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Springfield Centre | Making markets work Rationale, issues and opportunities The M4P Approach The Making Markets Work for the Poor Approach (M4P) What.

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Presentation on theme: "Springfield Centre | Making markets work Rationale, issues and opportunities The M4P Approach The Making Markets Work for the Poor Approach (M4P) What."— Presentation transcript:

1 Springfield Centre | Making markets work Rationale, issues and opportunities The M4P Approach The Making Markets Work for the Poor Approach (M4P) What it is and where its going A 1-day seminar sponsored by DFID and SDC Bangkok, November 2008 The Springfield Centre

2 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

3 Springfield Centre | Making markets work Structure Rationale and origins (the why) Rationale and origins (the why) What it is What it is How M4P works in practice How M4P works in practice Taking M4P forward Taking M4P forward But before that, an example

4 Springfield Centre | Making markets work Case study: Uganda rural SMEs constrained by lack of information 2 projects Project A: ; US$2.5m/3 yrs; est. av. $0.5m/yr Project B: ; ~US$1.2m Goal Increase info for rural MSEs Info is a long term strategic public good Establish sustainable, effective info for rural MSEs via the mass media Outreach 7m regular listeners Peak of 7-8m listeners Sustainability 24+ stations with MSE independent programmes; emerging new programmes & support services: no donor funding Initially 10 stations but dissemination cut as funding cut to $50k/yr. Other activities remain donor funded:

5 Springfield Centre | Making markets work What explains the difference? Rationale Provide information to MSEs Make commercial media work better for MSEs in rural areas Understanding Symptoms: what info do the poor need? Causes: understand structures, practices, incentives of media system – why not pro-poor? Sustainability Explicit: commercial, based on local ownership & incentives, appropriate for local context Unclear: A long term strategic public good, but no assessment of govt capacity or incentives Action 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 Direct involvement & finance: info collection analysis prog production purchase airtime coordinate

6 Springfield Centre | Making markets work Overview of Project B: FIT-SEMA, Uganda Exposing corruption in contract farming Improving conditions for market traders. Empowering women micro- businesses. Main activities Built capacity and incentives of radio stations and other players to improve programming Limited support for programme innovation Demonstrate business case Strengthen market supporting functions Achievements 25 stations – 50 new programmes 7 million + listeners Impact Improved information, voice and business environment FIT-SEMA was implemented by ILO and funded by several donors, including Sida, DFID and the Netherlands

7 Springfield Centre | Making markets work The essence of the market development approach The explicit objective of more effective and more inclusive market systems and of the facilitating role of development agencies A lens through which we view the world to help us identify and diagnose constraints and opportunities for market system development A set of principles and practices that guide intervention design and implementation consistent with objectives and understanding Rationale and objective Framework for analysis Guidance for action

8 Springfield Centre | Making markets work Structure Rationale and origins (the why) Rationale and origins (the why) What it is What it is How M4P works in practice How M4P works in practice Taking M4P forward Taking M4P forward

9 Springfield Centre | Making markets work Rationale and origins The market development approach (M4P) The real world Conceptual thinking The development world M4P In practice

10 Springfield Centre | Making markets work In different spheres of development, similar experiences… …a shift towards market systems Business services The objectives of outreach and sustainability can only be achieved in well-developed markets for business services Donor Committee Financial services Health Livelihoods Agriculture 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 The key requirement is to engage in ways that are non-distorting, market- oriented 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 To achieve its full potential, microfinance must become a fully integrated part of a developing countrys mainstream financial system CGAP The origins of market development Business environment reform Because the problem of poor business environments is systemic, genuine solutions must also be systemic Jacobs

11 Springfield Centre | Making markets work Across all development fields… two common problems Remote Reformers Impulsive Interveners Priority – overall, distant macro-picture Get prices right and the supply-side will follow Standard policy prescription Failure to recognise institutional realities Direct provision of subsidised finance, advice, materials etc. If the markets not working, do it yourself. Replace the market (at least in the short-term) Bring about final ends (but neglect market means) Ignore appropriate roles of key players United by failure to ground what they do in: (1) market realities (2) the way systems work (3) a clear vision of how they can work better M4P has emerged from this context

12 Springfield Centre | Making markets work Structure Rationale and origins (the why) Rationale and origins (the why) What it is What it is How M4P works in practice How M4P works in practice Taking M4P forward Taking M4P forward

13 Springfield Centre | Making markets work What it is – key features Aimed at Systemic change The systems around our target groups Large-scale Causes not symptoms Implementation through Facilitation Crowding-in other market players and activity Key principles and frameworks Different contexts, different tools as an Overarching approach Applicable to wide range of situations and using many tools Close knowledge of: functions and players constraints and opportunities Based on an understanding of Market systems A strong emphasis on Sustainability View of the future shapes interventions now Who does/who pays framework

14 Springfield Centre | Making markets work Conventional Social benefits Market development Market of SME consumers and suppliers Poverty reduction … From firms… to systems Funder SMEs Provider (Govt. or NGO) Facilitator

15 Springfield Centre | Making markets work A focus on systems requires different questions What problems do people/businesses have? How can I help to solve these? What problems do people /businesses have? Why isnt their market environment providing solutions to these? … Why isnt the market system working for the poor? ConventionalMarket development

