Setting the stage for SMEs in Fragile States

Today, there is a growing recognition of private sector in not only the fight against rural poverty, but also in its contribution to national development. But due to the increasing trend of conflicts in the developing world, the power of the private sector has become questionable. There have been enormous debates about whether SMEs have a future in fragile states. A number of researches and studies have been conducted to this regard, but the answer still remains elusive to date! However experiences in Southern Sudan, one of the most fragile states on earth show that, for SMEs to thrive in post conflict environment, there are a number of things that have to be put right..........

First and foremost, the major challenge of infrastrusture development commonly affecting businesses in fragile states need serious attention from both the public sector and private sector. Informal SMEs can thrive better only if the cost of doing business is reasonably lowered, this enables enterprenuers to affort resonable start up capital for initiating business.

Secondly, priority has to be given to development of financial institutions to enable the emergence of browing and lending transations. It is common practice in fragile states for enterprenuer to relay on the use of their own financial capital to finance their business. This is due to 1) total lack of financial services 2) extremely high interest rates imposed by the few available MFIs 3) the lack of knowledge of how the borrowing and lending busness work, this is mainly because most enterprenuers in fragile states are illitrate and finally lack of trust!

Thirdly, the need to establish favourable policies with deliberate support to SMEs and local enterprises is a positive way to go. In this regard, governments and their partners in frigile states need to work together to support the putting in place of policies that enable private sector development. Unclear policies such as those of taxation (multiple taxes), long bureaucracies, etc are common charateristics of doing business in fragile states

The list is too long, but I want to end with the two most critical success factors for enterprise development in fragile states, the training component and peace building components......business is business whether in fragile state or in stable states, in business the common target is to make profits. However, due to the challenges that the fiagile states enterprenurs face and also given to the fact that they are charaterised by high levels of illitracy and low business skills, it is a critical factor to enhance the business skills of enterprenuers in fragile states. Governments and their development partners; NGOs and Internetional companies must invest in establishment of training institutions the teach life skills for the low skilled enterprenuers. Additionally, movement of goods and services is hindered if there are spontenous outbreak of fresh conflicts. So Governments, NGOs, Communities and individuals have to invest Substantial amount of time and resources to mitigate conflicts.

It is my believe that if all the above are attended to, or being attended to, the stage for development of SMEs in post conflicts environments is set.