Presentación realizada por Mar Maestre, del Institute of Development Studies de la Universidad de Sussex en el Máster en Estrategias y Tecnologías para el Desarrollo en mayo de 2017

1. Market Systems
Approaches
to Poverty reduction
Mar Maestre
m.maestremorales@ids.ac.uk

2. • Unpack assumptions behind Private Sector Development
• Understand concepts & principles of ‘market systems
approaches’
• Be critical with the approach and assess real examples from
current practice.
Agenda:
• Business and Development
• Value chains
• Concepts of ‘market system’
• Case studies
Session objectives

3. What are the goals of International Development?

4. Business as a Development Actor
Organisations that sell goods and services as the prime means of generating revenue.
What is “business”?
Domestic Firms
Transnational
Companies
Informal Sector
Formal Sector
Social Enterprises
For Profit

5. “What does it mean to say that "business" has
responsibilities? Only people can have
responsibilities. The social responsibility of
business is to increase its profits”
- Milton Friedman
“Making rich people richer doesn't make the
rest of us richer”
- Ha-Joon Chang
What role for business? And other actors?

6. How can business make a difference?
Three approaches to understand the role of Private Sector in Development
• Untapped business
opportunities
• Address market and/or
government failures.
• Address negative
externalities
• Regulate markets
• Stimulate socially beneficial private activities that are currently under‐supplied
• Make investment in such activities more attractive to business.

7. Key questions
• How can businesses help to improve development outcomes?
• How can governments ensure that markets work effectively to
more effectively to poor people?
• How can governments and businesses work together to
improve opportunities for the poor?
versus

8. Value Chains

9. What are value chains?
“The sequence of activities required to make a product or a
service”
• Tool to explore the links created between companies
through the production process
• Lenses:
• Governance - distribution of power and/or control along
the chain
• Upgrading (economic / social) opportunities for
improvement due to participating on the chain
• Value Distribution: who gets what? do value chains lead
to poverty reduction?

10. What are value chains?
Source: Capturing the Gains

11. Moving beyond value chains
Critique to value chain or other tradition PSD approaches
• Tend to be firm-centred approaches - often insufficient
• Power dynamics within value chains can perpetuate poverty,
creating extra work without contributing to empowerment
• Often use linear models –
• Eg. Women entrepreneurs receive training that allows
them to engage in inclusive value chains
[Contestable assumptions - that women will have enough
free time to attend training, given care responsibilities
outside the paid economy]

12. Market systems
development
One approach to Private Sector Development: from
‘more’ to ‘better’

13. ‘A system is a collection of parts that, through their
interactions, function as a whole.’
The whole is more than the sum of the parts
In markets, we think of a set of actors, activities and
settings that (are perceived to) have an influence in or be
affected by a given problem situation
Business don’t function alone, they
operate within a system
13
What is a system?

14. 14
https://www.youtube.com/watch?v=WfyWgp95kgA&index=4&list=PLxRQR5u
7p9sceSk8hpbpuwxGE2nEz96Lc
Why Systems?
From linear models to systems thinking

15. Market Systems framework
Source: The Springfield Centre (2015)
Market Players
Government
Informal Networks
Private Sector
Civil Society Organisations
Not-for-profit sector
Communities
Delivering and resourcing different functions

16. Principles of market systems
approaches
GOAL: TRANSFORM THE SYSTEM TO REDUCE POVERTY
• address root causes not just the superficial problems (symptoms) -
always think about how the system will work after
• Recognise markets as complex adaptive systems with multiple
actors – dynamic and unpredictable. Experiment, learn, adapt.
• Leverage the incentives and capabilities of system actors by playing
the role of facilitator / catalyst - understand the interests and
capabilities of system ‘actors’ then look for opportunities to align
these with poverty reduction objectives

17. Approach
1. Analysis - market actors (government, company, community
leaders), functions, norms and rules, gender analysis
2. Identification of root causes
3. Seek entry points – assess incentives and capabilities – who to
partner with? (look for where the energy and ideas for
innovation is coming from / ‘quick wins’)
4. Design and facilitate interventions – often experimental and
several in parallel – act as broker to change relations
5. Embrace complexity – change is not straightforward or
predictable – you need time, curiosity and experimentation.
1. Gather data, assess, learn, adapt to reality, be flexible
6. Create spaces for dialogue and relationship building

18. Participatory mapping

19. Example
Private Enterprise Programme Ethiopia (PEPE)
• PEPE works with the garments sector in Ethiopia.
• Root causes:
• Lack of skilled workers
• High turnover of employees
• Lack of relevant training programmes as sectoral constraints
• Entry point – firms that provide training – in a sector that has the
potential to impact women – garments factories.
• Actors capabilities and incentives
• Training providers to design courses tailored to women
• Coordinate with factories to ensure employment
• Support factories establish a human resources function to better
retain skilled women employees.
• Outcome: improved coordination between training providers and
garments factories providing relevant training to women, new
customers for trainers and a stable workforce for factories.

