MDF’s Value to Business
Insights from MDF partners in the Indo-Pacific
The Market Development Facility (MDF) helps countries in the Indo-Pacific grow through improved productivity, economic diversification, competitiveness and trade. MDF supports businesses to develop markets that bring economic opportunity for women, men and people with disabilities, and address both the challenges and opportunities of climate change. MDF is funded by the Australian Government and co-funded by the New Zealand Government in Samoa, Tonga and Vanuatu.
MDF operates as a ‘social venture capitalist’, co-investing with businesses to reduce their risks and costs. It supports firms through market analysis, technical and financial assistance, and networking to enable them to innovate, succeed and grow profitably. MDF operates with diverse, locally led teams to provide tailored support to businesses.
MDF has catalysed USD30 million in private sector investment and USD222 million in additional turnover for businesses in frontier markets. This has contributed to USD166 million in additional income and 7,448 jobs for workers, small firms and farms in the region. MDF’s on-the-ground engagement with firms has provided Australia and New Zealand with a platform to engage with the private sector and inform economic diplomacy. A flexible mechanism that catalyses investment and innovation in nascent industries has also assisted partner governments to develop strategies, policies and support for sectors that can drive economic growth and diversification.
This paper examines MDF’s value to businesses by understanding its effectiveness in catalysing investment and innovation and generating turnover, income and jobs. Using partner feedback, it provides insight into MDF’s approach, benefits to partners and lessons learned from over a decade of operation. It is hoped that this insight might inform future investments by Australia and New Zealand and other programs that recognise that private sector development is an important driver of socio-economic growth.
MDF’s partners identify four types of benefits from MDF support. They can buy differently, as MDF assists firms in sourcing or producing in new ways that improve efficiency, reliability or quality. They can sell differently, as MDF assists firms to penetrate new markets, expand sales and improve margins or prices. Some partners have been able to introduce new products or solutions better suited for frontier markets, as MDF helps firms reduce the costs and risks of innovation. Some partners valued MDF’s help in developing commercially feasible sustainable and inclusivebusiness models that respond to climate change and increase the participation of women and people with disability in markets.
MDF’s success is attributed to offering a blend of support options beyond finance—including technical assistance, market insights and the mobilisation of industry collaboration—that can be tailored to businesses’ needs. The active roleMDF plays in co-investment with a partner to share risk and find creative solutions is highly appreciated, as is MDF’s rigour and objectivity, which help build trust with the industry. Flexibility and patience are crucial for navigating challenges in dynamic frontier markets.
The foundations for MDF’s performance lie in its adaptive design and flexible resource allocation, the close engagement between program funder and implementer, and MDF’s capable team, which brings together a variety of domestic, regional and international expertise and experience.
