"Small business is an asset for developing states"

Small business can the be engine for economic achievement writes Alphonse Akouyu, 20, a Commonwealth Correspondent from Bamenda in Cameroon, as he examines the potential for small enterprises to drive sustainable growth in developing countries.

In every economy nowadays, small businesses are gradually becoming a force to reckon with, not just in terms of satisfying the needs of the petit consumer but to a certain extent that of the large scale consumer. In fact where corporations and companies end in the customer supply chain for varying reasons, small businesses take over and ensure that they cover nooks and crannies of the market no matter the situation.

Generally, the definition of small businesses varies because what can be considered a small business in America can be a large scale company in Kenya. Size, capital and the number of employees have often been used by scholars to distinguish micro enterprises from large scale companies. In most developing states employees might range from one to ten in number, with size being a combination of both capital and work force.

Small businesses have over the years answered questions such as ¨would your solution give people opportunities they didn’t have before and does it create new sources of income?¨(Hult Prize 2013 Guide). This is because small scale enterprises are sensitive to the needs of the consumer and know how to reach them.  There is no doubt about their active role in income creation, employment, poverty reduction and improving other social aspects of the small business owner. An IFC report describes small businesses as key drivers for growth and job creation. In Ghana for example, Ghanaian micro-enterprises which employ fewer than five people accounted for 70 per cent of the country’s workforce (Government of Ghana, 2303; World Bank, 2006). Ajayi (2002) asserted that small-scale businesses in Nigeria represent about 90 per cent of the industrial sector in terms of the number of enterprises. They also account for 70 per cent of national industrial employment, contributing ten per cent of manufacturing output and contributing significantly to economic development through employment, job creation and sustainable livelihood (Nigeria Investment Promotion Commission, 2003). In Sri Lanka, in 1996, small and medium scale industries accounted for 85.4 per cent of all businesses and 36.3 per cent of employees. Further, it is noted that they play a vital role in socio economic development in Sri Lanka (M.D. Pushpakumari & Toshimitsu Watanabe 2008).

Micro enterprises are not without their own problems and key amongst them is financing. Ou & Haynes (2006); Cook (2001) noted that the availability of finance has been such a major factor in the development, growth and success of small enterprises that most countries are creating specialised banks and ministries. In Cameroon for example, the government created the Ministry of Small and Medium Size Enterprises, Social Economy and Handicraft in 2004 and of recent the Banque Camerounaise des Petites et Moyennes Entreprises or Cameroon Bank for Small and Medium Size Enterprises went operational this year, according to an article by Cameroonbwebnews.com titled ‘Cameroon: Small Medium Enterprise (SME) Bank opens in 2014’, published in November 2013.

However, financing problems must be properly addressed. Abdulaziz M. Abdulsaleh & Andrew C. Worthington (2013) assert that there is no doubt that access to finance is of crucial importance for the sustainable growth and profitability of the small and medium enterprises sector (SMEs). Financing facilitates the creation of new businesses, nurturing the innovation process as well as promoting the growth and development of existing businesses, which in turn boost national economic growth. SMEs also face problems in areas of taxation, managerial skill, financial management skill and overall business knowledge because the majority of small business owners are not experts in these areas.

There is really no doubt as to the fact that most of the large companies that exist today began as small businesses. Kelly Edmiston (2007) confirms this by saying that the the MITS’ Altair (1975), and the first personal computer as we know them today, the Apple II, were developed and marketed by very small businesses. The first software written specifically for the personal computer (BASIC) was developed and marketed by Paul Allen and Bill Gates as part of a small business, Traf-O-Data, which would later evolve into Microsoft in 1975. Small businesses would without doubt continue being assets in sustainable socio economic growth in both developing and developed states thereby confirming what Chu, Hung M, Kara Orhan, Benzing Cynthia (2008) implied – that micro and small enterprises (MSEs) are the leading force in the development of African economies and are essential for economic growth in many developing countries.
photo credit: BC Gov Photos via photopin cc
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About me:

Hello everyone this is your friend Akouyu Alphonse from Bamenda located in the North West Region of Cameroon. I’m currently in my last year in the Catholic University of Cameroon Bamenda studying Banking and Finance. I will be completing my studies in June of 2014 with the hope of becoming a Business/International Relations expert.

My areas of interest are serving as Journalist especially on Sports (football) and societal issues aimed at inspiring people to believe in themselves and volunteerism.

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Opinions expressed in this article are those of the author and do not necessarily represent the views of the Commonwealth Youth Programme. Articles are published in a spirit of dialogue, respect and understanding. If you disagree, why not submit a response?

To learn more about becoming a Commonwealth Correspondent please visit:
http://www.yourcommonwealth.org/submit-articles/commonwealthcorrespondents/

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