springfield centre | making markets work rationale, issues and opportunities the m4p approach the...

Springfield Centre | Making markets workSpringfield Centre | Making markets work

Rationale, issues and opportunities

The M4P ApproachThe M4P ApproachThe Making Markets Work The Making Markets Work for the Poor Approach (M4P)for the Poor Approach (M4P)

What it is and where it’s goingWhat it is and where it’s going

A 1-day seminar sponsored by DFID and SDC

Bangkok, November 2008

The Springfield CentreThe Springfield Centre


Objectives

Highlight key features of the market Highlight key features of the market development approachdevelopment approach**

Summarise some key challenges and Summarise some key challenges and opportunities for the way aheadopportunities for the way ahead

* Also known as Making Markets work for the Poor or M4P


Structure

Rationale and origins (the Rationale and origins (the whywhy))

What What it isit is

How How M4P works in practiceM4P works in practice

Taking M4P forwardTaking M4P forward

But before that, an example ........


Case study: Uganda rural SMEs constrained by lack of information

2 projectsProject A: 1999--; US$2.5m/3 yrs; est. av. $0.5m/yr

Project B: 1999-2007; ~US$1.2m

GoalIncrease 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:

Outre

ach

Time


What explains the difference?

RationaleProvide information to MSEs Make commercial media work better for MSEs in rural areas

UnderstandingSymptoms: 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


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


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


Structure






Rationale and origins

The market development

approach (M4P)

The real world

Conceptualthinking

The development

world

M4P In

practice


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 country’s 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


Across all development fields… two common problems

Remote ReformersRemote Reformers Impulsive IntervenersImpulsive 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


Structure






What it is – key features

Aimed atAimed at

Systemic changeSystemic change

• The systems around our ‘target groups’

• Large-scale • Causes not symptoms

Implementation through Implementation through

FacilitationFacilitation• Crowding-in other market players

and activity• Key principles and frameworks

Different contexts, different tools as anDifferent contexts, different tools as an

Overarching approachOverarching approachApplicable to wide range of situations and using many tools

‘Close’ knowledge of:•functions and players•constraints and opportunities

Based on an understanding ofBased on an understanding of

Market systemsMarket systems

A strong emphasis on A strong emphasis on

SustainabilitySustainability

• View of the future shapes interventions now

• Who does’/‘who pays’ framework


Conventional

Social benefits

Market development

Market of SME consumers

and suppliers

Poverty reduction

… From firms… to systems

Funder Funder

SMEs

Provider (Govt. or NGO)

Facilitator


A focus on systems requires different questions

What problems dopeople/businesses

have?

How can I help tosolve these?

What problems do people /businesses

have?

Why isn’t their market environment

providing solutions to these?

… Why isn’t the market system

working for the poor?

Conventional Market development


SUPPORTING FUNCTIONS

RULES

Laws

Info

rmal

rule

s &

norm

s

Standards

Regulations

Information

Infra

stru

ctur

eRelated

services

Informing & communicating

Setting & enforcing rules

The market system

Business membership organisations

GovernmentPrivate sector

Not-for-profit sector

Informal networks

MARKET PLAYERS

Demand SupplyCORE

The cause of poor

performance here .....

.... lies here


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


Interconnected market systems

?

?shoesagro-

processing

bicycles

etc

garments

business services

telecommunications

financial services

etc

RULES


RULES

CORE


CORE

Operationalising sustainability

Players

Who does? Who pays?

CORE

RULES


Functions

NowNowPlayers

Who does? Who pays?

CORE

RULES


Functions

FutureFuture

AmbitiousRealistic

Valid


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


An overarching approach - applicable to specific market systems

Property

Land

Commodities

LabourProducts

Voice and accountability

Finance

… applied to specific markets

Services

Value chains

Generic Approach

The market development

approach

Health

Education


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


Structure






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

How it works?

Dependent on Dependent on facilitator .....facilitator .....


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


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


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 .....

1. A strategic commitment to crowding-in

2. Key operational principles relating to:

• Ownership

• Relationships

• Resource levels

..... as long as these are consistent with:


Structure






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 we’re still learning


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?


... and opportunities - the prize of systemic change

Large-scale Large-scale outreach and outreach and

impactimpact

- building the capacities and incentives for growth

Sustainable Sustainable changechange

- building systems capacity for innovation and renewal

Fundamental Fundamental changechange

- focusing on causes not symptoms

Consistency and Consistency and clarity across clarity across developmentdevelopment

- the same objectives, frameworks and principles in different development spheres

Systemic change

The potential to stimulate .....


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


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 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

springfield centre | making markets work rationale, issues and opportunities the m4p approach the...

Documents

making markets work

m4p slide

springfield centre slide

development world m4p

m4p forward slide

market system development

poor approach m4p

practice slide