Final Documentation

The Experience of IFC/SEDF with Sector Development and Business Service Strategy in Bangladesh, 2006

    Description
    The objective of this case study is to analyze the experiences, successes and challenges of a complex and innovative private sector development strategy which seeks to stimulate markets that contribute to economic growth and poverty reduction. The strategy itself emerged from the implementation of the Sector Development and Business Services (SDBS) program of the International Finance Corporation's South Asia Enterprise Development Facility (SEDF), based in Bangladesh but also covering Nepal, Bhutan and North East India.

    The SDBS strategy focuses on direct interaction with pilot businesses in target sectors to stimulate a system-wide change. The target sectors are Ready-Made Garments, Light Engineering, and Agri-Business. The program works in cross-cutting support areas including management development and training, information technology and business linkages, and is also well-placed to address social concerns such as gender, environment and poverty. The overall aim of the SEDF strategy is to increase economic opportunity for the poor.

    Summary of results
    Over a period of three years (2003 to 2005), the program achieved significant short-term outcomes in firm-level growth, primarily in Small and Medium Enterprises (SMEs), and in outreach to the poor. SEDF has directly supported technical assistance (TA) and training to 136 enterprises, 20 service providers, 11 buying houses (apparels) and trained 3,017 people. Assisted firms and service providers have reported increased sales of over US $114 million and increased assets of more than US $35 million. This can be compared to a total program cost of US $6.08 million for a leverage value of total program costs to sales increases in assisted clients of 1:19. To date, assisted firms have created a total of 16,239 new jobs. One particular assisted lead firm was able to increase its outreach from 46,000 to 75,000 small-scale farmers.

    In addition to these gains, SEDF strategy also aims to create sustainable, long-term, systemic change by linking SMEs to viable markets through a range of mechanisms that include:

    1. Stimulating commercial business service markets,
    2. Building the capacity of business associations to provide market linkages and firm-level sector development services,
    3. Strengthening the role of lead firms in training and providing information to their SME suppliers and buyers as embedded service providers.

    Thus the program has achieved immediate firm-level results while stimulating the development of target sectors on the whole, so that SMEs are in a better position to grow and generate long-term, sustainable benefits for the poor. In its initial three years, SEDF has learned valuable lessons about how to leverage direct firm-level interaction to produce system-wide changes and how to help organizations shift from subsidized, narrow work to sustainable, market-level work that ultimately benefits the poor. SEDF's experiences provide useful guidance and highlight current challenges in enterprise development.