BDS market development guide.pdf - PACA

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28 the capacity to ensure that benefits continue beyond the period of an initial intervention. Capacity is concerned with the market capability to continue to offer services, and this is likely to be a combination of different actors performing different supply-side functions. “Capability” can include a wide range of factors—skills, motivations, systems, finances etc.—but in a simplified way can be reduced to two issues: ⇒ The ability to do; and ⇒ The ability to pay for/finance services. Beyond the period of an intervention: usefully, this reminds donors and facilitators they are there to be transient facilitators of change and not permanent fixtures on the BDS landscape. Benefits for SMEs are implied by their demand for services from providers—that is, demand/transactions is a proxy measure for benefits. Since SMEs need change and to become more differentiated, for benefits to continue services must also change; they cannot simply be a standardized, unchanging product offer. From this broad view, a general definition of sustainability in the context of BDS market development is: The market capacity to ensure that relevant, differentiated BDS continue to be offered to and consumed by SMEs beyond the period of an intervention. Building on this, more specifically, we can say that: A transparent view of long-term sustainability in BDS therefore is one that defines market capacity in more depth, linking market players with market functions by addressing the core questions of who does and who pays. Central to this definition is an institutional rather than organizational view of development. Although the terms “institution” and “organization” are often used inter-changeably, strictly speaking they are different. • Organizations are collections of individuals in a specific, recognizable entity and formal structure with internal rules. • Institutions are wider structures of individuals and organizations—formal and informal—in society or economy defined by mechanisms, relationships, values, and skills. Organizations are important and contribute to development objectives, but, ultimately, only institutional change can bring about lasting improvement. Although organizational development is concerned with developing individuals, managerial effectiveness, and systems and investing in physical assets, institutional development is aimed at overcoming the constraints that prevent people and organizations from working effectively together— such as information and linkages. Microenterprise Best Practices Development Alternatives, Inc.
29 Markets are institutions. Developing sustainable markets, therefore, is not just concerned with individual organizations in a marketplace or only with the delivery and consumption of services—although this is the central activity in any market—but with the other functions that are needed to support core transactions. We return to these support functions in Chapter Five. WHY IS CLARITY IN SUSTAINABILITY SO IMPORTANT? Development agencies are interested in generating longer-term change and benefits through their short-term interventions. 20 If, however, the nature of this longer-term picture is not clear, it can permit inconsistency between what projects do and what they are trying to achieve. A clear view of sustainability imposes discipline and direction on interventions. Conversely, a vague and ill-considered view allows interventions to drift aimlessly. The contrast with microfinance is instructive. Whereas in microfinance the drive toward financially sustainable microfinance institutions is consistent with tight cost control, positive real interest rates, and rigorous repayment collection, in BDS imprecise views about payment for services (from SME clients) and subsidies (from under-resourced governments) in the longer-term allow interventions to: • Develop products that are too expensive or inappropriate for SMEs; • Let the cost base of providers rise so they become out of tune with SMEs (and in tune with donor money); • Corrupt SMEs with the expectation of large subsidies and BDS as a donor creation rather than a normal product in a market; and • Lure governments into involvements that are beyond their capacity. WHY HAS IT BEEN SO DIFFICULT TO DEVELOP CLEAR VIEWS OF SUSTAINABILITY IN BDS? This characteristic problem of lack of clarity about sustainability in BDS interventions stems from a number of factors: • Not a Neat Organization, an Unruly Market: whereas in microfinance our focus is on specific organizations and this provides real boundaries for analysis, in BDS we deal with markets that, inevitably, are more elusive, being characterized by many more players, multiple relationships, and loose boundaries. 20 As opposed to relief agencies whose goals are inherently more short term. Chapter Three—Where Do We Want to Go?— Developing a Clear Picture of Sustainability
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 16 and 17: 6 Figure 2: Flows of Services in th
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: 27 CHAPTER THREE WHERE DO WE WANT T
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
Page 67 and 68: 57 C Informal, and C Individuals. T
Page 69 and 70: 59 The drawbacks of tender-based se
Page 71 and 72: 61 CHAPTER FIVE HOW DO WE ASSESS OU
Page 73 and 74: 63 • How well?—the quality dime
Page 75 and 76: 65 day income * This highlights key
Page 77 and 78: 67 Beyond SMEs—Unchanged Indicato
Page 79 and 80: 69 Figure 16: Measurement Methods i
Page 81 and 82: 71 • Donors may be interested in
Page 83 and 84: 73 and poverty reduction? Or is the
Page 86 and 87: A-3 KEY REFERENCES Anderson, Gavin,
Page 88 and 89:
A-5 Hitchins, R and Gibson, A; "The
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