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Micro and Small Enterprises in Africa

Micro and Small Enterprises in Africa. Characteristics and Contribution to Development. By Dorothy McCormick Institute for Development Studies, University of Nairobi 30 October 2008. MSEs in Africa. What do they do? Who works in them? Where are they located? How do they start? Change?.

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Micro and Small Enterprises in Africa

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  1. Micro and Small Enterprises in Africa Characteristics and Contribution to Development By Dorothy McCormick Institute for Development Studies, University of Nairobi 30 October 2008

  2. MSEs in Africa • What do they do? • Who works in them? • Where are they located? • How do they start? Change? MSEs - TIPS Presentation

  3. Kenyan MSEs by Sector MSEs - TIPS Presentation

  4. Kenyan MSE Owners • Gender: • 52% male and 48% female • Women predominate in trade and particular service and manufacturing activities • Age: mean age of 35 years • Education: • 90% have at least primary • 35% have secondary or better MSEs - TIPS Presentation

  5. Kenyan MSE Workers • 70% of businesses have no workers other than the owner • Many are casual workers, trainees, and, especially in rural areas, family members • Terms and conditions of work vary greatly MSEs - TIPS Presentation

  6. Enterprise Location MSEs - TIPS Presentation

  7. Start-ups • What attracts people into business? • Hope for better income, preference for self-employment, skills, family background in business • Lack of alternatives • What resources do entrepreneurs have? • Own savings • An idea of what they want to do MSEs - TIPS Presentation

  8. Business Life • Mean age of a Kenyan micro business is 6.9 years • Few outlive the founder • Most are under-capitalised • Few can access credit for expansion or working capital • Many suffer from poor infrastructure, insecurity, extremely competitive markets, and an unfavourable institutional environment • There is little information on “new” micro-enterprises such as technology firms, business process outsourcing, etc. MSEs - TIPS Presentation

  9. Closures • Urban enterprises more likely to close than rural • Age at closure • 3 years for urban businesses • 5 years for rural • Main reasons given for closure: • Lack of operating funds • Personal reasons • Lack of customers MSEs - TIPS Presentation

  10. Overall Importance of MSEs • To African economies • Contribution to GDP ranges from about 15% to as high as 70% • Goods and services offered • To households and individuals • Significant proportion of households earn some or all of their income from MSEs • Higher earnings • Convenience • Lower prices MSEs - TIPS Presentation

  11. Sectoral Importance MSEs - TIPS Presentation

  12. Challenges to MSE Development • Markets and competition • Resources • Technology • Infrastructure • Institutional environment MSEs - TIPS Presentation

  13. Meeting the Challenges • Business community • Government • Non-governmental organisations MSEs - TIPS Presentation

  14. Thank you! MSEs - TIPS Presentation

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