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Making Markets Work Better for the Poor. Moving from Research to Action - M4P as a basis for catalyzing public sector and private sector investment. Dominic Smith Interim Project Coordinator M4P Phase II - Vietnam
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Making Markets Work Better for the Poor Moving from Research to Action - M4P as a basis for catalyzing public sector and private sector investment Dominic Smith Interim Project Coordinator M4P Phase II - Vietnam Presentation to the “M4P Approach – What it is and Where it is Going” Workshop, Bangkok, November 26 2008
Contents of Presentation • Background to M4P Research in Phase I • Experience of using M4P as a basis for designing public sector investments • Challenges and responses • Using M4P as a basis for catalyzing private sector investment • Challenges and responses • Key Questions for Consideration
Information about M4P1 • M4P1 was a regional technical assistance project implemented in Vietnam, Laos and Cambodia between 2003 and 2007. • M4P1 concentrated on funding research on topics relevant to M4P, building capacity of research organizations and assisting policy makers. • In Vietnam, M4P funded 21 major research activities on a competitive basis and worked with 31 partner organizations • M4P concentration areas were (i) land markets; (ii) labor markets; (iii) commodity markets/value chains; (iv) public-private partnerships for rural infrastructure; (v) service markets. • In addition to research publications, M4P also developed toolbooks for Participatory Market Assessment and Pro-poor Value Chain Analysis.
M4P Research into Action I – Designing Investment Loans • Project worked with IFAD in 2005-2007 to utilize M4P principles and tools as the basis for designing 2 investment projects totaling $US80 million focused on rural development in 4 provinces of Vietnam. • Utilized research results and tools (including PMA toolbook and pro-poor value chains toolbook ) to analyze the interaction of the rural poor with various markets and the impact of those interactions on livelihoods • Resulting investments concentrated on making commodity markets and labor markets work better for the rural poor
Challenges • M4P research was oriented towards developing policy recommendations – in general trying to find low-cost high benefit solutions. Investment project design involves finding ways to effectively spend significant resources. • M4P covers wide range of markets, and rural livelihood problems are also related to a wide range of markets – however investment projects require great degree of focus. • Many investment solutions - for example for developing rural value chains or improving the interaction of the rural poor with labor markets – can have a wider geographic focus than the “project area”. • Developing a unified project is challenging when investment funds are split between grass-roots level and provincial levels
M4P Research into Action II – Catalyzing Private Sector Investment • Second phase of M4P in Vietnam has just commenced with DFID and ADB financing. • Project is being executed and implemented by Government of Vietnam – Ministry of Planning and Investment, Central Institute of Economic Management and Ministry of Finance. • M4P2 includes action research funding and funding of capacity building for stakeholders. • Majority of funding under the project will be for Vietnam Market Participation Challenge Fund - $US3 million project funding over 3 years for catalyzing pro-poor private sector investment. Will leverage at least another $US3 million from the private sector.
Challenges • Directing investment support to the private sector under an ODA project modality is a new concept in Vietnam • Assessing the pro-poor nature of private sector investments in rural labor markets, PPP for rural infrastructure and agricultural value chain development is challenging. • Significant level of interest from the private sector will result in challenges to give focus the fund activities, both geographically and in terms of sectors. • Selection criteria need to be carefully designed to provide a balance between innovation/pro-poor focus and financial performance/low risk investments.
Key Questions • What are the main lessons for organisations as they face challenges of moving from research/theory into practical action/application? • What can be done collectively (by agencies and others interested in M4P) to help organisations face these challenges more successfully?