MICROCAPITAL BRIEF: Global Entrepreneurship Program: Is There Greater Need for Investment in Small and Medium-Sized Enterprises (SMEs) Than in Microfinance?

Alan Patricof, Founder and Managing Director of US-based venture capital company Greycroft Partners, argues in a recent issues of Fortune magazine that while microfinance institutions (MFIs) “do play an important role in development, there is an even greater need to support small and medium-sized enterprises (SMEs), which have the greatest potential for job growth in most places around the world” [1].

Mr Petcricof adds, “By helping local entrepreneurs grow their businesses through equity capital – not just debt assistance – businesses can scale and in turn have a multiplier effect on employment and economic activity. This creates wealth of the sort that lifts people sustainably out of poverty” [1].

Citing the Global Entrepreneurship Program (GEP), an effort led by US State Department to promote entrepreneurship around the world, Mr Patricof states that, “These initiatives are beginning to transform the way many think about economic development abroad” [1]. Launched in 2010, GEP “highlights the Obama Administration’s commitments to use America’s entrepreneurial culture to advance entrepreneurship in emerging markets and developing countries” [2]. GEP is a public-private partnership that coordinates NGO partners around six categories of activity: identifying entrepreneurs, training entrepreneurs, connecting and sustaining entrepreneurs, increasing funding for emerging enterprises, enabling supportive policy, and celebrating entrepreneurs’ successes [2]. Originally launched in association with US President Obama’s June 2009 speech in Cairo calling for greater outreach to Muslim-majority communities, GEP is slated to operate in 15 “focus” countries with launches so far having occurred in Egypt and Indonesia [2].

By: Alexandra Pattee, Research Associate

Sources and Resources:

[1] Fortune, “In developing economies, equity beats microfinance”, http://finance.fortune.cnn.com/2011/04/20/in-developing-economies-equity-beats-microfinance/

[2] US State Department Website, “About the Global Entrepreneurship Program”, http://www.state.gov/e/eeb/cba/entrepreneurship/gep/about/index.htm

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