Document: Options for interventions following a BDS Market assessment

A new approach to provide Business Development Services (BDS), the market development approach, has been adopted as guiding principles for donor intervention by the Committee of Donor Agencies for Small Enterprise Development during the late nineties. This approach grew out of the shared recognition that traditional interventions have failed to provide quality, affordable BDS to a large proportion of the target population of small enterprises. Donors were starting to realise that achieving economic and social goals was possible only by relying on business-minded actors to provide a diverse array of services. Consequently, methods were developed to stimulate the development of well-functioning service markets with a diverse array of high-quality services that meet the needs of a large proportion of SMMEs affordably. During 2003 the GTZ BDS / LED programme undertook detailed market assessments in two pilot areas to better understand the demand and supply of business services in these two areas. The market assessment researched 16 services in Mbombela Municipality (Nelspruit and surroundings, Mpumalanga province) and Lukhanji Municipality (Queenstown and surroundings, Eastern Cape province).

The Market Assessment is followed by a phase where the data is mined, and service profiles are created that basically contain the most essential information regarding the current and desired state of each service, the characteristics of the market and some possible options for intervention. The role of a market facilitator trying to narrow the gap between demand and supply can be taken up by a donor project directly. In cases where the role of facilitator, however, is likely to be required for many years to come (which is the case in most of our partner countries), it is critical to identify the right partner organizations that can be qualified and are interested to act as a facilitator between demand and supply on a more long-term basis (and thus more sustainable) than a short to medium term donor intervention is able to do.