November 2004 Dhaka, Bangladesh Rural Areas

Contents  Katalyst  The Approach  BDS  BDS for Katalyst  Katalyst in Rural Markets  Sample Interventions  Sample intervention framework  Sample of an embedded service  Sample of a public benefit service  Wider market development approach

The Project KATALYST Services Industry and Rural Services Center of Expertise And Regulations Agro-tools Furniture Plastic Vegetables Bamboo Fishery DFID/SDC/Sida Swisscontact- GTZ-IS $25m 45 staff

BDS, basics  A wide range of commercial services are essential for Micro and Small Entrepreneurs  Donors / government can improve the functioning of markets for these services.  Understanding of present systems and as far as possible building on these.  Interventions should have a “short” duration and only take place with private sector “buy in”  BDS will improve the competitiveness of entrepreneurs, the impact on poverty is relatively slow and indirect, but it has, in principle, a structural impact on poverty.  BDS projects demand a private sector spirit from implementers  BDS is not a panacea for everything

BDS, role of Facilitator provider SE Service FACILITATOR Co-facilitator $

BDS, role of Facilitator provider SE Service provider SE

Adapted from Porter (1990) inputsthe business distribution, retail buyers Fee-based services (incl. commissions) tech. consulting financial advice advertising, sales production services market research recruitment Embedded services product designs material procurement quality control delivery market information BDS IN BUSINESS SYSTEMS Public Services facilitate linkages policy, regulation advocacy information sector/area promotion legal Springfield Centre for Business in Development

BDS in Rural Markets How can the business service market development approach be implemented in rural areas? Where the BDS discussion has:  Focused on urban areas and sectors  Looked at transacted services And the LED discussion has:  Focused on local infrastructure and institutions but not so much on service markets

Rural Services in Katalyst To meet these challenges, this division was set up with 2 tracks:  Promoting critical business service markets within selected sectors that would benefit the local economy  Complementing this with an LED approach:  Public benefit business services through BMOs  Interventions having an impact beyond sectors. E.g. retailer training, transport, packaging

The 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 Vegetables Input related constraints On-farm knowledge and information constraints Farm-to-Market constraints KATALYST Response Improved access to hybrid seeds Promoting private soil testing Reducing wastage in transport through better packaging Improved knowledge of inputs from retailers to farmers

V1: Improved knowledge on inputs for 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 outreach ERB/SRB benefit Incentive

Strategic Interventions in Faridpur Pond Fishery Input related constraints On-farm knowledge and information constraints Policy environment related constraints KATALYST Response Promoting a physical market for fingerlings Improving information on pond management through retailers Capacity building of the fishery association Promoting a quality channel for brood fish Improving linkages with Jessore Promoting a physical market for fingerlings Embedded information through input suppliers

F6: Capacity building of the fishery BMO Pond fishery BMO Pond fish entreprene urs: 107 members 22,000 fish farmers Advocacy K’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 LED Local governme nt Improved enabling environment Recognition Links to other business services

A wider view… but not too wide! Tertiary sector (services) Business services Individual/ household services Public services GOAL PURPOSE Primary sector (extractive) Secondary sector (manufacturing) Tertiary sector (services) “wider” services for business business services eg AFT or livestock husbandry advice public/collective services eg advocacy or trade licensing individual/consumer/household services eg media, land broking, telecoms

Wider market Principles 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 issues:  Insufficient Information  Insufficient Knowledge  Insufficient Skills This is our practical guidance. Our Wider Market Development thinking will respect the following principles:  developing the private sector in the medium and long term,  based on thorough understanding of the private sector and its systems  through better functioning service markets,  through sustainable changes,  with minimal distortion.

Wider Markets 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” Markets, examples Marketconstraintservice Labour Mismatch in seasonal availability Placement through Labour agency Property Unclear Property rights  Chamber advocacy (LEE)  Land registration service (eg lawyer) FuelUnavailability Systems to link importers with local demand (brokers) Transport Restrictive regulation  Chamber advocacy (LEE)