RURAL SMALL AND MICROENTERPRISE
PROMOTION PROJECT
THE PROJECT
Economic Justification
A variety of economic benefits
and project impacts, both direct and indirect,
are expected. In addition to handover operations
in 11 RSMEPP-I districts, over seven years, the
project will cover approximately 48 districts
(out of 98) in the 11 provinces. About 50% of
locally elected representatives and district mayors
in the project area will be trained on participatory
approaches and on local development. Each district
involved will be able to make use of a consultative
platform bringing together SMEs (represented by
collectives, professional bodies and federations),
locally elected representatives and the administrative
authorities. Women will constitute at least 30%
of the direct beneficiaries and will be represented
in the same proportion in decision-making bodies.
Sustainable national and local SME and MFI support
structures, and representative organizations of
SMEs (federations, collectives or professional
bodies) will be established. In total, it is expected
that 10 000 SMEs (including the 3 200 SMEs currently
covered under the first phase) will receive support
and that some 100 000 rural dwellers will directly
or indirectly benefit from the combined impact
of project activities. In addition, the capacity
and asset base of the financial sector will be
strengthened so that it can manage savings and
provide loans to SMEs. Access to finance in remote
rural areas will
be promoted through the establishment of 80 financial
centres.
While it is difficult to measure
the economic impact of a demand and process-driven
project such as this, a series of enterprise profiles
for representative activities has been developed
and the sensitivity of the activities assessed.
Fifteen typical enterprises have been analysed
and their financial rate of return varied from
10-91%. A tentative estimate on the number of
enterprises in each category arrived at an economic
return of 33%. Internal financial returns vary
widely and are highly sensitive, therefore an
eight per cent increase in cost reduces the economic
return to 12%. During project implementation,
SME performance will be monitored (component 2)
and entrepreneurs will be helped to improve their
performance and reduce risks. New entrepreneurs
will be informed of profiles and financial returns
so that they can make informed viable choices.
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