20. QUESTIONS?

21. Case studies and thinking
systemically

22. Case Studies
• GOAL Water supply in Uganda
• ELAN Water Transport in DRC
• Alliances Livestock in Georgia
• Katalyst
• Mini seed packets in Bangladesh
• Contract farming
• Potato farming

23. A brief intro to ‘complexity’
Simple Complicated Complex
Baking a cake Sending a
rocket to the
moon
Raising a child
One recipe to
follow for all
cakes
Different parts
that require
expert-
knowledge
approaches
Past
experience
and expert
advice helps-
no guarantees
The process
and results are
generalizable
and can be
solved with a
standard
procedure.
Success with
one rocket
provides
reasonable
assurance of
success with
future rockets
Success in
raising one
child is no
guarantee of
success in
raising another

24. System boundaries and assumptions
• We often draw
boundaries around the
factors we are
considering, though
these boundaries
sometimes need to
shift...
• Being explicit about
your impact pathway
and assumptions which
underpin them.
24

25. Thinking systemically
Systems thinking entails considering:
• The whole
• The parts
• Relationships – patterns, feedback loops, etc.
• What else you might be missing
• Your own position and perspective
Example questions...
- How can a particular goal be best achieved under specific circumstances?
- Who are the stakeholders related to this issue? What are their needs? What
are their worldviews?
- What is my own perspective? How does this enable me? How does it
constrain me? How does it affect my assumptions?
- What are we not seeing that we need to see?
- How would others see the market system differently?
- Who has the power to enable our goals to be reached? 25

26. Case Studies
• Read the case and Conduct analysis
• Identify key assumptions which guide the programme
• Assess the potential impacts (+/-) for the poorest and
most marginalized
• Assess the potential for market systems change
• Identify potential unintended effects (+/-)

27. • Markets are ‘complex’
• Markets are dynamic – they are always changing
• They consist of a large number of actors,
institutions and issues
• We cannot know everything at any given moment
• Poverty is ‘complex’
• Poverty does not just relate to incomes or to
production, but the intersection of social,
economic, environmental and cultural factors
• Issues related to poverty are often changing
• We cannot know everything at any given moment

28. Recap: Potentials and Limitations of
Market Systems Approaches
Potentials
• Everyone is affected by markets – markets are
everywhere
• Market-based approaches can have lasting effects at
large scale
• Markets can provide goods and services more
efficiently than governments or NGOs

29. Recap: Potentials and Limitations of
Market Systems Approaches
Limitations
• Might not always reach the poorest / most marginalized
• Might not always be appropriate for the poorest / most
marginalized
• Interventions might not always address the root causes of
poverty
• Can be subject to the framings (and interests) of donors,
NGOs and businesses
• It is not always possible to achieve alignment between
business interests and social or ecological interests

30. In sum…
• Making (which) markets ‘work’ for (what)?
• Assuming private sector / business activity will be the
solution
vs
• Knowing that markets have influence and engaging with
markets to bring about a change

31. Approaches for understanding and
engaging in complex (market) systems
• Incorporate a plurality of perspectives
• People living in poverty
• Beneficiaries
• Non-beneficiaries
• Stakeholders
• Informants who do not have a stake in the issue
• Look for emergent signs of change
• Does not need to be concrete change yet
• Be open to the unanticipated
• We cannot anticipate everything in advance – systems are
complex

32. • www.beamexchange.org
• http://policy-practice.oxfam.org.uk/publications/systems-thinking-an-
introduction-for-oxfam-programme-staff-579896?intcmp=RM_P&P
• http://www.springfieldcentre.com/wp-content/uploads/2017/05/2017-05-SDC-
Operational-Guide-for-the-M4P-Approach-Second-Edition-2015-es.pdf
• Burns, D. (2007). Systemic Action Research: A strategy for whole system change.
Policy Press.
• Byiers, B., and Rosengren, A. (2012). Common or conflicting interests: Reflections
on the Private Sector (for) Development Agenda, Discussion Paper 131
http://ecdpm.org/wp-content/uploads/2013/11/DP-131-Conflicting-Interests-
Private-Sector-Development-Agenda-2012.pdf
• Humphrey, J., Spratt, S., Thorpe, J. and Henson, S. (2014) Understanding and
Enhancing the Role of Business in International Development: A Conceptual
Framework and Agenda for Research, IDS Working Paper 440
http://www.ids.ac.uk/publication/understanding-and-enhancing-the-role-of-
business-in-international-development-a-conceptual-framework-and-agenda-
for-research
• Kaplinsky, Raphael and Morris, Mike (2000), A HANDBOOK FOR VALUE CHAIN
RESEARCH. https://www.ids.ac.uk/ids/global/pdfs/VchNov01.pdf
Resources

33. Thank you
Mar Maestre
m.maestremorales@ids.ac.uk