Facilitate market development rather than providing services: Sometimes donors and governments intervened in
the BDS market at the level of transactions, providing services directly or permanently subsidizing services. Try
instead to promote transactions between entrepreneurs and primarily private sector suppliers, ―facilitating‖ the
expansion of markets rather than providing services. Rather than offering financial assistance to suppliers,
interventions concentrate more on technical assistance and incentives that encourage suppliers to enter new
markets; develop new, low-cost products; and expand services to under-served markets.
Work toward clear picture of a sustainable market and have an exit strategy: Programs could continue
indefinitely unless program managers have a clear vision for a sustainable BDS market and an exit strategy. In a
sustainable market, usually competing providers offer a wide range of products; frequently innovate to meet changing
demand; and capitalize on market opportunities. Sustainable markets should also grow in volume and offer
increasing access to under-served groups. Programs are more likely to end successfully if they envision a
sustainable market and the challenge is to assess the market objectively to determine when it has reached a
sustainable level.
Promote competition and efficiency in the market: Don't work with only one provider and suppress competition in
the market. Facilitators should promote competition among suppliers, usually by working with many of them. This
does not preclude working with one supplier for particular activities at some point — when testing a new product or in
a new or very weak market, but a facilitator must always be careful to promote, not stifle competition. Private sector
providers are usually more efficient and innovative but programs do not have to exclude organizations with a social
mission - but facilitators should encourage these organizations to act as commercial players and distort the market as
little as possible. All market players should have access to facilitation services, otherwise the facilitator is ―picking
winners‖ rather than letting the market determine the best providers.
Tread lightly in markets: Visible donor involvement in market development programs tends to distort markets
because small enterprises and service providers have come to expect subsidies. Large government and donor
programs often suppress private BDS markets or crowd out private providers and even modest financial inflows can
damage a budding market. If markets are to develop and serve low-income clients with the services they desire, they
must not be smothered with inappropriate funding. Donors and practitioners must exercise discipline by matching
interventions to the level of the market, emphasizing technical assistance over financial inflows, and maintaining a
low profile. This may be difficult, but it is important in markets with weak demand, a common characteristic of low-
income consumers.
Develop a transactional relationship with suppliers: Facilitators should have a transactional relationship with
service providers. Programs should work with commercial suppliers prepared to invest their own resources in
program-promoted initiatives. If suppliers choose to work with the program in the same way they make other
investment decisions – weighing costs and benefits – they are more likely to feel ownership and to use program
resources wisely. The more a program works with market principles, the better.
Make programs flexible and responsive to the market: Often managers specify the steps leading to the
achievement of program outputs at the outset and then, follow them. Market development programs show that a more
flexible, entrepreneurial approach is needed. Markets can change rapidly and often react to facilitators‘ efforts in
unexpected ways. Facilitators must be free to respond to the market, taking advantage of opportunities and changing
strategies as appropriate.
Fit the intervention to the market issue: Because any intervention will change the market, limited and focused
interventions are more likely to address a market issue with minimal distortion. Donors and practitioners must target
market problems and opportunities identified during market assessments with interventions aimed at addressing
those issues and designed with specific market development objectives.
CLICK to read a report written by Ruth Campbell (of ACDI-
VOCA) for USAID. It compiles implementation best practices
for value chain development projects and updates the
DCED's 2001 BDS Guidelines.
BDS Guiding Principles 2001
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