This document details a session focused on utilizing a market systems approach to foster inclusive growth through strategic interventions in market functions. Participants are encouraged to identify key areas for improvement within the market system, define desired changes over three years, and discuss leveraging partnerships to facilitate behavior changes among market players. The session emphasizes the importance of understanding systemic constraints, partner selection, and implementing effective market relationships to achieve better economic outcomes for the poor.

1. Session
6:
Market
Systems
Approach

2. 1. Revisit
your
donuts
from
day
1
2. IdenHfy
the
areas
where
you
are
working
in
the
market
system
–
these
are
the
funcHons
of
the
system
you
circled
in
the
day
1
exercise.
Focus
on
the
two
funcHons
you
think
are
most
important
for
inclusive
growth
3. For
each
of
the
two
funcHons,
define
the
three
most
important
changes
in
these
funcHons
you
would
like
to
see
over
the
next
three
years.
4. How
do
you
think
these
changes
will
contribute
to
inclusive
growth
over
Hme?
Group
Task
SUPPORTING
FUNCTIONS
Informa.on
Demand
CORE
Standards
RULES
Supply
Laws

3.
Strategic
Framework:
Musika
Poverty
reduc-on
Economic
ac-vi-es
of
the
poor
are
yielding
be=er
returns
(income
+
jobs)
because
they
are
part
of
a
market
system
that
is
growing,
inclusively
Improved
enterprise
performance
Be=er
markets
–
rela-onships,
rules,
incen-ves
and
capaci-es
-­‐-­‐
allows
economic
ac-vi-es
of
the
poor
to
be
managed
for
be=er
returns.
Market
system
change
Markets
with
stronger
capaci-es
to
learn,
adapt
and
change
increases
growth
and
access
to
opportuni-es
among
poor
people
(and
everyone
in
the
market).
Systemic
interven-on

4. The
basic
diagnosHc
process
Diagnosis
Symptoms
Poverty
reduc-on
Improved
enterprise
performance
Market
system
change
Why?
The
poor
and
their
context
Specific
market
system
Systemic
constraints
Causes
Feasibility
Focus
of
intervenHon
Systemic
interven-on
Springfield
Centre|Making
Markets
Work

5. A
story:
Community
based
tourism
in
Africa
SUPPORTING
FUNCTIONS
Finance
Mediation Maintenance
& construction
Negotiation
Infrastructure
Booking
Marketing
Information
CORE
Community
enterprises
Local
tourism
industry
Wider
tourism
industry
Laws
Regulations
Standards
Informal rules &
norms
RULES

6. What’s
going
on?
Functions
Players
Who does?
Who pays
NGO / PS
Donor/PS internship
Advocacy
NGO
Donor / members
Finance
NGO
Donor
PS
Donor
NGO / PS
Donor
NGO
Donor
NGO / PS
Donor
Information
NGO
Donor
Standards
NGO
Donor
NGO / PS
Donor
PS
Donor
Conflict arbitration
NGO
Donor
Regional planning
NGO/PS/Govt
Donor / Govt
NGO
Donor
Business training/advice
Construction & maintenance
Joint venture mediation
Booking
Marketing and branding
Market research
Legal services
Advice to government

7. Sustainability
Strategy
Poverty
reduc-on
Improved
enterprise
performance
Market
system
change
Resources
interventions often
miss this link
Ac.vi.es
Systemic
interven-on
Springfield
Centre
|
Making
markets
work

8. Who
Does/Who
Pays
• Musika
matrix
• Set
up
slide
for
exercise

9. FacilitaHon
Principles:
Why
To increase the performance of the whole industry over
time to:
o Meet/exceed
changing market requirements (REFER BACK
earlier slide on performance)
o Foster
§
§
§
a systemic change process towards:
Broader and deeper commercial relationships
Ongoing innovation and upgrading
Benefit flows that drive better relationships and innovation
o Bring
about inclusive growth

10. Is
this
facilitaHon
of
market
system
change?
• Task
(class
discussion)
– Patrick
Boateng,
project
manager
of
the
Rice
Value
Chain
Project,
reports
to
donor
Shiela
Quayson
on
the
project’s
achievements
in
meeHng
annual
targets
and
what
lies
behind
their
success
– Can
this
case
be
described
as
“facilitaHon”?
Give
reasons
why/why
not?

