PUM aims to be a relevant player in development cooperation by contributing to positive, lasting changes for its customers and partners. The involvement in PRIME (Pioneering Real‐time Impact Monitoring and Evaluation) allows PUM to monitor and evaluate the impact of its activities. PRIME was established in 2013 to develop and implement a methodology to monitor and evaluate the real-time impact of private-sector development support provided to small and medium-sized enterprises (SMEs). Originally a research partnership between PUM, Wageningen Economic Research, Erasmus School of Economics and the Centre for the Promotion of Imports from Developing Countries (CBI) that expired in 2018, PUM decided to continue its involvement in PRIME in collaboration with Wageningen Economic Research.
As an update of the earlier comprehensive evaluation performed in 2017, PRIME conducted another survey in 2018, comparing some of the results with data collected in previous years. This survey focused on PUM’s contribution to business practices, sales, profits, investment and employment. The 2018 survey covers a representative sample of PUM supported SMEs. The 2018 survey was sent to 3560 SMEs where PUM conducted an advice mission between January 2016 and June 2018. In total, 1362 SMEs responded to this survey, resulting in a 39% response rate. The SMEs in the sample are representative for the broader population of SMEs supported by PUM, as both the size of these SMEs and their distribution across sectors is similar to that in the broader population of SMEs.
PUM continues to contribute to positive changes in business practices
The 2018 PRIME survey shows that PUM continues to contribute to changes in business practices among the majority of SMEs (93%) in the 2017/2018 period. PUM’s contribution to changes in business practices is more pronounced for SMEs from the services industry than among SMEs in food security, health & environment, and industry & trade (see chart below). Following the sectoral strategy implemented in 2017, the data further indicate that PUM’s contribution was significantly higher in those sectors that enjoy continued support compared to the sectors in which PUM decided to phase out its services. Finally, the data shows that PUM has a higher contribution to changes in business practices among the least developed and not fragile countries than upper middle income, lower middle income, and fragile countries.
PUM made a positive contribution to sales, profits, and employment
The 2018 PRIME survey further demonstrates that PUM’s contribution to business practices is positively associated with the growth in business profits. Among the SMEs that reported much or very much influence of PUM to changes in business practices over the past 12 months, the average profit growth in the period 2017-2018 is 41%. Moreover, the results show a statistically significant increase in sales among SMEs that were involved in a PUM mission (see chart below).
Average annual sales are about 80% higher after PUM missions than before PUM missions.
The results also show an increase in employment after PUM missions (see chart below). Average employment is about 5% higher in the period after PUM missions than in the period before, corresponding to two new employees per firm. High sales growth and low employment growth after PUM missions indicates that PUM mainly contributes to the productivity growth in SMEs. This is an important contribution because productivity gaps between SMEs and large companies are much larger in developing countries and emerging markets than in more developed markets. Closing the productivity gap may increase the wage levels in SMEs, thereby promoting inclusive growth. Increased sales may also lead to new investments, possibly resulting in new jobs in the future.