15 May 2015 - Clare Clifton
When you ask women and men in poor communities for their views on the best escape route from poverty, the same responses crop up time and again: jobs, enterprise and economic opportunity.
Poverty is by no means just economic. However, ending poverty means enabling poor communities to find sustainable ways of becoming financially self-sufficient, so they can reduce their dependency on aid.
The rural fishing village of Mo-Albert, Sierra Leone. Credit: Christian Aid / Heidi Bradner.
At the heart of this approach must be a private sector that acts responsibly and includes the poorest women and men as producers, consumers, employers and employees. That's why organisations like Christian Aid have set out to shift market power into the hands of poor, marginalised and excluded entrepreneurs, empowering them to secure a fair value for their work and to access products and services that improve their livelihoods.
Rather than focusing solely on individual producers and enterprises, genuine 'markets work' involves operating across entire market systems: markets have many actors including distributors, buyers, transporters, storage providers, processors, financiers and retailers. Poor producers need to have a voice as stakeholders in their market if they are to realise the opportunities before them.
In order to see a more inclusive market, any changes must be made with those that are marginalised, not for them. The buzzwords here are empowerment, participation and ownership. Why? Because only by enabling smallholders to understand and respond to the barriers preventing them from being successful entrepreneurs can they trade themselves out of poverty.
Overcoming the information gap
Take for instance northern Ghana, where many smallholder farmers in the Upper East Region have traditionally been unable to negotiate fair prices with buyers, due to a lack of availability and accessibility of up-to-date information on market trends. This information gap has inhibited their ability to secure the full value for their produce, attract new buyers, plan production or make decisions about crop diversification.
To overcome these market barriers, Christian Aid worked with a privately-owned agricultural market information system company and a local civil society organisation to deliver a platform that could send real-time market price information to over 500 farmers, via a low-cost SMS system.
Thanks to the initiative, 90% of farmers say they know market prices before they sell, compared to only 30% before the project. As a result they have been able to increase their revenue for the same quantity of produce, because they can now follow price trends and strategise about how, when and where to sell.
Successful though it was, this project was limited to farmers who owned mobile phones and had reliable access to electricity. Women were less likely to own phones or have sufficient literacy and numeracy skills to benefit. In this context, the twin barriers of energy and education prevented some producers from realising the full potential of their products. That's why any approach to markets work must be holistic and wide-ranging.
For an example of this, we can look to Sierra Leone, where a Christian Aid partner provided solar energy to help two fishing communities run deep freezers for fish storage. The aim was to reduce spoilage and enable small fishers to sell fresh, rather than smoked, fish at weekly markets. As part of the project, individuals in the fishing communities were trained in how to install, manage and maintain the solar facilities as a social enterprise.
The provision of the solar-run freezers led to a 30-40% increase in fishers' income and resulted in the emergence of women entrepreneurs, who bought the fresh produce to transport to local markets. The entire project was funded on a part-loan, part-grant basis, with the repaid money invested in new local activities, effectively creating a recyclable, sustainable business model.
Likewise, it's vital we help local producers access the specialist support they need for running a viable business. At times, this means moving beyond traditional grant-based models and towards ‘blended’ support packages, which combine strategic grant support, business analysis and technical assistance with loans and investment finance.
Too often, poor women and men have the enthusiasm, energy and enterprise to succeed, but the rules of the game are stacked against them: the creation of positive enabling environments for businesses is key. As part of improving access to markets, we must commit to tackling the power imbalances, systems and structures that continue to side-line producers and consumers.
Advocacy has a part to play in this. In Brazil, Christian Aid partners have seen success in lobbying the government to commit to procure from, and develop sustainable trading relationships with, smallholder farmers. In Malawi, we have enabled more than 20,000 rice farmers to have a voice on the future of the sector through the creation of a National Rice Platform and farmers’ union.
Let's be clear: we can only deliver meaningful results like these in local contexts by working with expert partners on the ground and by entering into partnerships with a range of market actors across various sectors.
The challenge, for the sector, is to transition from helping individual enterprises grow and towards ensuring that market systems function and generate a specific benefit for marginalised producers. If we want to maximise impact, we must focus on the markets that have the potential to make the biggest difference: the Malawian pigeon pea market or the Burundian sunflower market might not sound exciting to us as donors, but ask a local producer and they will tell you it could be life-changing.
As debates over the future of aid continue unabated, we must not be afraid to act to ensure markets become more inclusive so that poor women and men can move far beyond subsistence and can thrive in communities that are resilient to risks and shocks, whether economic, environmental or social.
If we take a holistic approach – working across entire systems to address issues such as access to markets, information, energy and finance – and if we make empowerment central to this, we will be one step closer to a long-term shift in the balance of power in markets. What's more, we'll also be one step closer to achieving the holy grail of poverty eradication: sustainable impact, at scale, for poor and marginalised communities.
To find out more about the approach and the impact of Christian Aid's inclusive markets work, see here.
This blog first appeared in Devex.