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Agri-business for Trade Competitiveness Project (ATC-P), branded as Katalyst is a market development project, implemented by Swisscontact in Bangladesh. Since 2002, the project has been working to increase the income of poor men and women in rural areas of Bangladesh. Currently, the project is in its Phase 3, which started from March 2014 and continues till March 2018. Phase 1 and Phase 2 of the project sustained from 2000 to 2013. During 2017-2018, Katalyst is mainly focusing to consolidate and anchor the project's learning and experiences with key public and private institutions in Bangladesh.
Over time, Katalyst was funded by different donors; however, the main donor consortium always consisted of SDC and UKAid, joined at different times by SIDA, the Canadian International Development Agency (CIDA) and the Embassy of the Kingdom of the Netherlands (EKN) and the Danish International Development Agency (DANIDA). Throughout the duration of the project, the Ministry of Commerce (MoC) of the Government of Bangladesh partnered these donors and provided the project with consistent and valuable support.
Katalyst was implemented by a consortium comprising Swisscontact as lead agency and GTZ-IS (later renamed GIZ-IS) as partner. This partnership was strong at the beginning; however, implementation shifted entirely to Swisscontact after 2010.
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.
Katalyst therefore identified innovative ways for companies to profitably include smallholder farmers in their business strategy. This created a win-win situation: Firstly, businesses gained millions of new customers by providing smallholder farmers with access to products, inputs, services and skills that helped them improve their yields and quality. This in turn created new income opportunities for poor farmers, as they could sell competitive products at a fair market price.
In order to support these efforts, Katalyst worked in close cooperation with the public sector, promoting an enabling environment for poor farmers to succeed, and businesses to grow. The Government of Bangladesh was a key player and partner of Katalyst’s ongoing efforts to reduce rural poverty.
Katalyst’s work can be seen as comprising three main streams:
Katalyst’s approach is designed to benefit the poor as producers, entrepreneurs, employees and consumers. The market development approach is based on the premise that better business services and an improved enabling environment lead to more competitive enterprises, which in turn results in sustainable economic growth and poverty reduction.
Katalyst implemented a pro-poor, market development approach to economic growth. The project focused on sectors with high growth potential in terms of jobs, productivity, profitability, outreach, and the potential for sustainable change. The project partnered with a wide range of private and public sector organisations in order to leverage resources and maximise impact.
Working on a sector-wide basis; targeting growth opportunities and removing constraints. As a guiding principle, Katalyst employed a comprehensive sector-wide strategy, identifying leverage potential and synergies, while focusing on achieving scale of impact. In partnership with market players, Katalyst implemented interventions to treat the underlying causes of weak markets, not merely the superficial symptoms. A key feature of these interventions was that they harnessed market incentives to encourage scaling up and ensure sustainability.
Katalyst’s approach is distinctive not simply because of its objectives for pro-poor market development, but also because of how it goes about achieving them. More conventional development initiatives support the poor by providing them directly with knowledge, goods and services. While such a direct approach can achieve quick results, it has limited sustainability, is often unable to achieve scale, and it can may distortionary effects on markets.
The project therefore worked indirectly, focusing on achieving systemic change, and partnering with a wide range of domestic and international private and public sector intermediaries who have long-term business interests or a mandate in a particular sector. By harnessing their resources and incentives, Katalyst’s interventions could leverage its own, thereby stimulating larger-scale and more sustainable impact than if it attempted to provide solutions in isolation.
Katalyst’s key strength is that it understands both the local development dynamics and the realities of the business world, and that it is able to bring the two together in ways which create viable businesses which provide a sustainable vehicle to address the developmental challenges of Bangladesh.
The success of the project over its long life has been monitored closely by the measurement and evaluation teams of the funding donor agencies. That Katalyst has been highly successful in creating jobs and raising incomes has been clearly demonstrated. Katalyst is a development project with a difference. Whereas many development programmes are based on making grants to governments and others, Katalyst’s approach was to work very closely with the private sector. Katalyst facilitated companies in the development of business models which provided benefits to poor people – be that by engaging the poor as producers and suppliers, or by developing goods and services they might consume.
In developmental terms therefore inclusive business works well as a tool for inclusivity. Inclusive business is a strategy which more companies might use to identify and enter new markets, and which can provide the skills and capabilities to do so successfully.
Katalyst has undertaken a wide range of activities and interventions over its lifetime, but what did the project do to ensure an inclusive business approach to addressing societal challenges where more traditional donor approaches had failed?
Collaboration with Katalyst has given companies services and support that has enabled them to create successful businesses. Katalyst is still valuable to private sector companies because it can identify and stimulate new business. It has a deep understanding of the needs of smallholder farmers in Bangladesh, while simultaneously being able to advise companies on how these needs might translate into profitable, durable business.
As donor agencies seek to work more closely with the corporate sector and engage companies in development, the experience of Katalyst will continue to provide vital lessons.
Despite growth in other sectors of the economy – most notably the ready-made garment (RMG) industry, agriculture remains central to life in Bangladesh. It is estimated that this sector employs 47% of the country’s total labour force, yet only provides 16% of GDP. Because of its central importance - and in order to improve productivity in the sector, agriculture has remained Katalyst’s focus throughout its years of operation. The project operates in three main agricultural sectors, as outlined below.
As well as these three value chains, Katalyst also works on three cross-cutting issues – that is, topics which are not specific to the cultivation of one crop in particular, but which are relevant across all sectors within agriculture. These are as follows:
Over the years, the project portfolio underwent a process of concentration and consolidation. Katalyst started working in 19 sectors in 40 locations (referred to as ‘markets’), which were predicted to provide the highest outreach and impact.
Starting with a rather diverse and mostly unconnected portfolio of generic business services and product sectors available in urban and rural areas, Katalyst then made the decision to withdraw from urban business services and focus more on rural sectors.
A second step was made with the introduction of so-called “cross-sectors”. Katalyst had identified the need to work in supporting markets such as seeds (since 2007), fertilisers (since 2008), and irrigation (since 2009) to address constraints in its core such as ICT, packaging, and others.