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The strategic role of the private sector  in agriculture and rural development             Platform Knowledge Piece (Part ...
Rationale for working with private sector• Donors must understand market systems to avoid  using aid ineffectively or suff...
Donor approaches                                      Progression of PSD approaches•Structural Adjustment   • Research    ...
Summary of findings on impact (1)Macro-level interventions to improve enabling environment:• Structural adjustment: still ...
Summary of findings on impact (2)Market development:• Overcome barriers to market entry: some successes, particularly  wit...
Donor approaches:                                          An evolving agenda                                        GIZ  ...
Donor approaches:              Conclusions & Recommendations (1)1. Engage more closely with private sector:   Many traditi...
Donor approaches:               Conclusions & Recommendations (2)4. Support institutional innovation: Many donor   agencie...
ODI is the UK’s leading independent think tank oninternational development and humanitarian issues.We aim to inspire and i...
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The strategic role of the private sector in agriculture and rural development (Part 2)

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Join IFAD and the Global Donor Platform for the launch of the report: The strategic role of the private sector in agriculture and rural development. Jonathan Mitchell (ODI), lead author of Platform Knowledge Piece 3 will be joined in his presentation via video by the authors of the Tanzania, Thailand and Vietnam country studies: Frédéric Kilcher, Wyn Ellis and Pham Thai Hung. A Question and Answer session will follow each discussion point.

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The strategic role of the private sector in agriculture and rural development (Part 2)

  1. 1. The strategic role of the private sector in agriculture and rural development Platform Knowledge Piece (Part 2) Jonathan Mitchell Wednesday 28th March 2012 International Fund for Agricultural Development, Rome .
  2. 2. Rationale for working with private sector• Donors must understand market systems to avoid using aid ineffectively or suffering unintended consequences• Private sector may need support to implement market initiatives with pro-poor impacts• Donor funding is small compared with domestic sources of rural finance (private and public sector) so emphasis should be on how donors can leverage these other sources of finance to reduce poverty at scale• Donor funds are transient on a project and a recipient country basis (donors are withdrawing from Peru, Thailand and Vietnam) – the private sector is the key anchor for sustainability2
  3. 3. Donor approaches Progression of PSD approaches•Structural Adjustment • Research • Supporting producer • Corridors groups•Infrastructure • Extension Services • Policy engagement • Helping producers•Access to financial meet standards services • Input Subsidies • Core corporate strategy • Business dev • Value chain services development
  4. 4. Summary of findings on impact (1)Macro-level interventions to improve enabling environment:• Structural adjustment: still largely support but, in themselves, insufficient to generate private sector-led development• Infrastructure development: sustainability issues but road and ICT infrastructure have had striking results• Business development services: Many different approaches with varying success, sustainability often an issueDirect financial assistance to business:• Social venture & patient capital: Limited availability and donor acceptance of risk is limited• Challenge funds & loan/equity through DFIs: clear rationale & some success but donors concern with failure rate and poor M&E• Credit enhancement: mixed evidence on additionality & sustainability of credit enhancement mechanisms4
  5. 5. Summary of findings on impact (2)Market development:• Overcome barriers to market entry: some successes, particularly with using technology improvements to upgrade farmer output• Supporting producer groups to be viable: some good results if focus is on giving farmers access to viable value chains• Incentivising commerical sector to engage smallholders: Some significant impact at low cost, donors adopt facilitating roleDialogue & partnership with business:• Partnerships and strategic initiatives: Private sector takes a leading role, donors focus on improving development impact & sustainability of initiatives• Policy dialogue: importance of consultation mechanisms to promote market development success & sustainability5
  6. 6. Donor approaches: An evolving agenda GIZ partnershipsMarket development SDC WB/IFC CIDA FAO AusAid IDH Market transformation & EU Challenge funds DFID USAID Value chains
  7. 7. Donor approaches: Conclusions & Recommendations (1)1. Engage more closely with private sector: Many traditional approaches to ARD have failed and spending on private sector development is limited2. Strengthen knowledge sharing: Much hope in market based approaches, although limited evidence of impact or learning from each other3. Challenge traditional ways of delivering aid: Different donors are in different places on this agenda – and the enthusiasm for private sector engagement varies
  8. 8. Donor approaches: Conclusions & Recommendations (2)4. Support institutional innovation: Many donor agencies are not well equipped to work with the private sector and partner with DCED5. Evidence supports porfolio approach: There is evidence that donors can help private sector development both with short-term market development initiatives and also ‘hard’ infrastructure6. Impact at scale: The prospect of working more closely with the private sector is more effective aid and poverty reduction at scale through leveraging in additional finances
  9. 9. ODI is the UK’s leading independent think tank oninternational development and humanitarian issues.We aim to inspire and inform policy and practice toreduce poverty by locking together high-qualityapplied research and practical policy advice.The views presented here are those of thespeaker, and do not necessarily represent the viewsof ODI or our partners. 111 Westminster Bridge Road, London, SE1 7JD T: +44 207 9220 300 www.odi.org.uk Jonathan.Mitchell@odi.org.uk

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