11 - A New Enterprise Development Paradigm

Summary

Internationally, by the turn of the millennium, a paradigm shift was taking place within the small enterprise support sector that crystallised into what became known as the market development approach to business development services (BDS) – later absorbed into a wider approach characterised as ‘making markets work for the poor’. The paradigm was certainly a game-changer – which we could not ignore, because, despite some internal contestation, the UK Department for International Development (DFID) had become a leading proponent of the approach. As MDA was at the time receiving significant support from DFID for strategic services and for the Lesotho programme, we found ourselves directly in the line of fire in relation to these seismic shifts in donor strategy.

This chapter will explain this paradigm shift, in the terms that we were confronted with at the time. While the approach had deep flaws, the irony is that it opened our eyes to dynamics we had not analysed before and to insights we would not have had without the challenge function it performed. It certainly shifted the terrain of debate in the sector and there is no way now to close Pandora’s box: the small enterprise development sector will certainly never be the same. In some respects it is better for it: although not necessarily in the ways anticipated. Yet it remains hard to measure at what price.

In essence, until this time, donors were willing to support NGOs involved in small enterprise development to offer a range of services that supported the development of small enterprises. The most common focus of donor support was on training, but support also went, for example, to product development and to upgrading small enterprise competencies to enable their participation in value chains, in a context in which value-chain analysis was also on the rise. While donor support to such services was common, donors also strongly encouraged NGOs to develop strategies for cost recovery from the delivery of such services, to contribute to their organisational sustainability in anticipation that one day donor funding would come to an end. In this context, sustainability was mainly defined as the ability to become financially self-sufficient in some way.