Rethinking Small Enterprise Development: between Poverty and Growth

1 RETHINKING SMALL ENTERPRISE DEVELOPMENT: BETWEEN POVERTY AND GROWTH Economic growth is the prime means of creating income and employment opportunities. Where markets for products are expanding, poor people are able to establish sustainable livelihoods for themselves either by increasing their existing production and finding new products to market, or by finding employment opportunities with new or growing enterprises. Without growth-with stagnant or even declining incomes-the poor will only be able to make insignificant improvements in their livelihoods at the expense of other poor people (DFID 1997: 29). For the small-scale economy 1 to be genuinely capable of contributing to lasting growth in Africa, it must be formalised. Links must be incorporated that are capable of transmitting macroeconomic signals and generating incentives for expansion. Such links may consist of more comprehensive credit systems, reliable regulatory systems and functioning institutions. Accordingly, the small-scale economy and the informal sector become more amenable to economic measures-no longer " just " a means of livelihood for poor groups in the population, but also an important pillar of the country's economic future (Swedish Ministry for Foreign Affairs 1997a: 119).