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UNCTAD Entrepreneurship Policy Framework and Implementation Guidance
 
Figure 1. Key components of an entrepreneurship policy framework  0 Display introduction1 National entrepreneurship strategy2 The regulatory environment3 Education and skills4 Innovation and Technology5 Access to Finance6 Awareness and Networking
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PDF UNCTAD Entrepreneurship Policy Framework and Implementation Guidance (PDF, 803KB)

Area 1: National Entrepreneurship Strategy

Entrepreneurship is one of the most important drivers of job creation and economic growth, and is crucial for the development of a vibrant formal small- and medium-sized business sector. It enhances productivity growth and can also help find practical business solutions to social and environmental challenges, including climate change. Despite its importance, entrepreneurship is not always actively encouraged in all developing countries through dedicated policy initiatives. Both economic theory and practice demonstrate that entrepreneurship may generate social gains beyond private gains. A proactive role of governments in supporting entrepreneurship is therefore justified and it requires a systemic approach. This section explores key elements of a national entrepreneurship strategy.

Policy objectives Policy options (recommended actions)
  • Understand country specific challenges
  • Map the current status of entrepreneurship in the country
  • Identify country-specific entrepreneurship opportunities and challenges
  • Specify goals and set priorities
  • Define strategies to achieve specific objectives and reach specific target groups
  • Develop and prioritize actions
  • Ensure coherence of  entrepreneurship strategy with other national policies
  • Align entrepreneurship strategies with overall development strategy and other private sector development strategies
  • Manage interaction and create policy synergies
  • Strengthen the institutional framework
  • Designate a lead institution
  • Set up an effective coordination mechanism and clarify mandates
  • Engage with the private sector and other stakeholders
  • Ensure business-like service delivery
  • Measure results, ensure policy learning
  • Define clear performance indicators and monitor impact
  • Set up independent monitoring and evaluation routines
  • Incorporate feedback from lessons learnt

National Entrepreneurship Strategy: A checklist of key questions

  • Are there surveys for assessing the national entrepreneurial environment?
  • Do mechanisms, such as multi-stakeholder forums, exist to promote policy dialogue on entrepreneurship?
  • Does the country have a dedicated policy framework to promote entrepreneurship? Is there a national entrepreneurship strategy?
  • Is there clarity about the priorities and type of entrepreneurship that the country wants to encourage?
  • Are there specific policies in place to favour start-ups and SMEs?
  • Are there specific policies in place to encourage the transition to the formal business sector?
  • Is the entrepreneurship policy closely coordinated with other national policies? Is entrepreneurship embedded into other national policies?
  • Is there a ministry, agency or institution championing entrepreneurship? Is there a ministerial level entity in charge of coordination of the strategy?
  • Is there a deliberate policy to promote formal entrepreneurial activity among specific groups of the population?
  • Are there specific targets or measurable objectives to increase entrepreneurial activity?
  • Does the government assess the impact of policy measures?
  • Does the government support regular independent policy evaluations?
  • Does the government incorporate feedback from lessons learnt?
  • Is there an annual (periodic) report on the state of entrepreneurship?

Indicators to measure effectiveness

Possible indicators What they monitor

- Number of formal business start-ups created annually
- Survival rates
- Share of total start-ups in target areas such as high-tech enterprises, green enterprises, social enterprises or enterprises in key exporting sectors
- Share of total start-ups in target groups such as women, youth, minorities, rural populations
- Job growth due to start-ups
- Revenue generated and taxes paid by start-ups (values and growth rates)

- Success of entrepreneurs in starting and sustaining businesses
- Success in reaching specific targets for different sectors
- Improved economic opportunities for target groups of the population
- Economic impact of entrepreneurship


Area 2: Optimizing the Regulatory Environment

The unleashing of entrepreneurship requires an environment that enables the entrepreneur to create, operate, manage, and if necessary, close a business within a context where compliance with the rule of law governing disclosure, licensing and registration procedures, and the protection of physical and intellectual property is guaranteed. The regulatory environment should encourage people to set up their own business, to try new business ideas and to take on calculated risks, keeping administrative burdens to the minimum required to support public policy and sustainable development objectives.

