What is M4P and M4P2?
What is M4P?
Making Markets Work Better for the Poor (M4P) is an approach that aims to accelerate pro-poor growth by making markets function better and with greater fairness for the poor men and women that participate in them. M4P focuses on changing the structure and characteristics of markets to increase participation by the poor on terms that are of benefit to them. It addresses the behaviour of the private sector, through a combination of changes to government policies and support to development of new business models that are more inclusive of the poor. Therefore they reinforce and strengthen market systems, rather than undermining them.
What is M4P2?
Making Markets Work Better for the Poor, Phase 2 is funded by the Asian Development Bank and the UK Department for International Development and aims to increase participation of the poor in three thematic areas – public private partnership in infrastructure services, value chains, and private sector employment. The project is being coordinated through the Ministry of Planning and Investment.
The programme’s primary focus is to bring about systemic change – changing the incentives that the market system in Vietnam provides to participants so that markets work better and fairly for the poor. Because change is systemic, it impacts all market participants, helping to deliver large scale impacts. And achieving systemic change ensures that these changes to the way the poor participate in and benefit from markets that matter to them are likely to be sustained in the future. Changing particular market systems involves addressing the government and market failures that are constraining market growth and deepening and, most probably, disadvantaging the poor. This means that, frequently, it will be necessary to engage with the public sector to address government failures in policies and institutions and the private sector to address market failures – when markets fail to function in either an efficient or inclusive manner. M4P2 provides the instruments to engage both:
- The Action Research Funding Component, implemented through the Policy Action Research Unit (PARU), provides the instrument for addressing government failure.The Policy Action Research component will fund research on a competitive basis leading to the adoption of market-oriented and pro-poor policy change. Grants from the US$ 525,000 fund will be awarded to research institutes and credible stakeholder groupings to support relevant research in the three key thematic areas of M4P2 – public – private partnership in infrastructure services, value chain development and labour markets.
- The Vietnam Challenge Fund (VCF) implemented through a specialised unit within the M4P2 project provides the instrument for engaging with the private sector to innovate business models and technologies that will improve pro-poor outcomes. It is the largest component of the project with a fund size of US$ 3 million. It is designed to challenge the private sector to propose innovative new business models that engage and benefit the poor, on a replicable and sustainable basis. The VCF will initially focus on agro-processing linkages with the poor, but will expand to the programme’s other thematic areas, if the initial implementation experience is positive.
- The Capacity Building Component is under the direct control of the Foreign Economic Relations Department (FERD) of MPI with assistance from the Consulting Team. The total funding of $230,000 will be used to support relevant training, seminars and workshops aimed at improving the market conditions for the poor. The priority for the capacity development component will be within MPI at the headquarters and Provincial levels, as well as other key government ministries such as MARD during the early phases of the project as this will ultimately determine the success of the project and the longer term use of the approach. Then the training is expected to be broadened to incorporate other stakeholders, particularly those in the private sector.