November 2004November 2004Dhaka, BangladeshDhaka, Bangladesh

Rural AreasRural Areas

ContentsContents

KatalystKatalyst

The ApproachThe Approach BDSBDS BDS for KatalystBDS for Katalyst Katalyst in Rural MarketsKatalyst in Rural Markets

Sample InterventionsSample Interventions Sample intervention frameworkSample intervention framework Sample of an embedded serviceSample of an embedded service Sample of a public benefit serviceSample of a public benefit service

Wider market development approachWider market development approach

The Project

KATALYST

ServicesIndustry and Rural

Services

Center of ExpertiseAnd Regulations

Agro-tools

FurniturePlastic Vegetables

Bamboo

Fishery

DFID/SDC/SidaSwisscontact-

GTZ-IS

2002-2007$25m

45 staff

BDS, basicsBDS, basics A wide range of commercial services are essential for Micro and A wide range of commercial services are essential for Micro and

Small EntrepreneursSmall Entrepreneurs Donors / government can improve the functioning of markets for Donors / government can improve the functioning of markets for

these services.these services. Understanding of present systems and as far as possible building on Understanding of present systems and as far as possible building on

these.these. Interventions should have a “short” duration and only take place Interventions should have a “short” duration and only take place

with private sector “buy in”with private sector “buy in” BDS will improve the competitiveness of entrepreneurs, the impact BDS will improve the competitiveness of entrepreneurs, the impact

on poverty is relatively slow and indirect, but it has, in principle, a on poverty is relatively slow and indirect, but it has, in principle, a structural impact on poverty.structural impact on poverty.

BDS projects demand a private sector spirit from implementersBDS projects demand a private sector spirit from implementers BDS is not a panacea for everythingBDS is not a panacea for everything

BDS, role of FacilitatorBDS, role of Facilitator

provider

provider

provider

provider

SE SE

SE

SE

SESE

SE

SE

SE

SE

ServiceService

FACILITATORCo-facilitator$

BDS, role of FacilitatorBDS, role of Facilitator

provider

provider

provider

provider

SE SE

SE

SE

SESE

SE

SE

SE

SE

ServiceService

providerSE

SE

SE

Adapted from Porter (1990)

inputs the business

distribution, retail

buyers

Fee-based services (incl. commissions)

tech. consultingfinancial advice

advertising, sales

production servicesmarket research

recruitment

Embeddedservices

product designsmaterial

procurementquality control

deliverymarket information

BDS IN BUSINESS SYSTEMS

Public Services

facilitate linkagespolicy, regulation

advocacy

informationsector/area promotion

legal

Springfield Centre for Business in Development

BDS in Rural MarketsBDS in Rural Markets

How can the business service market How can the business service market development approach be implemented in development approach be implemented in rural areas?rural areas?

Where the BDS discussion has:Where the BDS discussion has: Focused on urban areas and sectorsFocused on urban areas and sectors Looked at transacted servicesLooked at transacted services

And the LED discussion has:And the LED discussion has: Focused on local infrastructure and institutions but Focused on local infrastructure and institutions but

not so much on service markets not so much on service markets

Rural Services in KatalystRural Services in Katalyst

To meet these challenges, this division was To meet these challenges, this division was set up with 2 tracks:set up with 2 tracks:

Promoting critical business service Promoting critical business service markets within selected sectors that would markets within selected sectors that would benefit the local economybenefit the local economy

Complementing this with an LED Complementing this with an LED approach:approach: Public benefit business services through BMOsPublic benefit business services through BMOs Interventions having an impact beyond sectors. Interventions having an impact beyond sectors.

E.g. retailer training, transport, packagingE.g. retailer training, transport, packaging

The Approach: AnalysisThe Approach: Analysis

Area Potential Study

Industry Brief, Service Assessments & Interventions

Sub-sector Studies

•Rough overview of the area•Key actors•Area dynamics•Key sectors

•Sub-sector mapping•Sector dynamics•Key constraints and opportunities•Potential service solutions

•Service solutions to key constraints and opportunities•Supply & demand characteristics•Market facilitation activities

Strategic Interventions in Rangpur VegetablesStrategic Interventions in Rangpur Vegetables

Input related Input related constraintsconstraints

On-farm On-farm knowledge and knowledge and information information constraintsconstraints

Farm-to-Market Farm-to-Market constraintsconstraints

KATALYST ResponseKATALYST ResponseImproved access to Improved access to hybrid seedshybrid seeds

