the strategic role of the private sector in agriculture and rural development (part 2)
DESCRIPTION
Join IFAD and the Global Donor Platform for the launch of the report: The strategic role of the private sector in agriculture and rural development. Jonathan Mitchell (ODI), lead author of Platform Knowledge Piece 3 will be joined in his presentation via video by the authors of the Tanzania, Thailand and Vietnam country studies: Frédéric Kilcher, Wyn Ellis and Pham Thai Hung. A Question and Answer session will follow each discussion point.TRANSCRIPT
The strategic role of the private sector in agriculture and rural development
Platform Knowledge Piece (Part 2)
Jonathan Mitchell
Wednesday 28th March 2012International Fund for Agricultural Development, Rome
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Rationale for working with private sector
• Donors must understand market systems to avoid using aid ineffectively or suffering unintended consequences
• Private sector may need support to implement market initiatives with pro-poor impacts
• Donor funding is small compared with domestic sources of rural finance (private and public sector) so emphasis should be on how donors can leverage these other sources of finance to reduce poverty at scale
• Donor funds are transient on a project and a recipient country basis (donors are withdrawing from Peru, Thailand and Vietnam) – the private sector is the key anchor for sustainability
Donor approaches Progression of PSD
approachesMACRO LEVEL INTERVENTIONS
•Structural Adjustment
•Infrastructure
•Access to financial services
FILLING GAPS LEFT BY MARKETS
•Research
•Extension Services
•Input Subsidies
•Business dev services
MARKET DEVELOPMENT PROGRAMMES
•Supporting producer groups
•Helping producers meet standards
•Value chain development
DIALOGUE AND PARTNERSHIP WITH BUSINESS
•Corridors
•Policy engagement
•Core corporate strategy
Summary of findings on impact (1)
Macro-level interventions to improve enabling environment:• Structural adjustment: still largely support but, in themselves,
insufficient to generate private sector-led development• Infrastructure development: sustainability issues but road and ICT
infrastructure have had striking results• Business development services: Many different approaches with
varying success, sustainability often an issue
Direct financial assistance to business:• Social venture & patient capital: Limited availability and donor
acceptance of risk is limited• Challenge funds & loan/equity through DFIs: clear rationale & some
success but donors concern with failure rate and poor M&E• Credit enhancement: mixed evidence on additionality & sustainability of
credit enhancement mechanisms
Summary of findings on impact (2)
Market development:• Overcome barriers to market entry: some successes, particularly
with using technology improvements to upgrade farmer output• Supporting producer groups to be viable: some good results if
focus is on giving farmers access to viable value chains• Incentivising commerical sector to engage smallholders: Some
significant impact at low cost, donors adopt facilitating role
Dialogue & partnership with business:• Partnerships and strategic initiatives: Private sector takes a leading
role, donors focus on improving development impact & sustainability of initiatives
• Policy dialogue: importance of consultation mechanisms to promote market development success & sustainability
Donor approaches:An evolving agenda
FAO & EU
WB/IFC
AusAidCIDA
GIZ
IDH
DFID
SDC
USAID
partnerships
Market transformation
Value chains
Challenge funds
Market development
Donor approaches: Conclusions &
Recommendations (1)1. Engage more closely with private sector:
Many traditional approaches to ARD have failed and spending on private sector development is limited
2. Strengthen knowledge sharing: Much hope in market based approaches, although limited evidence of impact or learning from each other
3. Challenge traditional ways of delivering aid: Different donors are in different places on this agenda – and the enthusiasm for private sector engagement varies
Donor approaches: Conclusions &
Recommendations (2)4. Support institutional innovation: Many donor
agencies are not well equipped to work with the private sector and partner with DCED
5. Evidence supports porfolio approach: There is evidence that donors can help private sector development both with short-term market development initiatives and also ‘hard’ infrastructure
6. Impact at scale: The prospect of working more closely with the private sector is more effective aid and poverty reduction at scale through leveraging in additional finances
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