Katalyst is considered to be one of the most successful market development projects in the world, and the largest in South Asia. Since 2000, Katalyst has achieved significant impact on employment and income by increasing the competitiveness of micro, small and medium sized enterprises (MSMEs) and farmers, in selected urban and rural sectors.
The origins of the project date back to the end of 1990s, when the business development and SME promotion community faced the challenge of how to reach real scale in Business Development Services (BDS) projects. The emerging understanding was that in order to promote services to farmers and SMEs to allow them to prosper, an indirect approach might be more promising. This meant not directly supporting SME service providers, but instead creating markets for these service providers and thus reaching scale and promoting SMEs indirectly. In addition, there was increased understanding and acknowledgement of the importance of supporting functions and regulatory frameworks for market development. Given the development orientation, facilitated growth in any market had to be inclusive and pro-poor.
Swisscontact’s operations started up in Bangladesh as early as 2000, with pilot initiatives to develop markets for transacted BDS. A flexible approach allowed these initiatives to evolve into the Katalyst Project in 2002.
Already in the first phase (2002), the project concentrated on innovating, testing and proving the methodology of ‘Inclusive Markets’. The impact of the first phase of the project was impressive; more than 700,000 enterprises and farmers benefited from access to better services, more advanced technology, higher quality inputs, and more effective representation. Upon its start-up, Katalyst carried out a large number of market assessments and value chain studies covering specific industrial sectors, sub-sectors, services and rural markets. This information was further concentrated in more detailed business service assessments that provided the basis for constructing and prioritising market interventions.
From 2008 onwards, Katalyst focused on reaching greater scale in defined sectors. Its emphasis was on increasing the strategic coherence of Katalyst’s market development activities. It concentrated on a portfolio of agricultural, semi-rural industrial, and service sectors with prospects for large-scale impact on the poor, as well as mitigation of environmental, social and gender-related issues. Whereas Katalyst in Phase 1 worked in selected geographical areas, in Phase 2 it went beyond regional boundaries and switched its focus to addressing production, processing and trade of commodities, goods, and services on a nationwide scale.
In 2013, Katalyst began reaching out to approximately 2.36 million farmers and small businesses, increasing their competitiveness and incomes by USD 295 million. In 2014, the project began to implement an overall exit strategy. Therefore, the strategic orientation was to work towards systemic change; to consolidate and institutionalise past achievements in the most promising sectors; and to add capitalisation as an overarching topic, to ensure institutional learning and embed this in local institutions.
After 17 years the project reached 4.69 million additional farmers and small and medium enterprises, and increase the income of its beneficiaries by USD 689 million.
Katalyst increased the income of poor farmers by creating economic opportunities in cooperation with the private and public sectors. Businesses tend to overlook the potential of poor farmers as a lucrative consumer market for their products and services, whereas smallholder farmers represent an opportunity for businesses to diversify their supplier portfolio. More