The impact of strengthening micro, small and medium enterprises in Indonesia :-A case study of the USCc-Satunama project-

Abstract

In this mini-thesis, I explore what impact a particular project in Indonesia on strengthening micro, small and medium enterprises (SMEs) has on economic development. I argue, firstly that the project makes a positive contribution to development and secondly that an approach which combines training programs and technical assistance with credit makes a greater contribution than training programs and technical assistance alone. I use the view that SMEs are very important for development as the basis of my argumentation. In spite of this, there is a lack of support for SMEs from the Indonesian government. This gap of support for SMEs was and is partially filled by non governmental organizations (NGOs). The NGOs support SMEs in dealing with problems such as the lack of working capital as well as the lack of knowledge about production, marketing, and management. I focused my field study on the USC-Satunama project. USC-Satunama is a non-governmental organization which works (amongst other activities) to strengthen SMEs. Its activities include the provision of training programs and technical assistance to improve the human capital of the entrepreneurs as well as providing credit. Training programs and technical assistance are provided to all the beneficiaries of the project. However, not all beneficiaries are provided with a credit facility. Therefore, the respective impact of the two different types of support, (i)' a combination of training programs and technical assistance with credit and (ii) training programs and technical assistance alone, can be explored. I use the improved welfare of the entrepreneurs indicated by the increase of their profits as yardstick to ascertain the impact of the project on development. The result of the field study is: the approach of the USC-Satunama project, according to which a training program and technical assistance are combined with credit, indeed makes a significant and positive contribution to the welfare of the entrepreneurs and thus it contributes to the development of Indonesia.