Transcript Making markets work for business and income growth

The Springfield Centre
The Making Markets Work
for the Poor Approach (M4P)
What it is and where it’s going
The M4P Approach
Rationale, issues and
opportunities
A 1-day seminar sponsored by
DFID and SDC
Bangkok, November 2008
Springfield Centre | Making markets work
Objectives
Highlight key features of the market
development approach*
Summarise some key challenges and
opportunities for the way ahead
* Also known as Making Markets work for the Poor or M4P
Springfield Centre | Making markets work
Structure
 Rationale and origins (the why)
 What it is
 How M4P works in practice
 Taking M4P forward
But before that, an example ........
Springfield Centre | Making markets work
Case study: Uganda rural SMEs
constrained by lack of information
Project A: 1999--; US$2.5m/3 yrs;
est. av. $0.5m/yr
2 projects
Increase info for rural MSEs
“Info is a long term strategic public
good”
Peak of 7-8m listeners
Goal
Outreach
Initially 10 stations but
dissemination cut as funding cut to
$50k/yr. Other activities remain
donor funded:
Outreach
Sustainability
Project B: 1999-2007; ~US$1.2m
Establish sustainable, effective info
for rural MSEs via the mass media
7m regular listeners
24+ stations with MSE independent
programmes; emerging new
programmes & support services: no
donor funding
Springfield Centre
| Making markets work
Time
What explains the difference?
Provide information to MSEs
Rationale
Symptoms: what info do the poor Understanding
need?
Unclear: “A long term strategic
public good”, but no assessment of
govt capacity or incentives
Direct involvement & finance:
• info collection
• analysis
• prog production
• purchase airtime
• coordinate
Sustainability
Action
Make commercial media work better
for MSEs in rural areas
Causes: understand structures,
practices, incentives of media
system – why not pro-poor?
Explicit: commercial, based on local
ownership & incentives, appropriate
for local context
Facilitate and catalyse:
• develop own understanding,
networks & credibility
• influence, demonstrate & link
•TA to stations & other players
• work through local actors
• no finance to radio stations
Springfield Centre | Making markets work
Overview of Project B: FIT-SEMA, Uganda
FIT-SEMA
was
implemented by ILO
and
funded
by
several
donors,
including Sida, DFID
and the Netherlands
Main activities
Achievements
Built capacity and
incentives of radio
stations and other
players to improve
programming
25 stations – 50
new programmes
Limited support for
programme innovation
Demonstrate
“business case”
Strengthen market
supporting functions
7 million + listeners
Impact
Improved information,
voice and business
environment
Springfield Centre | Making markets work
• Exposing
corruption in
contract farming
• Improving
conditions for
market traders.
• Empowering
women microbusinesses.
The essence of the market
development approach
Rationale and
objective
The explicit objective of more effective and more
inclusive market systems and of the facilitating role of
development agencies
Framework
for
analysis
A lens through which we view the world to help us
identify and diagnose constraints and opportunities for
market system development
Guidance
for
action
A set of principles and practices that guide
intervention design and implementation consistent
with objectives and understanding
Springfield Centre | Making markets work
Structure
 Rationale and origins (the why)
 What it is
 How M4P works in practice
 Taking M4P forward
Springfield Centre | Making markets work
Rationale and origins
The
development
world
The real
world
The market
development
approach
(M4P)
M4P
In
practice
Conceptual
thinking
Springfield Centre | Making markets work
The origins of market development
In different spheres of development, similar experiences…
Health
Agriculture
“The key requirement is to engage “in
ways that are non-distorting, marketoriented and capable of generating net
benefits for the poor” Joffe et al
“Key systemic reasons for suboptimal functioning
of health systems are .... disjointed engagement
of the private sector in delivering health care”
Spinaci et al
Business services
Business environment reform
“The objectives of outreach and sustainability can
only be achieved in well-developed markets for
business services” Donor Committee
“Because the problem of poor business
environments is systemic, genuine solutions
must also be systemic” Jacobs
Livelihoods
Financial services
“A more imaginative approach is needed,
rooted in stronger understanding… of
institutional development in economic growth,
with market development one part of that
institutional development” Dorward et al
“To achieve its full potential, microfinance must
become a fully integrated part of a developing
country’s mainstream financial system” CGAP
…a shift towards market systems
Springfield Centre | Making markets work
Across all development fields… two
common problems
Remote Reformers
• Priority – overall, distant
macro-picture
• Get prices right and the
supply-side will follow
• Standard policy
prescription
M4P has emerged from
this context
Impulsive Interveners
United by failure to
ground what they do in:
• Direct provision of
subsidised finance,
advice, materials etc.
