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October 2016

Pathways to profits for micro and small enterprises

Bilal Zia's picture

Numerous research studies on micro and small firms from around the world have shown that (a) microenterprises are ubiquitous; and (b) only a very small percentage of such firms scale up to become SMEs.

The obvious question is why?

It is not for want of help. Each year billions of dollars in aid is given to developing economies to help entrepreneurs establish and grow their ventures.  Yet evidence suggests that this money is having little impact in some of the key areas it is directed towards improving.

Take microcredit for example. A recent review of six randomized evaluations from four continents suggests that, while microcredit has some benefits, it has not led to the transformative improvements in business performance and poverty reduction widely expected.