Supporting Small Businesses in Developing Countries: Which Programmes Work and Why?

This study examines how governments and donors can better promote ‘business enabling environments’ so that small and medium-sized enterprises (SMEs) can contribute to inclusive economic development in developing countries. It focuses on ‘what works’ and contains a review of literature on SME support plus three case studies. Despite a substantial literature on business development, remarkably little is known about which SME support programmes work and why. There is significant funding of SME support programmes by multilateral and bilateral actors but much of this is focused on providing financial loans to SMEs and advocating general reforms to the investment climate, which mainly benefit larger enterprises, including multinational companies, rather than SMEs. Other support programmes are often neglected. This study challenges these approaches and suggests alternative support policies.