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SMALL & MEDIUM

ENTERPRISE
DEVELOPMENT (SME)
Team Name: 1919

Members : Glenroy Phillip Gerard Chung
Hessie P. Martin Sarah Maharaj

Dated : 7
th
March, 2009

Presentation Outline
What is the SME?
Profile of the SME sector
Small Business Development Issues
Microenterprises Development
Creating and Entrepreneurial Environment
Development Models
Agenda for Entrepreneurship
Conclusion

What is the SME?

From a quantitative perspective - Small & Medium
Enterprise comprise of :
Less than 25 employees
Less than 4,000 sq. ft. of manufacturing area
Less than US$50,000 investment in equipment; (Note:
Investments exclude real estate)
Less than US$125,000 annual sales
The value of the machinery, equipment and working capital
must not exceed $1.5M
-
What is the SME?
From a qualitative perspective - Small & Medium
Enterprise signifies :
the owner of the enterprise works alongside
his/her workers

the enterprise is classified in the "formal" sector
Profile of the SME sector


Main Characteristics
Challenges
Barriers

Profile of the SME sector
Main Characteristics of the SME Sector of T&T
can be classified in the following sub-sectors:

Food and agro-processing Marine and fishing
Woodwork and furniture Garments
Emerging technologies Handicrafts
Transport Services
Light engineering and electronics
Tourism and service related activities
Profile of the SME sector Contd
Between 70 and 80 percent of businesses in the
country belong in the SME sector
Approx. 45,000 SMEs are operational in T & T
The MSME sector contributes significantly to
the countrys GDP (5-10%).
The MSME firms are leaders in manufacturing
sub-sectors such as wood products, garments
and sewn goods and handicraft items.

Profile of the SME sector Contd
CHALLENGES

Lack of access to or knowledge about available
resources including credit and training

Limited market access

Lack of e-business infrastructure

Most of the MSEs are dependent on Imported raw
materials (either primary or secondary) which are
expensive and sometimes not available on time

Profile of the SME sector Contd
CHALLENGES

Skilled and experienced staff now attracted to
the sector.

Only 3.6% of the small businesses in Trinidad
and Tobago are exporting goods and services.

High financial and labour costs resulting in
uncompetitive pricing.

Profile of the SME sector Contd
BARRIERS

Difficulties of access to new technologies or the inability to
adapt to local conditions

Inability to access private and public procurement opportunities

Non-availability of affordable technical and managerial
consultancy

Educational levels including computer competency

Inability to conduct Market research

Small Business Development Issues
MSEs have almost identical problems, but with varying
degree:
Legal constraints
Institutional constraints
Infrastructural constraints
Financial constraints
Non-availability of appropriate training and
technical assistance (TAT)
Marketing constraints
Business Survival or Failure

Small Business Development Issues
Contd
LEGAL CONSTRAINTS

While the importance of the MSE sector has been recognized and articulated in
official statements, no clear and comprehensive policy has been put forward for
its further development.

With the exception of the various Co-operative Societies Acts and in some
countries the New Companies Act, existing laws do not address the needs of the
small business sub-sector. While there are existing laws in all countries which
directly or indirectly affect the MSEs, there is no specific legislation aimed at the
establishment and the development of micro and small enterprises.

Fiscal Incentives and Hotel Aid Ordinances provide substantial incentives and
concessions, however, MSEs are generally ineligible because they either do not
satisfy the value-added criteria or are unable to present satisfactory investment
plans.

Small Business Development Issues
Contd
LEGAL CONSTRAINTS

Customs laws provide for the conditional exemption of duty.
Benefits to MSEs particularly in the anufacturing sector are
usually extended on an ad-hoc basis with approval of Cabinet
given after long delays and complicated procedures.

The Consumption Tax/VAT legislation generally requires that
all enterprises engaged in manufacturing be registered.
Unregistered enterprises remain ineligible for concessionary tax
rates on raw materials and finished products

Small Business Development Issues
Contd
INSTITUTIONAL CONSTRAINTS

Though there are many agencies which provide support for the small business
subsector, there is no institutional framework for facilitating the planning,
implementation, coordination and valuation of activities in this sub-sector.

Considerable duplication and replication of programmes.

There is no recognized national forum that provides an opportunity for MSEs
to exercise leadership and to participate meaningfully in the national decision-
making process. National Small Business Associations are weak or non-
existent and also lack financial and human resources.

The absence of an "one stop agency": small enterprises are unclear as to
"whom to approach for what" resulting in bureaucratic delays; they find it
difficult to access information, etc.

Small Business Development Issues
Contd
INFRASTRUCTURAL CONSTRAINTS

The unavailability of economically priced
factory/warehouse/commercial space for MSEs is considered in
many Caribbean countries to be one of the major impediments to
their growth and development.

The high cost of rent and limited commercial space in urban areas
adversely affects the profitability and development of MSEs.

Inadequate, unreliable and high cost of basic utilities (electricity,
telephone, water, roads, etc.) are considered to be other constraints
faced by MSEs in most of the Caribbean countries.

