Welcome to the Making Markets Work for the Poor (M4P) site of the e+i network. M4P is an overarching approach being used in different topics such as private and financial sector development and vocational skills development.
On this site you will find an
introduction into the topic, and will read about SDC's approach and
M4P project experiences. You can find much more information on the M4P approach following the links to other websites provided under the
links section.
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Introduction to the topic
In order for SDC to increase the outreach and the sustainability of its interventions e+i promotes a powerful systemic framework for understanding market systems and guiding interventions for more inclusive markets.
The terms making markets work for the poor (M4P) and market development have emerged over the past eight years. The origins of M4P are diverse, but essentially emerge from the real world experiences of numerous development agencies. This experience has been characterized by recognition that many interventions have not succeeded in producing sustainable outcomes which have incorporated the poor within the economic mainstream, instead often perpetuating their exclusion, vulnerability and dependency. They have failed to make markets work for the poor.
The main causes of these problems were seen to be (a) a failure to understand market systems and where the poor fit in to them and (b) inappropriate interventions, which actually distorted and displaced market mechanisms and institutions, rather than promoting local incentives and ownership and hence sustainability.
M4P is not a precise science or rigid methodology. Its key features include:
- A starting point which recognizes that the poor exist as actors within wider market systems - being as entrepreneurs, employees or consumers - and that the objective of development interventions is to stimulate those market systems to work more equitably for disadvantaged groups.
- A sound understanding of market systems as the basis for all interventions; why they don't currently work for the poor and how they might work more effectively in the future. Market systems is understood as a more realistic and nuanced picture of markets than that of classical economics' emphasis on spot transactions between private actors.
- An explicit commitment to sustainability, which focuses on stimulating and aligning the incentives and capacity of local institutions so that they play more effective roles in market systems.
- An explicitly temporary, finite role for development agencies, where they do not perform market roles directly, but try to facilitate indigenous market actors to play more effective roles in market systems.
- Intervention approaches which are sensitive to local market conditions and appropriate for objectives of sustainability.
In simple terms M4P can be seen as comprising three elements which can add value to private sector concepts and approaches like value chain analysis, clusters and networks, enabling environment or local economic development:
- A world view or rationale for thinking about poverty reduction.
- A framework for understanding the market systems in which the poor exist.
- Guidance for intervention practices.
It is important to recognize that M4P is not a substitute for these concepts and approaches; indeed it has grown out of some of their experiences. The three elements of M4P are overarching; they help us position different concepts and approaches into a bigger picture; they help use different concepts and approaches to better understand the poor in market systems; and they help us determine our role as development agencies.
SDC's approach
SDC promotes in his work the better understanding of market systems according to the Making markets work for the poor (M4P). This provokes a range of implications and opens opportunities for implementation.
1.
Facilitating change processes - M4P requires that agencies play a facilitating role as external players that seek to catalyze others in the market system while not becoming part of it themselves (facilitation is a temporary role).
2.
Working with development partners to make systems work as per the Paris Declaration on improved Donor Harmonization - Working systemically means working more strategically and coherently, coordinating and harmonizing efforts with development partners.
3.
Address rural poverty through working in interconnected markets - Poverty is most entrenched in rural areas but the solution to reducing poverty may well lie beyond rural territories. Building better market and marketing infrastructure between rural production and urban centers is critical for improved market access and incomes of poor producers. Working for the rural poor, might not mean working solely with the rural poor.
4.
Measuring results and impacts - Measuring system level change is, by nature, more challenging given the wider range of factors and influences which abound. It is however more likely to be able to demonstrate long term poverty reduction effects. SDC is therefore committed to working with and supporting internal and international efforts in this area.
As an overarching framework M4P does not necessarily replace other specific methodologies and approaches but provides a transparent and multi-disciplinary framework within which they can be utilized and adopted according to their utility and needs.
