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Generating growth and jobs through competitive small and medium-scale forest enterprises

CHALLENGE
SMEs are thought to constitute 80–90 percent of enterprises in the forest sector and employ over 40 million people (either part-time or full-time). SMEs also primarily service the domestic markets for wood and non-wood products—markets that in many regions of the world are growing in tandem with the middle class.
 
Despite receiving widespread support, forest sector SMEs, like SMEs more generally, suffer from limited access to business and financial services, lack of support to enhance their competitiveness, regulatory measures that constrain their ability to operate in a "legal" space or that create perverse incentives, and limited access to markets. These and other challenges for SMEs have been widely identified, and recommendations and efforts have been made to address them in a fragmented and often sectorally bound manner, limiting the effectiveness of interventions. A possible explanation is the limited consideration given to whether SMEs should be engaged in a particular forest subsector, and how to enhance their competitiveness.
 
APPROACH
The long-term development objective of the proposed activity is to create market and policy environments that support competitive SMEs in the forest sector that are sustainable and contribute to job creation and growth.
 
Using a “sector-neutral" approach, this activity will examine if forestry can contribute to a broad, sustainable development agenda, how it compares to other sectors, and the extent to which SMES could be part of forestry’s contribution to achieving that agenda. This will involve analysis – both at a high level and looking in depth at three countries - of knowledge around forest SMEs, their relation to sustainable growth, their access to financial and technical services, and how to assess the impact of regulations and enhanced competitiveness. An additional component may be added to this work program, focusing on the link between SMEs/community enterprises and job creation in the natural resource sector. This would entail a stocktaking on which demographic segment benefits from forest-sector SME employment and job opportunities; an assessment of the skill development needs for rural enterprises plus cost-effective models for meeting these needs; and ideas on how to increase opportunities for young people to engage in innovation in rural areas and forest-based enterprises.
 
FINDINGS AND RESULTS
This activity is ongoing. Based on the outcomes of this work, knowledge on opportunities to engage with SMEs will be used to augment existing briefs and infographics, and promoted in a way that is accessible to partners within and outside the World Bank. 

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Last Updated : 02-24-2017

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