Entrepreneurship Development

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Synthesis of Lessons Learned

Evaluation Office
No. 2, December 1999


Entrepreneurship development (ED) refers
to the process of enhancing entrepreneurial

skills and knowledge through structured
A worldwide consensus on the critical role of
training and institution-building programmes.
competitive markets and entrepreneurs in
ED aims to enlarge the base of entrepreneurs in
economic development has emerged in the last
order to hasten the pace at which new ventures
decade. In developing countries, the primary
are created. This accelerates employment
barrier to economic growth is often not so
generation and economic development.
much a scarcity of capital, labour or land as it
is a scarcity of both the dynamic entrepreneurs
Entrepreneurship development focuses on the
that can bring these together and the markets
individual who wishes to start or expand a
and mechanisms that can facilitate them in this
business. Small and medium enterprise (SME)
development, on the other hand, focuses on

developing the enterprise, whether or not it
employs or is led by individuals who can be
considered entrepreneurial. Furthermore,

entrepreneurship development concentrates
Entrepreneurship can be defined as the
more on growth potential and innovation than
process of using private initiative to transform
SME development does. However, many of the
a business concept into a new venture or to
lessons learned from experiences in both types
grow and diversify an existing venture or
of development are similar.
enterprise with high growth potential.
Entrepreneurs identify an innovation to seize

an opportunity, mobilize money and
This note on entrepreneurship development
management skills, and take calculated risks to
complements reviews of evaluation-based
open markets for new products, processes and
lessons that appear in two other issues of
Essentials: one on small and medium enterprise

development (no. 1), the other on microfinance
(no. 3).

family environment which is oriented towards
Lessons Learned

Try to think like an entrepreneur when
1. Begin with a clear understanding of the
designing ED projects, and involve private-
feasibility and objectives of the
sector representatives in the design process. In
determining the feasibility of the ED
programme, focusing on the development
programme, do not erroneously assume that
of ventures with the potential for rapid
entrepreneurship is an exclusive characteristic
of high-tech or knowledge-intensive

enterprises. Entrepreneurs can be found in all
There is a pervasive tendency to equate
entrepreneurship development (ED) with self-

employment. Many self-employed individuals
Example: A 1992 evaluation of a UNDP
are indeed entrepreneurs, but the majority are
International Labour Organization (ILO)
not. Their businesses are simply
entrepreneurship and technical training
microenterprises in the informal sector, with
programme in Kenya resulted in the
little growth potential. The promotion of self-
recommendation that “…electrical engineering
employment is a worthwhile objective, but it
graduates at a national polytechnic should be
should not be confused with ED.
considering such ideas as setting up a small
Entrepreneurship development programmes
firm as a partnership among several graduates,
that in reality focus only on self-employment
with service centres in three towns under a
are less likely to succeed in creating economic
unified logo, followed by a franchise-type
outreach to other towns after an initial success.

At the moment, the emphasis is too oriented
What to do?
toward one-person self-employment.” (Source:

UNDP, CEDAB, KEN/90/012)
Determine from the start whether the real focus

is entrepreneurship or self-employment; then

decide on the objectives accordingly.
Entrepreneurship development should be about
2. Develop criteria to select carefully the
helping people start and grow dynamic
target group that is the most
businesses that provide high value added. In
determining the difference, it is useful to look

at potential growth sectors or geographic areas
Entrepreneurship development programmes
and to explore criteria for selecting
require a selection process that attempts to
beneficiaries who are entrepreneurial. A needs
identify those target groups that have some of
assessment before programme formulation is
the key prerequisites for entrepreneurial
useful. An analysis of high-growth economic
success. While it can be argued that public
sectors enables more focused support to
funds should be spent on those who most need
entrepreneurs in the most promising sectors of
help, a selection process deploys limited
the economy.
resources where they are most effective, to the

overall benefit of the community. Beneficiaries
To identify risks and determine the likelihood
may be individuals and/or groups.
of success, identify the factors that affect the

levels of entrepreneurship in a country. These

factors include the perception of opportunity,

degree of respect accorded to entrepreneurs,
What to do?
acceptance of wide disparities in income and a

UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 2

The selection of those who are most likely to
security mechanisms (emergency fund, etc.) by
succeed as entrepreneurs should be based on
and for themselves. Other advantages may be
clear and transparent criteria. For example,
economies of scale, for example, by the joint
entrepreneurs are characterized by the need to
buying of raw materials, and marketing.”
be independent, to create value, to contribute to
(Source: UNDP, CEDAB, NEP/88/050)
family and society, to become rich or, quite

often, not to be unemployed. Potential
For a UNDP entrepreneurship project in
entrepreneurs display initiative and ambition,
Tanzania, "pilot results clearly demonstrate the
have business sense and foresight, and are
validity of the process, particularly in the more
decisive. They are agents of change who
effective use of local government for
accelerate the generation, application and
community needs assessment, identifying and
spread of innovative ideas.
selecting youth and women's groups….".

(Source: UNDP, CEDAB, URT/88/025)
Most businesses are conventionally started by

men aged 25-44. Focused programmes to

encourage entrepreneurship in other groups are
3. Identify the market through an
effective means of increasing the volume of
intensive preparation process, searching
entrepreneurial activity. Promising for innovation and growth potential.
entrepreneurs should be nurtured and helped to

serve as role models and mentors for their
In programmes focusing on self-employment,
communities. Measures to target groups rather
companies have often tried to copy other
than individuals can mitigate income inequality
successful enterprises, but they failed since the
and be effective in empowering disadvantaged
demand was not sufficient to support the
groups, especially women, youth and
additional supply. In some cases, the
minorities. For example, the formation of
programmes themselves have reinforced this
voluntary cooperatives allows groups of
trend towards “cookie-cutter” business, often
prospective entrepreneurs to help each other.
erroneously supposing them to be less risky.

However, successful entrepreneurial businesses
Examples: UNDP and the United nations
are those which meet a previously neglected or
Conference on Trade and Development
unforeseen need or do something better than it
(UNCTAD) have had good success with the
was done before.
Empretec (empreendedores y technologia)

Programme for stimulating enterprising
What to do?
persons to build enterprises, which started in

Latin America and is now in African countries.
An entrepreneurship development programme
The relative success of the Empretec
should help aspiring entrepreneurs to recognize
programmes in these regions is due in large
and design unique, innovative business
measure to this careful selection of persons
opportunities, based on an analysis of local
with enterprise and initial motivation. (Source:
conditions and their own special skills. The
United Nations, Economic and Social Council
programme can help the entrepreneur to
diversify based on his/her basic knowledge of a

product or skill in a certain sector without
The evaluation of the UNDP/ILO women’s
distorting the local markets. In a truly
entrepreneurship project in Nepal found that
entrepreneurial approach, innovative capacity
“Group formation among women
matters more than the size of the market.
entrepreneurs who live near to one another, for
Diversification can be accomplished by
example, in the form of a credit and savings
introducing a novelty or new product feature,
group, means that credit facilities which may
stressing quality or value added, anticipating a
otherwise not be available can be tapped and
new market or even creating a market.
that women can organize relevant social
UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 3

differentiated from souvenir goods sold locally
Business opportunity surveys may provide

in tourist shops. The niche market where the
advice to entrepreneurs, but they must be
Uzbek products have a specific global
analysed in the context of the specific market
advantage will change once the products are
situation in each case. To determine market
copied so the entrepreneurs must adapt and
potential, it is useful to conduct a needs
follow the trend from market feedback.
assessment or demand survey before
(Source: UNDP, CEDAB, UZB/98/005)
programme formulation. The final decision

should remain with the potential entrepreneur

without undue pressure from the project or ED
4. Provide support through an
independent, private-sector-based

organizational structure.
In spite of extensive market surverys, some

businesses will fail. The closure of
To date, most entities providing ED
unsuccessful firms is a normal part of the
programmes in developing countries have been
entrepreneurial process, allowing resources to
public-sector organizations. They have not
move to more productive uses. This does not
proven themselves to be the most effective
necessarily mean that the company goes
channel of support since they themselves are
bankrupt; it may close for other economic or
not entrepreneurial in approach and experience.
personal reasons.
In some cases, donor programmes provide