Small Business Development Issues
Contd
FINANCIAL CONSTRAINTS

The lack of accessible and affordable financing and appropriate financial
mechanisms remain a major constraint for small businesses, mainly due to:
lack of collateral
low credit-worthiness in terms of business experience
low capitalization which limits their borrowing capacity
the high risk involved in unproven management capability
uncertain market access
apart from the difficulty in obtaining start-up loans, many MSEs are unable to
source working capital resulting in premature failures. In fact, working capital
has been identified as perhaps the single most relevant financing constraint.
Small Business Development Issues
Contd
NON-AVAILABILITY OF TRAINING & TECHNICAL ASSISTANCE
(TAT)

MSEs owners come from different social backgrounds, with varying degrees of
education, little or no business experience and with little or no prior training.
Many institutions involved in skills, business and some limited entrepreneurial
training, the efficacy and relevance is far from what is desired due to:

training materials being too complex and sometimes irrelevant
the absence of qualified trainers
the core function of many agencies is not training but provision of credit
the absence of technical skills training and upgrading in the sector
Small Business Development Issues
Contd
MARKETING CONSTRAINTS

Except in the agriculture sector, there is no formal institutional
arrangement for marketing the products and services of MSEs in
the national/regional and international markets.

MSEs have no access to market information/opportunities and
thus miss potential market for their products.
Lack of financial and human resources, MSEs do not have the
capacity for sustained advertising and promotion of their
products.

Small Business Development Issues
Contd
From empirical studies the key determinants are:
Choice of Business
Education and Experience
Collaboration: Internal/External team and
connections
Prior choices of Employer and geographic
location
Small Business Development Issues
Contd


Starting Capital
Management Practices
Individual make-up
General Economic Conditions
Microenterprises Development
Government Initiatives
Youth Training and Employment Partnership
Programme (YTEPP).

Small Business Development Company (SBDC)
in Trinidad and Tobago

Military Led Academic Training (MiLAT) and
MiPART
Microenterprises Development
Private Sector Initiatives

BPTTs programme in the Mayaro and Guayaguayare
district.
Microenterprises Development
The National Business Information Centre
(NBIC)
The Entrepreneurship Technology Institution
and Incubation Centre (ETIIC)

The Centre provides the following facilities:
A Customer Service Centre:
A Resource Centre:
Computer Databases:
Microenterprises Development
Educational Institutions
The National Energy Skills Training Centre and
the Skills Training Division of Metal Industries
Company.

Vocational Training: San Fernando Technical
College and the John Donaldson Technical
College and SERVOL.
Creating and Entrepreneurial
Environment
Establishment of national micro and small
enterprises boards
Implementation of a national small business policy
Introduction of entrepreneurial education in the
school curriculum
Develop programmes to identify prospective
entrepreneurs and business opportunities

Creating and Entrepreneurial
Environment
Development of exclusive entrepreneurship and
enterprise programmes
Management programmes for women, youth and
other disadvantaged groups
Development of stronger linkages between
employers'/workers' organizations and the SMEs
Creating and Entrepreneurial
Environment
Integrate technology-based institutions with the
SME sector and establish a strong networking
mechanism with other promotional/ financing
agencies
Development of infrastructural support services
through Small Business Development Centres
Development of the MSE Model


Two SME Models were developed by Prof. Saburo
Kameyama (Model for SME sector development,
2000), which were:
1.Micro Model: Factors that impacts on SME itself.
2.Macro Model: Factors that impacts on the socio-
economic environment of the SME.
Development of the MSE Model contd









Mirco Level Sector Model
Focus placed on development tools such as:
Financial Assistance
Govt incentive tools such as direct or
indirect financial assistance or
guarantee scheme and tax incentives

Marketing Assistance
Chamber of Commerce, Govt
exhibitions to promote SME and their
products
Technology Assistance
Govt agencies that focuses on
research and development in several
business sectors

Training Assistance
Agencies that provides education and
training programmes that provided
trained personnel to support the SME
sector

Development of the MSE Model contd









Macro Level Sector Model
Focus placed on Social-economic development tools such as:
Structure Adjustment
Govt policies that promotes
productivity and demand in different
sector of the economy, which impacts
on GDP.

Infrastructure
Development of Industrial Estates,
Ports, Access to Roads, Electricity and
Water
Development via Mutli-
National Companies
Development of SME through
linkages / trade between multi-
national companies and domestic
SMEs.
IT / Software development
Institutions that provides training and
support to an industry that is rapidly
changing and very important to the
development of any developing
economy. E-teck

Agenda / Outlook for Entrepreneurship
SME continues to be of strategic importance in any economy in
its growth in GDP, industrial development and its immense
potential for employment generation.

The main issues in the development of SMEs in the
future are:
The continued lack of access to timely and adequate credit.
New policies to restructure the industry in the context of current
global economic and financial changes.
Tighter patent laws through regulation of intellectual property rights.
The creation of new economic union, which limits market access.
Conclusion

It must be recognized that the support of this
country's entrepreneurial talent and spirit of
enterprise could only be achieved through
empowerment.

Conclusion
Development of SME sector: Importance

For strengthening leading industries
For developing future industries
It provide the impetus fir socio-economic
development in the country.

Thank You




QUESTIONS?