Updated June 7, 2001
Second Summit of the Americas
FOSTERING THE DEVELOPMENT OF MICRO, SMALL AND MEDIUM SIZE ENTERPRISES
Long-term economic development in the Hemisphere relies heavily on the growth and development of micro, small and medium-sized businesses (MSEs). In much of Latin American and the Caribbean, industry tends to be polarized between a small number of large corporations and a very large number of informal, family-owned MSEs. Traditionally, the latter have not had access to finances and other resources necessary to stimulate growth and increase productivity.
In Santiago, governments reinforced past pledges to strengthen and develop micro, small and medium size enterprises (MSEs). They did so by making the following commitments in the Santiago Plan of Action:
- Accelerate the entry of formal-sector financial institutions into this market
- Support the development of institutions that work in the sector
- Eliminate impediments that limit the access of micro, small and medium size enterprises to financial services
- Simplify and expedite procedures for registration, obtaining licenses complying with labor and tax regulations of MSEs
- Support private-sector providers of non-financial services so that they may expand access to new technologies and training for MSEs
- Promote cooperative assistance partnerships in both the public and private sectors, and modernize MSEs business management, as well as inter-institutional coordination
- Convoke a regional meeting of ministers or senior officials responsible for public policies to support MSEs, to exchange information, and improve the effectiveness of support policies
- Request regional organizations, agencies, and governments to assist in policy reform and invest between US$400-$500 million over a 3-year period
- Finally, create technical assistance programs, among other programs, which will support the above-mentioned initiatives
IDB Group Activities Supporting MSEs, 1990-1998
For nearly a decade now, the Inter-American Development Bank Group has been placing emphasis on expanding the opportunities for small and medium-sized enterprises (MSEs). The IDB Group has attempted to channel entrepreneurial creativity, implement new technology and provide employment opportunities to the region. It also plays a key role in removing MSE constraints such as large fixed costs, absence of economies of scale, and costly financial and non-financial services. The IDB Group consists of:
Each group has specific duties such as, but not limited to: supporting economic development in the region, promoting private-sector development, making equity investments, providing loans, making grants for technical assistance, supporting public sector policies, supporting labor force training and promoting enterprise cooperation and development. The entire spectrum of activities is divided into five categories: financial services, nonfinancial services, science and technology, regulatory framework, and strategy and support. To foster change, growth and development each institution must not only work with the respective countries but also with larger corporations and each other.
To view the document in its entirety please see the Inter-American Development Bank Group Activities Supporting Small and Medium Sized Enterprises (1990-1998).
The IDB, through the Department of Social Programs and Sustainable Development, is the hemisphere's primary institution for carrying out the Summit mandate with respect to MSEs. The IDB has developed a Microenterprise Development Strategy which is the result of multi-governmental, microenterprisal and private sector consultation.
The objective of this strategy is to expand economic opportunities in the hemisphere through sustainable microenterprise development. More specifically, it aims "to promote the conditions necessary for the growth and development of the microenterprise sector in the region: a favorable policy and regulatory environment; strong, sustainable institutions providing financial and nonfinancial services to meet the demand of microenterprises; improved access of low income and disadvantaged microentrepreuneurs, including women and indigenous peoples, to financial and business services."
Since 1998, the IDB has organized an annual Inter-American Conference of Microenterprise. The First Conference was held in Mexico City from March 26th to March 28th, 1998. The following issues were discussed:
The Second Inter-American Forum on Microenterprise was held in Buenos Aires, Argentina June 24 to 26, 1999. A series of different workshops on the following topics were held:
At the end of this event, they made a list of the principal conclusions reached. To access some of those presentations, please click here (Spanish only).
For further information on the IDB activities on this mandate, please click here
United States Agency for International Development
The U.S. Agency for International Development (USAID) hosted the Second Conference on "Regulated Financial Institutions in the Area of Microfinances" from September 13 to September 15, 1999 in Salvador de Bahia, Brazil. The objective of this conference was to share experiences and information on recent developments in respect to commercializing and broadening microfinance render services.
The Organization of American States
The OAS has two MSE programs. They are the Young Americas Business Trust (YABT) and the Inter-American Program for Environment Technology Cooperation in Key Industry Sectors.
The Young Americas Business Trust, run by the Unit for Social Development and Education, aims to develop young entrepreneurialship in the Americas and the Caribbean by creating technical and financial partnerships, and by establishing closer working relationships with micro, small, and medium size non-governmental enterprises.
As a specialized and important private sector initiative within the OAS framework, the Young Americas Business Trust (YABT) is developing a variety of creative approaches and partnerships with the private sector, non-governmental organizations and companies doing business in the region.
The YABT has three priorities:
Through discussions between governmental and private sector leaders over the past two years, the Young Americas Business Trust has developed the following programs:
The Inter-American Program for Environment Technology Cooperation in Key Industry Sectors is a joint OAS - International Development Research Center (IDRC) of the Government of Canada - World Association of Industrial and Technological Research Organizations (WAITRO) initiative which responds to the challenges faced by small and medium size enterprises in Latin America and Caribbean countries to adopt cost-effective, environmentally sound technologies and management practices.
The purpose of the program is to better equip industry associations to deal with the environment management concerns of their membership and bring them together with organizations which can assist them with follow up initiatives, thus creating a support network in the hemisphere.
USAID has recently released a series of reports on the development of Micro-Enterprise in conjunction with USAIDs 1994 Microenterprise Initiative. The first report, entitled License Leverage and Micro-Finance, addresses mobilizing commercial monetary funds for every dollar of donated. It identifies five levels of leverage and suggests three microfinance strategy considerations for the donors. The report concludes by detailing three conditions for institutional development once the microenterprise has reached the fourth level of leverage.
The second report, entitled Prudential Regulation and Supervision, is designed to assist the microenterpreneur in avoiding a banking crisis while maintaining the integrity of the payments system, protecting depositors, and encouraging financial sector competition and efficiency. There are five central instruments in prudential regulation: licensing, capital adequacy, inside lending restriction, diversification, and liquidity.
The third report, entitled El Papel de los Grupos de Solidaridad en la Microempresa, (only available in Spanish) discusses how liability groups are effective ways for struggling small businesses to become self-sufficient. These groups stress 10 characteristics necessary for micro-businesses to effectively obtain credit. In addition, the article highlights new innovations in financial services and technical assistance.
For each of the respected regions of Central America, South America, and the Caribbean, the Bureau for Latin America and the Caribbean has made available 3 hand-outs. These brochures list the various on-going USAID projects and microenterprise activities in each of the designated regions.
For more information about any of the USAID microenterprise activities or for a copy of any of these reports, please visit the USAID Web sites at www.mip.org and www.info.usaid.gov.
The mandates and initiatives in micro, small and medium enterprises were reinvigorated and fortified at the 2001 Quebec City Summit of the Americas. For more information on these mandates, and to continue with follow up activities in this area, please click here.
Updated June 7, 2001[Microenterprise/tracker.htm]