Policy objectives Policy options
  • Examine regulatory requirements for start-ups
  • Benchmark time and cost of starting a business
  • Benchmark sector- and region-specific regulations
  • Set up public-private dialogue on regulatory costs and benefits
  • Balance regulation and standards with sustainable development objectives
  • Minimize regulatory hurdles for business start-ups where appropriate
  • Review and, where appropriate, reduce regulatory requirements (e.g. licenses, procedures, and administrative fees)
  • Introduce transparent information and fast-track mechanisms and one-stop-shops to bundle procedures
  • Enhance ICT-based procedures for businesses registration and reporting
  • Build entrepreneurs’ confidence in the regulatory environment
  • Ensure good governance
  • Make contract enforcement easier and faster
  • Establish alternative conflict resolution mechanisms
  • Guarantee property protection
  • Reduce the bankruptcy stigma and facilitate re-starts
  • Guide entrepreneurs through the start-up administrative process and enhance the benefits of formalization
  • Carry out information campaigns on regulatory requirements
  • Make explicit the link between regulatory requirements and public services, including business support services
  • Assist start-ups in meeting regulatory requirements

Regulatory Environment: A checklist of key questions

  • Has the government carried out an assessment of the process of starting a business? Does it benchmark the time and cost of starting a business? Does it have a good overview of sector- and region-specific regulations?
  • Is a public-private dialogue on regulatory costs and benefits in place?
  • Has the government considered initiating a process of weeding out unnecessary regulations?
  • Are there special provisions for social entrepreneurship?
  • Does the country have fast-track mechanisms and one-stop-shops to bundle procedures? Does it make use of ICT-based administrative procedures?
  • Does the government offer mechanisms to make contract enforcement easier and faster?
  • Has it considered the introduction of alternative dispute resolution mechanisms?
  • Do bankruptcy laws allow for business re-starts?
  • Does the government offer services to assist start-ups in meeting regulatory requirements?
  • Is information about business establishment procedures transparent? Are business regulations available online? Are there tutorials available for start-ups? Is information on business regulations also made available to disadvantaged groups?

Indicators to measure effectiveness
Possible indicators What they monitor

- Number of procedures to open a business, number of agencies involved
- Number of days, cost to start or close a business
- Number of days, cost to register a title to property
- Timeliness of dispute resolution mechanism: number of days from filing to judicial decision

- Ease of starting/closing a business
- Effectiveness of judicial system

Area 3: Enhancing Entrepreneurship Education and Skills Development

Entrepreneurial skills centre around attitudes (soft skills), such as persistence, networking and self-confidence on the one hand and enabling skills (hard skills) on the other hand, including basic start- up knowledge, business planning, financial literacy and managerial skills. Effective entrepreneurship education policies and programmes focus on developing these entrepreneurial competencies and skills, which are transferable and beneficial in many work contexts. The aim is not only to strengthen the capacity and desire of more individuals to start their own enterprises, but also to develop an entrepreneurial culture in society.

Policy objectives Policy options
  • Embed entrepreneurship in formal and informal education
  • Mainstream the development of entrepreneurship awareness and entrepreneurial behaviours starting from primary school level (e.g., risk taking, teamwork behaviours, …)
  • Promote entrepreneurship through electives, extra curricular activities, career awareness seminars and visits to businesses at secondary school level
  • Support entrepreneurship courses, programmes and chairs at higher education institutions and universities
  • Promote vocational training and apprenticeship programmes
  • Promote and link up with entrepreneurship training centres
  • Develop effective entrepreneurship curricula
  • Prepare basic entrepreneurial skills education material
  • Encourage tailored local material, case studies and role models
  • Foster interactive and on-line tools
  • Promote experiential and learning- by- doing methodologies
  • Train teachers
  • Ensure teachers engage with the private sector and with entrepreneurs and support initiatives that bring entrepreneurs to educational establishments
  • Encourage entrepreneurship training for teachers
  • Promote entrepreneurship educators’ networks
  • Partner with the private sector
  • Encourage private sector sponsorship for entrepreneurship training and skill development
  • Link up business with entrepreneurship education networks
  • Develop mentoring programmes

Education and Skills: A checklist of key questions

  • Do national curricula recognize entrepreneurship as a subject? Is it integrated across other disciplines?
  • Do policies promote key entrepreneurial skills’ training in schools including both attitudes and enabling skills?
  • Do policies recognize the specific needs of youth, women and other target groups?
  • Are entrepreneurship training programmes offered outside the formal education system? Do these programmes address low-literacy groups and those in rural areas?
  • Are there policies for introducing more interactive and experience-based teaching approaches in the educational system?
  • Are schools engaged with business practitioners and local entrepreneurs?
  • Has entrepreneurship been explicitly recognized as an objective of the national curricula for vocational, technical and commercial school of secondary level?
  • Have provisions of specific training and incentive for teachers been introduced?
  • Do curriculum designers develop local case studies and entrepreneurship course materials to be used in the classroom?
  • Are academic institutions encouraged and supported in providing training, counselling, diagnostic and advisory services to early-stage entrepreneurs?
  • Is extracurricular entrepreneurial activity promoted (e.g. student activities, business plan competitions, business development programmes, etc.)?
  • Have national entrepreneurship educators’ networks been established to facilitate the application of programmes?
  • Is private sector funding leveraged for entrepreneurship education?
  • Are there mentoring and coaching available to develop entrepreneurs’ skills?
Indicators to measure effectiveness
Possible indicators What they monitor

