterprise.co.ug/downloads/GOVERNMENT%20OF%20UGANDA%20INITIATIVES%20FOR%20MSME%20POLICY%20DEVELOPMENT.pdf (accessed on June 16, 2010). Ethiopia Agency: Central Statistical Agency.
Legal definition: N/A Interpretation: “Manufacturing establishments are divided into three major groups. These are: a) Large and Medium Scale Manufacturing Establishments, engaging 10 or more persons and using power -‐driven machinery. b) Small Scale Manufacturing Establishments engaging less than 10 persons and use power -‐driven machinery. c) Cottage/Handicraft Manufacturing Establishments performing their activities by hand (i.e., using non -‐power driven machinery).”1 Agency: Ministry of Trade and Industry. Legal definition: N/A Interpretation: “1.1.10.1 Micro Enterprises2 are those small business enterprises with a paid-‐up capital of not exceeding birr 20,000, and excluding high tech. consultancy firms and other high tech. establishments. 1.1.10.2 Small Enterprises are those business enterprises with a paid-‐up capital of above 20,000 and not exceeding birr 500,000, and excluding high tech. consultancy firms and other high tech. establishments.”3 Source 1: “REPORT ON SMALL SCALE MANUFACTURING INDUSTRIES SURVEY,” THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA CENTRAL STATISTICAL AGENCY REPORT ON SMALL SCALE MANUFACTURING INDUSTRIES SURVEY, April 2010, http://www.csa.gov.et/surveys/Small_Scale_Manufacturing_Industries/es-‐eth-‐ssis-‐2007-‐08/survey0/data/Docs/Small%20Scale%20Report-‐2010_F.pdf (accessed on July 21, 2010). Note 2: Due to the similarity of their characterstics, informal sector activities and micro enterprises are often lumped together and in this strategy, they are also treated as micro enterprises. Source 3: "MICRO and SMALL ENTERPRISES DEVELOPMENT STRATEGY," FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA MINISTRY OF TRADE AND INDUSTRY, November 1997, p. 8, http://www.bds-‐ethiopia.net/documents.html (accessed on July 21, 2010). Rwanda Agency: Private Sector Federation -‐ Rwanda.
Legal definition: N/A Interpretation: Micro enterprise: 1-‐10 employees Small enterprise: 11-‐30 employees Medium enterprise: 31-‐100 employees Source: "Business & Investment Climate Survey," Private Sector Federation – Rwanda, 2008, p.11, http://www.psf.org.rw/index.php?option=com_docman&task=cat_view&gid=38&Itemid=86 (accessed on June 21, 2010). Tanzania Agency: National Legislature.
Legal definition: 2002 Tanzania Small and Medium Enterprise Development Policy. Interpretation:
Source: "African E-‐Index: Towards an SME e-‐ACCESS AND USAGE across 14 African countries," Research ICT Africa!, 2006, p. 54, http://www.researchictafrica.net/new/images/uploads/sme%20access%20and%20usage%20in%2014%20african%20countries.pdf (accessed on June 23, 2010). Honduras Agency: Gallup.
Legal Definition: N/A Interpretation: Micro enterprises: 1-‐10 employees; Small enterprises: 11-‐20 employees; Medium enterprises: 21-‐49 employees Source: "Estudio de Micro y Pequeña Empresa no agrícola en Honduras MYPEs 2000: INFORME COMPARATIVO-‐ 1996 -‐2000," Desarrollo S. A.-‐CID/Gallup, p. 37, http://www.microfinanzas.org/centro-‐de-‐informacion/documentos/estudio-‐de-‐micro-‐y-‐pequena-‐empresa-‐no-‐agricola-‐en-‐honduras-‐mypes-‐2000-‐informe-‐comparativo-‐1996-‐2000/ (accessed on June 21, 2010). Nicaragua Agency: National legislature.
