Agents of Change This page intentionally left blank Agents of Change Studies on the Policy Environment for Small Enterprise in Africa Edited by Philip English and Georges Hénault I NTERNATIONAL D EVELOPMENT R ESEARCH C ENTRE in association with I NTERMEDIATE T ECHNOLOGY P UBLICATIONS Published in Canada by the International Development Research Centre PO Box 8500, Ottawa, ON, Canada K1G 3H9 and Published in the United Kingdom by Intermediate Technology Publications Ltd 103-105 Southampton Row, London WC1B 4HH, UK © International Development Research Centre 1995 English, P Hénault, G. Agents of change : studies on the policy environment for small enterprise in Africa. Ottawa, ON, IDRC, 1995. xx + 353 p. : ill. /Small enterprises/, /national policy/, /Africa/ — /policy making/, /private sector/, /fiscal policy/, /regulations/, /financial administra- tion/, /financial institutions/, /innovations/, /competitiveness/, /case studies/, /conference reports/, references. A CIP record for this book is available from the British Library. UDC: 334.746.4(6) A microfiche edition is available. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, or otherwise, without the prior permission of the International Development Research Centre. The paper used in this book is recycled as well as recyclable. All inks and coatings are vegetable-based products. ISBN: 0-88936-726-4 (IDRC) ISBN: 1 85339 272 3 (IT Publications) CONTENTS Foreword — Philip English and Gilles Lessard . viii Preface — Georges Hénault . xi Acknowlegments . xviii Part I. Introduction Opening Address — Ferdinand Kacou Angora . 3 Views from the Private Sector — Alain Bambara. 8 Keynote Address — William F. Steel . 12 Part II. The National Policy Process Formulating a National Policy for Small Enterprise: the Kenyan Experience — Isaya A. Onyango and James Tomecko . 25 The Role of the National Small Business Advisory Group in Promoting Small-Scale Enterprises in Zimbabwe — Enoch Moyo. 45 Creating a Private-Sector Environment in Togo — E.R. Assignon and M. Sow . 60 v Part III. Regulatory Reform How the Legal, Regulatory, and Tax Framework Affects the Dynamics of Enterprise Growth — Donald C. Mead. 75 Creating an Enabling Environment for the Development of Small-Scale Enterprise through Tax Reform: the Case of Uganda, 1986–1993 — Justin Zake . 87 Regulatory Restrictions and Competition in Formal and Informal Urban Manufacturing in Burkina Faso — Meine Pieter van Dijk . 106 Part IV. Financial Services Obstacles to Financial Innovation for Small Business Development in the Formal and Informal Private Sectors: Case Studies from the West African Monetary Union — Douato Adjémida Soedjede . 129 Change Agents in the Development of Financial Services for Small-Scale Enterprises in Ghana — Gloria Nikoi . 144 The Experience of FIDI in Developing Financial Services for Micro- and Small Enterprises in Côte d’Ivoire — A. Boissau . 161 Adapting Financial Systems to the Needs of Small-Scale Enterprises: Some Experiences from Nigeria — David B. Ekpenyong and A.T.T. Kebang . 177 The Changing Roles of Key Institutions in the Implementation of Credit Programs for Small-Scale Enterprise Development in Kenya — C. Aleke-Dondo . 187 vi Part V. Innovations for Increasing Competitiveness Improving Access of Small and Medium-Size Enterprises to New Technologies — Alan Kyerematen . 213 The Role of Business Associations in Increasing the Competitiveness of Small-Scale Enterprises — Elias Dewah . 227 Training for Entrepreneurship and Business Success in West Africa — R. Kouessi. 233 Effective Development of a National Apex Institution: the Case of the Malawian Entrepreneurs Development Institute — Mark Havers and Sosten M.C. Nyoni . 251 Increasing Small-Enterprise Competitiveness in Export Markets through Consortium Marketing: an Exploratory Study — J.T. Muzamani. 261 The Private Sector as a Change Agent in the Development of Small-Scale Enterprises: Large Firm–Small Firm Linkages in Kenya — Catherine K. Masinde. 275 Part VI. Conclusion The Other Two Thirds: a Summary of Papers, Discussions, and Closing Remarks — Philip English and Jacob Levitsky. 293 Appendix 1. Conference Participants . 321 Appendix 2. The Committee of Donor Agencies for Small Enterprise Development . 337 Appendix 3. Acronyms and Abbreviations . 339 Bibliography . 