Transformation through Market Systems Development study for the - - PowerPoint PPT Presentation

Promoting Economic Transformation through Market Systems Development

study for the DCED WORKING GROUP on MARKET SYSTEMS DEVELOPMENT PRESENTATION OF THE FINAL REPORT

11th June 2019

by Matt Ripley and Leyla Shamchiyeva, Impact Management

Overview

• Q1: What does the current evidence suggest about the role that

donor-funded market systems development (MSD) programming plays in promoting both structural and intra-sectoral economic transformation?

• Q2: How could the MSD approach be modified or adapted, including

through combinations with other forms of support, in order to better promote economic transformation?

• Literature review plus 26 telephone interviews with Working Group

members

• Focus on Sub-Saharan Africa, and aspects of inclusion
• Final report 31st May – this presentation follows report outline

• 1. Drivers of Economic

Transformation and the Role of MSD

Market Systems Development

• An approach to development that

seeks to address the root causes of why markets can fail to meet the needs of people living in poverty

• It aims to catalyze systemic changes,

which are changes in the way core markets, supporting functions and rules perform that ultimately improves the participation of target groups (such as people living in poverty, youth, marginalized groups) within the market system. MSD and Economic Transformation:  Alignment of focus: connecting macro, meso, micro  Alignment of objectives: sustained growth and poverty reduction  Alignment of timeframe: long- term, but short-term pressures  Alignment of principles: active interventions, adaptive, contextual

Source: BEAM Exchange

How does MSD currently contribute to ET?

Level ET focus MSD focus Where illustrative MSD programmes Macro Enabling conditions and economic fundamentals Functions and rules at the level of policy and economy

• ENABLE, Nigeria: Improving

public-private dialogue

• FSD Africa: Financial Sector

development Meso Sector- specific conditions and targeted interventions Sector- specific functions and rules

• MDF, Pakistan: Improved skills

for local leather manufacturing

• M4C, Bangladesh: Improved

services for geographically vulnerable farmers Micro Determinants

• f growth and

productivity at the firm level Business models and practices; target groups

• BIF, Myanmar: Modern

management practices in garment manufacturers

• Katalyst, Bangladesh: Smaller

seed pack sizes for farmers

• 2. Donor and development agency

perspectives on using MSD to promote economic transformation

Using MSD for economic transformation

Strength of MSD is its pragmatism “Market systems is the art of the possible” “Industrial policy often leads to academic recommendations, MSD can help put those into practice” “[The] MSD approach can be instrumental to promote the concept of mixed economy where public and private sectors can work together in a sustainable way with the view to achieve economic transformation.”

“The mechanisms for doing [economic transformation] are well known in principle if difficult to implement in practice.”

Timmer and Akkus, 2008

Conclusion

a) Seed. MSD programmes can support disruptive innovations that seek to kick-start or contribute to the early growth of new, more modern economic activities and sectors. b) Scale. MSD can play a play a role in supporting sectors that are already rapidly emerging, such as ‘industries without smokestacks’ c) Support. MSD programmes can seek to diversify rural livelihoods (off-farm employment) whilst continuing to raise on-farm productivity, in order to manage the ‘downside risks’ of economic transformation

Currently: MSD programmes are contributing to some aspects of within-sector transformation, particularly value chain development and agricultural productivity. This will continue to be important for inclusive transformation in Africa, but there is an opportunity for MSD to play a number of other roles in supporting different types of transformational change

• 3. How MSD could be modified or

adapted to better promote economic transformation

1) Adapt how sector selection criteria are applied in practice in order to align with structural change objectives

2) Engage more in the ‘rules of the game’ and address political economy constraints to inclusive ET 3) Greater clarity on systemic change in the context of structural transformation 4) Use a broader range of facilitation tools 5) Deploy a more strategic approach to building portfolio within and between programmes

• 4. Recommendations, focusing on

practical implications and guidance for donors

• 1. Set clear expectations for how MSD programmes should ‘work politically’
• Avoid; Align; About or Absorb?
• 2. Ensure the ‘enabling conditions’ are in place for MSD programmes to support

economic transformation.

• Align impact expectations with timeframe and risk appetite; longer-term

programming; joined up programming across PSD and other disciplines; mechanisms to explore risk-sharing between donors and implementers

• 3. Conduct in-depth research and commission specific case studies on the impact of

market systems development on economic transformation processes

• Country case studies to contextualise systemic change; the political economy of

economic transformation; specific examples of how MSD programmes facilitated a transition to high-value added activities and increased competition

Synergies and complementarities with BER study

Synergies

• Targeting BER and MSD for ET
• MSD report suggests a focus on sectors with structural change

potential, as part of an approach to balanced portfolio construction

• BER report calls for ‘smart’ and coordinated action (between donors

and governments) to target specific sectors

Complementarities

• BER study mentions tools to assess productivity potential of sectors, which

can be integrated into MSD sector selection (‘opportunity’ criteria)

• MSD report calls for engaging more in the ‘rules of the game’, which will

take programmes into BE topics

• BER report recommends general theories of change for ET; which can be

built on by MSD programmes (with an inclusion lens)

• MSD report highlights a “black box” understanding of ET; BER report calls

for a common definition - which would help shared understanding

• BER report calls for incorporating ET into strategies; this would help frame
• pportunities for MSD to be used strategically to support ET

Implications for donors

• Definitions
• ToC and ‘impact thesis’?
• Learning on BE & MSD for ET – systemic change case studies of

successful transformation, where MSD was used to improve BE