Potential Target Groups
Small enterprise producers (SEs) in viable sectors who face barriers accessing markets and may also need product development assistance.
Purpose and Rationale of Service
The purpose of the service is to facilitate market access for SE products in situations where:
• SEs and private intermediaries are able to take advantage of market opportunities;
• SEs lack information on, or are unable to produce to, market specifications;
• Large-scale buyers (including foreign importers) cannot expand to new products or producers because the existing system
cannot meet increased demands;
• Intermediaries and the SEs who produce for them lack the capacity to handle greater and more complex orders;
• New product development is insufficient or lacking;
• Too few new products are being introduced to buyers and importers;
• Quality control is inconsistent; and
• Producers lack the ability to sustain volume production.
The service also identifies new markets for SE products by:
• Communicating market specifications to producers;
• Assisting SEs to produce to market specifications; and
• Coordinating and ensuring the fulfillment and quality of large orders.
When is This Activity Appropriate?
This activity is appropriate when there is:
• An existing relationship between SE producers and market intermediaries; and
• The potential for increased sales to final markets that would benefit both the intermediaries and the producers
in a “win-win” fashion.
Methodology
• Determine the sub-sector(s) to focus on;
• Establish a linking support unit that can serve as the in-country BDS facilitator;
• Identify large scale buyers and markets (national and international) for targeted products as well as the kinds of products
they are most interested in acquiring;
• Identify private sector market intermediaries currently serving these markets and interested in participating in the program
(BDS providers);
• Identify SE producers capable of responding to market demands;
• Introduce intermediaries to large scale buyers and markets and oversee initial transactions;
• Provide training and technical assistance to market intermediaries to improve their ability to:
• Identify new markets,
• Communicate market specifications to producers,
• Coordinate and assemble production, and
• Mentor SEs in product development.
• Provide training and technical assistance to SEs, supported by intermediaries, to improve:
• Product development and design,
• Quality control standards,
• Volume production methodologies,
• Pricing strategies, and
• Employee compensation and incentives.
Have a clear exit strategy!
Note: This BDS activity describes market links through support to private sector intermediaries. Promotion of these links using other strategies (new marketing businesses, associations, etc.) is presented in separate BDS activity descriptions.)
Finance and Cost-Recovery Mechanisms
BDS providers (market intermediaries) recover costs through the mark-up they receive when they purchase products from entrepreneurs and then sell them to customers.
If the BDS facilitator is involved in training, it can collect a fee for training although this usually does not cover the full cost of the intervention.
How Should the Program be Evaluated?
Since existing links are sustainable prior to program start-up, the program is evaluated primarily on the increase in sales and income to SE producers through a growth in those linkages.
Additionally, as BDS providers (market intermediaries) must remain 100% sustainable through the margin they receive between the cost of the purchase and the selling price, the program is also evaluated on this indicator.
Note: See the introduction for general principles on evaluation
Potential Impact
• Increased sales and revenue for targeted SEs and the ability to continue selling in the market;
• Increased number of profitable linking arrangements that lead to increased competition, efficiency, and benefits for SE
producers and contribute to the development of a vibrant private sector BDS market; and
• A significant increase in scale and outreach potential depending on both the buying capacity of market intermediaries and
market demand.
Length of Intervention
Increased sales and income for SEs through greater number of sustainable linkages with private intermediaries should be complete in the short to medium term (1-2 years.)
Illustrative Programs, Sectors, and Regions
Manicaland Market Linkage Program, Zimbabwe – contact Don Mead at mead@pilot.msu.edu or look for the case study at: www.sedonors.org click on “BDS Materials” at the ILO web site.
Strengthening Market Linkages: A Demand-Led Approach to Crafts Sales in Mali (contact Action for Enterprise at Franklusby@actionforenterprise.org, or see www.enterpriseworks.org)
Where to get more information
Additional sources of information are:
• Aid to Artisans: www.aid2artisans.org
Lessons Learned
• Program must focus on sectors (products) where there is an un-met demand;
• It is important to carry out a sector analysis before sector constraints and opportunities can be determined and the role of
different market players understood;
• Program must be demand-led—interventions with SEs are based on what the final buyer wants. The role of a program is to
help the SEs produce to buyer specifications;
• The BDS facilitator should not take on a commercial role, but should help facilitate commercial linking arrangements
between buyers, intermediaries, and producers; and
• There is a need to address the potential problem of private intermediaries who have monopolies in certain markets. In this
situation the strategy should be to increase the number of intermediaries or to support producer associations.