Presentation is loading. Please wait.

Presentation is loading. Please wait.

Rationale, issues and opportunities

Similar presentations


Presentation on theme: "Rationale, issues and opportunities"— Presentation transcript:

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

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 Springfield Centre | Making markets work

3 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

4 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: Two projects in the same low income African economy were established to overcome information constraints facing rural businesses. Both had similar goals and both recognised the importance of information for economic participation and the role of the media in providing information although one saw information as a “long term strategic good”, whilst the other focused on the commercial provision of information. Both operated for similar durations, although A had the greater funding. B is in its phase out stage; it has not yet been determined when A will end. Both projects have achieved similar levels of outreach, however A has seen a marked decrease in outreach as it has run into funding constraints. B’s outreach has stabilised at around 7m regular listeners. Radio stations have continued – indeed expanded – their coverage of small business issues in their programming. This has not happened with A. Springfield Centre | Making markets work

5 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 Rationale: A saw its role as providing information. B’s saw its role as changing the way in which the media worked. Understanding: A’s analysis was… “MSEs don’t have info… what info do they need and therefore what must we provide?” B recognised a more complex picture. It tried to understand how the media worked and why it currently didn’t serve the poor. This meant understanding the wider system: structures, practices, incentives and different players. This systemic focus meant that B considered sustainability from the outset: how the system might work better in the future and the capacity and resources needed to ensure that it continued to do so, without project support. A, despite claiming that info was “a long term strategic public good”, made no assessment of government’s willingness or ability to resource info provision in the future. Consequently, the interventions of A and B differed markedly. A intervened directly to collect and analyse information and produce programmes, paying radio stations to broadcast this information. B provided no finance to stations. It influenced radio stations to recognise the potential of low income audiences: that they were attractive to advertisers who wanted to penetrate new markets (eg farm inputs, mosquito nets or cell phones). B assisted radio stations to alter broadcast formats and journalistic practices to ones better suited to low income audiences and commercial sponsors, linking radio stations and local specialists to do this. B’s results have been dramatic. With no further support, programming has expanded across the country, new programming has evolved, responding to audience demand, using interactive formats and ranging from advice to advocacy. In contrast, radio stations supported by A no longer broadcast their information as the project no longer has sufficient funds to finance them. Springfield Centre | Making markets work

6 Overview of Project B: FIT-SEMA, Uganda
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 Exposing corruption in contract farming Improving conditions for market traders. Empowering women micro-businesses. Impact Improved information, voice and business environment FIT-SEMA was implemented by ILO and funded by several donors, including Sida, DFID and the Netherlands Springfield Centre | Making markets work

7 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

8 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

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

10 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, 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 Business services “The objectives of outreach and sustainability can only be achieved in well-developed markets for business services” Donor Committee Business environment reform “Because the problem of poor business environments is systemic, genuine solutions must also be systemic” Jacobs Livelihoods Financial services - New thinking and practices have emerged in parallel in a number of separate fields, like .. Despite a failure or missed opportunity to learn from one another, there are very similar tendencies In FS for example it is now widely recognised that in order to reach large numbers in MF, it must be part of the mainstream financial sector. Existing financial sectors need to deepen, need to include products that meet the needs of the poor. We need to influence the PS so it becomes inclusive, in stead of developing a parallel sector that perhaps serves, but definitely isolates the poor. Progress in these different fields has not been smooth, consensual or uniform: considerable disagreement remains, with variations both between and within agencies. - But a clear trend is definitely emerging. We need to use aid more sensitively and effectively, and recognize the role of the PS in reaching those goals. “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

11 Across all development fields… two common problems
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 Remote Reformers Impulsive Interveners 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 Priority – overall, distant macro-picture Get prices right and the supply-side will follow Standard policy prescription Failure to recognise institutional realities Springfield Centre | Making markets work

12 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

13 What it is – key features
Aimed at Systemic change The systems around our ‘target groups’ Large-scale Causes not symptoms ‘Close’ knowledge of: functions and players constraints and opportunities Based on an understanding of Market systems View of the future shapes interventions now Who does’/‘who pays’ framework A strong emphasis on Sustainability 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 Springfield Centre | Making markets work

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

15 A focus on systems requires different questions
Conventional Market development What problems do people /businesses have? What problems do people/businesses have? Why isn’t their market environment providing solutions to these? How can I help to solve these? Conventional approaches ask Q like this: READ MMW can start with similar questions, but then asks: READ This emphasis is important: In trying to change market systems, MMW tries to address the underlying causes of problems that impinge on business, rather than trying to solve those problems directly. This distinction between addressing root causes (influencing the way in which things happen) rather than symptoms (providing quick fixes to systemic problems) distinguishes development from emergency relief. MMW wants to achieve lasting outcomes that influence markets so they better serve the needs and demands of the poor … Why isn’t the market system working for the poor? Springfield Centre | Making markets work

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

17 Applied to interconnected market systems
agro- processing shoes etc garments 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

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

19 Operationalising sustainability
Now Future Ambitious Realistic Valid The framework is merely another way of looking at these same questions.

