Building BDS Markets That Actually Work: Supply-Side Lessons from the Field
Before you can develop a Business Development Services market, you need to honestly assess what’s holding it back — and often, the problem starts on the supply side.
Weak BDS markets don’t fail by accident. Macro-economic constraints quietly block market growth, and subsidised monopoly providers crowd out private suppliers who could otherwise fill the gap sustainably. If these structural distortions aren’t identified and removed early, well-intentioned interventions simply add noise to a broken system.
Get the Diagnosis Right First
A rigorous market assessment must map not just demand, but the supply-side landscape: Who is providing services? At what cost? And are public or donor-funded actors unintentionally making it harder for viable private providers to compete?
Where public goods genuinely exist — services that benefit the broader market but can’t be monetised — those costs should be transparently subsidised. Everything else should move toward market pricing.
Facilitate, Don’t Distort
NGOs and development organisations face a particular temptation: stepping in as providers because it’s faster. Sometimes that’s appropriate. But direct provision should always be an interim measure, not a permanent posture. The exit strategy needs to be designed upfront, not retrofitted when the programme ends.
The most durable role for an intervening organisation is as a facilitator — stimulating supply, building market linkages, and gradually stepping back as the market matures. Acting as provider and facilitator simultaneously is possible, but requires clear boundaries and honest monitoring.
Match the Approach to the Market Stage
There is no universal playbook. A pragmatic approach means reading the level of BDS market development and calibrating accordingly — more hands-on in nascent markets, more light-touch as private supply grows. The goal is always a functioning market that outlasts the intervention.
Good BDS market development leaves behind stronger suppliers, more informed buyers, and no dependency on the organisation that started it.
Based on: Karsten Weitzenegger (2005), “Supply-Side Constraints in BDS Market Development.” weitzenegger.de