support services directly, distorting local
Examples: The evaluators of the UNDP
markets and competing with local providers of
women’s entrepreneurship development
business development services. Successful
programme in Nepal remark that
programmes are usually based in a private-
“Entrepreneurs who have not had much
sector framework, without government
business exposure and cannot or are reluctant
interference but with government support.
to take risks will often copy successful business

ventures in their immediate environment. Make
What to do?
sure that there is a market for the same types of

products or services in the project site. If not,
Donors should identify private organizations
convince the potential entrepreneurs to
that are well situated to implement innovative
diversify.” (Source: UNDP, CEDAB,
and cost-effective entrepreneurship
development programmes. A good ED sponsor

is often characterized by being development-
The evaluation report of the Sri Lanka project
oriented and having operational autonomy,
goes on to say “Unless extension efforts are
business connections and flexibility for
directed to help entrepreneurs be selective
promotional, fund-raising and coordination
about the closest business opportunity at hand,
tasks. It could be a university, a non-
fledgling entrepreneurs can find themselves
governmental orgainzation (NGO), a private
worse off than earlier, unemployed, frustrated,
consulting company or a specially established
discouraged and now also in debt.” (Source:
foundation based on public-private
UNDP, CEDAB, SRL/87/035)
partnerships as in the cases of some of the
Competency-based Economies through the
Any export-driven initiative needs to be highly
Formation of Enterprises (CEFE) and
selective. An evaluation of a project in
Empretec programmes,
a private-public
Uzbekistan on handicraft development found
partnership developed for the purpose, or even
that the entrepreneur associations needed to
a purely private and commercial entity. Also,
separate the products which are for export, i.e.,
large enterprises which face the prospect of
those that have a high value added and that are
large work-force reductions can soften the
UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 4

social costs of the resulting unemployment by
The Uruguay programme has diversified its
sponsoring ED programmes.
products, including training of government

staff and rural women. It benefits from strong
ED sponsors based in a private-sector setting
support from the Banco Republico, where it is
should have easy access to business
based, and recovers around one third of its
development services that already exist in the
expenses as fees for training and other work.
community. The sponsor does not need to
(Source: UNCTAD)
possess all the expertise necessary; it can call

on other available specialists in the fields of

financing, counselling, marketing, quality
5. Decide on a basic methodology that
assurance, and other support.
integrates the entrepreneurship

development elements with other support
Plan from the outset to recover progressively
and follow-up.
higher proportions of the service costs

provided by the ED sponsor. This ensures the
Earlier, the minimalist approach of providing a
sustainability of the support institution and
single service to entrepreneurs was often
helps the entrepreneur to reflect real costs in
favoured. In today’s complex environment, a
his/her product. Where the sponsor is privately
multifunctional continuum of support to
based, it is often easier to recover costs from
entrepreneurs can be more effective. A phased
the services.
approach may also be required, depending on

the needs of the entrepreneurs and their
Examples: A UNDP programme in China
works with the local Women's Federation and

combines training, credit and business
What to do?
incubation to encourage the formation of
entrepreneurial new businesses by women laid

Entrepreneurial development programmes may
off by State enterprises that are restructuring.
have to include support for (a)

entrepreneurship orientation and awareness, (b)
“Project Noah”, sponsored by South African
the development of the competencies (skills,
Breweries, a large private corporation, is
experience and attitudes) necessary to
providing entrepreneurial competencies for
recognize a market opportunity and organize
alternative livelihoods to laid-off employees,
the resources to meet it, and (c) the
mostly from disadvantaged communities. A
improvement of business performance for
business incubator (see p.6) supplements this
growth and competitiveness.

