Large companies are natural engines of enterprise development. On one hand, they are huge markets – the business cycle creates demand for a variety of goods and services and generates business opportunities for enterprises up and down the value chain. At the same time, many companies sell products and services that make other enterprises more productive and profitable. Companies can also invest philanthropic resources in enterprise development programmes not necessarily linked to their value chains, leveraging core competencies such as know-how. Finally, companies can play significant indirect roles in enterprise development by advocating for business
Driving Enterprise Development in Africa through business partnerships
Buying from, selling to, and distributing through low income producers and micro, small, and medium enterprises (MSMEs). Companies procure goods and services ranging from raw material and equipment to catering and distribution. At the same time, they sell productivity-enhancing goods and services ranging from inputs and equipment to information and communications technologies to financial services.
Investing in training and skills development for low income producers and MSMEs within the value chain. Doing business with these enterprises often means investing in building their capacity – bringing suppliers up to quality, environment, health, and safety standards, for example, or teaching customers how to use the company’s products and services to their advantage.
Advocating for business enabling environment reform, with a particular focus on the needs of low-income producers and micro, small and medium enterprises. Property rights, land reform, business registration procedures, labour laws, and tax regimes all play critical roles in legal empowerment and financial inclusion, helping the poor to create, protect, and grow their businesses.
Sharing the cost and risk of developing new models of doing business with low-income producers and MSMEs. Experimenting with new products, services, and value chains in unfamiliar markets and difficult operating environments can bring even more uncertainty than the typical business venture usually faces. Because of the potential for development impact, partners like NGOs, bilateral and multilateral donors, private foundations, and government agencies can be willing to help.
Enabling low-income producers and MSMEs to participate in corporate value chains by building their capacity and expanding their access to finance. Sometimes the capacity-building requirements of these enterprises go beyond what it is possible or economical for a company to do alone. NGOs, business associations, and financial intermediaries can be invaluable partners not only in building that capacity, but also in providing or facilitating access to finance and acting as aggregators – reducing the transaction cost to a company of doing business with large numbers of small enterprises. Partnership is especially appropriate when benefits are created that cannot be fully captured by the firm
Leveraging core competencies and social investment resources to support enterprise development outside the value chain. Companies can provide services (for example through small business mentoring) and build the capacity of local institutions to provide services (for instance through pro bono time and financial contributions). Local institutional capacity-building, in particular, helps sustain impact even after the company’s commitment is complete
Create or participate in collaborative platforms to strengthen public policy input and make it more credible. Such platforms can enable companies, business associations, NGOs, and donors to pool experiences, exchange perspectives, develop valuable policy input, and deliver it in impactful ways.