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2.5. Supporting Markets: Comments

1) Supporting markets that provide financial services, business consulting, and sector-specific services like irrigation equipment play an important role in firm upgrading, though not all services can be provided within value chains. 2) When developing value chains, projects may focus on strengthening supporting markets, such as a project in Zambia that worked to create a competitive veterinary industry for livestock producers. 3) Whether to engage supporting markets depends on if they can resolve key constraints, be commercially sustainable after the project, and see value chain actors as viable clients. Embedded services within value chains should be considered if supporting market engagement is not viable.

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33 views1 page

2.5. Supporting Markets: Comments

1) Supporting markets that provide financial services, business consulting, and sector-specific services like irrigation equipment play an important role in firm upgrading, though not all services can be provided within value chains. 2) When developing value chains, projects may focus on strengthening supporting markets, such as a project in Zambia that worked to create a competitive veterinary industry for livestock producers. 3) Whether to engage supporting markets depends on if they can resolve key constraints, be commercially sustainable after the project, and see value chain actors as viable clients. Embedded services within value chains should be considered if supporting market engagement is not viable.

Uploaded by

Erika Peterson
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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2.5.

Supporting Markets

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http://www.microlinks.org/print/6302

Published on USAID Microlinks (http://www.microlinks.org)


Home > 2.5. Supporting Markets

2.5. Supporting Markets


Introduction
Supporting markets play an important role in firm upgrading. They include financial services; cross-cutting services such as business consulting, legal advice and
telecommunications; and sector-specific services, for example, irrigation equipment or handicraft design services. Not all services can be provided as embedded
services, by value chain actors, and so vibrant supporting markets are often essential to competitiveness.
Review basic information on supporting markets

Promoting Supporting Markets


In value chain development programs, practitioners are interested in strengthening commercial relations that will result in improved competitiveness and greater
benefit flows throughout the chain. While supporting markets are important for growth and competitiveness, they need not always be a component of a value chain
development project; on the other hand, sometimes practitioners will be involved in strengthening supporting-market industries as value chains in their own right.
For example, a project in Zambia targeting the livestock value chain focused much of its efforts on creating a competitive veterinary industry that was responsive to
the needs of small-scale livestock producers.
What role to play and how to promote a supporting market should be based on the following considerations:
Are there supporting markets whose products or services can resolve critical constraints to the competitiveness of the targeted value chain?
Can the businesses in the supporting market be commercially sustainable by the end of the project? In addition, can supporting markets be made to see
target value chain participants as viable clientele? Will the demand from actors in the targeted value chain be sufficient for supporting-market businesses to
profit and grow? Conversely, can existing supporting market businesses be brought to see actors in the targeted value chain as a valuable market for their
products or services? If the answers are no, then alternative approaches, such as embedded services should be explored.
In the targeted value chain, is there a stronger rationale for promoting the needed products or services as embedded in relations between, for example,
producers and their buyers? One strong rationale might be that producers in the value chain do not have the scale to afford stand-alone products and
services. Another might be that value chain actors (that transact with producers) have strong incentives to develop, improve or expand the provision of
embedded products or services. A third rationale might be the potential to signal to supporting market businesses 1) the demand for such services and 2) the
potential value of investing in developing their own capacity to provide these services.
To promote the development of commercially viable supporting-market products and services practitioners may intervene to i) help supporting-market businesses
overcome constraints to providing products or services in a commercially viable manner and ii) ensure that these businesses are not dependent on project activities
for continued provision beyond the life of the project. To achieve these objectives, project implementers must first analyze the relationships among supportingmarket businesses and value chain actors.

Resources
View Tools and Resources for analysis of supporting markets.

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5/27/2014 12:46 PM

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