BDS market development guide.pdf - PACA

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46 • Developing conceptually and technically complete or perfect products, rather than products that are more suited to local preferences and delivery mechanisms. 28 28 Low-quality products and organizations are often given as reasons for intervention. The question is quality for whom? Although low quality by the standards of advanced economies, indigenous products may often be far more appropriate (and viable) for local conditions. See “Sustainable MSE training through grassroots training business”, a paper presented by Enoth Mbiene and Gavin Anderson at the Donor Committee’s Harare conference for insight on low priced training courses --$4 to $12 /course -- with high demand in rural communities. Microenterprise Best Practices Development Alternatives, Inc.
47 Avoiding overloading may involve different approaches: • Use market assessment and consumer research in intervention design: C Understanding the characteristics and norms of the market in question allows intervention to be geared to developing appropriate, viable products, organizations, people, and mechanisms in terms of cost, price, features, location, and the like. • Forget cost recovery, think about profit. The term “cost recovery” not helpful to developing sustainable, demand-led BDS because it is a manifestation of one key weakness of many BDS interventions: building organizations in advance of need: Box 12: Using a Portfolio Approach to Achieve Cross-cutting Development Objectives C Large front-end investments are made in facilities, equipment, and staff, which result in a bloated cost base that bears no relation to the earning capacity of the BDS provider. C The concept of cost recovery promotes an artificial culture of clawing back revenues to finance these cost bases and unproductive investments, in response to donor demands for sustainability. C Small businesses do not have this luxury; they grow in response to increasing demand and invest, when they can afford to, for productive purposes, to make a profit. • Use a portfolio approach (see Box 12). A portfolio approach entails working with multiple partners—a portfolio—rather than just one. Like an investment or lending portfolio, the performance of the entire portfolio is more critical than any single constituent part. The benefits of such an approach are: C This approach reduces investment in any single organization (by default, it is less intensive); and In a typical project, a partner service provider is given multiple objectives—for example, to achieve financial sustainability (based on revenues from SMEs) in two years and also that 65 percent of clientele must be female. A portfolio approach would be to work with 10 service providers, all of which have a financial-sustainability objective. The donor or facilitator does not assign individual service providers with a gender-outreach objective, however. Instead, an aggregate objective for the whole portfolio of the service provider is assigned—for example, gender outreach target of 65 percent. Thus, if there are 1,000 current clients for whole portfolio, 650 have to be female. The donor/facilitator then manages the portfolio on basis of both objectives: • Partner service providers are selected, assessed, or dropped on the basis of financial performance. • Partners are also selected on the basis of their offer to female entrepreneurs or market segments. Sufficient partners with such an offer are maintained in the portfolio to ensure aggregate gender objective is achieved. Key Points: Don’t impose that all service providers have to have 65 percent of clientele female; select those whose natural offer is to female clients or markets and then measure gender outreach of project as a whole. C A portfolio of partners means that donor Chapter Four—How Do We Get There?— Core Implementation Challenges
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 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: 45 • Have been developed to be pe
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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