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The Role of BDS in MSME Financing: Should it be deliberate or coincidental? Presented at SMME Awards 21 st Oct 2010
Paper Plan • Business Development Services Defined: Global View • Purpose of BDS • Business Development Services: Core Components • Business Development Services: NYDA Perspective • Real Life Situation Case Studies: Two Cases • Role of BDS: Taking A Position
BDS DEFINED: THE GLOBAL VIEW • Business Development Services (BDS) are generally defined as: “… services that improve the performance of the enterprise, its access to markets, and its ability to compete. Source: Committee of Donor Agencies for Small Enterprise Development, 2001)
Purpose of BDS • BDS are designed to serve individual businesses, as opposed to the larger business community. • Individuality of BDS
BDS: CORE COMPONENTS • The definition of ’business development service’… includes an array of business services (core components) • Training • Consultancy • Marketing • Information • Technology development and transfer • Business linkage promotion
Key Components Defined 1. Market access · • Market research • Market information • Trade fairs • Product exhibitions • Advertising • Packaging • Marketing trips and meetings • Subcontracting and outsourcing, etc.
2. Infrastructure • • Storage and warehousing Transport and delivery Business incubators Telecommunications Internet access Computer access Secretarial services, etc.
3. Policy and advocacy • • • Training in policy advocacy Analysis of policy constraints and opportunities Direct advocacy on behalf of MSMEs Sponsorship of conferences Policy studies, etc.
4. Input supply • • Linking MSMEs to input suppliers Improving suppliers’ capacity to deliver quality inputs Facilitating establishment of bulk buying groups Information on input supply sources, etc.
5. Training and technical assistance • • • Mentoring Feasibility studies Business plans Franchising Management training Counselling / advisory services Legal services Financial and tax advice Accountancy and bookkeeping Technical training, etc.
6. Technology and product development • Technology transfer /commercialization • Linking MSMEs and technology suppliers • Facilitating technology procurement Quality assurance • programmes Design services, etc.
7. Alternative financing mechanisms • Factoring companies providing capital for confirmed • • • orders Equity financing Facilitating supplier credit Equipment leasing and rental, etc.
BDS NYDA PERSPECTIVE • Entrepreneurship Education: An Entrepreneurship Training programme aimed at developing Personal Entrepreneurial Competencies (PEC) of aspiring and existing entrepreneurs. • Business Consultancy Services/Voucher Programme: A oneon-one support service, normally over a three month period, where a voucher is issued to a client or a group of clients, which entitles them to buy business support services from NYDA approved, suitably qualified and experienced Service Providers. • Mentorship Programme (Volunteer In Action Mentorship Programme): This is a mentorship support programme which is aimed at linking young entrepreneurs with experienced business mentors. • BUY YOUTH CAMPAIGN (Business Opportunities Support Programme): The Buy Youth Campaign is an initiative aimed at assisting youth entrepreneurs to access identified business opportunities; thereby increasing the participation of young people in the country’s mainstream economy and also advancing the government’s objective of broadening economic empowerment among the historically disadvantaged individuals
CASE STUDIES Case Study One: Mentoring Dibete Financial Services: Sindi, the owner of Dibete who is herself now a mentor, is a mentorship product. She was facing high personnel costs in that she was employing experienced accountants in her business who were getting very high salaries. After enrolling in our mentorship programme, she was advised to use university 3 rd year accounting students and she was able to cut her salary costs by over 50%. This enabled her to easily service her loan.
CASE STUDY TWO: BOSS • NYDA youth financed businesses are linked with markets whereby their products are exposed to pontential buyers including government departments. This enables them to have a ready market for their products and therefore remain competitive and able to service their loans.
THE ROLE OF BDS: TAKING A POSITION • GIVEN THE COCKTAIL OF ACTIVITIES IN BDS • PROGRAMME, WHICH ARE ALL KEY IN BUSINESS SURVIVAL, IT IS EVIDENT THAT BDS SHOULD BE DELIBERATE RATHER THAN COINCIDENTAL IN ASSISTING MSMEs in SERVICING THEIR LOANS!!! TAKE OFF: FINANCIERS MUST BEGIN TO INCORPORATE BDS IN THEIR FINANCING PROGRAMS
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