Legal Definition: "Arto. 3 de la Ley 645, Ley MIPYME.” Micro enterprise Small enterprise Medium enterprise Employees 1-‐5 6-‐30 31-‐100 Total Assets < 200,000 <1.5 million <6.0 million Total Annual Sales < 1 million <9 million <40 million Source: "Arto. 3 de la Ley 645, Ley MIPYME," Registro Único de la Micro, Pequeña y Mediana Empresa, Ministerio de Fomento, Industria y Commercio, http://www.mific.gob.ni/INICIO/REGISTROUNICODELASMIPYMES/tabid/112/language/en-‐US/Default.aspx (accessed on July 14, 2010). Bolivia
Agency: Bolsa Boliviana de Valores S.A (original source: Estado de Situación de la Competitividad en Bolivia, varios autores, Sistema Boliviano de Productividad y Competitivida). Legal definition: N/A Interpretation: Micro enterprise: 1-‐9 employee/s Small and medium enterprise: 10-‐49 employees Source: (2002) Armando Alvarez Arnal, "Acceso de PYMES al Mercado de Valores," Bolsa Boliviana de Valores S.A., October 2002. (original source: Estado de Situación de la Competitividad en Bolivia, varios autores, Sistema Boliviano de Productividad y Competitivida), http://www.iimv.org/actividades2/Bolivia2002/ponenciasjornada/armandoalvarez.ppt (accessed on June 21, 2010). Mexico *Agency: Instituto Nacional de Estadística Geografía e Informática.
Legal definition: N/A Interpretation: Micro: 0-‐10 persons employed Small: 11-‐50 persons employed Medium 51-‐250 persons employed Agency: N/A Legal definition: N/A Interpretation: Defining SMEs in Mexico.
Source: Axel Mittelstädt, “SMEs in Mexico: issues and policies,” Organization for Economic Co-‐operation and Development, 2007, p. 13. Mozambique Agency: Instituto Nacional de Estatística.
Legal definition: N/A Interpretation: Small enterprise: 1-‐9 employee/s Medium enterprise: 10-‐99 employees1 Agency: Ministry of Agriculture. Legal definition: N/A Interpretation: Micro enterprise: 1-‐5 employee/s Small enterprise: 6-‐25 employees Medium enterprise: 26-‐100 employees.2 Agency: Gabinete de Consultoria e Apoio a Pequena Industria. Legal definition: N/A Interpretation: Micro enterprise: 1-‐9 employee/s Small enterprise: 10-‐50 employees Medium enterprise: 50-‐100 employees.2 Agency: Ministry of Commerce and Industry. Legal definition: N/A Interpretation: Micro enterprise: 1-‐25 employee/s Small enterprise: 25-‐124 employees Medium enterprise: 125-‐249 employees. Source 1: CEMPRE, Instituto Nacional de Estatística, 2004, (QUADRO 18. NÚMERO DE EMPRESAS, NÚMERO DE PESSOAS AO SERVIÇO E VOLUME DE NEGÓCIOS, POR TAMANHO), http://www.ine.gov.mz/censos_dir/cempre/resultadoscempre.pdf accessed on July 20, 2010. Source 2: Bruno Nhancale, Sosdito Mananze, Nazira Dista, Isilda Nhantumbo and Duncan Macqueen, “S_m_a_l_l_ _a_n_d_ _m_e_d_i_u_m_ _f_o_r_e_s_t_ _e_n_t_e_r_p_r_i_s_e_s_ _i_n_ _M_o_z_a_m_b_i_q_u_e_” _IIED Small and Medium Forest Enterprise Series No. 25, Centro Terra Viva and International Institute for Environment and Development, p. 9, http://www.kent.ac.uk/dice/publications/Nhancale_09_SMEF_Mozambique.pdf (accessed on July 20, 2010). South Africa Agency: President’s Office/National Legislature.