Promoting private Promoting private soil testingsoil testing

Reducing wastage Reducing wastage in transport in transport through better through better packagingpackaging

Improved Improved knowledge of knowledge of inputs from inputs from retailers to farmersretailers to farmers

V1: Improved knowledge on inputs V1: Improved knowledge on inputs for vegetable farmers from retailersfor vegetable farmers from retailers

400 Retailers of agricultural inputs

50,000 farmers

Inputs

Advice

Improving this advice leads to increased

productivity

K’s intervention:

Work with a large pesticide company to include info on seeds and other input use in its retailer training programme

Better Knowledge Payment Increased Productivity

Gender outreachERB/SRB benefitIncentive

Strategic Interventions in Faridpur Pond FisheryStrategic Interventions in Faridpur Pond Fishery

Input related Input related constraintsconstraints

On-farm On-farm knowledge and knowledge and information information constraintsconstraints

Policy environment Policy environment related constraintsrelated constraints

KATALYST ResponseKATALYST ResponsePromoting a Promoting a physical market for physical market for fingerlingsfingerlings

Improving Improving information on information on pond management pond management through retailersthrough retailers

Capacity building Capacity building of the fishery of the fishery associationassociation

Promoting a Promoting a quality channel for quality channel for brood fishbrood fish

Improving linkages Improving linkages with Jessorewith Jessore

Promoting a Promoting a physical market for physical market for fingerlingsfingerlings

Embedded Embedded information information through input through input supplierssuppliers

F6: Capacity building of the F6: Capacity building of the fishery BMOfishery BMO

Pond fishery BMO

Pond fish entrepreneurs:

107 members

22,000 fish farmers

AdvocacyK’s intervention:

Work with the BMO to identify and develop its strategic role. This also enables K to undertake more complex interventions smoothly.

Capacity building Payment

Increased Productivity

Information

LEDLocal government

Improved enabling

environmentRecognition

Links to other business services

A wider view… but not too A wider view… but not too wide!wide!

Tertiary sector (services)

Business services

Individual/household

services

Public services

GOAL

PURPOSE

Primarysector

(extractive)

Secondarysector

(manufacturing)

Tertiarysector

(services)

“wider”services for business

business services eg AFT or livestock husbandry advicepublic/collective services eg advocacy or trade licensing

individual/consumer/household services eg media, land broking, telecoms

Wider market PrinciplesWider market Principles

Project goal is and remains:Project goal is and remains:

““Increased enterprise competitiveness through better functioning markets”Increased enterprise competitiveness through better functioning markets”

The question why Markets do not function optimal often comes down to 3 The question why Markets do not function optimal often comes down to 3 issues:issues:

Insufficient InformationInsufficient Information Insufficient KnowledgeInsufficient Knowledge Insufficient SkillsInsufficient Skills

This is our practical guidance.This is our practical guidance.

Our Wider Market Development thinking will respect the following principles:Our Wider Market Development thinking will respect the following principles: developing the private sector in the medium and long term,developing the private sector in the medium and long term, based on thorough understanding of the private sector and its based on thorough understanding of the private sector and its

systemssystems through better functioning service markets,through better functioning service markets, through sustainable changes,through sustainable changes, with minimal distortion.with minimal distortion.

Wider MarketsWider MarketsHow could this look like in a geographical area ?How could this look like in a geographical area ?

SBS approach in Poultry

SBS approach in Agro tools

SBS approach in Pond fishery

Generic service

approach in IT

Generic service

approach in Media

LEE Activities related to registration

LEE Activities related to taxation

Services related to better functioning of

the

labour market

Services related to better functioning of

the

fuel market

The New elements in “Wider” The New elements in “Wider” Markets, examplesMarkets, examples

MarketMarket constraintconstraint serviceservice

LabourLabour Mismatch in Mismatch in seasonal seasonal availabilityavailability

Placement through Placement through Labour agencyLabour agency

PropertyProperty Unclear Property Unclear Property rightsrights

Chamber advocacy Chamber advocacy (LEE)(LEE)Land registration Land registration service (eg lawyer)service (eg lawyer)

FuelFuel UnavailabilityUnavailability Systems to link Systems to link importers with local importers with local demand (brokers)demand (brokers)

TransportTransport Restrictive Restrictive regulationregulation

Chamber advocacy Chamber advocacy (LEE)(LEE)