While MDF's operations initially focused on supporting individual businesses, it has increasingly incorporated functions of a broader business engagement hub in order to develop a more connected economy. Specific initiatives include:
Promoting information exchange and commercial linkages between MDF partners;
Facilitating support services that cater to common needs across businesses and engagement areas, such as finance and skills development; and
Supporting better linkages between businesses and the government to enable demand-led reforms of the enabling environment for private investment
As highlighted earlier, innovative entrepreneurs in Timor-Leste typically integrate a lot of market functions under one roof. This adds to the costs of business operations and slows down their growth. Increasingly, however, new commercial relationships among businesses allow them to bring down these costs, and MDF has informally facilitated such linkages when possible.
For example, MDF has organised sectoral focus group discussions on shared constraints for businesses; in the agro-input sector this has led to joint efforts to build better relationships between wholesalers and the few, small transport businesses in the country.
A more recent platform for exchanging market information and forging collaborations is the Agricultural Input Association ANSA-TL, which MDF helped to set up (see below). Some of the bigger players in the association are now entering joint initiatives, e.g. in pooling imports or sharing distribution networks. However, the most remarkable connections are emerging between smaller businesses: Previously isolated agro-input retailers from 13 municipalities plan to pool resources for group buying, an entirely new phenomenon among small, rural businesses.
Indeed, a primary motivation of MDF's support to ANSA- TL has been to create a new platform for connecting businesses with the government -in order to help them better understand legal and regulato ry requirements, and collectively advocate changing unfavourable government policies regarding agricultural inputs. The formation of the association has been driven by member demand, and MDF financed its facilitation through a consultancy and legal support defining the association'fs goals and structure. MDF also assisted directly in the registration process with government authorities.
Making private sector voices heard: What ANSA-TL has achieved so far
A few months into its existence, ANSA-TL has already proven to be a turning point in the relationship between agro-input businesses and the government. Probably the most important development has been the presence of an ANSA-TL representative on the National Seed council, which advises the government on seed-related issues. Here, ANSA-TL will advocate for a reduction in free seed distribution to enable a more sustainable, market-driven way of reaching farmers with inputs and information. At the request of association members, the government has also presented information to ANSA-TL about import-related government regulations and procedures, such as quarantine requirements.
More generally - and despite a growing prioritisation of private sector development in public policies there is still a widespread perception that business growth is happening despite rather than because of the government.As a consequence, MDF has taken on an increasingly strategic role in facilitating a mutually supportive relationship between the government and businesses, beyond support to business associations. It involves:
MDF recognises that, in the long term, its role as a business and market development facilitator should be performed by competent government agencies.On top of its engagement with individual ministry advisors, MDF has begun to forge institutional linkages and knowledge transfer with Timor-Leste's recently revamped investment promotion agency, TradeInvest.
BOOSTING THE GOVERNMENT'S ROLE AS A FACILITATOR OF INCLUSIVE GROWTH: MDF'S WORK WITH TRADEINVEST
Why MDF works with TradeInvest
TradeInvest is a government initiative to serve as a one-stop service provider on all aspects of private investment -including advice on investment opportunities, licensing, taxes, tariffs or import and export procedures. It also has a mandate for research into and analysis of business environment constraints and recommending government actions to tackle them. Given that an inclusive private sector is only a recent government priority and that TradeInvest staff is relatively inexperienced in this area, there is a need for support and guidance. Ultimately, MDF believes that strengthening TradeInvest offers a highly strategic entry point for boosting the government'fs ability to engage with businesses and facilitate inclusive growth.
Joint Areas of Activity
Based on a Memorandum of Understanding, MDF is currently working with TradeInvest on a range of activities to help it grow into its new role by:
Enhancing TradeInvest's ability to organise networking events and solicit feedback on reform and support needs from the private sector - through technical support to thematic workshops with potential investors in agribusiness, manufacturing and tourism;
Facilitating TradeInvest'fs role in developing policy proposals for the government - by sharing MDF's experiences in studying inclusive growth constraints, identifying promising investors, and adapting support areas and strategies in light of the results achieved; and
Broadening TradeInvest's business contacts and first-hand experiences with private sector operations ? by involving TradeInvest staff in field and partner visits in Timor-Leste and facilitating study visits to other MDF programme countries.
Significance for Timor-Leste's economy
It is expected that within the next five years TradeInvest will have sufficient institutional knowledge and capacity to carry out its mandate without MDF's engagement.This will be an important step forward in enhancing Timor-Leste's business environment and facilitating investment in areas with the most strategic relevance for inclusive growth.
Lesson 6: Making the most out of budget constraints: The evolution of MDF's business engagement hub function
In MDF's experience, temporary budget constraints don't necessarily prevent inclusive growth programmes from engaging in fruitful activities. In fact, MDF's business engagement hub function emerged more strongly when MDF was facing temporary budget cuts. By focusing on promoting better relationships with, and between, different economic actors, MDF made effective use of minimal resources. Being increasingly known by businesses and the government has also made it easier to develop new partnerships once its budget was again increased.
However, the opposite is also true: It was only because MDF had the resources to develop business partnerships in the first place that it gained the knowledge about the economy, business contacts and the credibility it needed to adopt the role of a hub. As such, getting its budget back on track in 2016 and entering partnerships with new businesses has been crucial for MDF to continue learning about the real issues that businesses are facing and feeding new insights back into its engagement work.