The commercialisation of BDS through an NGO: case study of AKRSP-Pakistan

Abstract

Based on the theme of how donors can play a more effective role to stimulate effective and sustainable provision of BDS by or through private sector intermediaries, this case study looks at how the Aga Khan Rural Support Programme (AKRSP) has sought to encourage the development of markets for Business Development Services (BDS) in the remote areas of northern Pakistan. This paper explores that the isolation of the region, poor infrastructure, small scale of landholdings, and lack of economic development leads to problems when attempting to promote markets for business development services. In the short term, the priority is the development of more basic markets, rather than markets for business development services. Without active markets there are a few opportunities for BDS provision let alone the development of vibrant private sector markets for BDS. It specifies the geographic, economic, political, and institutional context in which the AKRSP’s interventions have been implemented. Grassroots village based initiatives have been discussed, where groups of farmers are facilitated by AKRSP to provide BDS to neighboring farmers (farmers interest groups in Chitral), along with more structured formal approaches such as the more direct provision of BDS through commercial entity associated with AKRSP (North South Seeds). It is argued that both models have a positive impact on MSME performance and lead to market development in the long run. Both are methods through which donors can promote BDS markets but which model is most appropriate depends on the market being served. Where the service offered is relatively simple and the business of the BDS provider is relatively straight-forward, facilitating private sector intermediaries may be the most effective way of creating markets for BDS. However, where the service is complex and there is a need to establish a sophisticated organisation to provide the service, it may be necessary to set up an organisation within the NGO, on commercially sustainable basis if possible, with a view to fully commercialising and ideally privatising the organisation over time.