Poverty Reduction through Small Enterprises: Emerging Consensus, Unresolved Issues and ILO Activities

The paper probes the connections between the development of the small enterprise economy and the task of poverty reduction. It also outlines the international initiatives of the past half-decade which have raised the profile of poverty as the prime issue of economic development and social justice. The increasing importance given to how private sector development can support poverty reduction and the difficulties of assessing the impact of enterprise development on poor workers, entrepreneurs and their families is also highlighted.

The paper recommends that the issue of creation and expansion of enterprises to support poverty reduction needs more focus from the ILO and the international community. Key areas that need focus include:

• Providing a regulatory and legal environment that is simple, fast, inexpensive and free from corruption;
• Finance that is accessible at low cost, and does not require the poor to provide physical collateral;
• Access to affordable business development services;
• Workers who are trained in appropriate skills;
• Basic health and education that strengthens human capital;
• Establishing a culture that supports and rewards entrepreneurship;
• Access to domestic and global markets on a fair and equal basis with large enterprises; and
• Providing reliable infrastructure (transport, energy, and telecommunications).