11. FacilitaHon
Principles
STRATEGY:
Use
levers
to
catalyze
behaviour
change:
–
Players
see
the
value
(incenHves)
of
playing
by
different
rules/norms
–
Players
have
the
capacity
and
willingness
to
iniHate
the
change
Build
momentum
to
sustain
a
beder
performing
system
Breadth
(more
coverage)
–
Depth
(norms
more
deeply
rooted)
–
TACTICS:
Foster
effecHve
market
rela-onships
and
ownership
by:
-
-
-
Buying
down
risks
in
the
short
term
Encouraging
self
selecHon
to
test
ownership
ConHnually
test
durability
of
changes
Deploy
resources
of
appropriate
intensity:
-
-
Roles
in
relaHon
to
market
actors
Resources
in
relaHon
to
market
norms

12. Facilitation Strategy: Leverage
…and here
Finding
Leverage:
• Points
in
the
market
system
than
can
affect
behavior
of
the
whole
industry
• TargeHng
feasible
opHons
for
change
Input
Supply
SUPPORTING
FUNCTIONS
CORE
RELATIONSHIPS
ProducHon
Processing
Wholesale
Retailers
CORE
FUNCTIONS
RULES
Intervening
here
Should
affect
here
…and here
12

13. Leverage:
Finding
It
Rela-onship
Structures
§ Economic
(geographic
nodes
in
the
system)
§ Social
(local
leaders,
key
influencers)
Rules
§ Formal
(standards,
regulaHons)
§ Informal
(aftudes,
norms)
Knowledge
Flows
§ Exchange
mechanisms
for
knowledge
and
skills
embedded
in
commercial
transacHons
§ Media
§ Formal/informal
networks
13

14. Exercise:
Working
with
Leverage
Orienta-on:
There
are
four
(4)
different
scenarios.
Each
scenario
describes
an
opportunity
or
a
problem
that
could
offer
the
project
a
means
to
leverage
wider
systemic
change
in
favor
of
market
system
improvement
while
also
decreasing
the
need
for
project
resources.
§ Maize
Farmers
with
Cash
Flow
Problem
§ Maize
Trader
Needs
to
Source
Much
Larger
Volumes
of
Maize
§ Government
Mandate
to
Increase
Food
Security
in
Rural
Areas
§ Large
Maize
Miller
Enforcing
Outgrower
Contracts
Task:
Read,
discuss
the
scenarios
and
answer
two
quesHons.
1. What
type
of
leverage
does
the
scenario
present?
2. Which
opHon
will
leverage
pro-­‐poor
systemic
change?
– a
beder
choice
– no
clear
choice
– no
feasible
opHon
3.
Be
prepared
to
present
your
choices
in
plenary.

15. Facilitate
Market
System
Change
Market not working
for the poor
Entry
Trial and pilot
Crowding-in
Exit
Enabling
Rules
CapaciHes/PracHces
RelaHonships
Aligned
IncenHves
&
Ownership
MulH-­‐faceted
LEVERAGED
IntervenHons
DEPTH
MOMENTUM
Towards
CROWDING
IN
BREADTH
Market working
better for the poor
Transactions &
benefit flows
Outreach &
inclusion
Appropriate
functions/players
Innovation &
responsiveness

16. FacilitaHon
tacHcs
OBJECTIVE
WHY:
To
leverage
a
change
process
à
crowding
in
INFLUENCE
HOW:
Facilitators
must
influence
behaviour
of
market
players
TACTICS
Smart
tacHcs
are
crucial
to
successful
facilitaHon
Iden-fica-on
Iden.fying
the
right
‘partners’
Rules
of
Engagement
Intensity
of
Resource
Use
Offer
Suppor.ng
partners
in
ways
which
alter
behaviour
posi.vely

17. Partner
SelecHon
Exercise
(1)
TASK:
• Revisit
your
donuts,
again
• Frame
the
objecHve
of
one
of
your
intervenHon
areas
• What
changes
do
you
want
to
bring
about?
• Who
are
your
partners
for
this
intervenHon?
– IdenHfy
up
to
3
exisHng
partners.
• Why
did
you
choose
these
partners?
– List
your
partner
selecHon
criteria.

18. SelecHng
a
partner
Leverage
Poten-al
1.
Point
for
achieving
large-­‐scale
change
Momentum
Poten-al
2.
Indicates
support
for/or
resistance
to
desired
change
3.
Indicates
competence
4.
Indicates
influence
on
broader
system
change
high
HIGH
WILL
|
LOW
SKILL
Capacity
problem?
HIGH
WILL
|
HIGH
SKILL
Why
aren’t
they
doing
it
already?
Why
aren’t
they
influen2al
in
the
system
?
WILL
Can’t
avoid
them?
low
Incen2ve
problem?
LOW
WILL
|
LOW
SKILL
low
LOW
WILL
|
HIGH
SKILL
SKILL
high

19. Partner
SelecHon
Exercise
(2)
• Re-­‐assess
your
3
partners
using
the
will/skill
matrix
• Re-­‐consider
your
choice
of
partner:
– ConHnue
as
is
– ConHnue
but
change
– Drop/Add
• Will
the
focus
of
your
partnership
change?
• Use
worksheet
(2)
to
record
your
discussion

20.
Summary:
Using
Partner
SelecHon
Criteria
• To
understand
partner’s
posiHon
to…
– Leverage
wider
system
change
thru
firm
behavior
– Versus
leverage
project
outcomes.
• To
assess
partner’s
readiness
to
test
new
business
aftudes/pracHces…
– Longer
term
growth
vs.
short
term
gain.
– Build
relaHonships
vs.
win
the
transacHon
– Separate
business
from
family
dynamics