BDS market development guide.pdf - PACA

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• To address poverty, governments and development agencies need to pursue a marketfriendly
approach to development, based on sound macroeconomic management,
competent delivery of public services, structural reform, and open trade.
• Inherent in this approach are two implications: that government focus on its areas of core
competence and that the private sector be recognized and encouraged as the prime engine
of economic growth. 1
• Private-sector development—of which SME development is an important part—is
therefore an intrinsic part of any effective poverty-reduction strategy.
Business Need for Services
A focus on private-sector and SME development grows directly from development agencies’
commitment to an environment promoting the private sector. Key aspects of this
environment are the macroeconomic context and public investment in people. However,
more immediately for SMEs, access to services is a vitally important dimension in their
business environment (see Figure 1) and a key factor in determining the competitiveness of
economies.
• SMEs have a range of different “needs” that are critical to their survival and growth. 2 The
nature of these needs will be influenced by sector and stage of SME development but will
also relate to their ability to, for example, find customers, design products, enhance
productivity, reduce fixed costs, improve administration, communicate effectively, and
access new technology. The degree to which these needs are met will have a major
influence on business success.
• Although business needs differ, needs can be understood as basic, practical questions
(such as how to, with whom, where to, and what about) in relation to essential business
functions. These are questions faced by all businesses. Indeed, businesses, and SMEs in
particular, are associated with independence. Yet, to a considerable degree, success as a
small business stems from the owner–manager’s ability to manage his or her business in
an interdependent manner and to develop appropriate working relationships with
providers of services (and other stakeholders) in the environment.
• Financial services are a critical part of this immediate environment but cannot meet all
business needs.
• Environments that are conducive to SME development provide relevant, differentiated
services to meet these needs on an informal or formal basis.
1
Economic growth is not seen as a guarantee of poverty reduction but as a necessary condition for it.
2
Needs are concerned with inputs to (administration, people, technology) and outputs from (access to markets,
customers) SMEs.
Microenterprise Best Practices
Development Alternatives, Inc.