Legal Definition: PRESIDENT'S OFFICE …. Definitions …. (xv) "small business" means a separate and distinct business entity, including cooperative enterprises and non-‐governmental organizations, managed by one owner or more which, including its branches or subsidiaries, if any, is predominantly carried on in any sector or subsector of the economy mentioned in column I of the Schedule and which can be classified as a micro-‐, a very small, a small or a medium enterprise by satisfying the criteria mentioned in columns 3, 4 and 5 of the Schedule opposite the smallest relevant size or class as mentioned in column 2 of the Schedule; (vii) (xvi) "small business organization" means any entity, whether or not incorporated or registered under any law, which consists mainly of persons carrying on small business concerns in any economic sector, or which has been established for the purpose of promoting the interests of or representing small business concerns, and includes any federation consisting wholly or partly of such association, and also any branch of such organization; (viii)1 NATIONAL SMALL BUSINESS AMENDMENT ACT To amend the National Small Business Act, 1996, so as to repeal all provisions pertaining to Ntsika Enterprise Promotion Agency; to provide for the establishment of the Small Enterprise Development Agency; to make provision for the incorporation of the Ntsika Enterprise Promotion Agency, the National Manufacturing Advisory Centre and any other designated institution into the Agency to be established; to provide for the necessary transitional arrangements to this effect; and to provide for matters connected therewith. BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:— Amendment of section 1 of Act 102 of 1996, as amended by section 1 of Act 26 of 2003 (e) by the substitution for the definition of ‘‘small business’’ of the following definition: ‘‘ ‘small *business+ enterprise’ means a separate and distinct business entity, together with its branches or subsidiaries, if any, including co-‐operative enterprises [and non-‐governmental organizations], managed by one owner or more [which, including its branches or subsidiaries, if any, is] predominantly carried on in any sector or subsector of the economy mentioned in column 1 of the Schedule and [which can be] classified as a micro-‐, a very small, a small or a medium enterprise by satisfying the criteria mentioned in columns 3, 4 and 5 of the Schedule [opposite the smallest relevant size or class as mentioned in column 2 of the Schedule];’’; (f) by the substitution for the definition of ‘‘small business organization’’ of the following definition: ‘‘ ‘small *business+ enterprise organization’ means any entity, whether or not
incorporated or registered under any law, [which consists] consisting mainly of persons carrying on small [business] enterprise concerns in any economic sector[, or which has been] and established for the purpose of promoting the interests of or representing small [business] enterprise concerns, and includes any federation consisting wholly or partly of such association, and [also] any branch of such organisation;’’2
Interpretation: N/A Source 1: “NO. 102 OF 1996: NATIONAL SMALL BUSINESS ACT, 1996,” the Department of Trade and Industry/Small, Medium & Micro Enterprise, http://www.thedti.gov.za/smme/act.pdf (accessed on June 11, 2010). Source 2: “National Small Business Amendment Act, 2004” the Department of Trade and Industry/Small, Medium & Micro Enterprise, http://www.thedti.gov.za/smme/amendment04.pdf (accessed on June 14, 2010). Source 3: “NATIONAL SMALL BUSINESS AMENDMENT BILL, 2003” the Department of Trade and Industry/Small, Medium & Micro Enterprise, http://www.thedti.gov.za/smme/ammendment03.pdf, (accessed on June 17, 2010).
United States Agency: Small Business Administration. The Small Business Act of July 30, 1953 created Small business Administration, which shall be under the general direction and supervision of the President and shall not be affiliated with or be within any other agency or department of the Federal Government.1 Legal definition: "SMALL BUSINESS ACT (Public Law 85-‐536, as amended) This compilation includes PL 110-‐246, approved 6/18/08: § 3 (a) (1) For the purposes of this Act, a small business concern, including but not limited to enterprises that are engaged in the business of production of food and fiber, ranching and raising of livestock, aquaculture, and all other farming and agricultural related industries, shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation: Provided, That notwithstanding any other provision of law, an agricultural enterprise shall be deemed to be a small business concern if it (including its affiliates) has annual receipts not in excess of $750,000. (2) ESTABLISHMENT OF SIZE STANDARDS.— (A) IN GENERAL.—In addition to the criteria specified in paragraph (1), the Administrator may specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purposes of this Act or any other Act. (B) ADDITIONAL CRITERIA.—The standards described in paragraph (1) may utilize number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors. (C) REQUIREMENTS.—Unless specifically authorized by statute, no Federal department or agency may prescribe a size standard for categorizing a business concern as a small business concern, unless such proposed size standard— (i) is proposed after an opportunity for public notice and comment; (ii) provides for determining— (I) the size of a manufacturing concern as measured by the manufacturing concern's average employment based upon employment during each of the manufacturing concern's pay periods for the preceding 12 months; 127 Companion Note for the MSME Country Indicators (II) the size of a business concern providing services on the basis of the annual average gross receipts of the business concern over a period of not less than 3 years; (III) the size of other business concerns on the basis of data over a period of not less than 3 years; or (IV) other appropriate factors; and
(iii) is approved by the Administrator. (3) When establishing or approving any size standard pursuant to paragraph (2), the Administrator shall ensure that the size standard varies from industry to industry to the extent necessary to reflect the differing characteristics of the various industries and consider other factors deemed to be relevant by the Administrator.”1 Interpretation: “Summary of Size Standards by Industry To qualify as a small business concern for most SBA programs, small business size standards define the maximum size that a firm, including all of its affiliates, may be. A size standard is usually stated in number of employees or average annual receipts. SBA has established two widely used size standards—500 employees for most manufacturing and mining industries, and $7 million in average annual receipts for most nonmanufacturing industries. While there are many exceptions, these are the primary size standards by industry. Source 1: Small Business Act, Public Law 85-‐536, as amended, PL 110-‐246, approved 6/18/08, p. 19, http://www.sba.gov/idc/groups/public/documents/sba_homepage/tool_serv_sbact.pdf (accessed May 13, 2010).
