PARTNERS IN BUSINESS INNOVATION
A
lasting reduction in poverty is achieved through sustainable and broad-based economic growth. The poor need access to jobs and more productive livelihoods as well as essential services in order to improve their lives in a meaningful way. The private sector is the engine of economic growth. The Market Development Facility (MDF) is Australia’s flagship private sector development programme in the Indo-Pacific region. MDF is focused on reducing poverty by stimulating economic growth and works through partnerships with the private and public sector to identify and develop new products and services or new, innovative ways of doing business or regulatory reform. These partnerships open up markets and provide increased income and employment opportunities for poorer populations, or benefit them as consumers. Each partnership with a business or institution contributes to systemic and lasting changes in the economy to increase its ability to innovate and grow and deal with competitive, regulatory, social and environmental pressures, so that the benefits for the poor are sustainable and continue to expand over time.
WHERE MDF WORKS MDF began in 2011 in Fiji and has expanded to Timor-Leste in 2012, Pakistan in 2013 and Sri Lanka and Papua New Guinea in 2015. In each country MDF focuses on market systems that involve people from rural and urban areas. Under each market system, MDF has a portfolio of partnerships that support private sector businesses on different aspects such as access to technical advisory services, selective infrastructure support, marketing and promotion, and regulatory reform. MDF works in the following sectors and thematic areas in each country: • Fiji: Tourism, Horticulture, Export Processing • Timor-Leste: Agribusiness, Greenfield Industries (Tourism and Manufacturing)
Pakistan
• Pakistan: Horticulture, Diary and Meat, Leather Sri Lanka
Papua New Guinea Timor-Leste
Fiji
• Sri Lanka: Tourism and Related Sectors (Tourism, Sri Lankan Made Goods, Digital Capability, Business Activity in Lagging Regions) • Papua New Guinea: Emerging Industries and Services (ICT and Logistics, Local Value Addition, Agricultural Inputs Services, and Tourism and Hospitality)
HOW MDF WORKS: AT A GLANCE MDF is committed to implementing a market systems approach: • In each country MDF first gathers a rich and diverse body of knowledge about poverty, propoor growth opportunities and bottlenecks, challenges to Women’s Economic Empowerment (WEE), challenges to the environment and the inclusion of persons with a disability. • Market systems are selected that can act as drivers of pro-poor growth and are aligned with the economic and development needs of the country. • MDF works through partnerships with private sector businesses and public sector organisations to ensure that change is locally owned and can last. • With each partner, MDF designs and negotiates detailed business plans, which include clear financial and resource commitments from both MDF and the business (cost sharing arrangement) to arrive at appropriate, innovative and sustainable business models or reforms. • Partners take the lead in implementing activities and improved business practices – increasing the partner’s capacity. But MDF continues working closely with our partners – advising, mentoring, facilitating and planning for the future. • As partners get stronger, start to innovate ways of doing business, or new products and services catch on within a market system – consumers and workers benefit and gain better livelihoods.
By 2021, as a result of all its activities in Phase 1 (2011- 2017), MDF will have: Introduced 199 sustainable innovations to make market systems around the poor work better Leveraged US $8.3 million in private sector investment Benefited 238,000 poor women and men
• Poorer populations gain more opportunities through jobs created and increasing income opportunities, or as consumers of better, more affordable or more available products and services.
Created US $68 million in additional income for poor women and men
• By introducing sustainable solutions through partnerships the benefits introduced reach far beyond the life of the programme. MDF rigorously monitors progress through a state of the art results measurement system.
