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State of the Small & Growing Business Sector 2016

Posted By Administration, Thursday, June 22, 2017
Updated: Monday, June 19, 2017

State of the Small and Growing Business Sector:

2016 Impact Report

by the Aspen Network of Development Entrepreneurs 

Since 2009 ANDE has been tracking the state of the small and growing business (SGB) sector to assess its growth and impact on emerging market economies. This year’s report begins with an overview of SGB intermediaries in 2016, including data on capacity development services, direct investments into SGBs, and donor funding. Next, the report focuses on trends and activities at ANDE’s six most established regional chapters: Brazil, Central America/Mexico, East Africa, India, South Africa, and West Africa.

Capacity Development Services

Capacity development services like mentoring, skill-building, and network expansion are a critical component of the SGB sector.

  • Forty percent of ANDE members identify themselves primarily as capacity development providers, but many investors also provide nonfinancial support.  The most common type of service is facilitating mentorship and peer networks.
  • Within the diverse landscape of capacity development service providers, accelerators have emerged as one model with a consistent program design. These are time-bound programs that work with cohort of entrepreneurs and typically focus on connections to investors. Ongoing research from GALI shows increasing evidence that accelerators positively impact participants’ future revenue earned, investment raised, and jobs created.
  • Recruiting, developing, and retaining talent is a key challenge for SGBs, and many capacity development providers are stepping in to help.  For example, the Argidius-ANDE Talent Challenge winners are testing solutions to identify, attract, and retain middle- and senior-level managers.
  • Corporate partnerships are increasingly central to the SGB sector.  Large companies partner with SGBs as potential customers, suppliers, or sources of innovation. Corporate foundations are important funders in the sector, and corporate social responsibility units often facilitate important capacity development services. However, data shows that the majority of ANDE member partnerships focus on the corporation’s core business unit.

SGB Investing

Over the past decade, new SGB investors have been steadily entering the market, and the percentage of emerging market deals that are US $2 million and under continues to increase annually.

  • Over 500 investment vehicles have launched in the past 10 years that invest in emerging market SGBs, with an estimated US $28 billion in committed capital.
  • Fifty-three investment vehicles launched in 2016, and raised over US $2.7 billion in committed capital.
  • South Asia has dominated new vehicles launched in the last five years, and health, financial services, and agriculture were also on the rise. 
  • According to the Emerging Market Private Equity Association (EMPEA), US $278 million was invested in deals US $2 million and under in 2016, which represents 28 percent of total emerging market deals.

Donor & Foundation Funding for the SGB Sector

Funding from public and private donors is an important source of support for capacity development services, as well as investments into funds that focus on SGBs. 

  • Funding for SMEs rose dramatically from US $2.4 billion in 2013 to US $4.7 billion in in 2014. In 2015, the amount of donor disbursements increased to US $4.8 billion.
  • This growth is due to funding from European donors and institutions, which made up 80 percent of all donor disbursements to SMEs in 2015.
  • In 2015, Turkey received the most SME funding for the third consecutive year.
  • Between 2010 and 2014, US foundations gave US $536 million in almost 3,000 grants focused on entrepreneurship or social enterprise in developing countries.

Regional Insights

ANDE’s seven regional chapters promote collaboration and knowledge sharing among local ANDE members and support regional activities and advocacy efforts that support SGBs in the region.  For each chapter, the local context is distinct, and presents diverse areas of opportunity.  The final section of the report highlights data on each entrepreneurial ecosystem, and regional leaders’ perspectives on key trends for each region. 

 

Read the report now

Tags:  2017  ANDE publication 

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