Building Markets founder and chief executive officer, Scott Gilmore, visited our Yangon operation the other week. He came to meet with staff, local stakeholders and partners to explore actionable strategies for expansion as Building Markets approaches the end of our first year in Myanmar.
Scott Gilmore Meets With Participants During A Recent Procurement Training Session
To be sure, our first year has been a fascinating journey. We went from having zero presence in Myanmar last September to facilitating almost $10 million in local contracts. Some of those contracts are large. Many of them are small. We are fine with that. We want that. Big contracts pack punch and sound impressive, but the small ones are easily as meaningful. For instance, a $5,000 contract might be too small for a large company to pursue, but it can truly accelerate a small supplier’s chance to grow in a place like Yangon.
How does that work? How can aid money achieve greater impact via local procurement? Imagine this scenario: An aid agency needs medical stretchers for a humanitarian relief project. Those stretchers could be obtained from Thailand, and the impact on the local economy would be exactly $0. However, if a local medical supplies company receives the contract, that aid money goes into the Myanmar economy. The impact is greater still if the medical supplies company purchases those stretchers from a local producer. If the local producer purchases some of the raw materials from another local company we are left with an interesting situation – that relatively innocuous contract for medical supplies has cycled through the local marketplace and helped to sustain jobs at three (or more) different companies. Jobs mean spending power and that means rice on the table, so to speak, and improved local capacities.
We love promoting local sourcing, and that will remain the heart of our operation. However, as we move forward in Myanmar we also want to find ways to achieve impact in the areas adjacent to our primary focus. We are highly specialized in facilitating local procurement, but businesses need more than contracts. They often need skills and capital. Building Markets has finance projects running in Liberia and Mozambique, and another reason for Scott Gilmore’s visit was to determine if Myanmar could be a fruitful setting for another SME finance project. It could be similar to, or different from, our projects in Africa. We are interested in finding what can work in Myanmar because over half of the businesses with whom we work have told us they would be interested in financing business expansions if they could find loans with favorable repayment terms.
Long characterized as immutable, Myanmar these days is incredibly dynamic. When we launched operations last year, public demonstrations and private daily newspapers were illegal, credit cards were non-existent and the ink on the 2012 Foreign Investment Law was still drying. All that is now a memory. Just as foreign businesses and investors are struggling to stay current on all the changes in Myanmar, so too are local businesses. As we decide on any additional services in the coming year we want to ensure small local businesses are able to compete effectively – whether through finding new customers, achieving scale or learning new skill-sets.
Scott’s visit was instructive. Many multinational firms salivate over Myanmar’s abundant cheap labor, but we get more excited about how we can make that labor less cheap by growing local enterprises, creating jobs and improving livelihoods. We’ll leave you with that thought, illustrated below:
One of several ways to think about the multiplier effects of local sourcing.
Tags : Building Markets finance local procurement local sourcing Scott Gilmore SMEs
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