ED training is usually more effective when
The Ethiopian and Nigerian entrepreneurship
linked to finance and other services such as
development programmes suffered from State
marketing, quality assurance and productivity
interference and were then unable to attract
improvement. For example, involving the
external resources. The Guinea and Senegal
development banks at an early stage of the
programmes and Empretec in Ghana and
support process helps to prepare the
Zimbabwe received strong donor support since
entrepreneur for the credit process and
they were relatively autonomous. (Source;
facilitates the bank’s appraisal of the business
United Nations, ECOSOC)

In Uzbekistan, a UNDP project on handicraft
A balance must to be struck between over-
development established a strong, positive
loading an ED programme with numerous
relationship with the museum in Samarkand to
service needs and providing an effective,
support the craft entrepreneurs. (Source:
integrated package. This may be addressed by
UNDP, CEDAB, UZB/98/005)
UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 5

coordination between programmes or ED
The Empretec programmes, supported in Latin
providers so that each provides a different and
America by UNCTAD and in Africa mainly
specialized service. Programmes usually begin
through UNDP, have mobilized strong
with developing competencies and move on to
business, consulting, banking, university,
supporting the trained candidate with
community, donor and government capacities
counselling and other business support.
in order to amplify the in-house efforts.

(Source: UNCTAD)
One mechanism for integrated support is

business incubators. An incubator nurtures

Programmes in Guinea (Programme rural
early-stage businesses through continuing
intégré pour le développement de l'entreprise
entrepreneurship development, counselling and
(PRIDE)), Niger and Senegal enhanced their
administrative services and by accessing
performance as they moved from only credit or
external professional support and facilities all
training towards the integration of training
under one roof. It is particularly relevant where
with credit. This lesson was reinforced by the
intensive assistance is appropriate. A business
World Bank experience: disbursements of
started in an incubator has a better chance of
some $4 billion as loans to small enterprises
survival than one starting outside one, but the
from 1975 to 1991 were generally found to be
assistance of an incubator is limited to a small
ineffective. Now financial services are being
group of promising enterprises and it is often
linked to the non-financial. (Source:
difficult to “graduate” the companies when
they have developed sufficiently.

Examples: The women’s entrepreneurship

development project in Nepal found that

"Women who cannot meet the basic needs of
6. Create special measures to develop the
themselves and their families are often keen to
desired competencies of trainers and
undertake income-earning activities, but they
face many constraints. An integrated package of

assistance, therefore, has to be provided, which
Success also depends on the quality and
often cannot be limited to training in
entrepreneurship, confidence-building and
commitment of the trainers and facilitators.
technical skills, and provision of microcredit
They should become an integral part of the
facilities. The assistance of other agencies will
target group and understand its culture and
have to be sought to provide support services,
needs. Criteria for the selection of trainers
such as literacy training, health care and water
include some business experience and an
supply." (Source: UNDP, CEDAB, NEP/88/050)
intimate knowledge of the local business

environment. Training of the facilitators may
Evaluations of incubator programmes in
enhance their effectiveness in addressing
Brazil, China, Nigeria and Zimbabwe indicate
entrepreneurial needs.
that (a) since this modality is relatively recent,

a feasibility/business plan process is needed to
What to do?
mobilize support from sponsors; (b) initial
investment/working capital is required, usually

Include the training of trainers and facilitators
from public sources, before the incubator
in the programme. For example, the trainers
operations are stabilized; and (c) the selection
employed by the ED sponsor may have basic
and training of the incubator management
business or private-sector experience but need
team are critical to its success. (Source:
more exposure to entrepreneurial approaches.
RAF/88/099, RAF/88/T03)

Encourage innovative approaches to learning
through, for example, the formation of
UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 6

entrepreneur clubs under the guidance of a
7. Launch a pilot entrepreneurship
facilitator. This informal means of sharing
development programme and expand to a
experiences on common problems among like-
national network as warranted.
minded people, trading goods and services,

camaraderie and learning from each other can
Entrepreneurship development programmes
be an integral component of training
have often been too ambitious in terms of
geographical areas covered and number of

entrepreneurs targeted. The selection of the
Programmes can also help to orient educators
initial target area can depend on the availability
and the educational curricula to the relevance
of support institutions and on the interest in
of entrepreneurship development. Vocational
entrepreneurial development among
schools and university programmes, especially
beneficiaries, which can vary considerably
in such fields as business and engineering, can
from one geographical area to another. A pilot-
encourage students to apply their skills by
or preparatory-phase feasibility analysis can be
starting new businesses and they can assist
effective in launching a major ED programme.
them in doing so. At the primary and secondary
Programmes of demonstrated performance
levels, it may be most appropriate to focus on
could then be expanded through national and
developing entrepreneurial attitudes.
subsequently regional networks, based on

lessons learned.
Examples: In Empretec programmes, the

"empretecos" meet regularly in the city,
What to do?
country and among countries in Latin America.

