The Critical Connection: Governments, Private Institutions and the Informal Sector in Latin America

This book discusses ways in which state and private entities must operate to effectively reach microenterprises with financial and non-financial assistance. It suggests that experience demonstrates that a government's approach to the informal sector must be integrated to include policy formulation, legal, and regulatory modifications and extend credit training, and other services, to this population. The most useful role of government is that of an active collaborator, integrating other institutions into its national strategy.

The book also looks at NGOs experience in extension services to microentrepreneurs. It states that NGOs play an important role as financial intermediaries in the implementation of microenterprise programmes. It concludes that:

• Growth and development of microenterprises should be an indispensable ingredient of a country's national economic plan;
• Programs that reach the informal sector, whether conducted by private entities or by the government, require a favourable environment in which to operate;
• NGO microenterprise programmes are an important mechanism to extend credit training to informal sector producers and retailers, and should be incorporated into a national plan;
• Each donor organisation must structure clear policies and strategies to assist the informal sector. In addition, donor organisations must take responsibility to assist governments to design their own programmes and policies.