Startups Key to Growth in Postconflict Areas

Entrepreneurs have an important role to play in reconstruction efforts in conflict and post-conflict zones to create sustainable economic growth and stability. But first they need a level playing field—or at least something close to level—and in far too many cases the international aid community is focused on microenterprise at the exclusion of potential high-growth, high-impact entrepreneurs.

A new paper released by the Council on Foreign Relations makes that case while showing that entrepreneurs and small business owners (particularly women) face an uphill battle when it comes to accessing capital, markets, networks and business skills trainings. Author Gayle Tzemach Lemmon points to too many well-intentioned players doing their own thing with little collaborative effort. She argues that the sharing of information around successful pilots and initiatives—for example, business matchmaking services—would reduce the barriers to entrepreneurship and help stimulate economic recovery.

Some of the recommendations made include:

  • Improved access to credit should be supplemented with more advanced business-skill training for entrepreneurs. Entrepreneurs who have survived conflict have often done so using techniques that may not be sufficient for attracting risk capital from the formal banking sector.
  • A healthy amount of flexibility should be included in business models for loan facilities given the constant changes on the ground and the evolution of business environments in fragile states.
  • Training programs should be scalable and replicable. Rigorous monitoring and evaluation procedures should be established to analyze what is and is not working while programs are under way, and findings should also be publicly shared to encourage dialogue and potential investment in SME growth.

Lemmon closes with the following statement: “For those promoting peace, stability, and prosperity, supporting entrepreneurship should be a vital component of any reconstruction effort.”

Entrepreneurship in Postconflict Zones was funded by the Kauffman Foundation and is part of CFR’s Civil Society, Markets, and Democracy initiative.

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