This study investigates three issuesconcerning the role of indigenous entrepreneurs in thetransition from a state-led development strategy to a moremarket-oriented approach with the private sector taking thelead: 1) the effects of liberalizing the policy regime onthe conditions for micro and small-scale enterprises (MSEs);2) the responsiveness of MSEs to changes in incentives andmarket conditions; and 3) the capacity of MSEs to mobilizesavings, absorb employment, and contribute to growth. Thestudy consolidates the results of surveys undertaken toassess the effects of structural adjustment programs (SAPs)on MSEs in five African countries. The positive effects ofSAP reforms on the environment for MSEs included greateraccess to imported inputs, a shift in relative prices infavor of domestic inputs, and less restrictive regulation ofprivate business. On the negative side, many MSEs facedincreasingly intense competition from imports and from agrowing supply of self-employed workers. Small-scaleenterprises (SSEs) with 6 to 49 workers were generallybetter able to respond to changing conditions thanmicroenterprises with 1 to 5 workers. They were more likelyto change product lines, buy new equipment, and seek exportmarkets. SSE owners were also more likely to have enteredbusinees in response to a market opportunity, whereasmicroentrepreneurs were more likely to have been motivatedby "push" factors such as family tradition andlack of other opportunities.
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