Small business is receiving a surge of interest in the developing world as it has never received before. Schumpeter's concept of "Small is Beautiful" is taking on new meaning as the international development community, is giving serious attention to the specific needs of businesses who are beyond the levels of subsistence concentrating on the needs of those businesses which have the opportunity, whether they be in Africa, Asia or Latin America, to build organizations with a potential multiplier effect on employment. Certainly in many instances there is an absence of adequate management talent, and most importantly a legal framework to create a more hospitable environment. But first and foremost is the need for patient double bottom line capital that is willing to sacrifice some degree of financial return in exchange for accomplishing worthwhile social objectives. This translates into accepting potential single digit returns in exchange for creating thousands of jobs over an extended period of time.
Just last week, two conferences with significant attendees from the development finance organizations such as the IFC, World Bank, DEG, FMO as well as SECCO, multilateral finance organizations, together with some of the worlds leading foundations such as Shell, Omidyar, Google, Rockefeller, Skoll etc., and 500 others were first present in Geneva, at a conference entitled Investing Private Capital in Emerging & Frontier Markets SMEs, run by Casin, The Center for Applied Studies in Negotiation immediately followed by a UN conference on the same subject. Back in New York over 2,000 individuals attended the Third Annual Clinton Global Initiative which had a clearly delineated track devoted to "Poverty Alleviation" where the focus of discussion was on SMEs -- Small and Medium Sized Enterprises what we tend to refer to in the developed world as "Venture Capital companies." For the first time since 2003, which was "The Year of Micro-Credit", attention was shifted and a clear delineation was made between lifestyle businesses and businesses prepared to enter the formal sector of their local society and meet the conditions of corporate governance, standard accounting practices, minority investor protection and, of course, legal governmental reform required to encourage such investment. Clearly, much has happened since the Monterey Conference of 2003. Today many more countries, particularly in Africa, have developed trained entrepreneurs awaiting the opportunity to implement well thought-out business plans to meet the enormous commercial opportunities which are available.
Consider for a moment the potential financing gap. The global availability of venture capital and private equity according to last year's figures were about 3% of GDP; in Kenya it was .07%; Uganda .05% which suggested that just for East Africa alone a financing gap of $100 million a year or $1 billion over the next decade, a figure which in some respects seems so small but on a local basis seems so very large.
New thinking, new instruments and a new vision are needed to encourage the increasingly educated and trained cadre of entrepreneurs, who have followed our advice of increasing skills and education, that opportunities do exist for those with good ideas trained to implement their vision.
The implementation of their ideas will not necessarily look like Silicon Valley, but the Steve Jobs, The Sergey Brins and Larry Pages as well as the Howard Schultzes and Ralph Laurens are out there and can not only generate businesses with local and international potential but serve as role models for other young men and women to follow.