Making Markets Empower the Poor: Programme perspectives on using markets to empower women and men living in poverty

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Market-based development programmes can help people living in poverty benefit from markets and lift themselves out of poverty. However, many such approaches do not pay attention to power imbalances that perpetuate marginalisation and poverty. To reach their fullest potential, market-based programmes should actively strengthen the power of marginalised smallholders and women. Major events in the market system, induced by changes in policy, regulation, social movements or business models can provide opportunities to intervene and rebalance power. Market-based programmes should also be complemented by non-market interventions that address poverty and sustainability issues in household and environmental systems. Through its work, Oxfam has encountered some of the challenges and limitations of market-based approaches. This paper is intended to raise these challenges with the broader community of development practitioners employing market-based approaches and share approaches Oxfam has taken to addressing them. The most conspicuous of these challenges is a need to address power imbalances between smallholders and larger businesses, as well as between women and men.
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    www.oxfam.org.uk Oxfam Discussion Paper Making markets empower the poor Programme perspectives on using markets to empower women and men living in poverty Erinch Sahan (Oxfam GB) and  Julia Fischer-Mackey (Oxfam America) 7 November 2011  Market-based development programmes can help people living in poverty benefit from markets and lift themselves out of poverty. However, many such approaches do not pay attention to power imbalances that perpetuate marginalisation and poverty. To reach their fullest potential, market-based  programmes should actively strengthen the power of marginalised smallholders and women. Major events in the market system, induced by changes in policy, regulation, social movements or business models can  provide opportunities to intervene and rebalance power. Market-based  programmes should also be complemented by non-market interventions that address poverty and sustainability issues in household and environmental systems. Through its work, Oxfam has encountered some of the challenges and limitations of market-based approaches. This paper is intended to raise these challenges with the broader community of development practitioners employing market-based approaches and share approaches Oxfam has taken to addressing them. The most conspicuous of these challenges is a need to address power imbalances between smallholders and larger businesses, as well as between women and men. Oxfam Discussion Papers Oxfam   Discussion   Papers   are   written   to   contribute   to   public   debate   and   to   invite   feedback   on   development   and   humanitarian   policy   issues.   They   are   ‘work   in   progress’   documents,   and   do   not   necessarily   constitute   final   publications   or   reflect   Oxfam   policy   positions.   The   views   and   recommendations   expressed   may    be   those   of   the   author   and   not   necessarily   those   of   Oxfam.   For   more   information,   or   to   comment   on   this   document,   email   research@oxfam.org.uk       Making     Markets   Empower    the   Poor,   Oxfam   Discussion   Paper,   November   2011   2   Summary Market ‐  based   development   programmes   are   increasingly   attracting   more   support   from   donors.   However,   it   is   important   that   they   do   not   limit   themselves   to   ‘market ‐ ready’   individuals,    but   reach   more   marginalised   groups   that   are   not   ready   to   engage   meaningfully   in   markets.   This   paper   is   intended   to   raise   challenges   around   power   disparities   in   markets,   which   can   prevent   market ‐  based   programmes   from   reaching   those   who   are   not   market   ready.   It   also   shares   approaches   Oxfam   has   taken   to   address   these   challenges.   People   are   poor    because   they   are   powerless. 1   To   tackle   poverty,   every   development   programme,   including   market ‐  based   development   programmes,   should   focus   on   increasing   the   power   of   marginalised   women   and   men.   Where to intervene: not only in the market system Market ‐  based   approaches,   which   naturally   operate   within   the   market   system,   will   not   address   all   poverty   issues.   It   is   important   that   they   are   accompanied    by   complementary   interventions   in   household   and   environmental   systems.   For   example,   it   may    be   necessary   to   address   gender ‐  based   violence,    build   capacity   to   sustainably   manage   natural   resources,   or   provide   water   infrastructure   to   communities.   Interventions   in   the   market   system   must   also   ensure   that   they   do   not   destroy   the   natural   environment,   on   which   the   survival   of   the   market   system   depends.   When to intervene: leverage catalytic events that disrupt markets Events   such   as   significant   government   policy   changes,   large ‐ scale   social   movements,   migration,   regulatory   reform,   changes   in   powerful   firms’    business   models,   technological   change   or   disasters   can   open   up   the   possibility   for   interventions   to   rebalance   power.   