Synthesis Documents

RLDC's role as a facilitator of market development. Learning from experience, by Godfrey Bana, Maude Berset and Maja Rueegg, 2012

    Description
    Background: The Rural Livelihood Development Programme (RLDP) is a programme funded by the Swiss Agency for Development and Cooperation (SDC). It is implemented through the Rural Livelihood Development Company (RLDC), a non-profit organisation. Advisory services and support to RLDC has been contracted by SDC to a consortium of two Swiss NGOs, HELVETAS Swiss Intercooperation and Swisscontact. The general objective of RLDC is to make a significant contribution to improve the welfare of rural households in the Central Corridor of Tanzania, where small producers have low production level and experience difficulties in accessing profitable and sustainable markets while many medium and large scale processors see opportunities but cannot get adequate supplies from small producers.

    Phase 1: Market linkages approach:Since 2005, RLDC used a market linkages approach, which consisted in encouraging private companies to come with ideas to further develop their business and elaborate kinds of business plans proposals. The assumption was that an enhanced business of selected companies would automatically profit a larger number of producers and improve their livelihoods. The proposals were awarded with grants enabling private companies to develop their business Though the approach was called “market linkage”, RLDC did not play a role of intermediary between private companies (buyers) and producers. Rather, RLDC endorsed the role of an advisor to private companies, and, de facto, acted as a market player. Though the number of producers collaborating with buyers increased, the issue of price was not much taken in consideration. Actually, being a non for profit private company RLDC had in mind to once becoming an independent service provider. Around the end of the first phase, it was realised that it would be better to support well established organisations to play that role and that RLDC would be better placed as a facilitator of market development.

    During the midterm review of the first phase, RLDC realised that the market linkage approach was not likely to achieve its objectives towards the poor. Firstly, the grants required by the private actors were quite significant, raising issues of sustainability. Secondly, grant applicants did not have a precise vision of what creating market linkages with small producers really meant and how it would help their business. This was probably the result of the lack of successful demonstration of examples of market linkages, particularly in the rural areas of the Central Corridor. Besides, in the end, the approach benefited more the private firms than the poor farmers. By playing the role of service provider, RLDC involved itself too much in the market and therefore created market distortions. Due to the low initial willingness of private sector actors to invest in market linkage development, the sustainability of the interventions was compromised.

    Purpose of the study - Lessons in moving from a market linkages to a market faciliation approach: In 2008, RLDC decided to change the approach from a market linkage to a market development approach (M4P). changed the role of RLDC from a market actor to a market development facilitator. It differentiated between interventions which are simply providing subsidies to private firms (largely for private gains) and those which use firm-level support to stimulate systemic (public) change.

    This study documents RLDC's lessons learnt in moving from a more direct market linkages to a facilitative approach in 2008. The objectives of this capitalization of experience document include:
    - To share RLDC’s experience with other market facilitators and partners
    - To strengthen RLDC’s own understanding on facilitation through a systematic analysis of its interventions and to learn from its experience to improve its interventions
    - To complement the existing M4P theory with RLDC’s practical experience in its specific context

    Summary of results
    Unlike the market linkages approach, the M4P approach is systemic in action, thus focusing on market system failings to serve the needs of the poor. Secondly, it seeks sustainable changes from the outset by better aligning key market functions and players. Thirdly, the approach pursues large scale impact by targeting interventions that benefits large number of poor people. Lastly the approach adopts a facilitative role by designing interventions that stimulates but does not replace market functions or players. Through the M4P approach, RLDC has achieved more outreach in comparison to the previous approach.

    The document studies in detail RLDC's role as a facilitator in five of its interventions in three different sectors, namely dairy, radio and sunflower. RLDC has defined six major facilitation criteria for its interventions:
    • Being external to the market system
    • Giving temporary support with sustainable impact
    • Enhancing collaboration and information sharing
    • Achieving systemic changes
    • Influencing the behaviour of market actors
    • Achieving large scale poverty reduction

    Overall various good and bad practices are identified that should specifically be replicated or avoided in future interventions by RLDC or other organisations working with the M4P facilitation approach:

    Best practices in facilitation to be replicated and spread in all interventions :
    • Work on the business environment but pay attention to ensure poverty impact
    • Work with a large number and various types of stakeholders (different levels in the market system)
    • Sequence and interlink interventions (facilitate market system improvement from various angles)
    • Use grants and subsidies cautiously with a clear idea of who will bear the costs in the future (sustainability, exit strategy)
    • Have a clear poverty focus in all interventions with special emphasis on productivity increase at producers’ level
    • Bring actors together to find solutions or enforce win-win partnerships
    • Propose and demonstrate convincing business models to generate changes in market actors’ behaviours

    Practices to avoid in the future:
    • Avoid sub-contracting (risk of being internal to the market system through the sub-contractor, unsustainable interventions)
    • Avoid too short support and coaching (unsustainable interventions) especially when organisational development is involved (FOs, BMOs)
    • Avoid working with only a few partners (although it always depends on the context of the area of intervention)
    • Avoid too much financial involvement (unsustainable interventions)

    Competences to be improved in the future:
    • Communication about RLDC’s role, objectives of facilitation and best practices
    • Coaching market actors
    • Replication of good practices/activities/changes of behaviours by other market actors beyond the projects