Join IFAD and the Global Donor Platform for the launch of the report: The strategic role of the private sector in agriculture and rural development. Jonathan Mitchell (ODI), lead author of Platform Knowledge Piece 3 will be joined in his presentation via video by the authors of the Tanzania, Thailand and Vietnam country studies: Frédéric Kilcher, Wyn Ellis and Pham Thai Hung. A Question and Answer session will follow each discussion point.

1. The strategic role of the private sector
in agriculture and rural development
Platform Knowledge Piece (Part 2)
Jonathan Mitchell
Wednesday 28th March 2012
International Fund for Agricultural Development, Rome
.

2. Rationale for working with private sector
• Donors must understand market systems to avoid
using aid ineffectively or suffering unintended
consequences
• Private sector may need support to implement market
initiatives with pro-poor impacts
• Donor funding is small compared with domestic
sources of rural finance (private and public sector) so
emphasis should be on how donors can leverage these
other sources of finance to reduce poverty at scale
• Donor funds are transient on a project and a recipient
country basis (donors are withdrawing from
Peru, Thailand and Vietnam) – the private sector is
the key anchor for sustainability
2

3. Donor approaches
Progression of PSD approaches
•Structural Adjustment • Research • Supporting producer • Corridors
groups
•Infrastructure
• Extension Services • Policy engagement
• Helping producers
•Access to financial meet standards
services • Input Subsidies • Core corporate
strategy
• Business dev • Value chain
services development

4. Summary of findings on impact (1)
Macro-level interventions to improve enabling environment:
• Structural adjustment: still largely support but, in
themselves, insufficient to generate private sector-led
development
• Infrastructure development: sustainability issues but road and
ICT infrastructure have had striking results
• Business development services: Many different approaches with
varying success, sustainability often an issue
Direct financial assistance to business:
• Social venture & patient capital: Limited availability and donor
acceptance of risk is limited
• Challenge funds & loan/equity through DFIs: clear rationale &
some success but donors concern with failure rate and poor M&E
• Credit enhancement: mixed evidence on additionality &
sustainability of credit enhancement mechanisms
4

5. Summary of findings on impact (2)
Market development:
• Overcome barriers to market entry: some successes, particularly
with using technology improvements to upgrade farmer output
• Supporting producer groups to be viable: some good results if
focus is on giving farmers access to viable value chains
• Incentivising commerical sector to engage smallholders: Some
significant impact at low cost, donors adopt facilitating role
Dialogue & partnership with business:
• Partnerships and strategic initiatives: Private sector takes a
leading role, donors focus on improving development impact &
sustainability of initiatives
• Policy dialogue: importance of consultation mechanisms to
promote market development success & sustainability
5

6. Donor approaches:
An evolving agenda
GIZ partnerships
Market development SDC
WB/IFC
CIDA FAO AusAid IDH Market transformation
&
EU
Challenge funds DFID
USAID Value chains

7. Donor approaches:
Conclusions & Recommendations (1)
1. Engage more closely with private sector:
Many traditional approaches to ARD have
failed and spending on private sector
development is limited
2. Strengthen knowledge sharing: Much
hope in market based approaches, although
limited evidence of impact or learning from
each other
3. Challenge traditional ways of delivering
aid: Different donors are in different places
on this agenda – and the enthusiasm for
private sector engagement varies

8. Donor approaches:
Conclusions & Recommendations (2)
4. Support institutional innovation: Many donor
agencies are not well equipped to work with the
private sector and partner with DCED
5. Evidence supports porfolio approach: There is
evidence that donors can help private sector
development both with short-term market
development initiatives and also ‘hard’ infrastructure
6. Impact at scale: The prospect of working more
closely with the private sector is more effective aid
and poverty reduction at scale through leveraging in
additional finances

9. ODI is the UK’s leading independent think tank on
international development and humanitarian issues.
We aim to inspire and inform policy and practice to
reduce poverty by locking together high-quality
applied research and practical policy advice.
The views presented here are those of the
speaker, and do not necessarily represent the views
of ODI or our partners.
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T: +44 207 9220 300
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Jonathan.Mitchell@odi.org.uk