40. An earlier World Bank study of the Bank’s record in providing TA to SMEs over the period 1973-93 found relatively few cases of satisfactory outcomes.<sup>28</sup> The study, which is one of the most comprehensive assessments of World Bank assistance to SMEs, reviewed 70 projects, involving $142 million in finance for TA. The TA components accounted for 4% of overall IBRD/IDA financing in these 70 SME projects. In addition to supporting apex units and banks, the projects provided industrial extension, consultancies, and training services for small entrepreneurs, mostly through public sector agencies. The study concludes that most TA services for entrepreneurs failed to meet their objectives, both in the quantity and quality of services delivered. Three main reasons for poor performance were identified: a) poor design of components, ignoring real needs of clients and not well-matched with the capabilities of the implementing institutions; b) inadequate preparation and supervision on the Bank's part, particularly where components were complex and implementing agencies were weak, and c) poor implementation and weak commitment by public institutions.

41. The successful TA projects tended to be small with modest and clearly defined goals and tried to strengthen existing programs with proven track records rather than launch new initiatives. Institutions with proven competence or exceptional leadership performed far better than weaker institutions that were to be strengthened by projects while simultaneously providing services. Technical assistance that targeted specific sub-sectors were more effective than courses in general business skills.

_Other SME programs_ 42. The UNCTAD-coordinated EMPRETEC program in Ghana provided training and business advisory services to SMEs. 57 such firms were surveyed in 1997 (reference). On average, beneficiary firms reported positive outcomes in terms of increased employment and sales, which increased by 15% and 25% respectively per annum. However, cost recovery of the services was low; on average below 40%. An evaluation of IDB-supported EDCs (employment development centers) in Latin America which supported training and improvement of management practices in SMEs did not find satisfactory results either. There was no systematic evaluation of project impact on clients. At the time of the evaluation, sustainability of the project was in doubt; cost recovery remained low, about 40% or below in most countries (reference).

43. A recent paper on the experience with business development services in developing countries concludes that public provision of services tends to distort business development service markets and crowd out private providers through subsidized delivery of services. To the extent that it has been measured and evaluated, the impact of government programs on SME performance has been fairly limited.<sup>29</sup> 44. Similar experience is reported for developed countries by an OECD study on public support for SMEs in OECD countries. The study, which covered the late eighties and early nineties, found high administrative costs with less than 10% of the support designed

> 28 Webster (1991).

> 29 ILO (2001).

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