(1) market realities
• If the markets not working,
do it yourself.
(2) the way systems
work
• Replace the market (at
least in the short-term)
(3) a clear vision of how
they can work better
Failure to recognise institutional realities
Bring about final ends (but neglect market
means)
Ignore appropriate roles of key players
Springfield Centre | Making markets work
Structure
 Rationale and origins (the why)
 What it is
 How M4P works in practice
 Taking M4P forward
Springfield Centre | Making markets work
What it is – key features
Aimed at
Systemic change
Based on an understanding of
Market systems
A strong emphasis on
Sustainability
Implementation through
Facilitation
Different contexts, different tools as an
Overarching approach
• The systems around our
‘target groups’
• Large-scale
• Causes not symptoms
‘Close’ knowledge of:
• functions and players
• constraints and opportunities
• View of the future shapes
interventions now
• Who does’/‘who pays’ framework
• Crowding-in other market players
and activity
• Key principles and frameworks
Applicable to wide range of
situations and using many tools
Springfield Centre | Making markets work
… From firms… to systems
Market development
Conventional
Funder
Funder
Provider
(Govt. or NGO)
Market of SME
consumers
and suppliers
Facilitator
SMEs
Social benefits
Poverty reduction
Springfield Centre | Making markets work
A focus on systems requires
different questions
Conventional
What problems do
people /businesses
have?
Market development
What problems do
people/businesses
have?
Why isn’t their market
environment
providing
solutions to these?
How can I help to
solve these?
… Why isn’t the
market system
working for the poor?
Springfield Centre | Making markets work
The market system
SUPPORTING
FUNCTIONS
MARKET PLAYERS
Information
Government
.... lies here
Informal
networks
Informing &
communicating
Demand
CORE
Supply
Setting &
enforcing rules
Standards
Laws
RULES
Not-for-profit sector
Springfield Centre | Making markets work
Private sector
The cause of
poor
performance
here .....
Business
membership
organisations
Applied to interconnected market systems
shoes
agroprocessing
garments
etc
bicycles
business services
telecommunications
financial services
etc
Public or collective
services: eg
standards, advocacy,
etc
Enabling
environment set by
policy & regulation
etc
Springfield Centre | Making markets work
Interconnected market systems
SUPPORTING
FUNCTIONS
CORE
?
shoes
agroprocessing
etc
bicycles
garments
RULES
business services
telecommunications
financial services
SUPPORTING
FUNCTIONS
etc
CORE
?
RULES
Springfield Centre | Making markets work
Operationalising sustainability
Now
Future
Players
Functions
Who does?
Players
Functions
Who pays?
Who does?
Who pays?
CORE
CORE
RULES
RULES
SUPPORTING FUNCTIONS
SUPPORTING FUNCTIONS
Ambitious
Realistic
Valid
Facilitating system change
Catalysing
Not “what you do”
but “how you do
it”
‘Right’ touch
Flexibility
• Initiating, motivating, linking
• Crowding-in, not crowding-out
• Active – not passive
• Appropriate levels of
support to market players
• Often indirect
• Responsive and opportunistic...
• ....But guided by strategy
Springfield Centre | Making markets work
An overarching approach - applicable to
specific market systems
Health
Land
Services
Property
Commodities
Value chains
The market
development
approach
Finance
Education
Products
Labour
Voice and accountability
Generic Approach
… applied to specific markets
Springfield Centre | Making markets work
An overarching approach - using different tools
The poor and their context
Socio-economic studies,
census data, poverty
assessments, livelihoods
analysis, investment
climate surveys,
competitiveness analysis,
drivers of change
Specific market system
Systemic constraints
Access frontier, value chain
analysis, consumer research,
productivity studies, regulatory
reviews, organisational appraisal
tools, stakeholder analysis,
participatory tools
Intervention
focus
Focused interaction with
informants, interviews, focus group
discussions, brainstorming
Causes
Springfield Centre | Making markets work
Symptoms
Structure
 Rationale and origins (the why)
 What it is
 How M4P works in practice
 Taking M4P forward
Springfield Centre | Making markets work
How it works?
