Approaches and tools
From microLINKS Wiki
There are numerous tools and approaches available to help donors, practitioners and policy planners spur the economic growth of small firms, communities and nations. A few of them are listed below.
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Sustainable Livelihoods Approach
Championed by the UK Department for International Development (DFID), the Asian Development Bank, CARE and many other organizations, this is an integrated approach to thinking about the objectives, scope and priorities of development activities. It is based on a joint examination of how poor and vulnerable people live their lives and the importance of policies and institutions. This approach helps practitioners design activities that are:
- People-centered
- Responsive and participatory
- Multilevel
- Conducted in partnership with the public and private sectors
- Dynamic
- Sustainable
Whereas the value chain approach considers the intersection of people’s livelihoods and market systems from an economic perspective, the sustainable livelihood approach takes a more people-centred perspective. It makes the connection between people and the enabling environment that influences the outcomes of livelihood strategies, and helps identify the potential of people with regard to their skills, social networks, access to physical and financial resources and ability to influence core institutions. To learn more about the sustainable livelihoods approach, click here.
Microfinance
The increasing prevalence of conflict, especially among the world’s poorest nations, has compelled USAID and other donors to intensify their focus on economic development strategies for rebuilding conflict-affected communities. Although microfinance is widely considered an important component in rebuilding and sustaining economic recovery, its potential has yet to be realized. Some programs focus only on microcredit despite demand for other types of financial products and others fail due to the inappropriate use and faulty design of institutions and products that do not suit the environment. Applied research to identify demand, design institutions and products, and develop practical solutions for effective use of microfinance for conflict-affected areas is scarce. Lessons that could help manage microfinance institutions during sporadic, low-intensity conflicts are almost non-existent.
Recent research is examining the minimum environmental conditions required for initiating microfinance in conflict-affected areas, the types of institutions that are most effective in providing financial services in these areas, and the types and sequencing of financial products needed to serve those affected by conflict. Researchers are finding that the preconditions for initiating microfinance depend on the community and the magnitude of damage caused by the conflict. It also is clear that the financial services and products offered in conflict zones must be specialized and adapted to the context. For example, while savings mobilization may be appropriate in some situations, it is not in others. USAID's research priorities are to 1) examine donors’ roles in supporting microfinance in conflict areas; and 2) develop a better understanding of possible institutional linkages and partnerships, and their potential impact on creating a stronger microfinance industry in conflict areas. For more on microfinance in conflict-affected environments, click here.
Making Markets Work for the Poor (M4P)
The role of markets is critical to understanding and addressing poverty. Different market situations impinge on the lives of the poor on a daily basis, for example labor, land and financial services markets; commodity and product markets (such as agriculture), services markets (infrastructure and business services), and markets for public services (such as water). While for some, markets are considered to be the domain of the rich and market reform a process from which the poor must be protected, some argue that improving market operations has the potential to raise incomes and reduce poverty on a massive scale. While the M4P approach is not a precise formula, it is a rigorous process and a market development framework that guides analysis and action and one that
- Is grounded in where the poor are in markets
- Understands the complexity of market systems
- Builds realistic plans for how markets can work more effectively in the future
- Sets out to address the key impediments to better functioning markets
The approach uses facilitation rather than direct interventions and focuses on market systems, scale and sustainability. For more information on the approach and a list of M4P case studies, click here.
Bottom of the Pyramid
Aiming to help the roughly 2.1 billion poor who live on less that $2 per day,[1] this approach focuses on poor people as consumers and entrepreneurs rather than as beneficiaries of a development intervention. Companies partner with the poor to innovate and develop products and services that work for the poor and are scalable and replicable across contexts. The collaboration between the poor, civil society organizations, governments, multinational companies and other firms can create large-scale and widespread entrepreneurship, fast growing markets and a sustainable solution to poverty. Large and small private enterprises are beginning to build markets at the bottom of the pyramid as a way to earn a high return on their investment and simultaneously diminish and possibly eradicate poverty. For a summary of the approach, click here. To read the postings and synthesis of a discussion on the role of the private sector in poverty alleviation at the base of the pyramid, click here.
Social Enterprise
Social enterprises are organizations or ventures that achieve their primary social or environmental mission using business methods. They reinvest profits in the business or in the community and, in doing good while doing business, they address social needs rather than maximize profits for themselves or shareholders. The needs social enterprises address and the business models they use are as diverse as human ingenuity. Social enterprises apply market-based strategies to today's social problems, using an array of business models for the common good — retail, service and manufacturing businesses that help people overcome employment barriers; contracted providers of social and human services; fee-based consulting and research services; community development and financing operations; and even technology enterprises. They are conceived and operated by visionary entrepreneurs who want to improve the common good and to solve a social problem in a new, more lasting and effective way than traditional approaches. Click here for more information on this approach.
Competency-based Economies through Formation of Enterprise (CEFE)
CEFE is a comprehensive and adaptable set of training tools that use an action-oriented approach and experiential learning methods to develop and enhance the business management and personal competencies of target groups, mostly in the context of income and employment generation and sustainable economic development. Members of the Global CEFE Network provide the following services:
- concept development
- training of trainers
- course adaptation, preparation and realization
- manual preparation
- project implementation
- monitoring and evaluation
Click here for more information on the CEFE approach and how to join the network and find certified trainers.
Footnotes
Navigation
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