- Share of secondary schools offering entrepreneurship programmes/extra-curricular activities
- Share of technical/vocational schools offering entrepreneurship programmes/ extra-curricular activities
- Number of annual spin-offs from universities/research programmes

- Availability of entrepreneurship education
- Success of higher education institutions in enterprise-relevant research and in commercializing results of research

Area 4: Facilitating Technology Exchange and Innovation

Entrepreneurship, technology and innovation are mutually supportive. Technology provides entrepreneurs with new tools to improve the efficiency and productivity of their business, or with new platforms on which to build their ventures. In turn, entrepreneurs fuel technological innovation by developing new or improving existing products, services or processes and ensuring commercialization. In developing countries, both angles are important, to varying degrees, depending on the level of local economic development, the rate of adoption of technologies in use internationally, and the innovation capabilities of local firms or research institutions. Taking into account the two-way relationship between technology/innovation and entrepreneurship, table II.4 presents a synopsis.

Policy objectives Policy options
  • Support greater diffusion of ICTs to the private sector
  • Launch awareness and capacity-building campaigns on ICT use
  • Stimulate the introduction of ICT into business
  • Support the development of on-line and mobile market information platforms
  • Provide training on ICTs to target groups such as women and rural entrepreneurs
  • Promote inter-firm networks  that help spread technology and innovation
  • Promote horizontal linkages through cluster development
  • Provide assistance for standardization and quality certification to networks of local enterprises (including  social and environmental standards)
  • Promote business linkages through supplier development.
  • Build bridges between public bodies, research institutions, universities and the private sector
  • Identify joint research activities with clearly designated participants and beneficiaries
  • Promote PPPs and mixed public/private structures to diffuse innovation
  • Develop  market friendly university-industry collaboration
  • Promote institutional synergies at the sectoral level
  • Support high-tech start-ups 
  • Establish high-tech business incubators, knowledge hubs and science  parks
  • Facilitate start ups that commercialize innovation
  • Build networks in knowledge intensive sectors with leading science experts and academics around the world
  • Give researchers and innovators streamlined access to cost-effective patent protection

Technology Exchange and Innovation: A checklist of key questions

  • Are there awareness and capacity-building campaigns on ICT use?
  • Is there a policy to promote diffusion of technologies to SMEs?
  • Does the Government facilitate or provide training and support for technology upgrading in small firms?
  • Are there initiatives to facilitate and encourage exports, business linkages and industrial clusters?
  • Are there supplier development programmes to engage SMEs in the value chain of larger companies?
  • Does the Government provide assistance for standardization and quality certification for local enterprises to meet required standards, including social and environmental standards?
  • Does the government encourage and support linkages for university–industry partnerships?
  • Does it provide support for applied research and commercialization of science and technology?
  • Does the government provide support infrastructure or engage in public-private partnerships to establish business incubators, clusters, networks and science parks for science and technology commercialization?
Indicators to measure effectiveness
Possible indicators What they measure
- Share of graduates with science/ engineering degrees
- Number (and occupancy rates) of science parks, technology hubs and incubators
- Share of technology-intensive start-ups in total start ups
- Share of technology-intensive start-ups with venture capital funding
- Success in promoting science/ engineering careers
- Availability and success of facilities for the promotion of technology intensive start-ups
- Success in promoting technology intensive start-ups

Area 5: Improving Access to Finance

Inadequate access to finance remains a major obstacle for many aspiring entrepreneurs, particularly in developing countries. As recent studies confirm, the global financing gap for micro, small and medium-sized enterprises remains enormous. Entrepreneurs of all types and sizes require a variety of financial services, including facilities for making deposits and payments as well as accessing credit, equity and guarantees.

Policy objectives Policy options
  • Improve access to relevant financial services on appropriate terms
  • Develop public credit guarantee schemes
  • Stimulate the creation of private mutual guarantees
  • Promote FDI in financial services, supply chain finance (“factoring”) and leasing
  • Facilitate collateral-free loan screening mechanisms
  • Promote funding for innovation
  • Provide incentives to attract venture capital investors and business angels
  • Encourage equity and “risk capital” financing modalities
  • Provide performance-based loans and incentives for innovation and green growth
  • Facilitate the use of intellectual property as collateral
  • Build the capacity of the financial sector to serve  start-ups
  • Establish a national financial charter
  • Promote public-private sector "access to finance partnerships"  for specific groups
  • Provide capacity-building grants and technical assistance to expand lending activities (e.g. financial service provision through post offices and other “proximity lenders”; use of new banking technologies to reach rural areas)
  • Provide financial literacy training to entrepreneurs and encourage responsible borrowing and lending
  • Set up financial and accounting literacy training
  • Undertake appropriate supervision of financial products offered to social and micro-entrepreneurs
  • Expand private credit bureau and public credit registry coverage

