The 'mafi-festo' outlines principles for inclusive market development, emphasizing a shift from direct interventions by NGOs to facilitation that harnesses the dynamics of market systems. The document synthesizes discussions into key themes, including the importance of system-targeted strategies, contextualized interventions, and building capacities in systemic thinking. It aims to bridge the gap between existing practices and effective facilitation methods to enhance market functionality and reduce poverty sustainably.

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The MaFI-festo: facilitation-friendly principles and rules for inclusive markets<br />Working Paper (Revision 15 June 2011)<br />Introduction<br />The MaFI-festo is a learning and advocacy process involving practitioners in markets and livelihoods development as well as donor agencies and NGOs to promote facilitation-friendly rules and principles for inclusive market development in the international aid system. <br />The objective of this paper is to serve as a reference point for practitioners, donor organisations, NGOs and other social development investors to engage in virtual and in-person dialogues to identify areas where change is possible and to come up with joint action plans to achieve it.<br />Background<br />The increased use of facilitation in development initiatives and especially in inclusive (or pro-poor) market development initiatives is based on a paradigm shift away from direct inputs and service provision by NGOs and towards the creation of appropriate conditions for public and private stakeholders to drive structural changes in the market system easier, faster and more cost-effectively. <br />Despite some donor-led initiatives with a facilitation-centred discourse, there are still rules and principles in international aid that hamper or are not conducive to effective facilitation. Practitioners and donors need to work together to close the gap between the discourse and real, effective facilitation of the ground that can unleash the resources, creativity and leadership of public and private market stakeholders to make markets work better to reduce poverty at scale and environmental degradation. There are political and technical challenges along the way but taking no action is not an option if we are to achieve the MDGs and other development objectives where markets play a crucial role.<br />Firstly, this paper synthesises the discussions held by MaFI members since July 2010 into six discussion clusters. Secondly, the paper presents the discussions in more depth, indicating issues where a general consensus was found and where more discussion is needed. Finally, the paper synthesises the issues in a table comparing the current with the ideal situations.<br />Six major thematic clusters so far:<br />The discussion on MaFI during the last year touched on different aspects and topics about “good” facilitation for inclusive market development. The major insights of the discussion can be grouped under six clusters:<br />1. Markets are dynamic systems: approach with care<br />Market systems should be seen and approached as dynamic systems, exhibiting non-linearity, an ability to learn and interconnectedness – markets are so called Complex Adaptive Systems (CAS). This makes it difficult to predict the effects of an external intervention. It is also not possible to change one aspect of the system without having an effect on other aspects.<br />2. Target the system, not the poor<br />Because of the dynamics and interconnectedness of a system, it is almost impossible to predict who will profit the most from an intervention. A rigid focus on the poor can often lead to interventions that are not adapted to the system’s reality with difficulties in reaching scale and sustainability. Interventions need to aim at provoking changes in the system to make them more inclusive.<br />3. Contextualise interventions<br />Because every market is different, it is extremely important to develop tailor-made solutions rooted in the respective context and not to rely on ‘best practices’ from other contexts. Because of the inherent dynamics of market systems, it is important to embrace uncertainty and have the necessary flexibility to improvise and react on new insights and experiences.<br />4. The solutions have to be driven by the system<br />Good facilitation needs to recognise available potentials and use available energy from within the system. The most adapted solutions can mostly be found within the system, based on existing capacities and incentives. Strengthening local innovation capacity and adaptability to changing environments has the highest probability of success in a sustainable way.<br />5. Measuring what matters<br />Measuring change in a dynamic context is a big challenge for development practitioners. Impacts can often only be seen after the lifetime of a project. Measuring project impacts in terms of achieved outcomes does not make sense in this context. More innovative ways of measuring change in terms of increased ownership, leadership, inclusiveness, adaptability, etc. need to be developed.<br />6. Building the capacities of development practitioners in systemic thinking<br />Understanding dynamic markets requires skills and knowledge which are not readily available to most people on the ground or on management level. A strong thrust towards capacity building is needed to achieve a breakthrough of the new facilitation paradigm.<br />Practical implications<br />The presented major principles of the market system development have some very practical implications that were brought up by the participants of the discussion.<br />Beneficiary selection<br />The discussion about beneficiary selection started with the question of whether self-selection of beneficiaries as opposed to donor prescribed criteria was necessary to reach sustainability and scale. Prescribed beneficiary selection, strictly followed, is leading to a very narrow range of possible beneficiaries, usually the “poor” and “very (or extreme) poor”. While no one is contesting that the poor and very poor should ultimately profit from the interventions, it was questioned whether a direct and exclusive focus on this target group would lead to a sustainable change at scale. <br />While some of the participants clearly favoured the notion of self-selection as being a “critical methodology to ensure appropriate interventions and ownership over promoted changes”, others pointed out a possible combination of presumed self-selection that is driven by a specific target group in mind: “In many cases, we can craft our self-selection processes so that target beneficiaries are more likely than others to opt in to interventions. Selection criteria are designed to be particularly appealing or relevant to target populations but without intentionally excluding non-target populations.”