Created 12,000 full-time jobs for poor women and men
MDF IN SRI LANKA
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ith a GDP of around USD 78 billion and a population of around 22 million Sri Lanka, the small Island nation in the Indian Ocean, is one of the most prosperous countries in South Asia. Since the conclusion of a three decade long civil war in 2009, the economy has grown around 6% per annum and poverty rates have fallen from over 20% in 2002 to 6.7% in 2013. Nevertheless, the country faces several challenges. Growth was stimulated by post-war public Colombo investments in infrastructure and increased consumer spending, but mounting private and public debt and a weak fiscal base makes this unsustainable. The country also has a significant trade imbalance with its deficit running up to 11% of its GDP (USD 8 Billion) and while extreme poverty has reduced, around a third of the population still are vulnerable and live below US$2.50 per day (based on 2005 Purchasing Power Parity). Sri Lanka aspires to become one of the strongest economies in Asia and a high-middle income country with a diverse middle-class population. The further growth and job creation to drive this economic transformation needs to come from an expansive export-led strategy, to better market and connect Sri Lankan products and tourist destinations to the outside world. MDF focuses in Sri Lanka on Tourism and Related Sectors. Tourism is one of Sri Lanka’s fastest growing sectors and job creators and pivotal to economic transformation. The continued success and growth of tourism and its related sectors – and export-led growth more generally – is dependent on business investment and innovation in four thematic areas. This investment and innovation not only improves the tourism experience and international perceptions of Sri Lanka, it creates more inclusive and diversified economic growth – increasing resilience to external shocks, such as fluctuations in the prices of natural resources, fluctuations in currency, change of governments and global economic changes. The four thematic areas are: Encouraging diversification of tourism in Sri Lanka: Expanding tourism to new destinations help makes Sri Lanka a more diverse and attractive destination. MDF is supporting tourism product development, promotion, better access to locally made products and increase connectivity to community/experiential tourism providers. Stimulating business activity in lagging areas: Supporting, establishing and promoting growth of business and entrepreneurship in lagging regions – particularly those affected by the civil war. Improving ‘Sri Lankan-made’ products for international consumers and markets: Supporting the growth of high quality products (such as horticulture and aquaculture) to drive export revenue for the country – reinforcing perceptions of Sri Lanka as a dynamic destination with a rich heritage and good quality products and services. Creating better information flows to farmers and improving backward linkages for better market access for companies, and reduce post-harvest loss. Supporting Sri Lanka’s digital capability: Targeting niche opportunities including promotion, product development, access to better HR skills and a more conducive business environment for international visitors and customers such as exporters. Consumers and businesses that require a range of information based products that can be catered by the local ICT industry in Sri Lanka. Tourism and Related Sectors is an ideal platform for MDF to engage the Sri Lankan economy and drive a socially inclusive growth, investment, innovation and reform. In addition to growing tourist numbers, the sectors ability to reach beneficiaries across the nation, its synergies with other key drivers of future economic growth such agricultural exports and ICT and job creation – tourism and its related sectors holds a central, pivotal space to promote increased income opportunities for both women and men across the country in a sustainable manner.
PARTNERING WITH MDF
Divron Bioventures In Sri Lanka, there are large number of underutilised reservoirs, where local fish farmers struggle to eke out a livelihood. Access to quality fingerlings or fries (juvenile fish) is a common reason why farmers have low volume and low quality catches. They mostly rely on government hatcheries for their supplies which is at best, sporadic. MDF is supporting Divron Bioventures, a fisheries exporter, to strengthen their supply. Divron saw huge potential in exporting giant fresh water prawns and has invested in setting a hatchery which is now used to regularly stock a selected number of reservoirs. Through this partnership, Divron will make improvements in their cold chain and transportation while educating fish farmers to become more aware of how to reduce their post-harvest loss and also improve their productivity and supply to Divron.
MDF Sri Lanka: No. 18, Police Park Avenue, Colombo 05, Sri Lanka info@cardnomdf.org
www.marketdevelopmentfacility.org
MDF’s flexible design includes country teams within each country supported by a Core Leadership Team responsible for the management of the overall Facility. This design gives the Facility the ability to scale-up efficiently across countries while tailoring strategies and implementation to the local context. We utilise best practices and cross-country learning to create a tailored approach to achieve sustainable economic growth, innovation and poverty reduction in each country. ▪▪ MDF’s Business Advisers continually engage with a wide variety of businesses in each sector. They actively seek out potential partners to discuss opportunities and are always open to new ideas. ▪▪ Potential partners and MDF Business Advisers work closely together to transform initial ideas into detailed business plans. These activities are commercially sustainable and have a demonstrated link to poverty reduction. ▪▪ For each business plan MDF and its partner will sign a partnership agreement, specifying a cost sharing arrangement and other areas of support. ▪▪ The partner implements the partnership as a part of its business activities; while MDF monitors the partnership and measures its pro-poor impact.