I presume the allocation was based on some numbers concerning the SME's. If that was the case, may I suggest that we re-examine our definition of the SME i.e the criteria which determines whether an establishment/enterprise qualifies as an SME. This is of utmost importance since an SME so defined will stand a high chance of being a beneficiary of the various programs under the budget allocation. Get the LATEST ECONOMIC SURVIVAL TIPS AT Click Here!
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reez said the following on 23/02/2010 03:58:
While governments are providing generous allocations for the development of Small and Medium scale Enterprises (to enable them to graduate to higher levels), the numbers have shown a continued expansion of SME participation. Are those in the informal sector entering the formal sector in droves as SMEs?
Aziz Mohammad
http://azizfikrym0.blogspot.com/
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Hari Srinivas Tue, Feb 23, 2010 at 10:23 AM
Reply-To: hari.unep@gmail.com
To: kilz_punk@yahoo.com
Cc: hsrinivas@gdrc.org, azizfikry.m0@gmail.com
Dear Aziz,
Well, as you can imagine, there is no simple one-line answer to this! Some of the points worth exploring further are:
- the criteria with which you define and characterize informal sector and SME entities. And the essential "advantages" of informality!
- informal sector entities already have links to the formal sector - in fact they are part of the same urban economy continuum
- SME start-up and expansion cannot happen in vacuum, and in fact they need large enterprises, as well as informal sector entities to enable this
- Despite the relative importance of the informal sector, especially in developing countries, governments have uniformly negated the potential of the informal sector and strived to curb it. Informal sector entities don't pay taxes, after all!
Informality, after all, is lack of a legal basis for operating your business (among the different criteria for defining the informal sector). If such entities see the advantage of greater financial allocation from governments, market stability, access to resources and finances, etc. then they might indeed look at 'graduating' to an SME status more favourably. But it may not be government or public financial allocation alone that may drive them.
Thanks,
Hari
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