Value Chain Program Design

Promoting Market-Based Solutions for MSME and Industry Competitiveness

The approach presented in this paper is an attempt to combine the strengths of value chain analysis with the promotion of sustainable, market-based solutions that respond to the recurrent needs of micro, small, and medium scale enterprise (MSME).

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.

Targeted at donors and practitioners involved in the field of enterprise development, this approach consists of eight steps.

  1. Value Chain Selection—choose a value chain with the greatest potential for growth in MSME income and employment.
  2. Value chain Analysis—gain a greater understanding of the operating context for MSMEs and intelligence on the market players, their roles, and interrelationships.
  3. Identification of Constraints and Opportunities—determine key issues hindering growth and competitiveness in the value chain.
  4. Identification of (Potential) Market-Based Solutions—determine which solutions can best address the constraints identified in Step 3.
  5. Selection of Market-Based Solutions—target specific market-based solution(s) for more in-depth analysis.
  6. Assessment of Targeted Market-Based Solutions—understand constraints to the sustainable supply/demand of the targeted solution(s).
  7. Identification of Facilitation Activities—determine facilitation activities which address the constraints of the targeted market-based solution(s).
  8. Selection of Facilitation Activities—choose the most appropriate facilitation activities to implement.

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