Small firms versus large firms ‒ is there an ideal partner to collaborate with?

The success of any market development programme depends on the quality of partner chosen to work with. Motivated partners with a shared vision of the market system are key to the sustainability of any market development intervention.  

 

But determining the right partner depends on a number of factors, such as market realities, incentives, the business model, the capacity of the partner to scale, and the partner’s reception to new ideas. Given the importance donors attach to achieving scale, the natural inclination of project implementers is to work with large, established firms who can drive quick results. However, based on our experience this isn't always the right route. So, is there ideal partner between small or large firms?

 

To develop sustainable market systems for antimalarial products in Nigeria, the Support to National Malaria Programme (SuNMaP) partnered with various businesses. The aim was to address market constraints and catalyse the malaria commodity market to achieve market changes that affected household poverty levels.

 

During the course of intervention implementation, SuNMaP signed partnerships with small companies with about 20 staff, and with larger organisations that had over 150 staff. 

 

A large organisation often has the right resources and structures to reach their targets. For instance, a partner with a large workforce spread across the country was able to meet her contract target by deploying her best people to the intervention states. Large organisations also have the financial capabilities to run interventions without programmes disbursing funds prior to the commencement of activities. 

 

However, due to internal structures, large organisations are often more difficult to convince. They develop annual plans and budgets which are hard to alter during the year. In a bid to increase the supply of long lasting insecticidal nets (LLINs), SuNMaP engaged with a number of national mattress manufacturers. Mattresses are a complementary product to LLINs, and together the two products would help achieve systemic change. These manufacturers refused to partner for various reasons ranging from the inability to alter budgets and their investments in other businesses. 

 

Smaller, local distributors were more willing to partner, and they did with a significant level of success. Small partners are usually interested in testing new markets once they are convinced of the market potential. They are also more willing to learn new techniques to sell their products and grow the market. One of the most successful LLIN partners, a small partner, increased its geographic spread and established links with LLIN distributors in other sections of the country thereby improving LLIN distribution. Smaller firms may have lower credibility and will need to go the extra mile to convince programmes of their ability to deliver.

 

Market forces can ultimately influence partner selection. For instance, the national agency for malaria in Nigeria (NMEP) after testing malaria rapid diagnostic tests (RDTs), selected three brands for national distribution. Each brand had its own national sole distributor, thereby limiting the possible partners to three. In another case, the malaria treatment drugs (ACT) recommended by the World Health Organization had importers registered by the Global Fund on the Affordable Medicines Facility – Malaria (AMFm). These importers were certified to import the low priced quality assured products that SuNMaP targeted for rural distribution. These events influenced and limited the scope of partners at the disposal of the programme.

 

Given that crowding in is important to the sustainability of markets and the reduction of poverty, the nature of engagement with large or small firms, and the success of interventions, will determine the pace of crowding in.

Partner selection is a very important aspect of M4P implementation. The SuNMaP experience suggests there is no right or wrong answer to which partner is best for the implementation of market systems development interventions. Partner selection will depend on market analysis, prevailing market situations, intervention design and targeted outcomes. Crowding in also allows for sustainable scale and this should be considered by market facilitators from intervention design to implementation.

 

What experiences have you had in partner selection? Share your experiences below.

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Kabir is a market development specialist with experience in the Nigerian healthcare and agriculture sectors. He was the senior intervention manager at the DFID funded SuNMaP. He currently works on strengthening health and agricultural systems in post-insurgency regions in Nigeria.