During the early 1980s as unemployment in the Coal fields and Steel towns of the UK grew, many miners and steelworkers ploughed redundancy money into small businesses such as taxis and hairdressing salons. It was enterprising – to a point – but made little contribution to the need for sustainable growth fuelled by innovative and productive SMEs.

Then, as now, it begs the question whether everyone is capable of being an entrepreneur. Often, this laudable mantra serves to fragment increasingly scarce credit facilities at the expense of loans to fewer, better quality business models. As the current recession deepens the impact of starving SMEs of much needed finance has strong parallels with the impact of microcredit and developing economies where rickshaws and kiosks proliferate when SMEs are the real route to sustainable growth.  (more…)


Text books are fond of linear supply chains that move in a logical flow from concept to consumer; cow to fridge (dairy); from a sketch to the clothes rack (textiles) and, from a bauxite mine to the fridge (coke). Process mapping takes us from raw materials to manufacture and, through various modes of transport to the retail outlet or, even the on line store. And yet, for many products such neat moves are far from reality as each step fragments into a multiplicity of interdependent actors – formal and informal. Take traditional carpets or rugs – from loom to room.

Carpet weaving

Carpet weaving


There are 13 million SMEs in India which accounts for 80% of all companies. They have a 40% share of industrial output and account for 45% of all exports mainly from sectors such as textiles, leather, jewellery, auto components and pharmaceuticals. They are the biggest employers in the country – second only to Agriculture. Many of them are an integral part of all sorts of supply chains that lead to formal brands on shelves or in the showroom. Without them few brands could be cost effective. And yet, according to statistics from SMERA (Small and Medium Enterprises Rating Agency) of all the investments made by SMEs in 2007 – Rs 100,000 crore or, over $20 billion – only 14% was provided by the formal banking sector! (more…)

We have short memories. Not long ago, the Internet spawned a rush to invest in everything that would help out the money rich / time poor generation. Crash. This year we have seen both sides of a similar coin. First, the three F’s (Fuel; Food and Finance) and scarcity driving inflation. And now. Crash and deflation. Not bad for six months! Maybe this is just a levelling back to what things are really worth. One thing is for certain, the informal economy is not the only place for “shadow” financial arrangements. (more…)