Brazil organizes regional fairs every year
Donor-supported programmes can help to
where "empretecos" can exchange experiences
initiate a promising development by testing it
and identify business opportunities. (Source:
on a pilot scale to demonstrate its usefulness
and transferring the experience to the local host

institution. For rapid transfer and subsequent
In programmes of the Entrepreneurship
replication, the local institution should take the
Development Institute, in India, one of the few
initiative to further adapt, improve and apply
campuses anywhere devoted exclusively to ED,
the ED programme. From the initiation and
the facilitator stays with the trained
design of the programme onwards, the local
entrepreneur through the initial stages of
host institution should be responsible for the
starting and stabilizing the new firm.
programme, with technical support depending

on need.
SEBRAE, the Brazilian Service for Small

Enterprises, has introduced a school
The nature of entrepreneurial activity often
curriculum in Belo Horizonte, Minas Gerais
varies across regions owing to differences in
State, where all instruction is centred on
demography, wealth, education, infrastructure
aspects of entrepreneurship.
and occupational profile. Plan carefully for

expansion to other areas or groups, taking these
Starting in Nepal in 1980, the CEFE
factors into account, while continuing to
International Network, sponsored by
strengthen and consolidate existing support
Gesellschaft für Technische Zusammenarbeit
networks. Entrepreneurship
(GTZ), now consists of 200 institutions in 60
requires long-term commitment.
countries. It trains 100,000 persons annually

through 2,000 "CEFistas" (national trainers).
In cases where local institutions already have a
Its success is due to the commitment and
market base, the donor behind the ED
competence of the local staff.
programme should not dictate which regions to

intervene in - this may jeopardize the realistic

UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 7

expansion of the support and hamper the local
variety of local sponsors helps to expand the
institution - since it lacks knowledge of that
support network and move towards
sustainability when donor support declines.

Examples: The Uruguay Empretec programme
What to do?
is now being linked to a technology incubator

in Montevideo. Conversely, Corporación
It is imperative that ED programmes create a
Innovar, an incubator in Bogota, hosts and
strong local sense of ownership by involving
implements the Empretec programme in
local organizations and building local
Colombia. UNDP-supported pilot incubator
capacities from the start. Work with existing
programmes in China and Uzbekistan have
institutions where available, and avoid
been expanded nationwide in order to create
programming missions with limited inputs
growth-potential ventures and revive
from the local institutions and beneficiaries.
entrepreneurship in restructuring countries.
Advocacy on the importance of ED and

preparatory efforts in building local support for
The ILO Start and Improve Your Business
the programme are often as important as the
(SIYB) programmes are essentially for self-
technical assistance provided. Promotional
employment and enterprise management. In
activities aimed at civil society can also
South Africa, the project tested and adapted
support internalization by changing the culture
the training materials and translated them into
around entrepreneurship, for example, by
a number of local languages. During the pilot
encouraging rewards for taking measured risks
period, 16 organizations participated, and
and by considering bankruptcy as a lesson
after six months, 75 local organizations were
learned, not a terminal failure.
waitlisted to benefit from the expanded

programme. Interest was also generated by the
Examples: The experience of the German-
training provided to the local organizations to
initiated CEFE International Network shows
enhance their capacity to support
that sustainability comes from the motivation
entrepreneurs. (Source: www.ilo.org, go to
and energy of the institutional structure. The
numbers of CEFistas trained worldwide are

growing rapidly, with limited support from the
Having started in 1988, Empretec is now
GTZ/German Government. The focus is on
operating in 10 countries (Argentina, Brazil,
developing personal competencies through
Chile, Colombia, Ghana, Morocco, Nigeria,
knowledge and experience, on recognizing
Uruguay, Venezuela and Zimbabwe). Well over
one's strengths/weaknesses in the context of
10,000 "empretecos" (one third of them
new opportunities, and on mobilizing money,
women) have participated in ED workshops
people, information and networks in pursuit of
and related follow-up services. (Source:
a goal. This essentially sustainable network is
a result of the internal drive of the national