Access to Finance: A checklist of key questions

  • Are there measures to encourage financial institutions to lend to start-ups and SMEs?
  • Does the government require banks and other financial institutions to report their lending by size of firm?
  • Are there public–private funds for entrepreneurs?
  • Is FDI promoted to broaden access to finance to local entrepreneurs?
  • Are factoring and leasing schemes encouraged?
  • Are there incentives for venture capital and the development of networks of business mentors or supporters, including business angel networks?
  • Are development-oriented funds encouraged to invest in seed capital and small firms?
  • Has the government taken steps to improve access to finance for target groups (minorities, youth, women, immigrants, expatriates, those in rural areas, etc.)?
  • Is the adoption of financial service provision through post offices and other “proximity lenders”; and new banking technologies (e.g., mobile phone banking) encouraged?
  • Are effective intellectual property rights (IPR) accepted as collateral?
  • Is there a financial charter?
  • Does the government provide appropriate supervision and regulation to prevent unsustainable lending?
  • Are there formal courses on financial literacy designed and available for SMEs and micro-enterprises?
  • Is training available to lenders to design ways to expand lending activities to SMEs and entrepreneurs?
  • Are there credit bureaux?
Indicators to measure effectiveness
Possible indicators What they measure

- Share of microfinance/SME loans in total business loans
- Average value of collateral required for SME loans (per cent of loan)
- Total VC invested in SMEs
- Credit bureau coverage (per cent of adult population)

- Performance of banking sector in facilitating loans to entrepreneurs
- Support by private investors for start-ups
- Adequacy of financial infrastructure for entrepreneurship lending

Area 6: Promoting Awareness and Networking

Negative socio-cultural perceptions about entrepreneurship can act as significant barriers to enterprise creation and can undermine the impact of policy intervention in support of entrepreneurship. The impact of regulatory reforms in support of start-ups or to facilitate access to finance for entrepreneurs will be less than optimal if large sections of the population do not consider entrepreneurship as a viable and rewarding option, i.e. if they would only consider entrepreneurship if forced, or out of necessity. Fostering an entrepreneurial culture that positively values entrepreneurs and entrepreneurship is a key determinant of the success of an entrepreneurship policy framework and it is also a crucial factor to overcome the culture of dependency – either from governments or aid donors. Table II.6 provides a synopsis.

Policy objectives Policy options
  • Highlight the value of entrepreneurship to society and address negative cultural biases
  • Launch entrepreneurship outreach and awareness campaigns at national, regional and local levels in collaboration with all stakeholders
  • Utilize the media and spaces for policy dialogue, speeches, addresses and reports to communicate support for entrepreneurship
  • Disseminate information about entrepreneurship, including social entrepreneurship, and its impact on the economy
  • Publicly celebrate entrepreneurship role models through awards and other initiatives
  • Involve entrepreneurs in policy dialogue processes to sensitize government officials
  • Raise awareness about entrepreneurship opportunities
  • Advertise business opportunities linked to national sustainable development strategies, and related incentive schemes
  • Organize information and career fairs, forums and summits on business opportunities, including in specific economic sectors or on specific business models such as micro-franchising
  • Stimulate private sector-led initiatives and strengthen networks among entrepreneurs

 

  • Support private sector-led campaigns
  • Facilitate business exchange platforms, business portals, fairs, business associations and clubs
  • Engage diaspora  community in local entrepreneurship networks

Awareness and Networking: A checklist of key questions

  • Does the government carry out campaigns to promote entrepreneurship?
  • Do policy makers communicate their support for entrepreneurship in speeches, and communicate the link between entrepreneurship and economic development?
  • Are measures taken within the public sector to raise awareness of entrepreneurship issues with officials?
  • Does the government take part in global entrepreneurship awareness initiatives such as Global Entrepreneurship Week?
  • Does the government engage in public-private partnerships to organize entrepreneurship awareness activities such as entrepreneurship fairs or entrepreneurship forums?
  • Does the government support competitions, awards or similar events to publicly recognize entrepreneurs?
  • Are there initiatives to encourage and recognize corporate social responsibility?
  • Do information platforms on entrepreneurship and trade opportunities exist?
  • Does the government support networks of entrepreneurs and business leaders?
  • Are there measures in place to engage international diaspora networks?
Indicators to measure effectiveness
Possible indicators What they measure
- Results of opinion/attitudinal surveys and evaluations following awareness campaigns
- Number of business associations devoted to women, youth, rural entrepreneurs, SMEs, …
- Success in fostering a positive societal attitude toward entrepreneurs
- Opportunities for networking for specific target groups
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