Value chain program design : promoting market-based solutions for MSME and industry competitiveness

Value chain analysis is important in understanding markets, inter-firm relationships, and critical constraints that limit MSME growth and industry competitiveness, while market-based, commercially viable solutions can result in solutions that are sustainable in the long run and that do not distort local markets. The paper is targeted at both donors and practitioners from enterprise development organizations, and is organized into three main sections. This first section explains the rationale of the approach in the context of current thinking on private sector/enterprise development programs. The second section describes the approach and provides guidelines for implementation. The third section describes the importance of donor coordination and presents suggestions to improve it. Included in the appendices are model interview guides and a list of resources. This approach is still evolving and not meant to be prescriptive. There are many different and valid approaches to the design and implementation of enterprise development programs - this is just one of them. As a work-in-progress, more testing and field implementation will be necessary to further refine and improve it. Throughout the paper, a detailed case study is used to illustrate specific steps involved in the program design process. The case is presented and sequentially developed via nine text boxes. Although the case example is based on actual program analysis and design work conducted by Action for Enterprise (AFE), it is meant to be strictly illustrative. (Author abstract)