I am in the process of designing a system whereby mainstream markets can play an important role in a pre competitive way in the provision of social infrastructure to poor agricutural communities. This role must be in partnership with governments and donors and not instead of since the responsibility for provision of these services must be govenment led.
A major challenge for the development of the system is whether the donor community will begin to embrace mainstream markets as the most important source of partnership for achievement of MDGs (in many countries but not all) and lifting people out of poverty. At present, the preoccupation of donors with niche markets and NGO led activity is inhibiting the development of effective partnerships. Budgetary assistance is also not proving to be effective particularly for rural communities when centrally donated funds do not get through to them.
Equally recipients of donor funds tend to write plans in line with what they think donors want to hear and not necessarily what is most effective for poverty alleviation. This produces an over emphasis on urban development, encourages urban drift and sends totally the wrong message to young people in the rural sector who do not see any future in agriculture when it is agriculture that, in Africa for example, can lift many out of poverty. Whilst the World Bank finally recognised the potential of agriculture in their 2008 Report - we do not see any evidence of meaningful support for the words.
Commodities are a source of development although when I am asked to speak these days on this subject it is usually to defend the importance of these commodities. There is an increasing tend to get for governemtns and NGOs to focus on the "resource curse" rather than looking at the root causes of problems which are often disillusioned and disenfranchised young people and inequitable distribution of a country's wealth. Budgetary assistance is in theory a solution at the democratic level but it needs to be supported at rural community level by direct evidence of improvments in the quality of life and it is here that our challenges lie.
The proposal I am advocating is for mainstream markets which rely on commodities should be part of a funding mechanism for social infrastructure which directly reaches the local authorities (district assemblies or Departements/Prefectures) of the communities which produce the goods on which our markets rely and through capacity building in those local authorities overtime, develop the susutainability and maintenance culture that is required. Education,health, water,sanitation, roads are all key to a country's development and porductivity and essential to support any diversification away from commodity dependency in the long term. Aid must be more effective and better managed- we hear of schools built with HIPIC released funds which have no funding to operate. - this has to be nonsense. As we move from 0.3% of G20 GDP allocation to aid to developing countries in 2006 (£55bn) to 0.7% (£120bn) by 2015 please let us use it wisely and get the donors to reach out to mainstream markets rather than blame them as part of the problem in a simplistic "pay the farmers more" approach which in itself is doomed to failure and displacement of markets.