BDS market development guide.pdf - PACA

53
Existing
MARKET
(sub-sector, enterprise, location)
New
PRODUCTS
(services, providers)
1 2
3 4
New
Agencies can adopt four basic strategies (or combine several):
# Work more intensively within existing sectors and existing services and providers,
perhaps to reach disadvantaged groups (market share or market penetration);
# Increase the range of sectors in which they try to work (new market strategy);
# Introduce new services and providers (product development strategy); and
# Move into entirely new sectors with new services and providers (diversification).
The further donors move from square 1 toward square 4—into new markets, services, and
providers—the more risk increases. The potential for distortion decreases, however,
assuming that the general level of BDS activity is weak in these new areas.
Factors to Take Account of in Pursuing Poverty Reduction/Equity Objectives
All of the preceding analysis applies equally to the poor as it does to the non-poor. These
challenges need to be addressed generally if BDS markets are to be developed and,
specifically, if the poor are to be included within markets and poverty/inequity addressed.
The approach is all about making markets work more effectively for the poor—as well as for
everybody else—rather than isolating them in enclaves of welfare and charity.
Yet, commonly, intervention responses that seek to be especially poverty-focused are often
based on direct subsidy of service provision or consumption. Projects are designed to reach
disadvantaged groups using, for example, subsidized services for microenterprises or target
quotas for coverage of female-owned businesses.
Intervening in this fashion is a non-market response. The risk is that solutions are artificial,
delivering short-term benefits but ultimately doing little to incorporate the disadvantaged into
Chapter Four—How Do We Get There?—
Core Implementation Challenges