An Empowering Tool

SCALING UP

Adolfo Brizzi, Director PTA, IFADJune 14, 2012

WHAT ARE WE SCALING UP ?

Our projects – From small to big– Limited scope to larger coverage– Phase 1 to Phase 2 …..

This is a money issue The more money is available the easier it is

WHAT ARE WE SCALING UP ?

What about if the money is short ? $

We have ideas

• Innovate, make it work and hope for someone else to pick it up and replicate

• Co-financing• Leverage remittances• Mainstreaming into Government Programs (MIC agenda) • Policy dialogue

What about helping the poor reach scale ?

• Scaling up not an end but a means to achieve wide-spread benefits

• When you are poor, voice and scale is the best hope to be heard and create opportunities

• Scale is power, collective action, organization, becoming a market (consumers and producers), economy of scale, efficiency, reduced transaction costs, bargaining capacity, access to services

• The bottom of the pyramid: potentially the biggest untapped market by the private sector.

• Scale up as a leverage to sustainability

IFAD Agenda ? • BOP: Largely a poor small-holder business• Organize the tail-end of the value chains• Micro-finance, risk management tools• Institutions of the poor, social empowerment, “facebook effect” • Mostly a software agenda, (not a money issue)• Can be self-replicated• Enhance private sector ability to access BOP as organized

markets (supply chains) • Leveraging a potentially much bigger financing capacity• Need to operationalize the concept of “pathway to scaling up”

in project design as a way to build collective action

Where are we coming from: a dysfunctional model

Public Sector

Private Sector

Communities

Intermediaries of all sorts

Dominant, Inefficient Public Sector

Disinterested Private Sector

Disorganized smallholders and groups

High transaction costs

Do-Good Projects

We need a new model:PPP with a “P” for people

Smallholder Sector

Public Sector Private Sectr

Becoming a market and leveraging more competition, access to banking, markets, etc.

Demand for governance & accountability

Devise regulatory framework and incentive mechanism for PPP

Rethink public sector intervention and find better ways to deliver services

Attract private sector and link their business model with development objectives

People Sector

Public Sector Private Sector

Institutions of the poor

The graduation model

Affinity-basedSavings and Loans

Activity-basedValue Chains

Assets/marketing

Resource-based Irrigation,

Watershed, forestry

FranchisingRetailing

Commodity Cooperatives Federation of

User Groups

Marketing services

Banking Savings &

Loans Coops

Different levels of associative and federative tiers

TradeCommunity enterprises

Institutions firstMoney second

Going to Scale

BanksMicrofinanceInsurance Co.Service Providers

People Sector Institutions

Money and InfluenceAgri-businessInput suppliersService ProvidersInsurance/warehouse

Control over nat. res. (land, water, forest, fish)Sustainable Use/financeAgri-business

Bridge the viability gapAgriculture is a business, but for the private sector to work with smallholders it costs more. We can help bridge the viability gap. On the demand side:

– create a new market. BOP, People Sector, scale, collective action.– Demonstrate creditworthiness of our clients to banks/MFIs, leverage

remittances

On the Supply side. If “people sector” scale is not enough (transaction costs too high), devise an incentive mechanism to attract the private sector.– Subsidizing private goods through matching grants not a solution. – Better to finance (semi) public goods as part of matching grants, but

associated to the private sector business plan. – Design matching grants competitively and look for leveraging private

sector money in project design (co-financing)

Take away• Scale up results not necessarily projects

• Financial sustainability and scaling up more likely to come through the private sector, remittances, banks, beneficiaries contribution, rather than ODA or Government.

• In MIC, need a different engagement approach. Innovation, KM, policy dialogue, leveraging public and private sector money

• Build scale up strategy in project design (“pathway”)

• Develop delivery “products” around the “people sector” models, brand them and sell them. Wholesale rather than retail

Make ideas converge

1000 flower bloom Branding & Customizing

Scaling Up: deal with growing complexity by keeping things simple

• Highly distinctive core business• Keep the business model as simple as possible• Apply it relentlessly to new opportunities and innovate• In pruning your catalogue and bringing it to scale make

sure you keep what works• Keep flexibility, constant revision and innovation to adapt

your core products and survive changes• Keep some part of your business on innovation only• Innovation leads to scaling up which can lead to more

innovation