<br />There was a general agreement, however, that a strict selection of beneficiaries by development agencies would in most cases not lead to sustainable changes for this particular group. Overcoming the marginalisation of one specific group cannot be achieved by working only with them. “For every beneficiary group that you specify, you might just be reducing your impact, leverage and long term influence on the system,” as it was clearly pointed out by one MaFI member.<br />Especially when embracing the fact that market systems are dynamic systems with ever changing non-linear relations, it becomes extremely difficult to predict who will benefit the most, first, or the longest.<br />Direct vs. indirect interventions<br />Very strongly connected with the discussion about beneficiary selection, the question came up of whether conventional development projects are too strongly focusing on direct interventions to achieve the intended changes as compared to using indirect ways of achieving changes in a more sustainable way.<br />The discussion was brought to a point by one of the participants asking: “When we say ‘pro-poor development’, do we mean that poor must directly benefit, eventually benefit, disproportionally benefit?”<br />The point was further illustrated by a quote from a recent book of John Kay: “Directness blinds us to new information that contradicts our presumptions, fools us into confusing logic with truth, cuts us off from our intuition [...], shunts us away from alternative solutions that may be better than the one we're set on, and more [...].”<br />Definition of poverty or how to approach the poor<br />One of the important questions that came up during the discussion and that is very strongly related to the principle of using the available energy and available potentials of the system, is how we approach the poor: “Is there not also a risk though that if you label me as Poor that you might subconciously consider me as helpless and unable to develop or contribute meaningfully to creating a solution?” (sic). “The risk seems to be that although we don't mean to do it, by establishing in our minds that people are ‘Poor’ we can assume that people in communities struggling in this way don't have the capacity to create change and this is a mistake.”<br />Connected to this discussion is also the fact that in many contexts, practitioners are confronted with the statement: “there are no entrepreneurs in this community”. Experiences from the practitioners show, however, that if carefully assessed, motivations of individual people are a very powerful driver of change in communities.<br />Moving the discussion forward<br />Based on the six clusters identified and in their practical implications, a list of issues is presented in the table below. The table gives an overview of current and desired rules, principles and practices as identified by MaFI members.<br />IssueCurrent practiceIdeal practiceIntervention focusFocusing interventions directly on beneficiaries (the “poor”).Other stakeholders are considered as static means to benefit the poorMore focus on indirect interventions, i.e., on actors who can drive changes in the market systemsBeneficiary selection and poverty focusRigid criteria to select only the poor as direct beneficiaries.The donor and the “implementer” decide who should participate in the programTop-down, static selectionBeneficiaries “play” the system: dancing to the tune of the program until it finishes and then return to business as usualRecognition that also non-poor actors need to benefit from market development for it to be ‘pro-poor’ and sustainable and have impact at scale. At the same time, there needs to be more emphasis on effective strategies for integrating very poor and other vulnerable populations.Selection based on a mix of needs, interests, potentials and passionsGeographic focus and contextualisationVery prescriptive calls for large geographic regions leading to generic interventions.More consideration of local contexts leading to more adapted and sustainable solutions.Project management practicesRigid project cycle management.Beneficiaries become the subject of linear, “engineering-like” management practicesThe donors and implementers try to remain outside the process of change (“we invest so they can change, improve, develop…”)More flexible project schedules, logframes, budgets and M&E systems adapted to the dynamism and unpredictability of market systems. We (donors and facilitators) change, learn and grow through our interventions.Beneficiaries seen in the context of a system of relationships that are alive and have the potential to evolve in unpredictable ways.M&E as a means to improving facilitation but also to promote mutual learning between all actors involvedCapacity building in systemic approachesCapacity building as sole responsibility of implementing agency.More investment from donors in organisational learning and skills of field staff.Learning (capacity building, training, skills development, etc.) is “sourced” from within the system itself.Impact assessment and M&ERigid focus on accomplished project outcomes and impacts. M&E used solely (or mainly) as a means to reporting to donorsFocus on processes initiated by the system with a focus on increased ownership, leadership, inclusiveness, adaptability, etc.M&E as a means to improving facilitation but also to promote mutual learning between all actors involved<br />Decision making practicesFunds disbursed on basis of ex-ante analysis. Once program is running, flexibility, improvisation and adaptability are diminished by lack of trust and bureaucracyMore investment to promote evidence based decision-making before and during implementation.In-built flexibility for facilitators to improviseTrust-building mechanisms between donors and facilitators (certified facilitators and NGOs?). Can a balance between more freedom to improvise and higher accountability and tougher penalties for abuse of trust be achieved? Is it politically viable?RelationsHierarchical power relations between the “funders” and the beneficiaries (“recipients”)High protagonism and visibility of the implementers and donorsOne way accountabilility (bottom up)Relationships of partnership or alliance between facilitators, donors and market stakeholdersThe facilitator remains in the backstage; surrenders control of the process; and gives the spotlight to the actors driving changeMultiple accountability paths: not only up-down-up between donors, facilitators and stakeholders but also horizontally amongst stakeholders<br />Illustrating the discussion<br />This illustration gives an insight into the discussion following the four main clusters as presented above. All boxes are anonymised quotes from the discussion.