BDS market development guide.pdf - PACA

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6 Figure 2: Flows of Services in the Economy The Primary Sector—Extractive (commodities) Public Administration Services Business Services Consumer Services Service Sector The Secondary Sector— Manufacturing (goods) Source: Adapted from Riddle (1992) − Business Services—these are supplied from business to business and aimed at improving business performance through, for example, improved market access, operational efficiency, reduced costs, better designs, and greater skill levels; and − Consumer Services—such as leisure, tourism, retail, and household services—many of which are related to personal wealth. • Business services are the focus of attention here. It is difficult to be precise about how much of the wider service sector is accounted for by business services, but it has been estimated to be one-half in high-income economies and one-third in low-income countries. • Business services are an increasing proportion of overall service-sector activity. Indeed, business services are among the highest growth areas in many economies. Why is this so? Several points can be made: − There is increasing recognition that services add value to commodities and goods that allow businesses in these sectors to compete more effectively, access new markets, and operate efficiently. − In an increasingly complex and competitive global environment, and even at a local level, businesses have to focus on their core areas of competence, staying with what Microenterprise Best Practices Development Alternatives, Inc.
7 they know best rather than trying to do everything in-house. This means developing effective working relationships with a range of external specialists. − This trend has been hastened by technology developments and the opportunities (and threats) posed by them. Business service specialization is particularly evident, for example, in Internet services in which services increasingly need to be highly specific. Although some of these trends may appear distant from the hard realities of low-income economies, they are equally relevant here. A conducive environment for business development offers appropriate services to businesses to enable them to survive, develop, and grow. This has always been the case but is becoming even more important now. The World Bank (1999) highlights this trend concisely: Economic output has traditionally been visualized as commodities and goods— wheat, coffee, shirts, or automobiles. This economic vision grows less accurate each year… . The growing importance of services means that knowledge—how to do things, how to communicate, how to work with other people—is becoming ever more important, overshadowing the natural resource base. WHY BDS MARKET DEVELOPMENT? Many donors have long held the view that SMEs need more than finance and so have intervened to support the provision of nonfinancial services to SMEs. But why has this understanding led to a new, different focus on market development? The origins of BDS market development lie in the early-to-mid-1990s, when it became clear to many development agencies that—in comparison with the results of microfinance—BDS, after many years of funding and endeavor, had disappointing results, specifically with regard to the following: • Outreach—Only a small number of SMEs were being reached with officially supported services. Most were untouched. • Sustainability—Public organizations supported to deliver services consumed resources but, with little or no income from their SME clients, depended on aid. The apparatus of BDS required never-ending subsidization. • Impact—There were few signs of major impact—although, in the absence of a price-based transactional relationship and the signals this would send about client satisfaction, this was difficult to judge. Certainly, there seemed to be little perceived value on the part of SME clients. Chapter One—Why BDS Market Development? Why It Is Important and What Is New about It
Page 1 and 2: BDS Market Development: A Guide for
Page 3: Alan Gibson is a co-founder of The
Page 6 and 7: ii CHAPTER FOUR HOW DO WE GET THERE
Page 8 and 9: iv Table 1 Implications of Differen
Page 10 and 11: vi How to Use This Guide: A Quick R
Page 12 and 13: 2 • To address poverty, governmen
Page 14 and 15: 4 • Potentially, a range of provi
Page 18 and 19: 8 • Efficiency—The cost bases o
Page 20 and 21: 10 • Advocacy: for the business c
Page 23 and 24: 13 CHAPTER TWO WHERE WE ARE NOW—A
Page 25 and 26: 15 The flow diagram of an effective
Page 27 and 28: 17 KEY CHARACTERISTICS OF EFFECTIVE
Page 29 and 30: 19 Figure 7: Quadrant of Supply-sid
Page 31 and 32: 21 • Consumers—such as female-o
Page 33 and 34: 23 WHERE SHOULD INTERVENTIONS FOCUS
Page 35 and 36: 25 Figure 10: Matching Market Analy
Page 37 and 38: 27 CHAPTER THREE WHERE DO WE WANT T
Page 39 and 40: 29 Markets are institutions. Develo
Page 41 and 42: 31 What Needs to Be Done?—Key Sup
Page 43 and 44: 33 Box 7: Key Considerations in Ass
Page 45 and 46: 35 Figure 12: Functions of the Stat
Page 47 and 48: 37 Table 2: Sustainability Framewor
Page 49 and 50: 39 CHAPTER FOUR HOW DO WE GET THERE
Page 51 and 52: 41 Figure 13: Where to Intervene to
Page 53 and 54: 43 • Consistent Policies and Appr
Page 55 and 56: 45 • Have been developed to be pe
Page 57 and 58: 47 Avoiding overloading may involve
Page 59 and 60: 49 C For new product development, a
Page 61 and 62: 51 • Precisely, what are they goi
Page 63 and 64: 53 Existing MARKET (sub-sector, ent
Page 65 and 66: 55 To Reach Female-Owned Businesses
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57 C Informal, and C Individuals. T
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59 The drawbacks of tender-based se
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61 CHAPTER FIVE HOW DO WE ASSESS OU
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63 • How well?—the quality dime
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65 day income * This highlights key
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67 Beyond SMEs—Unchanged Indicato
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69 Figure 16: Measurement Methods i
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71 • Donors may be interested in
Page 83 and 84:
73 and poverty reduction? Or is the
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A-3 KEY REFERENCES Anderson, Gavin,
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A-5 Hitchins, R and Gibson, A; "The
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