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 PAKISTAN
P
akistan has an estimated GDP of USD 232 billion and a population of 182 million with growth significantly lower than neighbouring economies. An estimated 45% (UNDP – Oxford Multidimensional Measure) of the population is poor with poverty levels varying widely between geographic regions and between rural and urban environments. The incidence of poverty is dramatically higher in remote rural areas (up to 90%), with strong variations caused by differences in climate and the presence of cash crops. The bulk of the poor live in the densely populated Punjab and around a few big cities.
Pakistan’s economy is characterized by modest growth, declining Foreign Direct Investment (FDI), security concerns, energy and water shortages and a complex regulatory environment. International competitiveness in manufacturing is improving, but companies struggle to comply with the quality, service and certification expectations of global customers. Local ancillary services are often poorly developed. Agricultural production struggles to keep up with domestic demand which further limits the country’s ability to export. Formal distribution networks and supply chains lack reach and volume. Agricultural information and innovation reaches bigger farmers, but not many small ones. MDF is focusing in Pakistan on three growing sectors – Dairy and Meat, Horticulture and Leather. Focus on agricultural sectors have the potential to connect rural and regional households to demand in cities and overseas. Focus on an urban sector allows poor workers to acquire skills and offers opportunities for women. MDF focuses on partnerships that help to increase the reach and scale of rural value chains and information channels that help diversify local services, foster new entrepreneurship and reduce the cost of doing business in Pakistan.
DAIRY AND MEAT
HORTICULTURE
Better access to inputs and information and innovations in supply chain will allow small dairy and meat farmers (mainly in Punjab and Sindh) to become more productive and commercially oriented. Greater volumes of quality products are required to satisfy growing domestic demand for dairy and export demand for meat products.
LEATHER
There is a strong focus on establishing better connections and regional entrepreneurship, processing and value addition. Improved market linkages provide income opportunities for fruit producers in remote areas. Horticulture provides opportunities to exploit specific agro-climatic advantages of (mainly borderland) regions to supply Pakistan or global market.
Improving access to quality onion seeds in Pakistan In Pakistan lack of quality onion seeds results in low yields and continues to be an impediment to increase production. Farmers have the option of either buying low-quality locally produced seeds or better quality and expensive imported seeds. Chitral in Khyber Pakhtunkhwa province offers the right environmental conditions for onion seed production. MDF supported Magnus Kahl Seeds in developing a drying unit for onion seeds. They have scaled-up their existing operations ensuring farmers in Chitral have a consistent buyer for the seeds they produce, and onion growers have access to high quality seeds. They are now involving even more men and women in Chitral in onion seed production through MDF support.
MDF Pakistan: (+92) 42 3575 8752-4
(+92) 42 3575 8751
info@cardnomdf.org
www.marketdevelopmentfacility.org
The leather sector can be made more competitive internationally with improvements in product innovation, process innovation and the availability of ancillary services. Value addition through conversion of leather into leather goods could potentially add USD 3 billion to the economy and increase urban employment opportunities.
PARTNERING WITH MDF 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.