<br />39941503175Understanding dynamic markets requires skills and knowledge which is not readily available to most people on the ground because headquarter staff and senior staff are putting out too many fires and have too much work on their shoulders.Understanding dynamic markets requires skills and knowledge which is not readily available to most people on the ground because headquarter staff and senior staff are putting out too many fires and have too much work on their shoulders.193675-105410We also have to do a lot of work on training development practitioners involved in market development of the principles of markets and other transaction mechanisms. The policy documents used at the top of the organisations are excellent, but a lot gets lost in the downward communication within organisations (and their implementing service providers).We also have to do a lot of work on training development practitioners involved in market development of the principles of markets and other transaction mechanisms. The policy documents used at the top of the organisations are excellent, but a lot gets lost in the downward communication within organisations (and their implementing service providers).43351456722745Donors should consider and view the ‘project’ in the background of ‘overall process’Donors should consider and view the ‘project’ in the background of ‘overall process’285751018540Too often projects commit to indicators and targets - whether self-imposed or imposed by donors - during the design process that are poorly aligned with their ultimate needs for project management or the realities of the people we are saying we will benefit.Too often projects commit to indicators and targets - whether self-imposed or imposed by donors - during the design process that are poorly aligned with their ultimate needs for project management or the realities of the people we are saying we will benefit.-850902919095Measuring impacts in terms of some finished output or outcome does not make sense in this context. Perhaps measuring trends towards increased ownership, leadership, inclusiveness, and adaptability of the system could be more productive?Measuring impacts in terms of some finished output or outcome does not make sense in this context. Perhaps measuring trends towards increased ownership, leadership, inclusiveness, and adaptability of the system could be more productive?23501357268210Is it possible that if we got really good at valuing everything that people in these situations had to offer, that if we really disciplined ourselves to get very good at supporting them in releasing their ideas and energy and some of the more difficult barriers they may come across, that we may not have as much to do?Is it possible that if we got really good at valuing everything that people in these situations had to offer, that if we really disciplined ourselves to get very good at supporting them in releasing their ideas and energy and some of the more difficult barriers they may come across, that we may not have as much to do?9836156450965Start and end with the people. Don't 'let them think it's their idea', let it be their idea, let them do the thinking and take the action - just open the space for them and support them in removing some of the (few) barriers which they themselves haven't been able to remove.Start and end with the people. Don't 'let them think it's their idea', let it be their idea, let them do the thinking and take the action - just open the space for them and support them in removing some of the (few) barriers which they themselves haven't been able to remove.-1333505120005Leverage existing energy and to affect the system (thus changing the momentum of the system but starting from what we have.)Leverage existing energy and to affect the system (thus changing the momentum of the system but starting from what we have.)50196752608580I think as a field we are moving into the complicated and complex as we are understanding that we are in need to collect the data to make the decisions on how to facilitate market development rather than remain in the simple area where best practices and pat responses can be replicated across regions and contexts.I think as a field we are moving into the complicated and complex as we are understanding that we are in need to collect the data to make the decisions on how to facilitate market development rather than remain in the simple area where best practices and pat responses can be replicated across regions and contexts.46799501358900Our interventions must be recognised as change impulses into a complex, non-linear and dynamic system.Our interventions must be recognised as change impulses into a complex, non-linear and dynamic system.49733205390515Markets are embedded in social contexts which have histories. And the histories of developing countries are very turbulent, most times violent.Markets are embedded in social contexts which have histories. And the histories of developing countries are very turbulent, most times violent.26517601059180Capacity building in systems thinkingCapacity building in systems thinking14331952169160Solutions have to be driven by the systemMeasure what mattersSolutions have to be driven by the systemMeasure what matters26517605252085Contextualise interventionsContextualise interventions38588952169160Markets are dynamic systemsTarget the system not the poorMarkets are dynamic systemsTarget the system not the poor23914103032125Principles for market system developmentPrinciples for market system development<br />