20 Facilitating system change
Catalysing Initiating, motivating, linking Crowding-in, not crowding-out Active – not passive Not “what you do” but “how you do it” ‘Right’ touch Appropriate levels of support to market players Often indirect Flexibility Responsive and opportunistic... ....But guided by strategy The essence of this facilitation is to stimulate market players to play more valid roles within the system. From the outset therefore M4P interventions are guided by a strategy to crowd in indigenous market players Any actions must be consistent with this strategy to build on indigenous ownership and incentives, but there is no step-by-step guide. However in general interventions tend to be catalytic, light touch, flexible and opportunistic (… but not scattered). The key lesson has been to focus on “why you do it” and “how you do it” – where you put your subsidy, with whom, how, how much – rather than “what you do”. Springfield Centre | Making markets work

21 An overarching approach - applicable to specific market systems
Property Land Commodities Labour Products Voice and accountability Finance … applied to specific markets Services Health The market development approach Value chains Education Go through diagram quickly For now the MAIN POINT. In successful economies: NEEDS are met by PRODUCTS/SERVICES offered by PROVIDERS Note that financial services are part of this – while this is not our focus here, they are a vital, integral part of the SMEs’ environment. Our priority focus of services for business is part of a wider awakening and realisation of the key importance of services in economic development. Go back - creating the right kind of environment for SME development is important. In order to do this, we need to understand more about how BDS have grown and developed and become so important. Generic Approach Springfield Centre | Making markets work

22 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 Symptoms Causes 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 Springfield Centre | Making markets work

23 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

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

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

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

27 Potential interventions
A range of activities are possible ..... ..... as long as these are consistent with: 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 1. A strategic commitment to crowding-in 2. Key operational principles relating to: Ownership Relationships Resource levels The essence of this facilitation is to stimulate market players to play more valid roles within the system. From the outset therefore M4P interventions are guided by a strategy to crowd in indigenous market players Any actions must be consistent with this strategy to build on indigenous ownership and incentives, but there is no step-by-step guide. However in general interventions tend to be catalytic, light touch, flexible and opportunistic (… but not scattered). The key lesson has been to focus on “why you do it” and “how you do it” – where you put your subsidy, with whom, how, how much – rather than “what you do”. Springfield Centre | Making markets work

28 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

29 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? Before I discuss the main elements of M4P, I want to emphasis what it is not M4P recognises that market imperfection is the norm and rarely operate freely as per economic theory. Markets in the real world are complex socio-economic phenomena, encompassing a variety of formal and informal mechanisms and also public and private roles Finally, and contrary to some critics’ opinions, M4P does not argue that there should be no subsidy in development interventions – after all, all interventions involve some form of subsidy – but it is concerned with what that subsidy is used for and how it is used. At its heart M4P calls for a more nuanced approach to development agency intervention which is better suited to the complex and dynamic market contexts of low income countries. we know something but we’re still learning Springfield Centre | Making markets work

30 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 M4P be made more ‘saleable’ to decision-makers? Before I discuss the main elements of M4P, I want to emphasis what it is not M4P recognises that market imperfection is the norm and rarely operate freely as per economic theory. Markets in the real world are complex socio-economic phenomena, encompassing a variety of formal and informal mechanisms and also public and private roles Finally, and contrary to some critics’ opinions, M4P does not argue that there should be no subsidy in development interventions – after all, all interventions involve some form of subsidy – but it is concerned with what that subsidy is used for and how it is used. At its heart M4P calls for a more nuanced approach to development agency intervention which is better suited to the complex and dynamic market contexts of low income countries. How can ‘good practice facilitation’ be better transferred? How long should facilitators ‘stay’ in weak markets? Springfield Centre | Making markets work

31 ... 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 The potential to stimulate ..... Consistency and clarity across development - the same objectives, frameworks and principles in different development spheres Conventional approaches ask Q like this: READ MMW can start with similar questions, but then asks: READ This emphasis is important: In trying to change market systems, MMW tries to address the underlying causes of problems that impinge on business, rather than trying to solve those problems directly. This distinction between addressing root causes (influencing the way in which things happen) rather than symptoms (providing quick fixes to systemic problems) distinguishes development from emergency relief. MMW wants to achieve lasting outcomes that influence markets so they better serve the needs and demands of the poor Fundamental change - focusing on causes not symptoms Systemic change Springfield Centre | Making markets work

32 M4P in practice: delivering significant, sustainable change
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 Coordination Poor Information – on consumers and financial services. Whils there was published data on the overall consumption of financial services, it could not provide the kind of detailed information that might be useful for banks in developing new services. Poor Coordination – commitment to a Charter process but limted data and trust around which to build an operational consensus on the way forward. Inappropriate rules and regulations – many and varied influences such as capital adequacy and supervision requirements. Weak product innnovation – brought on by sector consolidation and preceived risks in servicing lower income groups.Why innovate when margins are good and competitiion low? 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 Springfield Centre | Making markets work

33 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 Learning Communication Promotion Exchange Skills development Evidence A new resource in going forward - three new public documents The Synthesis The Perspectives -The Operational Guide Before I discuss the main elements of M4P, I want to emphasis what it is not M4P recognises that market imperfection is the norm and rarely operate freely as per economic theory. Markets in the real world are complex socio-economic phenomena, encompassing a variety of formal and informal mechanisms and also public and private roles Finally, and contrary to some critics’ opinions, M4P does not argue that there should be no subsidy in development interventions – after all, all interventions involve some form of subsidy – but it is concerned with what that subsidy is used for and how it is used. At its heart M4P calls for a more nuanced approach to development agency intervention which is better suited to the complex and dynamic market contexts of low income countries. Springfield Centre | Making markets work


Download ppt "Rationale, issues and opportunities"

Similar presentations


Ads by Google