Dependent on
facilitator .....
Not a formula
Common frameworks
Not precise models - it’s
about markets!
Central questions
Key principles
Not an excuse for not
thinking!
Closeness
Knowledge and insight
Entrepreneurial instincts
Independence
Springfield Centre | Making markets work
How? – key stages in implementation
1. Setting the strategic
framework
5. Assessing market
system change
Vision and
rationale
Monitoring and
evaluation
Identification
and research
2. Understanding market
systems
Implementation
Planning and
design
4. Facilitating market
change
3. Defining sustainable
outcomes
Typical project cycle
Springfield Centre | Making markets work
Main steps along the pathway to
crowding-in
Market not working
Market working better
Step 1: Initial
interventions
Step 2: Overall
market vision
Step 3: Multi-faceted actions to
promote system change
Period of intervention
Springfield Centre | Making markets work
Potential interventions
A range of activities are possible .....
Social marketing to
stimulate demand
Technical assistance
to supply-side players
Introducing new idea or
‘business model’
Information on
new opportunities
Technical
assistance to
regulators
Forums for ideas
and exchange
One-to-one
replication
..... as long as these are consistent
with:
Research on
constraints and
opportunities
Limited ‘riskdefraying’
financial support
for new idea
Developing a new
commercial
service
Vision-building
with public and
private players
1. A strategic
commitment to
crowding-in
2. Key operational
principles
relating to:
• Ownership
• Relationships
• Resource levels
Springfield Centre | Making markets work
Structure
 Rationale and origins (the why)
 What it is
 How M4P works in practice
 Taking M4P forward
Springfield Centre | Making markets work
Caution and caveats – some key questions
Where does market
development meet
social protection?
Is replacing informal
with commercial
services good for the
poor?
What should the role
of government be in
different contexts?
How can environmental
concerns be embedded
into market systems?
Do the poor always
‘win’ from market
change?
...... we know something but we’re still
learning
Springfield Centre | Making markets work
Strategic and operational challenges .......
How does M4P fit
within funding
structures and
mechanisms?
Where should facilitators
be positioned?
What evidence is
needed to make a
better case for M4P?
What are the
structural options for
facilitators?
How can ‘good
practice
facilitation’ be
better transferred?
How can M4P be made
more ‘saleable’ to
decision-makers?
How long should
facilitators ‘stay’ in
weak markets?
Springfield Centre | Making markets work
... and opportunities - the prize of
systemic change
Sustainable
change
The potential to
stimulate .....
- building
systems capacity
for innovation
and renewal
Consistency and
clarity across
development
- the same objectives,
frameworks and
principles in different
development spheres
Large-scale
outreach and
impact
- building the
capacities and
incentives for
growth
Systemic
change
Springfield Centre | Making markets work
Fundamental
change
- focusing on
causes not
symptoms
M4P in practice: delivering significant,
sustainable change
•
•
•
•
Financial services in South Africa
Vegetable value chain in Bangladesh
Coordination
Higher access: 39%
(8.8m) in 2002 – 60%
(19m) in 2007
Higher outputs and productivity amongst 1m
vegetable farmers
Systemic changes
Systemic changes
New commercial information source
Improved regulatory processes
Better coordination
Improved innovation processes
• Better farming practices, resulting from ...
• ... Improved information flows through input
retailers
• Training supplied by input suppliers
• Changing the input supply business model
Dairy sector in Armenia
Water users in
Somalialand
Small wool farmers in S Africa
Better quality and
reliability for 3,000 users
Improved access to services and higher
incomes for 5,000 farmers
Springfield Centre | Making markets work
Doubling output, securing
market access, tripling incomes
for 2000 farmers
An agenda for taking M4P forward?
What needs to be done now to ensure that the potential gains
from M4P are realised?
A key focus for this workshop
(which we return to the afternoon)
Collaboration
A new resource in going forward three new public documents
Learning
Communication
-The Synthesis
Promotion
-The Perspectives
Exchange
-The Operational Guide
Skills development
Evidence
Springfield Centre | Making markets work