16 Springfield Centre | Making markets work SUPPORTING FUNCTIONS RULES Laws Informal rules & norms Standards Regulations Information Infrastructure Related services Informing & communicating Setting & enforcing rules The market system Business membership organisations Government Private sector Not-for-profit sector Informal networks MARKET PLAYERS DemandSupply CORE The cause of poor performance here lies here

17 Springfield Centre | Making markets work shoesagro- processing bicycles etc garments business services telecommunications financial services etc Applied to interconnected market systems Public or collective services: eg standards, advocacy, etc Enabling environment set by policy & regulation etc

18 Springfield Centre | Making markets work Interconnected market systems ? ? shoes agro- processing bicycles etc garments business services telecommunications financial services etc RULES SUPPORTING FUNCTIONS RULES CORE SUPPORTING FUNCTIONS CORE

19 Operationalising sustainabilityNow Future Ambitious Realistic Valid

20 Springfield Centre | Making markets work Facilitating system change Not what you do but how you do it Catalysing Initiating, motivating, linking Crowding-in, not crowding-out Active – not passive Right touch Appropriate levels of support to market players Often indirect Flexibility Responsive and opportunistic But guided by strategy

21 Springfield Centre | Making markets work An overarching approach - applicable to specific market systems Property Land Commodities Labour Products Voice and accountability Finance … applied to specific markets Services Value chains Generic Approach The market development approach Health Education

22 Springfield Centre | Making markets work An overarching approach - using different tools Socio-economic studies, census data, poverty assessments, livelihoods analysis, investment climate surveys, competitiveness analysis, drivers of change Symptoms Causes Specific market system The poor and their context Systemic constraints Intervention focus Access frontier, value chain analysis, consumer research, productivity studies, regulatory reviews, organisational appraisal tools, stakeholder analysis, participatory tools Focused interaction with informants, interviews, focus group discussions, brainstorming

23 Springfield Centre | Making markets work Structure Rationale and origins (the why) Rationale and origins (the why) What it is What it is How M4P works in practice How M4P works in practice Taking M4P forward Taking M4P forward

24 Springfield Centre | Making markets work Not a formula Not precise models - its about markets! Not an excuse for not thinking! Common frameworks Central questions Key principles Closeness Knowledge and insight Entrepreneurial instincts Independence How it works? Dependent on facilitator.....

25 Springfield Centre | Making markets work How? – key stages in implementation Vision and rationale Identification and research Planning and design Implementation Monitoring and evaluation 1. Setting the strategic framework 2. Understanding market systems 3. Defining sustainable outcomes 4. Facilitating market change 5. Assessing market system change Typical project cycle

26 Springfield Centre | Making markets work Main steps along the pathway to crowding-in Market not working Market working better Step 3: Multi-faceted actions to promote system change Step 1: Initial interventions Step 2: Overall market vision Period of intervention

27 Springfield Centre | Making markets work Potential interventions Technical assistance to supply-side players Introducing new idea or business model Information on new opportunities Social marketing to stimulate demand Technical assistance to regulators Forums for ideas and exchange One-to-one replication Developing a new commercial service Limited risk- defraying financial support for new idea Research on constraints and opportunities Vision-building with public and private players A range of activities are possible A strategic commitment to crowding-in 2. Key operational principles relating to: Ownership Relationships Resource levels..... as long as these are consistent with:

28 Springfield Centre | Making markets work Structure Rationale and origins (the why) Rationale and origins (the why) What it is What it is How M4P works in practice How M4P works in practice Taking M4P forward Taking M4P forward

29 Springfield Centre | Making markets work Caution and caveats – some key questions Where does market development meet social protection? Do the poor always win from market change? What should the role of government be in different contexts? Is replacing informal with commercial services good for the poor? How can environmental concerns be embedded into market systems? we know something but were still learning

30 Springfield Centre | Making markets work Strategic and operational challenges How does M4P fit within funding structures and mechanisms? How can good practice facilitation be better transferred? What are the structural options for facilitators? Where should facilitators be positioned? How long should facilitators stay in weak markets? How can M4P be made more saleable to decision-makers? What evidence is needed to make a better case for M4P?

31 Springfield Centre | Making markets work... and opportunities - the prize of systemic change Large-scale outreach and impact - building the capacities and incentives for growth Sustainable change - building systems capacity for innovation and renewal Fundamental change - focusing on causes not symptoms Consistency and clarity across development - the same objectives, frameworks and principles in different development spheres Systemic change The potential to stimulate.....

32 Springfield Centre | Making markets work M4P in practice: delivering significant, sustainable change Coordination Financial services in South Africa Higher access: 39% (8.8m) in 2002 – 60% (19m) in 2007 Systemic changes New commercial information source Improved regulatory processes Better coordination Improved innovation processes Vegetable value chain in Bangladesh Higher outputs and productivity amongst 1m vegetable farmers Systemic changes 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 Doubling output, securing market access, tripling incomes for 2000 farmers Water users in Somalialand Better quality and reliability for 3,000 users Small wool farmers in S Africa Improved access to services and higher incomes for 5,000 farmers

33 Springfield Centre | Making markets work An agenda for taking M4P forward? What needs to be done now to ensure that the potential gains from M4P are realised? Collaboration Learning Communication Promotion Exchange Skills development Evidence A key focus for this workshop (which we return to the afternoon) A new resource in going forward - three new public documents -The Synthesis -The Perspectives -The Operational Guide


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