Evaluation: Private-sector development support to SMEs by PUM
PUM aims to contribute to sustainable economic development by enabling Dutch senior experts to transfer knowledge to small and medium enterprises in developing countries, thereby improving their performance. Argidius partnered with PUM in 2013, advising 40 SMEs in Nicaragua, Guatemala and Honduras, and renewed the partnership in 2016. This second phase supported 55 SMEs, and 15 Micro-enterprises. The median baseline revenue of enterprises supported was EUR1 million. As at the end of 2019, these enterprises grew at a median annualized growth rate of 15%, generated EUR69 million in incremental revenues, and created 689 full time jobs.
The following results of PUMs impact are based on findings from PRIME. PRIME is a research partnership between Wageningen Economic Research, Erasmus School of Economics, PUM and the Centre for the Promotion of Imports from Developing Countries (CBI). PRIME uses assess quantitative analysis of administrative data and online surveys with the qualitative analysis of interviews held with PUM beneficiaries, experts and stakeholders in five countries: Peru, Bolivia, Uganda, Bangladesh and Indonesia. While the countries focussed on as part of the Argidius partnership were not included in this PRIME research scope, the findings resonate with the experience in Central America.
- The results show that PUM has contributed to one or more changes in knowledge and business practices for 90% of the businesses they support. PUM’s contributions were most significant in three areas:
- (1) efficient ways of organising the business,
- (2) leading, planning and organising the business, and
- (3) ideas about new products and services.
- PUM’s contribution to better practices has helped to improve SMEs’ performance.
- Typically, a company’s sales increased by about €11,000 (34%) following PUM support compared to sales before PUM support.
- The effect of PUM’s support on employment varies according to the focus of the missions.
- Missions that focus on efficient ways of organising the business increase employment in the business by 33%, while
- Missions that focus on financial management reduce employment by 18%. However, missions that focus on financial management target companies that have financial problems and have to cut costs.
- “The right kind of expert, at the right time, can speed up the overall development of the firm.“
- The effectiveness of the support depends to a large extent on the qualities of the expert, the timing of the mission, and the communication between the expert and the SME manager. PUM’s interventions are not always successful in boosting a firm’s performances.
- The presence of strong business support organisations (BSOs) was identified as an important enabler.
See a summary of the key findings and find below the full report: