Inclusive Market Development

UNDP's programmes/projects with the private sector vary considerably in nature and size but most of them aim at inclusive market development (IMD).

Inclusive markets are markets that extend choices and opportunities to the poor (and other excluded groups) as producers, consumers and wage earners. Inclusive markets thus create jobs and affordable goods and services needed by the poor.

In a number of developing and transition countries UNDP contributes to development of inclusive markets by working in the areas of policy and institutional infrastructure, value chain integration, provision of affordable goods and services, entrepreneurship development and corporate social responsibility. These areas are the pillars of UNDP's private sector strategy.

The IMD approach focuses on entire markets or sub-sectors that are important to the poor by addressing barriers to inclusive market development at various levels (micro, meso and macro). Such barriers may range from lack of appropriate policies, over limited access to finance and markets, missing business and value chain linkages, capacity constraints to lack of infrastructure, etc. Thus, various interventions at different levels might be needed.

The IMD approach promotes participation of all relevant actors at various levels. Which market/sector to target and how to promote inclusion is defined through an open and participatory process where the focus is on the sectors/markets that are important to the poor. The process involves not only UNDP and other UN agencies but also additional partners/stakeholders such as the local government, academia, private sector organisations, civil society organisations, etc. Upon selection of target sector/market the sector specific stakeholders are identified along with investors and/or lead firms. This ensures a demand driven strategic approach where the opportunities for the poor are the starting point.

The IMD approach has evolved from UNDP's Growing Sustainable Business (GSB) initiative, which came into existence in 2003. GSB signified a new and innovative approach to work with companies on their core business while promoting development objectives. GSB has established programmes in over 15 countries across Asia, Africa, Eastern Europe and Latin America. GSB global portfolio has counted more than 50 projects distributed among the energy, agriculture, water, telecommunications, pharmaceuticals, financial services and manufacturing sectors. GSB has worked with over 75 companies from small- and medium sized enterprises (SME's) to multinationals (MNC's) and has facilitated direct investments ranging from USD 10,000 to 4 million. Most of the former GSB countries are currently transitioning into employing the broader IMD approach.

The GSB initiative is still ongoing in a number of UNDP's programme countries, however most of these countries are transitioning to the broader IMD approach thereby shifting the focus from working with one lead firm to strategically identifying sectors and value chains and work with multiple companies in the selected sectors and value chains. IMD/GSB is currently active in the following countries: Angola, Bosnia & Herzegovina, Egypt, El Salvador, Indonesia, Kazakhstan, Kenya, Kosovo, Madagascar, Malawi, Mozambique, Nigeria, Uganda, Uzbekistan, Syria, Turkey, Zambia.

EXAMPLES OF INCLUSIVE MARKET DEVELOPMENT

In Indonesia, the reconstruction efforts in Aceh province following the devastating Tsunami provided an opening to expand opportunities for farmers.

From 2006 and onwards, working with the local government, UNDP helped create a programme that supported farmers in export oriented sectors by linking them to external markets.

The programme has resulted in orders equaling roughly USD 1,000 in revenue per household. It has also contributed to a decline in poverty of almost four percent in Aceh between 2004-2008.

In Bulgaria, UNDP has, since 2000, assisted the Government in designing and implementing a programme to support local entrepreneurs and start-ups by providing business and financial services at locally-established business centres and business incubators.

The efforts have resulted in the creation of nearly 40,000 sustainable jobs, and a network of 42 autonomous and financially viable support organizations that have provided services to 26,000 entrepreneurs.

A new financial institution comprised of loaning and leasing is also in the process of being created as a component of this initiative.

In Latin America (Brazil, Colombia, El Salvador, Guatemala, Honduras and Peru) UNDP contributed to biodiversity conservation and sustainable livelihoods among coffee farmers.

In partnership with Rainforest Alliance, the international conservation organization, UNDP has worked with major players in the coffee industry, such as traders, roasters and retailers to build the demand for sustainable “Rainforest Alliance Certified” coffee.

The partnership, initiated in late 2006, has supported approximately 15,000 farmers and the growing demand for sustainable coffee has increased certified areas from 92,000 hectares in 2006 to more than 300,000 hectares today.