345 vii FOREWORD Donor collaboration, cynics sometimes say, is an oxymoron. There is, however, one example of donor collaboration that is still going strong after about 15 years — the Committee of Donor Agencies for Small Enterprise Development. Initiated by the World Bank in 1979, this committee now includes 17 bilat- eral agencies, 15 multilateral institutions, and 2 other interna- tional development organizations. As befits a group focused on small enterprise, it is infor- mal, with no legal status. But the committee seems to serve a need, as donor representatives keep coming back. The com- mittee’s objective is to promote small enterprise in developing countries by • exchanging information on the programs of partici- pating agencies; • sharing experiences and lessons learned in project implementation; and • coordinating efforts in this field. The committee has been particularly active in the first two areas. There have been regular annual meetings, nine con- ferences have been organized, and the Journal of Small Enter- prise Development was launched in 1990. Attempts at better coordination at the country level are somewhat more problem- atic because they depend a lot on the initiative of individual field officers. But, as one of our members said at the close of the most recent conference, one of the principal ways in which donors can serve as a catalyst in small-enterprise promotion is through the transmission of ideas. In this respect, the commit- tee has undoubtedly been a success. Our second conference was held in Abidjan, Côte d’Ivoire, in 1983, and had a regional focus on Africa. After vari- ous, more thematic conferences, we again turned our attention to this troubled continent when we met in The Hague in 1991. This meeting was seen as an exploratory step on the way to a viii larger conference to be held, once again, in Africa in 1993. In each case, the emphasis was on the policy environment because of its crucial importance and past neglect. The best papers from the conference in The Hague were published in Small Enter- prise and Changing Policies: Structural Adjustment, Financial Policy and Assistance Programmes in Africa, edited by Helm- sing and Kolstee (1993). That conference was especially notable for involving a large number of African speakers. As Helmsing and Kolstee (1993, p. 6) emphasize, “it has become painfully clear that there can be no major progress in tackling Africa’s development dilemmas without strong and clear participation by African policymakers, practitioners and researchers.” Encouraged by its success in The Hague in 1991, the Committee chose to extend this approach in Abidjan in 1993 by moving the conference back to Africa and by further limiting the role and number of non- Africans. At least two other modifications were adopted for 1993. First, it was agreed that there should be a greater diversity of participants. Whereas the conference in The Hague in 1991 was dominated by researchers, this one would have a greater share of speakers and listeners from governments, banks, nongovern- mental organizations, and private enterprise itself. In this way, it would be firmly anchored in the reality of current experience and, hopefully, would also include some genuine agents of change. Another significant modification adopted for 1993 was a change in focus — away from the definition of appropriate pol- icy and toward the process of designing and implementing such policy. It was felt that at least the basic principles were fairly well understood, but somehow they were not finding their way into policy reform. The conference proposed to explore the ways in which some countries manage to galvanize the necessary political will and what obstacles continue to block the path for others. The conference was a truly collaborative effort. Its agenda and objectives were initially discussed in the commit- tee’s annual meeting in 1992. A subcommittee was formed, and it met again in March 1993. From then, the Canadian Inter- national Development Agency (CIDA) and the International Development Research Centre (IDRC) took the lead, with the assistance of Georges Hénault and other members of the ix subcommittee. Eighteen donors contributed to the financing and helped in almost as many different ways. The list of invited delegates was put together through a collaborative process. Even the title was chosen by committee (and it probably shows it). Yet, somehow it all came together in Abidjan in late November 1993. Some late arrivals were moved to other hotels because another conference got some of our rooms. And there was a danger that the whole country would be closed down with the imminent death of its long-standing president, Félix Houphouet-Boigny. But at the close of the conference, everyone seemed to agree that it had met its objectives. Perhaps policy and program design dominated the dis- cussion, more so than process, but it became clear that many of the basic principles of policy and program design are still being debated by practitioners. Problems tended to figure more promi- nently than success stories, but this is part of the challenge