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Trends and Challenges in facilitating
    Business Development Services for micro Enterprises (BDS4ME)

                  ...
Q. How did BDS evolve over the years?

Ans. Initially, Enterprise development focused on both financial and non financial
...
Q. What are key challenges for promoting BDS4ME?

Ans. Key Challenges for promoting BDS4ME include:

       Proper assessm...
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Trends and Challanges in facilitating BDS for micro Enterprises 241009

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Transcript of "Trends and Challanges in facilitating BDS for micro Enterprises 241009"

  1. 1. Trends and Challenges in facilitating Business Development Services for micro Enterprises (BDS4ME) Some Frequently Asked Questions (FAQs) Jitesh Panda* Q. What is Business Development Services for micro Enterprises (BDS4ME)? Ans. BDS4ME refers to Non Financial Non Transactional Services for sustenance and growth a micro Enterprise. Q. What is difference between Business Service and Business Development Services? Ans. Business services relates to ongoing Business to Business services while BDS relates to services for starting and/or strengthening an Enterprise. Q. What are different types of BDS4ME? Ans. BDS4ME could be strategic or operational. Operational BDS$ME services refers to services required for day to day management of a micro Enterprise while Strategic BDS4ME is required for medium and long term support to micro Enterprises. BDS could be village based value chain based i. e. either horizontal or vertical. Similarly, BDS could be embedded being offered along with business transaction or independent of business services. Q. What is difference between traditional embedded BDS and new generation BDS? Ans. Traditional embedded BDS is usually offered as part of business transactions. As they are part of business, they are generally sustainable. However, it has its limitations in terms of inclusiveness, outreach and likeliness of vested business interest associated with BDS. New generation BDS is generally offered by development (both Government and Non Government Organizations), which is independent of business transactions. In this case, BDS is provided either free or in subsidized manner. However, with success of sustainability of micro Finance, there has always been thrust on promoting market led financially sustainable BDS. Nevertheless, while developing BDS market, there is opportunity to learn from informal traditional BDS market. Q. Who are different Actors in provision of BDS? Ans. BDS Facilitator – focuses on developing BDS Market; Provides services to BDS Providers which includes developing new BDS products/services and capacity building, to micro Enterprises on information on identifying potential BDS services/providers. BDS Providers – An Institution or Individual that provides BDS directly to micro Enterprises. This includes those who may be providing BDS as part of broader business transaction
  2. 2. Q. How did BDS evolve over the years? Ans. Initially, Enterprise development focused on both financial and non financial services to micro enterprises. As lack of access to credit was considered as key problem for starting, sustenance and growth of micro Enterprises, the focus shifted to financial services. In due course, Non Financial Services (BDS) market got separated from financial services market. By then, BDS market was very weak (which also continues to remain so). As financial services market (mainly through micro Finance) got established the focus shifted to Non Financial Services (BDS). This is mainly because of further realization that stand alone credit service is not sufficient to promote micro Enterprises. Q. What has been the focus of donors relating to promotion of BDS? Ans. Donors do not prefer to deliver BDS directly to micro Enterprises, but work with existing and/or new BDS providers to facilitate delivery of BDS. The focus has been on developing BDS market. It is widely acknowledged that there is need for grant support to facilitate the BDS market. Q. What are some of the practices in promotion of BDS? Ans. Some of the practices in promotion of BDS include: Facilitating development of BDS market than providing BDS As far as possible, do not provide subsidy to BDS transactions. Nevertheless, subsidy would be required for designing and developing BDS services. Promote Facilitators of BDS who are independent of BDS providers Promoting competition amongst BDS providers Initiate BDS after proper assessment of BDS Market focusing on both demand and supply of BDS Focus on low profile intervention with minimum distortion to existing BDS providers Only when tangible benefits are realized by micro Enterprises, fee for BDS services may be introduced Focus on including poor than exclusively working with poor Persons with experience in business sector (in comparison to development sector) are in better position to provide BDS Q. What are Key trends in BDS4ME? Ans. Key trends in BDS4ME include: Shift in focus from horizontal BDS to vertical BDS. Focus on market led BDS i.e. financial sustainability of BDS Emphasis on separating role of BDS Facilitator and BDS Provider Focus on Making Market work for the Poor (M4P) than pure Market Development approach, while developing BDS markets
  3. 3. Q. What are key challenges for promoting BDS4ME? Ans. Key Challenges for promoting BDS4ME include: Proper assessment of BDS Market – Demand and Supply, including availability of tools and methodologies Involving micro Entrepreneurs while designing BDS services Making market driven BDS more demand led than supply led Designing BDS Interventions based on learning from traditional informal BDS market In developing approach and methodologies to work with informal BDS market Reaching out with BDS to smaller micro Enterprises through a market based approach Ensuring equity and inclusiveness in provision of BDS services Developing clarity on role of Government in provision of BDS, mainly when focus is on market led BDS Involving either development (having limited understanding of business) or business sector (being less development focused) in facilitating BDS market Appropriate use of ICT in provision of BDS for micro Enterprises. Unless carefully designed, it may affect (work in the interest of large enterprises) or strengthen micro Enterprises Q. What are key differences between micro Finance and Business Development Services? Ans. BDS covers wide range of services while micro Finance is quite focused. Micro finance can be offered in a generic mode while BDS demand tailor made services. Q. Should BDS and Financial Services be delivered separately? Ans. The nature and expertise required for offering financial and BDS services are quite different. Although sustainability is easy to achieve in case of financial services and it has potential to cross subsidize the BDS services, combining the two would affects both the services. As financial services require separate regulation, it is also desirable to separate both the services. *Senior Consultant, Vrutti – A Livelihoods Resource Centre, Catalyst Group, 19, 1st Main, 1st Cross, Ashwath Nagar, RMV 2nd Stage, Bangalore 560 094 India Email: jitesh@cms-india.org

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