November 2004 Dhaka, Bangladesh

1. Rural Areas November 2004 Dhaka, Bangladesh

2. 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

3. KATALYST Center of Expertise And Regulations Services Industry and Rural Services Bamboo Agro-tools Fishery Furniture Vegetables Plastic The Project DFID/SDC/Sida Swisscontact-GTZ-IS 2002-2007 $25m 45 staff

4. 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

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

6. BDS, role of Facilitator SE provider SE SE provider SE SE Service provider SE SE SE SE SE provider SE SE SE provider

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

8. 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

9. 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

10. The Approach: Analysis • Rough overview of the area • Key actors • Area dynamics • Key sectors Area Potential Study • Sub-sector mapping • Sector dynamics • Key constraints and opportunities • Potential service solutions Sub-sector Studies • Service solutions to key constraints and opportunities • Supply & demand characteristics • Market facilitation activities Industry Brief, Service Assessments & Interventions

11. Strategic Interventions in Rangpur Vegetables

12. V1: Improved knowledge on inputs for vegetable farmers from retailers Increased Productivity Better Knowledge 400 Retailers of agricultural inputs Payment 50,000 farmers Inputs K’s intervention: Work with a large pesticide company to include info on seeds and other input use in its retailer training programme Advice Gender outreach ERB/SRB benefit Incentive Improving this advice leads to increased productivity

13. Strategic Interventions in Faridpur Pond Fishery

14. F6: Capacity building of the fishery BMO Increased Productivity Pond fishery BMO Pond fish entrepreneurs: 107 members 22,000 fish farmers Capacity building Payment Advocacy Links to other business services K’s intervention: Work with the BMO to identify and develop its strategic role. This also enables K to undertake more complex interventions smoothly. Information Local government Improved enabling environment LED Recognition

15. Primary sector (extractive) Secondary sector (manufacturing) Tertiary sector (services) Tertiary sector (services) Individual/ household services Business services Public services A wider view… but not too wide! GOAL PURPOSE “wider” services forbusiness 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

16. Wider market Principles Project goal is and remains: “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.

17. Wider MarketsHow could this look like in a geographical area ? SBS approach in Poultry SBS approach in Pond fishery SBS approach in Agro tools Services related to better functioning of the labour market Generic service approach in IT Generic service approach in Media Services related to better functioning of the fuel market LEE Activities related to registration LEE Activities related to taxation

18. The New elements in “Wider” Markets, examples