Large businesses operating in frontier markets rely on many Micro, Small and Medium Enterprises (MSMEs) in their extended value chain: as direct suppliers, distributors, customers and providers of complementary products or services. As these small businesses can find it difficult to engage and/or deliver on time and at the quality needed, large businesses have an incentive to invest in strengthening their effectiveness and efficiency through, for example, training or finance. This Challenge will explore how companies can increase the effectiveness of their support by taking an “ecosystems” approach to MSME development. An ecosystems approach starts from an understanding of the multiple external constraints an MSME faces - such as difficulties in accessing finance, weak infrastructure, regulatory burdens, and capacity or information constraints - and then working, often in partnership, to tackle these. In some cases, the company may choose to go further and target MSMEs beyond their own value chains and/or focus on strengthening the wider system, such as the financial or regulatory system.
The output will be practical business guidance on why, when and how to take an ecosystems approach to MSME development. Through the process, we aim to identify specific partnering opportunities.
9 months, ending March 2020