BDS market development guide.pdf - PACA

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56 WITH WHOM SHOULD WE WORK? A shift in the focus of intervention to development of BDS markets calls for a similar shift in thinking about the partners 35 with whom we work. What has changed? Essentially thinking about developing BDS markets has led us to recognize that: # The spectrum is broader: we are starting to understand that the range of actual or potential service providers is much more diverse and different than we originally believed. # Our intervention objectives will be different: switching from assisting SMEs directly to ensuring sustainable access to services, via functioning markets, changes the nature and objectives of our interventions and, by extension, influences partner choice. The combination of these two factors gives us a much less rigid picture of who partners should be. The mesolevel (Box 16) can no longer be thought of a distinct institutional layer made up of organizations with specific characteristics or structures. Overall, we are faced with a much messier choice regarding market development, from which the following trends are emerging: Box 14: Changing Views of the Meso-level in Nepal There is a long history of donor agency support for BDS in Nepal. In the early- 1980s, GTZ undertook pioneering work on training and counseling that eventually led to the development of the well-known CEFE model. By the 1990s, a wide range of donors, including SDC, were involved in supporting BDS. During this period, there has been a discernible evolution in how agencies perceive the meso-level in BDS: • 1980s-Early-1990s: government and quasi-government organizations as the key deliverers of services (with donor and government subsidy for almost everything); • Focusing less on any single provider; • Working with more service providers; 36 • Working with a greater diversity of service provider types; • Focusing more on private sector service providers; • Increasingly specialized, differentiated, nichefocused service providers; and • Smaller service providers: • Early-Late 1990s: business membership organizations as the main players (with significant donor support for delivery); and • Late-1990s-Now: private sector and other market-oriented providers with market development as the overarching objective (and with donor support more focused on development rather than delivery). Although perhaps less obvious in some countries, this shift in thinking that is so evident in Nepal is representative of a wider trend that has major implications for partner choice. 35 “Partners” here refers to service providers. 36 See McKenzie, J, "Creating a market in management training for Vietnam's private firms: MPDF's experience"; Paper presented to conference on "Business services for small enterprises in Asia: developing markets and measuring performance"; Hanoi, 3 rd -6 th April, 2000. Leila Webster reported at an April 2001 BDS workshop that the new business management training products stimulated by the project is resulting in a new range of tailored management courses offered by a range of local providers. Microenterprise Best Practices Development Alternatives, Inc.
57 C Informal, and C Individuals. The move toward BDS market development, therefore, often means that agencies need to work with different kinds of organizations. In particular, agencies may need to consider working with for-profit private sector companies as the main providers of BDS. Criteria for Selecting Partners Criteria for selection should draw on the key design principles in BDS relating to factors such as ownership, commercial orientation, offer, people, resources and capacity, and systems. These should be formulated as questions or, if possible, as specific indicators. For example, the key questions might be the following: 1. Do the people have the right skills and motivations, personal ownership, and working culture to enable them to work in a business-like manner? 2. Does the structure—legal and operational—allow organizations to behave in an entrepreneurial way? 3. Are internal systems—for example, payment structures, systems of performance assessment, and cost control—appropriate? 4. Do partners have transactional relationships with their clients, manifested, for example, in their approach to pricing and client selection? 5. Is the cost base of the organization consistent with the client group it seeks to serve? 6. Are partners’ current approaches to product pricing fed by accurate cost information and consistent with longer-term sustainability? 7. Do partners allocate costs to their products and activities to allow a clear view of the real costs of delivering products? 8. Is the client base clearly defined? 9. Is there consistency between the product offer and the client base? Although developing clear and specific criteria for selection is essential, it is important to recognize that—as with any business investment—this is not a full-proof process and, like business investors, personal factors (such as belief in the providers) play an important role in selection, even if they are difficult to capture in a list of criteria. Selection of Partners Chapter Four—How Do We Get There?— Core Implementation Challenges
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BDS Market Development: A Guide for
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Alan Gibson is a co-founder of The
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ii CHAPTER FOUR HOW DO WE GET THERE
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iv Table 1 Implications of Differen
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vi How to Use This Guide: A Quick R
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2 • To address poverty, governmen
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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 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: 55 To Reach Female-Owned Businesses
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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