4.2 Strengthening the capacity of service providers

In their efforts to promote the establishment of new business development service providers and to strengthen the capacity of existing ones, government agencies and donors have tended to focus on the following aspects of capacity strengthening.

· Organizational capacity: this relates to an organization having a clear mandate with vision, objectives and goals. While many BDS service providers supported by governments and donors are not private sector consultancy firms, they are expected to operate according to private sector principles. This implies that the staff of these organizations have a long-term commitment to the successful growth of their organization.

· Managerial capacity: an organization requires a legal and organizational structure that allows it to realise its vision, and appropriate management systems and procedures, along with staff with the necessary management capabilities.

· Technical capacity: an organization should use the instruments or methods that allow it to realise its vision, and its staff should be able to use these instruments. This includes a capacity for further development of the programme, and to meet the changing needs of the clients.

· Financial capacity: this refers to an organization's ability to obtain funding for the implementation and development of its programmes, through self-financing or external support, and to keep its costs at an acceptable level.

The promotion of new business development service providers and the strengthening of existing ones is a relatively new field of intervention by government and donors. Approaches and procedures are still being developed. One important constraint is that in many developing countries there are few staff members of MSE development agencies with sufficient knowledge in this area. There are still no obvious solutions to this problem, and as a consequence there is a reliance on local and foreign experts, at least in the early stages of interventions in this area.

In addition to business development service providers, there is an increasing interest in promoting the establishment of networks of business development service providers and of MSEs themselves.