Changes in firm behaviour or investment lead to better or cheaper products or services for the poor

This page shows evidence that businesses deliver better or cheaper products or services to the poor in a lasting and sustainable manner following a government or donor intervention.

The evidence on this page shows that value chain and market systems development interventions, as well as private sector engagement programmes have been effective in creating incentives for businesses to provide access to products and services to small businesses or farmers.

Improved service provision to the poor as a result of sustainability certification

One study shows a positive impact of Fair Trade Certification on access to finance.

  • Ruben and Fort (2012) assess the impact of Fair Trade Certification by comparing 180 Fair Trade coffee producers and 180 non-Fair Trade farmers in Peru. Fair Trade farmers are found to receive better access to financial services due to the collateral value of Fair Trade delivery contracts.

Improved product and service provision as a result of market systems interventions

The examples below illustrate how market systems development interventions have effectively led to improved access to specific value chain services and affordable packages of quality seeds for poor farmers, as well as access to information for small businesses.

  • According to a review by Practical Action (2008) of a project to develop the cattle market in Guruve District, Zimbabwe, the project helped to initiate new commercial relationships between farmers and suppliers of veterinary drugs. As a result, Practical Action estimates that around 20,000 farmers have increased their uptake of veterinary services. Before the project, many cattle in this region died prematurely from preventable diseases.
  • A good example of demonstrating the business case of providing tailored products to poor people is provided by Katalyst, a market development programme in Bangladesh. Companies active in the seed market primarily targeted only large farmers through large packages of seeds. Katalyst worked with two companies to develop a business plan to suply quality seeds in mini-packets to smaller farmers in more remote locations. Before the end of the season, these companies sold their entire stock of more than 400,000 mini-packets. Though the product was meant to be launched in 5-10 districts, they were eventually sold in more than 50 districts.
  • FIT-SEMA (2004) interviewed 1111 individuals to assess the impact of the FIT SEMA Project of the ILO, which worked with Ugandan radio stations to establish small enterprise-focused programmes. As of 2004, 12 radio stations had started to broadcast at least one small business-focused programme due to FIT’s activities and 7 million adults across the country listened regularly to the programmes, thereby accessing new information about good business practices.

Improved service provision as a result of a donor-business partnership

The example below shows how a partnerships with individual large businesses, in this case initiated via a challenge fund, has also been successful in extending financial services to the poor.

  • A Review of the AusAID Enterprise Challenge Fund (ECF) (2012) describes how a matching grant to the mobile payment service provider WING in Cambodia encouraged the company to expand into rural areas. The  grant funded 25% of the cost of extending affordable payment services to rural Cambodians, and was used mainly for education programs and marketing campaigns. By the end of March 2011, two years after the grant was awarded, WING had reached more than 200,000 customers, most of whom were previously un-banked. The company’s money transfers are 50% cheaper than other locally available methods.