Canada Agency 1: Industry Canada (Government) Legal Definition: N/A Interpretation: “In some instances, Industry Canada has used a definition based on the number of employees, which varies according to the sector —goods-‐producing firms are considered “small” if they have fewer than 100 employees, whereas for service-‐producing firms the cut-‐off point is 50 employees. Above that size, and up to 499 employees, a firm is considered medium-‐sized. The smallest of small businesses are called micro-‐enterprises, most often defined as having fewer than five employees. The term “SME” (for small and medium-‐sized enterprise) refers to all businesses with fewer than 500 employees, whereas firms with 500 or more employees are classified as “large” businesses.”1 Legal Definition: N/A Interpretation: For the purposes of Canada Small Business Financing Program. Small business: “A business being carried on in Canada for gain or profit, with estimated gross annual revenue of not more than $5 million. It does not include the business of farming or a business having as its principal object, the furtherance of a charitable or religious purpose.”2 Agency 2: Canadian Bankers Association. Legal Definition: N/A Interpretation: “Classifies a company as “small” if it qualifies for a loan authorization of less than $250 000.”3 Agency 3: Export Development Corporation. Legal Definition: N/A Interpretation: “Small or “emerging” exporters are firms with export sales under $1 million.”4 Source 1: “Key Small Business Statistics,” Industry Canada, Small Business and Tourism Branch, January 2010, p. 5, http://www.ic.gc.ca/eic/site/sbrp-‐rppe.nsf/vwapj/KSBS-‐PSRPE_Jan2010_eng.pdf/$FILE/KSBS-‐PSRPE_Jan2010_eng.pdf (accessed on May 12, 2010).
Source 2: “Canada Small Business Financing Program,” Guidelines SECTION D: Annex, Forms and Glossary, http://www.ic.gc.ca/eic/site/csbfp-‐pfpec.nsf/eng/la02891.html#smallbus (accessed on May 12, 2010). Source 3: Op. cit, “Key Small Business Statistics,” Industry Canada. Source 4: Ibid.
Nigeria Agency: USAID/Chemonics Inc. Legal definition: See below. Interpretation: Micro enterprise: 1-‐5 employees Small enterprise: 6-‐20 employees Medium enterprise: 21-‐50 employees.1 Agency: National Council on Industry. Legal definition: was adopted at 13th Council meeting of the National Council on Industry held in July, 2001. Interpretation: • Micro/Cottage Industry An industry with a labor size of not more than 10 workers, or total cost of not more than N1.50 million, including working capital but excluding cost of land. • Small-‐Scale Industry An industry with a labor size of 11-‐100 workers or a total cost of not more thanN50 million, including working capital but excluding cost of land. • Medium Scale Industry: An industry with a labor size of between 101-‐300 workers or a total cost of over N50 million but not more than N200 million, including working capital but excluding cost of land.”2 Source 1: "Assessment of The Micro, Small and Medium Enterprise (MSME) Sector in Nigeria," Volume 1: MSME Assessment, PRISMS: Promoting Improved Sustainable Microfinance Services, Contract No. 620-‐C-‐00-‐04-‐00037-‐00, Submitted to: U.S. Agency for International Development/Nigeria, by: Chemonics International Inc., p v-‐vi, http://www.usaid.gov/ng/downloads/reforms/assessmentofthemsmesectorinnigeria.pdf (accessed on June 24, 2010). Source 2: Fred. N. Udechukwu, “SURVEY OF SMALL AND MEDIUM SCALE INDUSTRIES AND THEIR POTENTIALS IN NIGERIA,” in publications for the SEMINAR ON SMALL AND MEDIUM INDUSTRIES EQUITY INVESTMENTS SCHEME (SMIEIS), NO. 4, Central Bank of Nigeria (CBN), 2003, http://www.cenbank.org/out/Publications/guidelines/dfd/2004/smieis.pdf (accessed on June 24, 2010).