networks between NGOs and government to change policies, where needed (Fellows, 2003).
Tax incentives often work against small-scale enterprises as they must to be registered or licenced to receive the benefits (Harper, 1984a). Licencing a small-scale enterprise can be very expensive and time-consuming (Harper, 1984a). Government departments such as Trade and Industry, that are involved in licencing and controlling, as well as promotion of small-scale enterprises, could face resistance from small-scale entrepreneurs, as controllers will most likely not be accepted as helpers (Harper, 1984a). Potential entrepreneurs are often discouraged to apply for financial incentives such as government grants, due to the complicated bureaucracy involved in the application process (Cardoso, 2000).
Government departments tend to provide large grants and other assistance to a few selected enterprises and continue to invest in these enterprises, whether they are viable or not, because the officials concerned do not want to lose face (Harper, 1992). Only a few enterprises can be assisted to this extend, resulting in a large number of enterprises having to survive without assistance. If the enterprises that did not receive assistance from government fail, they may ascribe their failure to the government, not realising that success of the enterprise must come from their own efforts (Harper, 1984a).
The case study of the bakery in Botswana highlights the effect that government policy can have on the success or failure of an enterprise. Despite various constraints, the group managed to increase bread sales five fold in the first eight months of existence. The opening of a large bakery in Gaborone (370km away from Serowe) by the government caused a major decline in sales by the small-scale bakery (Carr, 1985).
Another extrinsic constraint that small-scale food processing enterprises face is the lack of institutional support. Inadequate support services may include a wide range of aspects, starting with teaching institutions who do not have sufficient skills and understanding of small-scale enterprises; development consultants lacking skills and professionalism; poor access to research and development institutions and a lack of, or poor quality engineering support to develop appropriate equipment (Fellows, 2003). The role of institutional support in the success of a small-scale food processing enterprise will be more fully discussed in the next section.
2.6.2 The role of institutional support in small-scale food processing enterprise development
There are many organisation that provide institutional support to small-scale enterprises.
Harper (1984a) suggests that inter-institutional competition may ensure that the small-scale enterprises get the best institutional support possible. Aspects that can be addressed through institutional support include monitoring of government policy, providing finance for small enterprise development, management and technical training, advisory and extension services, development of technology marketing support and provision of infrastructure (Harper, 1984a).
Most small-scale enterprises need some financial assistance at start up. Whatever capital is available for the development of small-scale enterprises needs to be used for as many beneficiaries as possible and used effectively to maximise the creation of new jobs, rather than creating a few capital intensive enterprises (Harper, 1984a). Several case studies decried by Harper and Ramachandran (1984); Harper and Vyakarnam (1988); Mavhunga et al. (2004) and Salagae et al. (2004) highlight the problem of low rates of loan repayment by small-scale enterprises. The case study of the Starehe General Engineering Society in Kenya, although not a food processing enterprise, demonstrates the danger of relying on continued financial support from donors and financial institutions for small-scale enterprises. In this case study, a group of young men were selected and provided with advanced skills training in steel work. The Starehe General Engineering Society was established and for four years received grants from voluntary organisations to develop the enterprise. Despite continued financial assistance and advanced skills training; the group did not manage to secure a sustainable market and was reliant on contracts from international agencies. The enterprise was, in effect, protected from the real situation of overcoming competition with good-quality products and did not grow into a viable company (Harper and Ramachandran, 1984). It is of critical importance that a small-scale enterprise generates profits to ensure sustainability. Even if small-scale enterprises are supported by an NGO, the NGO will exit from the project at some stage. It is becoming more and more difficult to secure funding from donor agencies if an exit strategy is not clearly indicated (Dawson, 2002a).
Finding a reliable market can be a daunting task, as can be seen from the Starehe General Engineering Society case study. Government and developing agencies can play a role in facilitating market links for small-scale enterprises (Harper, 1984a; Kapila et al., 2002).
Government should keep a list of products that could be purchased from small-scale enterprises, as is the case in India and in the United States, and place emphasis on purchasing goods from these enterprises on the lists (Harper, 1984a).
Development agencies have different approaches to helping small-scale enterprises to establish markets. In some cases they link the small-scale enterprise with larger enterprises, to lower transport costs (Dawson, 2002a). In other cases, the developing agency assists in the establishment of a marketing company (Dawson, 2002b; Rawlinson and Fehr, 2002;
Stosch and Hyman, 2002). The establishment of marketing companies is a more comprehensive and often longer-term intervention, as the marketing companies establish links with a number of institutions, ensuring a network of market outlets (Kapila et al., 2002). The establishment of marketing companies is relatively expensive and time consuming and involves a great deal of co-ordination among various role players (Kapila et al., 2002). Development agencies can help with marketing, but it is important that they do not buy or force other people to buy products that are not competitive in price and are of poor quality, as this will mislead the entrepreneurs and keep them financially dependent on donors (Harper, 1992).
Provision of training and advisory services commonly performed by government officials, banks and staff from developing agencies must be needs driven. Therefore trainers and advisors need to be trained in identifying problem areas that small-scale enterprises may face, such as lack of marketing skills and direct training to respond to problem areas (Harper, 1984a). The success of training depends on the commitment of the trainer to respond to a demand, rather to train for the sake of training. The training institute could include the sharing of information on available appropriate technology (Harper, 1984a). As advisors often over-emphasise the importance of training, it remains important that the entrepreneur requests training and that the entrepreneur has to sacrifice something to acquire the training, such as providing the raw material; this could prevent customers from
attending training for the sake of training which is not to be used for the enterprise (Harper, 1992).
The need to share information on available appropriate technology is more important than the need for the development of appropriate technology, since manufacturers of capital- intensive processing equipment promote their products aggressively (Harper, 1984a).
Appropriate technology research for small-scale enterprises is often allocated to universities and government research, resulting in reports and demonstration units that typically do not meet the needs of target markets. Harper (1984a) suggests that small, locally based institutions may be the best way to introduce new technologies to small-scale