CROSS-COUNTRY WORKSHOP FOR IMPACT EVALUATIONS IN FINANCE
AND PRIVATE SECTOR DEVELOPMENT
Dakar, February 1-4, 2010
RSA
The Impact of Improving SMMEs'
Networking Capacity
Lusapho Njenge
Small Enterprise Development Agency
Title
Background
Major constraint for SMMEs is the difficulty to expand
their customer base
Particularly acute in RSA due to the legacy of
institutionalized segregation, closed business
networks, limited business interactions between
groups
Andrews (2007): selection of suppliers in RSA is done
primarily through internal referrals and CEO's social
networks
.....despite preferential procurement policies
(Black Economic Empowerment)
Title


Possible Reasons
To search for SMMEs and to screen them can
be too costly...
As a result, large firms end up outsourcing to
large firms

Better information because of overlapping social
networks, easier to signal credibility and quality of service
Title
Priorities for Learning:
Interventions
How to link SMMEs to the private sector
How to reduce the cost of searching for, and
screening SMME suppliers, particularly for
groups with lower networking capacity
(gender, race, youth)
Title
Evaluation Questions
Does improved information on SMMEs
increase their share in the supply chain?
Does the impact of information vary by the
SMMEs owner's gender, age group or
race?
Women, young, and black-owned SMMEs
tend to have lower networking capacity
Title
Evaluation Design
Intervention
Creation of an online (and sms-accessible)
MARKETPLACE to link SMMEs to larger firms
Intervention 1: Reduction of search costs
– Searchable Directory of SMMEs (contact info, size,
location, sector)
Intervention 2: Reduction of search costs +
Reduction of screening costs
– Performance Rating System, mapping of existing
business relationships
Features
of
the
Marketplace
Title
DIRECTORY of SMMEs
Searchable engine by size, location, type of SMME
BUSINESS NETWORKS MAPPING
Maps of existing business relationships for each SMME
PERFORMANCE RATING SCHEME
Client firms rate performance of SMMEs, make referrals,
provide feedback
Title
Gender, Race and Youth
RACE and YOUTH
Directory of SMMEs is balanced on race and age of owner
Generate comparable groups, within each of these
categories, in terms of size, sector and length of
establishment
GENDER
Start by NOT providing gender of the SMME owner on the
marketplace
6 Months later, phase it in
10 Months later, remove it (broken link)
Title
Sampling
Pilot of the Marketplace
KwaZulu Natal province, good distribution of
SMMEs across gender and race
Sample Size
Random assignment
1,500 SMMEs (treatment group)
1,500 SMMEs (comparison group)
Client firms log on and get randomly assigned to
Intervention 1 or Intervention 2
Block Randomization
within race and age group of owner
Title
Data
LISTING of FIRMS
Business Registries
Business Chambers
Seda Database
SURVEY of SMMEs and LARGE FIRMS
Baseline and Follow up survey
3,000 SMMEs
500 randomly selected large firms
Data collected
Relationship with suppliers, type of contracts, performance
indicators, share of supply chain secured by SMMEs
Title
Data
MARKETPLACE
Track all interactions between clients and suppliers
-clients have to click through to get the contact info,
request a quote, obtain a more detailed description of
each SMME
Obtain direct feedback from participants via periodic minisurveys when firms log on
Timeline
for
Impact
Evaluation
Title
TASK
DATE
Listing of Firms in KZN (Sampling Frame)
April 2010
Outsource Marketplace Development
July 2010
Baseline Survey
July 2010
Pre-test Marketplace and Promotional Campaign
Launch Marketplace
Gender Switch (Remove Disclosure of Gender of SMME
Owner)
Follow up Survey
August 2010
September 2010
March 2011
September 2011