Small Business Membership Organizations (SBMOs) have been of increasing interest to donors because of their potential to deliver services according to the needs of small businesses and in a way that is useful to their members. The following article, based on a survey of SBMOs in Africa and South Asia, reveals that SBMOs often lose this responsiveness as they grow too large and bureaucratic. Donor finance itself has sometimes contributed to this loss of direction. The article outlines the findings of the survey, suggests how donors can identify the most useful SBMOs, and points to ways of supporting them without overwhelming them.
Business development services (BDS) have not been subject to the same degree of comprehensive, systematic analysis as microfinance, a fact now recognized by many development agencies. Although there are difficulties in defining precisely what is meant by 'good practice' in BDS, examination of the experience of BDS donors and practitioners suggests that there are a number of core principles which underpin the current state of the art of BDS. These form a general framework to guide interventions. However, there remain many unresolved questions in BDS. Future priorities for action should seek to answer these questions, focusing in particular on more rigorous assessment of current practices, the development of benchmarks of performance and greater innovation.
The Empretec Ghana Foundation has emerged as a strong organization, with a motivated staff, delivering a broad range of training and consultancy services to growth-orientated SMEs. This article describes its strengths, which owe much to the vision of its leadership, and include a business-like culture and a commitment to moving towards financial sustainability. Empretec's staff and services have been developed with the help of 'mentors', funded at considerable cost by donor agencies. The article questions whether this level of intervention creates organizations that can achieve sustainability.
In one of the poorest countries in Africa, AMKA assists small-scale producers to export to markets in rich countries. AMKA selects clients whose operations accord with principles of 'fair trade', thereby aiming to have a greater impact on poorer people. The article points out, however, the tension between reaching poorer producers who require greater levels of assistance, but cannot pay high fees, and achieving sustainability. One possible option is identified: dividing the organization into two and carrying out the more developmental work through a not-for-profit trust, while offering the more profitable services such as brokering through a trading arm. A number of lessons are drawn from AMKA's experience: the need for a good information system to make effective decisions on which services to concentrate upon; the advisability of staying focused on a sector; and the strong sense of ownership within AMKA which has been fostered by participatory relationships with its main stakeholders, Traidcraft Exchange and DFID.
The BDS market development field has clearly made progress in its first few years of activity. However,to advance the field further,and to address incipient signs that spread has not been accompanied by depth in understanding, it now needs to confront ten critical challenges. These are concerned with reasserting the analytical rigour that underpins the approach, with confronting the difficult issues of how to operationalize market development objectives and with building the capacity of organizations and personnel. This article highlights these challenges and, in doing so, positions BDS market development within the wider private sector development field. While neither straightforward nor given to pre-packaged solutions, the issues identified here are relevant to all development efforts aimed at making markets work more effectively and inclusively for the benefit of the poor.
Business services, increasingly important for the competitiveness of rural economies, can be developed through considered and focused actions by development agencies and governments. The distinctive features of the rural context mean that business services here can be different, with more emphasis on embedded services in subsectors, on collective delivery and consumption of services and on public–private collaboration. However, the role they play in the economy is essentially the same as in urban environments; providing knowledge and information to help businesses solve problems and realize opportunities (e.g. reduce costs, gain market access and improve efficiency).Drawing on a wider review and a variety of case material this paper demonstrates the nature of rural business services and highlights key steps that can be taken to promote their development. These build on the logic of the market development approach and, while posing challenges, argues that these are within the grasp of agencies to implement.
‘Making markets work for the poor’ (M4P) is a generic approach to developing market systems that benefit poor people. Interest in M4P is increasing but there are still many misconceptions over what it is and why it is important. This article sets out to address these issues. The foundation for M4P lies in real world changes, new conceptual thinking and learning from the wider experience of development agencies. More recently, the positive experience of M4P in practice - and the results generated - are a strong argument for the approach. From an operational perspective, M4P presents a framework to define market systems, emphasizes the facilitation role of agencies and offers guidance in each element of the implementation process. Although there are a number of caveats associated with it, M4P has considerable potential to bring about pro-poor systemic change.