Providing Cost-Effective, Indirect Assistance to Microenterprises

This article is available on pages 52-56 within this document.

Suggests in order to avoid the high-cost, low-impact trap common to firm-level non-financial assistance, support should not be aimed at individual microenterprises directly, but at intermediaries (usually larger firms) that can work with large numbers of smaller firms.

These larger firms generally do not need help in bookkeeping, motivation, or marketing - the standard aid package for direct microenterprise training and technical assistance. They are more likely to need assistance in technological innovation and in the creation of new forms of business linkages with smaller firms that can help them and their collaborators access new markets. Therefore, technology and business linkages are promising areas for indirect assistance. However, this does not mean that organisations that work on technological change or linkage promotion will be more cost-effective than others working in more "classical" assistance areas, such as firm-level training.

Concludes that the key to cost-effective indirect assistance is working with existing markets and making changes with the right actors in a way that helps both the larger and the smaller firms use their comparative strengths to achieve market gain.

[Author's abstract]