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 TIMOR-LESTE
T Dili
imor-Leste is a small island nation in Southeast Asia with a population of 1.2 million. Timor-Leste has embarked on a remarkable recovery from its history of conflict and underdevelopment. When Timor-Leste officially gained independence in 2002, its economy had been left with minimal infrastructure; the education system was in disarray; and the agricultural production base was largely destroyed.
Since 2005, revenues from large deposits of oil and natural gas under the Timor Sea have allowed the government to invest in infrastructure and improve basic service provision. This resulted in a significant drop in child mortality and increases in the years of schooling as well as per-capita income. And yet, the fundamental economic structure remains largely unchanged and embodies the perils of small island developing nations. Timor-Leste is constrained by a small resource base, which deprives the country of economies of scale; small domestic markets and heavy dependence on a few remote markets for import and export; vulnerability to irregular international transport volumes; the high costs of energy, transportation, communication and servicing. As a result, there are few profitable business opportunities. Furthermore, only 15 per cent of Timor-Leste’s mountainous terrain is cultivatable. In Timor-Leste MDF design partnerships that promote structural changes in three economic areas – agribusiness, manufacturing and tourism. As there is no single solution to the constraints on all its business partners, MDF designs individual support packages, rather than implementing ready-made plans and standardised forms of assistance. GREENFIELDS MANUFACTURING
AGRICULTURE
With the majority of Timor-Leste’s poor living in rural areas, promoting productive growth in agriculture is a critical entry point. Empirically, “no country has achieved...poverty reduction without prior investment in agriculture.”
Manufacturing industries have been essential in driving economic growth and raising living standards in all developing economies, and could play a key role in creating jobs for growing urban populations in Timor-Leste.
Coffee is the second largest export industry in Timor-Leste. Developing the coffee industry is an important way to diversify Timor-Leste’s economy away from oil and gas. MDF works with Café Brisa Serena to improve coffee quality to be branded “speciality coffee”. Speciality coffee can be sold at a higher price on the export market. To do this, Café Brisa Serena, set-up a “cupping laboratory” to test the coffee and provide feedback to farmers. After establishing the facility, almost half of Café Brisa Serena’s 100 metric tons of coffee sales was sold solely because of increased buyer confidence. Café Brisa Serena’s efforts were recognized at the inaugural coffee festival, Kafe Festival Timor. International judges blind tested coffee samples from all over the country with Café Brisa Serena’s farmers receiving the 1st and 3rd prizes.
(+670) 3311 316
Tourism has become a major source of growth in many Least Developed Countries (LDCs). Businesses in tourism face relatively low entry barriers and can create jobs for lowand semi-skilled workers, including in remote areas.
PARTNERING WITH MDF
Building the non-oil economy
MDF Timor-Leste
GREENFIELDS TOURISM
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.
info@cardnomdf.org
www.marketdevelopmentfacility.org