BDS market development guide.pdf - PACA

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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