Programmes   can    build   upon   these   disruptions   and   intervene   to   support   marginalised   producers   in   taking   advantage   of   new   opportunities   and   acquire   greater   power.   In   the   absence   of   such   catalytic   events,   interventions   can   themselves   disrupt   markets   to   rebalance   power.   However,   they   can   have   greater   impact   when   they    build   upon   a   catalytic   event   that   is   already   occurring.   Why to intervene: to disrupt the market and rebalance power There   are   three   underlying   approaches   that   drive   the   debate   on   market ‐  based   development.   They   differ   in   the   extent   to   which   they   focus   on   rebalancing   power.   They   also   provide   different   levels   of   flexibility   in   allowing   or   preventing   interventions   to   shake   up   the   market   system   and   rebalance   power:   1.   Avoid   intervening   directly   to   assist   those   in   poverty,    but   rather   play   a   facilitative   role   in   connecting   those   people,   firms,   or   institutions   already   in   the   market   system;   2.   Play   a   service   provision   role   in   markets   directly   to   fill   gaps   in   the   market   system;   and   3.   Intervene   temporarily    but   directly   in   markets,   informed    by   an   understanding   of   market   incentives,   so   as   to   disrupt   markets   and   rebalance   power.   Across   these   approaches,   underlying    beliefs   about   markets   will   shape   interventions.   Beliefs   centred   on   free   markets   will   make   a   programme   reluctant   to   intervene   more   actively   in   the   market   system.   This   will   lead   to   reaching   only   the   market ‐ ready.    How to intervene: Oxfam’s experience Unless   markets   are   disrupted   and   power   rebalanced,   programmes   will   only   reach   such   market ‐ ready   smallholders.   Many   marginalised   people   live   in   remote   areas,   or   are       Making     Markets   Empower    the   Poor,   Oxfam   Discussion   Paper,   November   2011   3   surrounded    by   undeveloped   market   systems.   These   are   places   where   the   costs   and   risks   of   doing    business   inhibit   commercial   investment,   leading   to   producers    being   denied   access   to   key   services   such   as   finance.   Additionally,   some   of   the   most   marginalised   people,   especially   women,   face   cultural   exclusion   from   markets.   Such   people   can    be   excluded   from   not   only   markets    but   also   from    broader   society,   through   exclusion   from   rights,   resources   and   relationships. 2   To   assist   marginalised   people,   a   programme   should   actively   address   the    barriers   that   keep   these   people   from   using   markets   to   lift   themselves   out   of   poverty.   In   order   to   reach   more   remote   and   marginalised   smallholders,   Oxfam   tries   to   disrupt   markets   and   rebalance   power   via   four   interventions:   1.   Supporting   producer   organisations   (POs):   Effective   POs   (such   as   co ‐ operatives   and   collectives)   can   empower   small ‐ scale   producers   through   economies   of   scale,   increased   influence   in   output   and   input   markets,   and   strength   in   numbers.   Oxfam   assists   POs   to    build   the   market   power   of   producers,   and   encourages   them   to   take   progressive   measures   to   ensure   equal   participation   and    benefits   for   women   producers.   2.   Supporting   new   business   models:   Enterprises   such   as   specialised   intermediaries   and   service   providers   often   fill   an   important   gap   in   markets   for   smallholders.   They   allow   a   poorly   organised   producer    base   (smallholders)   to   connect   to   sophisticated   and   modern   input   and   output   markets.   They   also   provide   support   in   product   quality   control,   processing,   and   access   to   inputs.   While   this   role   can    be   performed    by   POs   themselves,   which   operate   at   the   primary ‐ tier,   it   is   often   more   effective   for   it   to    be   performed    by   a   separate   enterprise   operating   at   a   second   level   (i.e.   serving   multiple   POs).   These   higher ‐ tier   enterprises   can   themselves    be   owned    by   a   group   or   union   of   POs.   To    be   successful,   enterprises   must   adapt   to    be   commercially   efficient,    but   also   empower   smallholders,   including   women,    by   helping   them    become   more   competitive   and   able   to   access   more   lucrative   formal   markets.   It   is   also   important   for   development   programmes   to   work   with   existing   firms   to   get   them   to   deal   more   fairly   and   transparently   with   smallholders.   3.   Making   pre ‐ commercial   investments:   Many   marginalised   people   lack   the   assets   and   skills   necessary   to   use   markets   to   lift   themselves   out   of   poverty.   Providing   pre ‐ commercial   investments   to   such   individuals   and   groups   is   often   necessary   to   allow   them   to   participate   meaningfully   in   markets.   Providing   assets   and   training   for   women   is   a   core   part   of   Oxfam’s   work.   4.   Giving   marginalised   groups   a   voice   in   governance   and   investment:   Where   regulations   and   public   investment   address   the   needs   of   small ‐ scale   and   female   producers,   this   can    bring   new   producers   into   the   market   and   level   the   playing   field   for   women.   