This case study presents lessons AIP-Rural on how to work with the private sector.
As development agencies increasingly recognise how businesses can contribute to development goals, many have been working more and more with the private sector.
However, the efforts of some development agencies to collaborate with business have resulted in disappointing outcomes. In a rush to embrace the private sector, some development agencies have:
- Given money to firms which share the development agency’s objectives, then treated these firms as contractors whose role is to spend the agency’s money. Here, the firm may feel obliged to “serve” the development agency, distracting them from doing business better with poor women and men, and undermining their own commitment to the relevant development objective.
- Linked private sector firms with target beneficiaries (usually poor women and men) but in such a way that the relationship depends on the ongoing presence of the development agency acting as a broker. At the core of market systems development is the imperative that change must be sustainable after the agency leaves.
- Celebrated token investments from a firm’s corporate social responsibility budget, while missing opportunities to influence its core operations in far more impactful ways.
- Been unclear about how growth in the private sector will benefit those who are disadvantaged by the system, or how development investment will translate into benefits for the private sector.
- Claimed success based on thin evidence or before generating sustainable results.
- Supported single firms without a vision of how this will stimulate wider, lasting change. This creates a danger that development agency support gives particular firms a competitive advantage and thereby distorts the market they operate in.
The market systems development (MSD) approach seeks to learn from these mistakes.
The first phase of the programme was implemented from 2013 – 2018, with the second phase (PRISMA-2) from 2019 – 2023 in East Java, West Nusa Tenggara, East Nusa Tenggara, Papua, West Papua and Central Java.