How Can Donors Amplify Impact with Limited Resources?
Dalberg’s recent global study of agricultural markets has revealed that donors are continuing to invest heavily in agricultural programming to improve outcomes of rural communities. While we are pleased that agriculture remains a priority, we observe that donor interventions are siloed with limited collaboration across programs. Increasing information sharing would encourage strategic alignment of programming and private sector activities, thereby amplifying impact of existing funds and delivering a step-change in outcomes for the sector at low cost. Due to the breadth of their networks and geographic footprints, donors are well positioned to form a consortium to invest in a management system that can connect disparate market actors.
Donor activities are often focused on specific value chain actors.
During 2017, we conducted field research in Kenya, Nigeria, Honduras and Nepal, meeting with a variety of stakeholders to understand the high-level challenges that sit across agricultural value chains globally. We found that each donor typically invests heavily in a sub-set of value chain actors within any one geography. For example, USAID offers capacity-building support to smallholder farmers in the form of agronomic knowledge and business management through their MARKETS program in Nigeria. Simultaneously, donors like AGRA are capacity-building financial institutions to educate them on how to serve the agricultural market, e.g., by developing appropriate products for smallholders. The result is that there are a wide variety of actors, who are being supported to some extent by a donor.
While initially impactful, these interventions rarely deliver long-term, sustained improvement in outcomes.
The impact of capacity building on farmer outcomes is well-documented, e.g., USAID’s MERCADO delivered 30 percent increases in gross margin per acre of corn (see annual report). That said, many experts we met with said the impact following a program closure is limited. The reason being that the implementation partner plays a crucial role in supporting and monitoring in-field execution as well as underwriting — or at least facilitating — relationships with buyers. But at program end, these skills are not embedded into the ecosystem, so behavior change is not sustained and market linkages falter.
An integrated approach that involves the entire value chain is more effective but is prohibitively expensive.
Some donors have recognized that programs are not delivering sustained value and are therefore developing programs that incorporate the entire value chain. For example, the Clinton Guistra Enterprise Partnership invests in capacity-building farmer cooperatives to offer business services such as equipment rental, aggregation, storage and input financing to build a sustainable and profitable ecosystem around smallholder farmer. Such interventions, when implemented effectively, are thought to deliver significant and sustained impact.
Unfortunately, these interventions require significant investment in terms of time and finance to reach a sustainability. Therefore, large national donors should look to leverage the existing activities of each other to compound impact.
Existing donor programs could be better harnessed to capacity build the value chain and develop sustainable market linkages.
Within any one country, different donor programs deliver support to multiple actors across the value chain. The challenge is that these programs typically target different regions. Therefore, financial institutions that offer agricultural products are not targeting farmers that have received training.
If programs aligned to target the same beneficiaries, programs would see a magnified impact as a virtuous cycle between programs is fostered. Delivering this requires an integrated approach to spending which incorporates all value chain actors, building their individual capacities as well as fostering linkages between them to amplify the collective output.
Therefore, donors should take a holistic view and collaborate to join the dots across programs.
To successfully network programs together, we expect a single actor (or collaborative) to take ownership of this challenge and develop a platform that joins existing programming. Below, we outline four guiding steps that can inform the setup phase of such a mechanism for integrating and aligning donor activities.
- Collate a database. Work with the biggest donors and country programs to develop a standardized and interoperable database of program beneficiaries. Ensure the format contains sufficient detail to be useful to potential users while remaining within regulatory boundaries.
- Build a platform. Develop an online platform that can service and manage the data, assign a team to quality control the information repository and address ongoing operational concerns.
- Offer access. Open a portal to interested parties, curtailing data access to specific user groups as appropriate (e.g., private equity investors gain access to specific datasets).
- Convene users. Work with relevant actors to convene regional and country-level meetings between relevant parties to share ideas, encourage relationships and form market linkages.
Our suggested intervention would be a systemic solution that accelerates the impact of historic, existing and future programs: sustainably delivering a step-change in outcomes at low incremental cost. This future is at our fingertips — it just needs a catalyst.