Thinking about MFIs and BDS: How BDS in its Larger Sense should Serve Best the Needs of the Poor

Publication Date: 2004
Published by: http://www.coopgalor.com
Document Type: Paper

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How important is the integration of Business Development Services and finance delivery for an MFI?

This paper examines the issue of MFIs role as only finance suppliers for small entrepreneurs. The author emphasizes that MFIs should be linked with other aspects needed to create a successful enterprise

The Author presents an illustration to support his views. Further the document explains two approaches to BDS:

• Older approach emphasizes on providing training activities, on consultancies other services, solves internal difficulties in enterprises, such as lack of know-how and technical skills.
• Newer approach comprises services of marketing, information, which will enable small enterprises access to services reserved only to big enterprises, development of infrastructure and taking off constraints existing in the external environments of MFIs.

The Author:

• Summarizes the activities that form BDS;
• Analyzes ILO’s definition of BDS;
• Describes the missing components of BDS supplied;
• Emphasizes the importance of offering all aspects of Essential Triangle of Production (ETP );
• Sets out the importance of integration of financial services while offering BDS;
• Explains the working and benefits of BDS with the help of five illustrations from ILO’s paper.

The paper further states that:

• MFIs should be aimed to those among the poor that not only lack access to financial means and venues but also lack needed access to inputs and marketing skills & channels;
• Finance should be provided
  • For groups which will endeavor for an enterprise on joint ownership;
  • To such an enterprise which repels the worries of ownership and management for poor.

Finally the paper concludes that if the ideas brought forward are carried out it would:

• Enable better implementation of the work of MFIs;
• Bring about better results to the clients.