NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

“They say that time changes things; but you actually have to change them yourself.” – Andy Warhol

When it comes to mobilizing the BoP’s $10 trillion in hidden capital and creating an enabling environment to get the most out of it, there is no magic reform recipe – but local knowledge is always a vital ingredient.

International exposure and competition through the World Bank’s Doing Business Reports have pressured governments into seeking enterprise solutions to poverty and growth. Given this pressure for reform, there is a great need for local perspectives on which specific policy changes are needed to improve Doing Business rankings, mobilize capital and improve the business climate at the BoP.

It’s no secret that economic policy reform continues to be a governance challenge for policymakers and entrepreneurs around the developing world. The convening power of business associations, who rally and organize entrepreneurs around the bread and butter issues of daily life, is a much overlooked yet potentially useful tool for better governance.

Good governance doesn’t just happen; civil society groups such as business associations help make it happen. Independent, grassroots business associations use their convening power to raise attention and advocate for the changes needed to improve enabling environments for BoP entrepreneurs – ’Doing Business’ is their business. They facilitate reform through open and productive dialogue between policymakers and the entrepreneurs in their own countries.

Not every business association is the same; just as some companies might have a vested interest in closed societies where they can continue to benefit from being political insiders, so do many associations. While their purposes and constituencies can be diverse, a good number of associations are clearly devoted to development through enterprise.

The Federation of Economic Development Associations (website in Arabic) is a grassroots organization of SMEs in Egypt that made news in 2004 when it played a significant role in drafting Egypt’s SME law requiring that SMEs be awarded no less than 10 percent of Egyptian government procurements – a significant step toward a more open process that had previously been exclusive to large, politically connected firms. Since SMEs account for 75 percent of employment and around 80 percent of Egyptian GDP, the impact of opening up the public procurement process, even marginally, is hard to understate.

FEDA hasn’t stopped there. In parts one and two of a report and interview on Nile Life TV’s popular Every Night program, broadcast nationally in Egypt and by satellite across the Middle East, FEDA brings the limelight to one of the most ubiquitous yet most under-protected classes of BoP entrepreneurs: street vendors.

FEDA is using its convening power to gather views and opinions from the street vendors themselves – no easy task, given their diversity of needs and perspectives. Retailers would like to assure costumers that they are meeting all health and safety standards, for example; but their wholesale suppliers are wary of inspectors who have an appetite for bribes.

Policymakers often underestimate the true complexity of BoP markets. FEDA is working to change that, by also using its convening power to bring street vendors’ concerns to policymakers in small meetings or larger conferences – the objective being an enabling environment that protects entrepreneurs as well as the society they wish to serve. In order to bring Egypt’s street vendors under the rule of law, as FEDA envisions, the street vendors must be a part of the process to make the laws. It’s the governance challenge in a nutshell; a challenge that holds back BoP entrepreneurs every day, no matter the brilliance of their business ideas or the strength of their business strategies.

Egypt has an estimated $240 billion in hidden capital, and its legions of entrepreneurs including street vendors represent just a few of the millions of entrepreneurs in Muslim-majority countries, which happen to be the focus of next year’s Presidential Summit on Entrepreneurship. If their wealth and talent is to be fully mobilized, governance must be front and center at the summit. Millions have already taken up the entrepreneurial challenge. They need more than visibility; they need more than applause; they need more than capital. They need to be heard.