Reaching the Poorest
Executive Summary
Market Systems Development (MSD) programs, such as DFAT’s Market Development Facility (MDF), are driven by considerations of scale, sustainability and value for money. MSD programs’ responses to these drivers, along with a traditional focus on working with established businesses, have been argued to make MSD programs ineffective at reaching extremely poor people. This brief explores these arguments and provides commentary on a proposed hybrid push/pull approach, combining facets of social protection and graduation approaches with MSD currently being considered for a new Australian Department of Foreign Affairs and Trade (DFAT) initiative in Nepal.
The knowledge brief suggests that there are opportunities for more explicit targeting of MSD programs towards extreme-poor people and explores how combining MSD with other approaches may help to ensure the inclusion of those who might otherwise face exclusion from profitable engagement with markets. It commends efforts to improve the effectiveness of poverty reduction efforts for extremely poor people and suggests that regardless of the tools a hybrid approach may use, a maintained focus on sustainability needs to remain the priority.
This knowledge exchange brief is part of a series developed by the DFAT-funded Market Development Facility (MDF). The briefs reflect a range of perspectives from roundtable discussions facilitated by MDF at DFAT in Canberra in October 2018 as part of MDF’s learning agenda. The briefs acknowledge the diversity of policy perspectives on MSD and incorporate examples and lessons learned from MDF and other MSD programs. The learning agenda aims to support learning and information sharing by MDF, one of DFAT’s largest, most sectorally diverse and geographically dispersed MSD programs. Learning Agenda sessions are aimed at deepening understanding of the value, application and complementarities of MSD as well as other private sector approaches in complex economic and political environments.
Purpose
Social protection/social security systems are core ongoing parts of a country’s economic and social architecture. MSD programs are timebound initiatives that aim to improve the functioning of market systems for the benefit of poor people. Whilst there are significant overlaps in their objectives, they have largely been understood in isolation from each other. DFAT, with help from Palladium-Swisscontact and BRAC, is currently exploring a new hybrid program in Nepal, which would see ‘pull’ MSD interventions driving market expansion complemented by community-level ‘push’ interventions such as targeted stipends or cash transfers. It is a highly novel approach. One of the more novel features is the implementation model which is based on a partnership between a commercial contractor and one of the world’s largest NGOs.
The proposed Nepal team would include representatives from both a social protection background as well as MSD practitioners. Decisions on the nature of interventions would be taken jointly by MSD and social protection managers on an intervention-by-intervention basis, ultimately driven by what the program’s analysis indicates will be the most effective and sustainable approach. This proposal for a new program with this hybrid approach presents an opportunity to test the complementarity of MSD/ social protection approaches as well as the potential challenges.
