New Direction for Funders
The increasing role of the private sector in serving the poor and financially excluded as well as advances in technology and new business models serving the bottom of the pyramid are strengthening the potential for advances in financial inclusion. This blog series will feature global experts writing about how donors can play a catalytic role in advancing market development, especially in complex emerging economies, to enable financial inclusion for all.
How can funders balance the need for flexibility and accountability requirements with partners while ensuring effective outcomes? The answer lies in defining a monitoring and impact evaluation system that includes a "theory of change," quick feedback loops and reasonable assumptions.
How do we support a market building approach in practice? The current advice is to either become a market facilitator or fund one. But what is a market facilitator; what do they do?
Market systems are dynamic and changes stimulated by projects are rarely linear, making it difficult to match each activity with a single output and outcome. Rather, activities can generate multiple outputs, and outcomes are interconnected and can occur at different points in the market system. Moreover, traditional M&E approaches tend to emphasize baseline and end line indicators such as volumes and values of production, productivity, income. However, we found that changes in relationships, interactions and behaviors of market actors were much better indicators of sustainable change. Yet these indicators are more challenging to capture.
Market systems are complex, and it's nearly impossible to predict their future outcomes. Can setting concrete goals be too limiting?
Being able to measure and demonstrate progress are critical issues as taxpayers and other funders of donors and DFIs require explanations and justifications of the use of their limited resources. A handful of donors are starting to experiment with different tools for measuring progress in agricultural and other non-financial markets. It is difficult work, especially when attempting to measure attributable and sustainable changes to a market system.