BDS market development guide.pdf - PACA

More documents

Recommendations

Info

50 If a donor/facilitator is to achieve leverage through a limited intervention, the intervention must be shaped into an offer to partners that is clear, unambiguous, and attractive. As with any other transaction, each party has to know what it is going to get if the offer is going to work. Often, interventions have an extremely ill-defined offer, partly because the range of potential support is extremely broad and partly because there is a genuine absence of transparency about roles and capabilities. Key questions to be asked when ascertaining an offer to partners are: • What is our distinctive core competence (especially in contrast with other agencies, government, and private sector)? • Why should someone want our support? Microenterprise Best Practices Development Alternatives, Inc.
51 • Precisely, what are they going to get? Box 13: Using Incentive-based Support 32 Some agencies make their support to partners conditional, based on explicit performance criteria; the objective is to replicate <strong>market</strong> behavior. Using incentive-based support effectively can present numerous challenges. Link support to performance: Some form of conditionality has to be established, whereby funding or technical assistance is extended based on the achievement of performance criteria, such as outreach, activities, and financial performance. This may be on an organization or product-by-product basis. Choosing the right conditionality is the principal challenge here. • How will the chosen incentive work? • What is the objective of the incentive mechanism? • Does the incentive motivate the desired behavior? Define the package of support: Recognizing that just as there is a transaction between service provider and consumer, so there is a transaction between donor/facilitator and service provider. What does the partner get from the donor/facilitator? It is particularly important that consistency and clarity are maintained over time with respect to both the offer of support and the incentive mechanism. Shifting the goal-posts can be extremely damaging. Develop performance targets: Mutually agreed performance targets must be established in advance. Targets need to be realistic and achievable, but should also present enough of a challenge to stimulate change: too low, behavior or performance is unchanged; too high, the target is de-motivating. A more difficult challenge for many <strong>development</strong> agencies is that performance-based support also means walking away when partners consistently fail to deliver (rather than keeping them on life-support). If the sanction for under-performance is not credible, incentives will not work. Implement rigorous measurement systems: Because funding and technical support are dependent on performance, measuring performance has to be transparent and credible if disputes, manipulation, and fraud are to be avoided. The challenge for the donor/facilitator is to minimize distorting effects while maintaining accountability. Problems with Incentive Mechanisms: • Inappropriate conditionality motivates undesired behavior—for example, basing funding only on outreach or sales income can cause a service provider to maximize sales, without considering the profitability of sales. When support ends, the service provider finds both a large operating deficit and inappropriate cost and price structures. • Loose conditionality and measurement can encourage fraud and manipulation. • Incentive schemes, if they are well run, place considerable demands on donors/facilitators in terms of skills, systems and procedures, and staff time. Building on Existing Ownership The most distinctive characteristic of a small business is its ownership structure—usually a single individual who drives the organization. There is an emerging consensus that the most 32 See Hitchins, R; "Assessing the experience of Swisscontact's business centre approach in Latin America and Asia"; Swisscontact; SDC Issue paper No.3, 1999 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 and 56: 45 • Have been developed to be pe
Page 57 and 58: 47 Avoiding overloading may involve
Page 59: 49 C For new product development, a
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
show all

BDS market development guide.pdf - PACA

Create successful ePaper yourself

Delete template?

Save as template?