CEFistas themselves -- what CEFE calls the

“inside-out principle”.
Internalize the entrepreneurship
One lesson emerging from the United nations
development support system so that it has
Industrial Development Organization
the momentum and capability to continue
(UNIDO) Viet Nam programme is that the
and expand through local efforts.
local institution should develop a longer-term

and more focused strategy in cooperation with
Support systems that are actively driven by
additional partners. (UNIDO, Training
external sponsors often take a longer time to
Programme for Women Entrepreneurs in the
become sustainable. Internalization of the
Food-Processing Sector: Report of the
entrepreneurship development programme by a
Evaluation Mission, February 1998)
UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 8

Sustainability is also influenced by other
markets for capital, labour, goods and services
success factors. For Empretec, these included
are working well. It also requires that
clear policy guidelines, assurance of initial
impediments to entrepreneurship be removed
funding, government involvement only in
and that conditions be established in which
supportive tasks, a strong counterpart
innovation and risk-taking can flourish.
organization, representative advisory board,
Government policy-makers also seek to foster
national directors all fully familiar with
entrepreneurship through programmes which,
private-sector dynamics, identification of
for example, augment the supply of
strategic niche markets and selectivity in the
information, encourage networking, facilitate
choice of participants. Other reasons for the
the provision of finance, and seek to create
relative success of the Empretec programmes
positive attitudes towards entrepreneurial
include in particular: basing programmes
usually in a national bank as a foundation;

insistence on presenting business plans after
Focused policies that facilitate access to
an initial workshop; and training of the
finance, professional services and training for
trainers. The good results led to high client
start-up companies, that simplify business
satisfaction, which reinforces sustainability.
registration, reporting and taxation, etc. are
(Sources: Geneva meeting, December 1997, to
essential to entrepreneurial venture creation.
review ten years of Empretec experience: see
Seminars and the study of entrepreneurial
UNCTAD paper No. I-14 and DFID paper No.
development abroad can be included in
I-13 presented at International Conference,
programmes addressing entrepreneurship
Rio de Janeiro, March 1999; UNCTAD report
to ECOSOC E/C.10/1994/9; Report of

Evaluation Mission of Ghana project, July
Where numerous ED programmes are already
in operation, donors may be able to make the

greatest contribution by creating a forum in

which existing programme sponsors can
9. Successful entrepreneurship also
exchange views and begin to work in synergy.
depends on supportive and coordinated
Strengthening the capabilities of governments
government policies.
and NGOs to evaluate such programmes can

also be an effective means of minimizing
Entrepreneurship is conducive to economic
unnecessary duplication.
growth and the creation of employment.
Examples: The report of the 1991 evaluation
Government programmes and policies have a
in Sri Lanka notes that "Probably the most
significant impact on the level of
important amongst the advisory services to be
entrepreneurship within a country. While many
provided to Government under this project is
governments profess support for advice about a national strategy for
entrepreneurial businesses, they often lack
entrepreneurship and enterprise development."
specific policies and coordinated programmes
(Source: UNDP, CEDAB, SRL/87/035)
designed to support entrepreneurial activity.

The 1991 evaluation of the employment
creation programme in Bangladesh noted that

What to do?
multiple government, NGO and donor

programmes offering similar services in the
Liberalizing imports, ending public monopolies
same upazilas (districts) caused confusion and
and opening public services to private-sector
frustration and hampered the effectiveness of
provision of goods and services enhance the
each intervention. (Source: UNDP, CEDAB,
conditions for entrepreneurship. Fostering
entrepreneurship involves ensuring that

UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 9

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UNDP, Evaluation Office ESSENTIALS • Entrepreneurship • 10

Document Outline

  • Background
    • 1. Begin with a clear understanding of the feasibility and objectives of the programme, focusing on the development of ventures with the potential for rapid growth.
    • 9. Successful entrepreneurship also depends on supportive and coordinated government policies.
    • Entrepreneurship is conducive to economic growth and the creation of employment. Government programmes and policies have a significant impact on the level of entrepreneurship within a country. While many governments profess support for entrepreneurial bu