Oxfam   supports   marginalised   groups   in   dealings   with   governments,   helping   them   to   access   public   pre ‐ commercial   investment   in   technologies   such   as   irrigation.   It   also   works   to   influence   policies   that   have   an   impact   on   women,   such   as   those   covering   land   rights.   It   is   important   that   interventions   open   up   new   opportunities   for   marginalised   producers   without   exposing   them   to   excessive   risk.   Promoting   access   to   local   markets   and   the   diversification   of   crops   is   critical   for   programmes   to   protect   smallholders   from   such   risk.   This   could   also   include   support   to   diversify   sources   of   income    by   promoting   access   to   off ‐ farm   income.   It   is   also   critical   that   programmes   avoid   facilitating   contractual   relationships   that   lock   smallholders   into   single   value ‐ chains   and   dependent    business   relationships.       Making     Markets   Empower    the   Poor,   Oxfam   Discussion   Paper,   November   2011   4   Glossary of terms Business   models:   A   ‘business   model’   describes   how   an   individual   firm   organises   itself   and   its   relationships   in   order   to   create   and   capture   value.   It   explains   how   the    building    blocks   of   production,   marketing,   costs   and   revenues   come   together   to   provide   a   value   proposition   in   the   marketplace   that   differentiates   the   firm   from   its   competitors.   The    business   model   concept   is   linked   to    business   strategy   (the   process   of    business   model   design)   and    business   operations   (the   implementation   of   a   company ʹ s    business   model   into   organisational   structures   and   systems).   Crowding   in:   ‘ Making   markets   work   for   the   poor’   programmes   aim   to   stimulate   private   and   public   sector   actors   to   take   on   new   (or   adapted)   functions   –   to   ‘crowd   in’   –   while   avoiding    becoming   active   market   players   themselves.   Facilitative   approach:   The   approach   of   facilitating   existing   market   actors   to   perform   required   roles,   as   used    by   the   making   markets   work   for   the   poor   approach.   Formal   markets:   A   regulated   system   within   which   the   exchange   of   goods   and   services   takes   place.   Making   markets   work   for   the   poor   (M4P):   An   approach   that   grew   out   of   the   market   development   work   of   the   UK   Department   for   International   Development   (DFID)   and   others.   It   focuses   on   understanding   where   market   systems   are   failing   to   serve   the   needs   of   poor   people,   and   acts   to   correct   those   failings.   M4P   divides   the   market   system   into   three   parts:   the   core   (where   providers   and   consumers   exchange   goods   and   services);   the   rules   (formal   or   informal   rules   which   shape    behaviour);   and   the   supporting   functions   (such   as   information,   logistics,   marketing).   In   M4P   interventions,   donors   or   NGOs   play   a   facilitative   role   rather   than   an   active   part   in   the   market   system,   i.e.   they   catalyse   others.   Interventions   may    be   small   themselves,    but   they   strive   to   leverage   market   forces   to   create   sustainable   impact   at   a   large   scale. 3   Market   actors   (aka   market   system   actors):   Someone   who   is   actively   participating   in   the   exchange   of   goods   or   services.   Pre ‐ commercial   investment:   Upfront   grant   or   asset   transfer   to   either   a)   enable   new   market   actors   or   enterprises   (which   may   lack   assets,   skills,   or   knowledge)   to   access   a   market,   or    b)   ensure   that   the   necessary   market   system   infrastructure   (e.g.   transportation   services   or   rural   market   provision)   is   operational,   to   enable   market   actors,   or   enterprises   to   initiate   a   new    business   model   or   value   chain   within   the   market   system.   Producer   organisations   (POs):   For   Oxfam,   there   are   three   defining   features   of   a   PO:   1.   It   is   a    business   (also   called   an   enterprise).   It   must   generate   enough   profit   to   provide   tangible    benefits   to   its   members   and   cover   its   own   costs.   2.   It   is   owned   and   controlled    by   its   members:   small ‐ scale   producers.   3.   It   collectively   markets   or   supports    joint ‐ marketing   of   commodities   produced    by   its   members.   Value   chain:   The   full   range   of   activities   that   are   required   to    bring   a   product   (or   a   service)   from   conception,   through   the   different   phases   of   production,   to   delivery   to   final   consumers   and   disposal   after   use.   Oxfam   takes   a    broad   understanding   of   value   chains,   and   looks   at   the   complex   range   of   activities   implemented    by   all   actors   (primary   producers,   processors,   traders,   service   providers,   etc.)   to    bring   a   raw   material   to   the   retail   of   the   final   product.   The   ‘broad’   value   chain   starts   from   the   production   system   of   the   raw   materials   and   will   move   along   the   linkages   with   other   enterprises   engaged   in   trading,   assembling,   processing   and   other   activities.  
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