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

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rationale issues and opportunities
Rationale, issues and opportunities

The M4P Approach

The Springfield Centre

The Making Markets Work for the Poor Approach (M4P)

What it is and where it’s going

A 1-day seminar sponsored by DFID and SDC

Bangkok, November 2008

Springfield Centre | Making markets work

objectives
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
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
Case study: Uganda rural SMEs constrained by lack of information

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

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

2 projects

Establish sustainable, effective info for ruralMSEs via the mass media

Increase info for rural MSEs

“Info is a long term strategic public good”

Goal

Outreach

Peak of 7-8mlisteners

7mregular listeners

Initially 10 stations but dissemination cut as funding cut to $50k/yr. Other activities remain donor funded:

24+ stations with MSE independent programmes; emerging new programmes & support services: no donor funding

Sustainability

Springfield Centre | Making markets work

what explains the difference
What explains the difference?

Make commercial media work better for MSEs in rural areas

Rationale

Provide information to MSEs

Causes: understand structures, practices, incentives of media system – why not pro-poor?

Symptoms: what info do the poor need?

Understanding

Unclear: “A long term strategic public good”, but no assessment of govt capacity or incentives

Explicit: commercial, based on local ownership & incentives, appropriate for local context

Sustainability

  • 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

Action

Springfield Centre | Making markets work

overview of project b fit sema uganda
Overview of Project B: FIT-SEMA, Uganda

Main activities

Built capacity and incentives of radio stations and other players to improve programming

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

Limited support for programme innovation

Demonstrate “business case”

Strengthen market supporting functions

FIT-SEMA was implemented by ILO and funded by several donors, including Sida, DFID and the Netherlands

Springfield Centre | Making markets work

the essence of the market development approach
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

Rationale and

objective

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

structure8
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
Rationale and origins

The real

world

The

development

world

The market

development

approach

(M4P)

Conceptual

thinking

M4P

In

practice

Springfield Centre | Making markets work

the origins of market development
The origins of market development

In different spheres of development, similar experiences…

Health

Agriculture

“Key systemic reasons for suboptimal functioning

of health systems are .... disjointed engagement

of the private sector in delivering health care”

Spinaci 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

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

Financialservices

“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
Across all development fields… two common problems

Impulsive Interveners

Remote Reformers

  • 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)
  • Priority – overall, distant macro-picture
  • Get prices right and the supply-side will follow
  • Standard policy prescription

Bring about final ends (but neglect market means)

Ignore appropriate roles of key players

Failure to recognise institutional realities

M4P has emerged from this context

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

Springfield Centre | Making markets work

structure12
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
What it is – key features
  • The systems around our ‘target groups’
  • Large-scale
  • Causes not symptoms

Aimed at

Systemic change

  • ‘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

from firms to systems
… From firms… to systems

Market of SME

consumers

and suppliers

Market development

Conventional

Funder

Funder

Facilitator

Provider

(Govt. or NGO)

SMEs

Social benefits

Poverty reduction

Springfield Centre | Making markets work

a focus on systems requires different questions
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?

… Why isn’t the market system working for the poor?

Springfield Centre | Making markets work

the market system
The market system

SUPPORTING

FUNCTIONS

MARKET PLAYERS

Private sector

Government

Demand

Supply

Business membership organisations

Informal

networks

RULES

Not-for-profit sector

Information

Infrastructure

Related

services

Informing & communicating

The cause of poor performance here .....

.... lies here

CORE

Setting & enforcing rules

Informal rules & norms

Regulations

Standards

Laws

Springfield Centre | Making markets work

applied to interconnected market systems
Applied to interconnected market systems

business services

telecommunications

financial services

etc

shoes

agro-

processing

etc

bicycles

garments

Public or collective services: eg standards, advocacy, etc

Enabling environment set by policy & regulation etc

Springfield Centre | Making markets work

interconnected market systems
Interconnected market systems

shoes

agro-

processing

etc

bicycles

garments

business services

telecommunications

financial services

etc

SUPPORTING

FUNCTIONS

CORE

?

RULES

SUPPORTING

FUNCTIONS

?

CORE

RULES

Springfield Centre | Making markets work

operationalising sustainability

Now

Future

Ambitious

Realistic

Valid

Operationalising sustainability
facilitating system change
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

Springfield Centre | Making markets work

an overarching approach applicable to specific market systems
An overarching approach - applicable to specific market systems

Land

Services

Property

Finance

Commodities

Products

Labour

Voice and accountability

… applied to specific markets

Health

The market

development

approach

Value chains

Education

Generic Approach

Springfield Centre | Making markets work

an overarching approach using different tools
An overarching approach - using different tools

Symptoms

Causes

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

Springfield Centre | Making markets work

structure23
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
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

how key stages in implementation
How? – key stages in implementation

1. Setting the strategic framework

5. Assessing market system change

Vision and rationale

Monitoring and evaluation

2. Understanding market systems

Identification and research

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
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
Potential interventions

Technical assistance to supply-side players

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

Social marketing to stimulate demand

1. A strategic commitment to crowding-in

Introducing new idea or ‘business model’

Research on constraints and opportunities

Information on new opportunities

  • 2. Key operational principles relating to:
  • Ownership
  • Relationships
  • Resource levels

Limited ‘risk-defraying’ financial support for new idea

Technical assistance to regulators

Developing a new commercial service

Forums for ideas and exchange

Vision-building with public and private players

One-to-one replication

A range of activities are possible .....

Springfield Centre | Making markets work

structure28
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
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
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?

How can ‘good practice facilitation’ be better transferred?

How long should facilitators ‘stay’ in weak markets?

Springfield Centre | Making markets work

and opportunities the prize of systemic change
... 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

Fundamental change

- focusing on causes not symptoms

Systemic change

Springfield Centre | Making markets work

m4p in practice delivering significant sustainable change
M4P in practice: delivering significant, sustainable change
  • 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
  • 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

Coordination

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

an agenda for taking m4p forward
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

Springfield Centre | Making markets work