Micro and small enterprises have demonstrated their potential to deliver integrated poverty-environment-climate solutions that meet today's development challenges and can accelerate the transition to fair, green and resilient economies.

Growth of such enterprises is often hindered by restricted access to key drivers for enterprise development-credit, technology and markets. There is increasing evidence that poor infrastructure and inadequate market support systems are among key factors that constrain the growth of the sector in developing and emerging economies.

Government entities and service providers often are restricted in their outreach and nature of support services to micro and small businesses. Moreover, enterprise support service providers often do not engage with one another to mutually support business development. Civil society organisations have made progress in promoting green and inclusive micro and small enterprises, but typically have limited ability and capacity to support their development at scale due to the lack of a business orientation, inadequate financial resources to provide post-commissioning support and other factors.

Unlocking the transformative potential of micro and small enterprises hence, requires a more comprehensive, integrated and multi-stakeholder effort to address the systemic barriers to catalysing innovation and growth; to create the enabling conditions for such enterprises to achieve significant scale and impact; and to build the sustainability and resilience of the enterprise sector itself.

Meso level aggregators and market players play a significant role in translating these innovations from a simple idea into a concrete model – that is resilient and competitive within the formal economy. These are essentially group based or individually run entrepreneurial endeavours that bridge critical gaps in value chains by connecting local enterprises to high-end markets through aggregation of their products/services.

Development Alternatives Group (DAG) has been working on models for access to agri-inputs, farm aggregation and collective access to extended markets. To help farmers realise improved prices for their produce, DAG has supported the establishment of aggregation platforms for farmers to collectively access formal and extended market channels. Equipped with post-harvest management infrastructure, the aggregation centres serve as common facility centres to cater to value addition requirements of farmers to realise improved returns from the market. Direct linkages with buyers helps farmers realise improved returns owing to the elimination of middlemen from the supply chain. Work has been done on the value chain development of spices, dairy products and vermi-compost to enable farmers to realise improved prices.

Farmers are formed into farmers' clubs or collectives and linked to apex level farmer producer organisations (FPO) in order to enhance their collective bargaining power with the market. The FPO enables access to resource efficient and sustainable farm technologies, inputs and practices for production that is responsive to the needs of the market while understanding the needs of the farmer. The FPOs operate on self-sustainable business mode while being driven by the interests of its member farmers. Core members of the organisation are trained on aspects like farmer mobilisation, technology assessment, business operations, financial management and market negotiations. To help farmers effectively engage with the market to realise improved returns, their capacities are built to provide services for agri-inputs and accessing marketing channels.

At present, DAG is nurturing 7 FPOs in Uttar Pradesh and Madhya Pradesh providing services to over 1500 farmers. ■

Endnote

¹International Finance Cooperation. 2012 Micro Small and Medium Enterprise Finance Market in India

Leon Sra
lsra@devalt.org