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 PAPUA NEW GUINEA
W Port Moresby
ith an estimated GDP of USD 14 billion and a population of 7.6 million, PNG is the largest country and economy among the Pacific Island countries. An estimated 87% of its population live in rural areas and around the same number are involved in agriculture, primarily at a semi-subsistence level. Around 2.8 million people in PNG live in poverty (ADB statistics) with the highest proportion of the poor living in rural areas. With an average GDP growth above 6% – largely driven by the extractive industries, much of this growth has not translated into providing opportunities for the local population to move out of of poverty.
The PNG economy is characterised by poor and costly connections between production inputs and services on the one hand, and producers and consumers on the other. The terrain is challenging, roads are in bad shape, and supply chains are underdeveloped. As a result, economic opportunities are missed. Producers do not have access to the inputs and services that make them productive and costeffective, and access to markets is costly. Local employment creation is limited as it may be cheaper to import goods from overseas than to source locally. Consumers do not always have access to affordable products and services. MDF is focusing in PNG on four emerging industries and services that help improve access, reduce the costs involved in connecting demand and supply, preserve quality, and in particular cases, increase the safety and mobility of women. These include investments in ICT (e.g. mobile phone applications), logistics and distribution (e.g. warehouses, cold chains, packaging), and transport connections (e.g. shipping lines, taxi services). MDF will also focus on industries and services that will benefit from and reinforce better connections. These include agro-input services (to connect farmers to inputs and information), local value addition (to connect farmers to sources of demand, and consumers to affordable products), and tourism and hospitality (to tap into the growing domestic demand and international interest for such services (stemming from a growing domestic middle class, large numbers of foreign workers, adventure tourists, and cruise ship tourists) – all of which generates local employment and income earning opportunities. ICT and Logistics: Isolation and distance between markets and regions in PNG means people have weak access to markets. While the range of agricultural production and services is large, there is limited connection between people and places. Regions need to be connected and products need to find a market. MDF will work with partners who can better connect places through transport options between regions as well as improving the ability for producers, buyers, sellers and workers to communicate with each other using cheaper and better quality information and communication technologies. Local Value Addition: While PNG has large amounts of raw materials and resources, most only get exported in their rawest form. MDF will work with partners to add value to local material through processing and manufacturing so businesses can ear more revenue by selling high value products. Agricultural Inputs and Services: To supply to the countries different industries, agricultural productivity needs to be improved through better supplies, information and farming practices. MDF will work with partners to better equip farmers with inputs and ensure they have access to important information and training to become more productive and commercially orientated. Tourism and Hospitality: While incomplete infrastructure and high costs constrain growth in tourism in PNG, it is a country with a lot to offer for adventurous travellers. MDF aims to work with partners that improve infrastructure for tourists and improves the skills of people working in the hospitality industry. Activities will include Investments in destination marketing, training, and possible investments in infrastructure.
Improving access to authentic rural accommodation and experiences in PNG – Village Huts Village Huts is a local adventure and backpacker tourism operator. It has been providing a online space for village homestays and guest house accommodation since 2012. It is the leading Papua New Guinea travel and accommodation booking website mainly targeting adventure tourists and the backpacker market. It works with accommodation, tour operators, and communities in all parts of the country to offer a reliable and secure way of booking accommodation and tours in the country. MDF is working with Village Huts to widen the network of huts, guesthouses, and activity providers registered on the website and to promote them to a larger client base domestically and internationally. The partnership will create jobs in the tourism industry and help communities develop to tap into the tourism market in PNG. MDF Papua New Guinea: Level 6, PwC Haus, Harbour City, Port Moresby, Papua New Guinea (+675) 7374315
www.marketdevelopmentfacility.org
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.