whereas most large enterprises have connections to infrastructure services, most msmes do not
DESCRIPTION
Whereas most large enterprises have connections to infrastructure services, most MSMEs do not. Rural MSMEs spend more time getting their products to market than urban MSMEs. MSMES HAVE LIMITED ACCESS TO FINANCE. - PowerPoint PPT PresentationTRANSCRIPT
Whereas most large enterprises have connections to infrastructure services, most MSMEs do not
16 June 2010 1
Rural MSMEs spend more time getting their products to market than urban MSMEs
Time delivering products for urban and rural firms All Urban Rural
0-10 minutes 2 5 1
11-30 minutes 13 26 11
31 minutes to one hour 28 31 27
1 hour - 1 day 52 32 56
more than one day 3 3 3
don't know 2 3 2
16 June 2010 2
MSMES HAVE LIMITED ACCESS TO FINANCE
16 June 2010 3
Very few MSMEs have access to any formal financial services, but Large Enterprises have generally good access
96.9%
84.5%
45.3%
96.7%
11.2%
7.7%
2.3%
0.9%
Large Businesses MSMEs
Savings
Transactions
Insurance
Credit
16 June 2010 4
Poor physical access to banking infrastructure and the high cost of banking products are the most important constraints on banking access
16 June 2010 5
THE PRODUCTIVITY OF MSMES IS AFFECTED BY POOR ACCESS TO BOTH HARD AND SOFT INFRASTRUCTURE
16 June 2010 6
MSMEs produce far less output for each worker they employ than large enterprises in the same sectors
MSMEs in yellow; Large Enterprises in green
16 June 2010 7
However, MSMEs are not a homogenous group of enterprisesThere are large differences in their productivity
16 June 2010 8
MSMEs that have access to electricity and water are more productive
16 June 2010 9
The more productive firms use technology, and especially for small retailers and service providers, cell phone use is related to higher enterprise productivity
16 June 2010 10
MSMEs managed by educated owners are more productive
16 June 2010 11
NOT ALL MSMEs ARE THE SAME
• It is necessary to determine the differences within the populations of MSMEs & large enterprises
• When segmenting the market, there is a trade-off between size and specificity of the segments
• Common approaches towards segmentation are not ideal in the context of the Zambian business landscape
• The Business Facilities Measure (BFM) is an analytical tool that segments the landscape Zambian of enterprises in a unique and useful way
16 June 2010 12
For MSMEs & Large Enterprises, the most defining characteristics are a series of indicators that relate to access and use of business facilities that contribute to enterprise competitiveness – Not all MSMEs are the same, and that not all microenterprises are survivalists. Nor are all Large Enterprises the same.
16 June 2010 13
The lower end BFM groups for MSMEs (segments 1 to 4) tend to be a lot more rural than the top end BFM groups for MSMEs (segments 5 to 8)
16 June 2010 14
The attainment of secondary education appears to be an important factor in moving MSMEs from the lowest two segments
16 June 2010 15
Attainment of vocational & university education seems to align closely with upward BFM mobility
16 June 2010 16
IMPLICATIONS FOR POLICYMAKERS AND PRIVATE SERVICE PROVIDERS
• This research report can:– Assist GRZ in making it easier to start and grow a business– Help service businesses design new products and market them
more effectively– Support policymakers in adopting targeted approaches towards
reducing constrains on MSME & Large Enterprise growth• Given the breadth of problems that MSMEs face, it is
important to be selective when tackling constraints• The communication programme arising from this research
can be used to develop concrete recommendations that can be applied by GRZ, the private sector, and donors
16 June 2010 17
PRIORITY AREAS TO IMPROVE THE PRODUCTIVITY OF ZAMBIAN BUSINESSES
1. Invest in hard infrastructure so that MSMEs – especially those in rural areas – have better access. – Transportation is a serious constraint, especially in rural areas, that
needs to be better understood. – There is more to transportation than improving roads, e.g. Cost of
fuel, maintenance, etc. 2. Encourage innovative approaches to providing financial services
and improve ICT infrastructure to make access to finance easier for MSMEs. – The greatest constraint to accessing finance is that most MSMEs are
not productive enough to be able to afford access to the most basic financial services or loans.
– Stimulate mobile banking and other innovative approaches to improve access to financial services and reduce costs.
– This approach, however, will only be successful if information and ICT infrastructure is strengthened.
16 June 2010 18
PRIORITY AREAS (cont.)
3. Expand access to basic education – There are strong complementarities between
education and other forms of investment
4. Improve the delivery of business services– Better service delivery to MSMEs is essential and
can be delivered by the public sector, the private sector, the social sector or some combination of these
16 June 2010 19
Thank YouPlease refer to the flash disk, as well
as the brochure, for all of the full reports & other details
16 June 2010 20