This case study is part of the AIP-Rural Learning Series.
Market system development (MSD) programs aim to make markets function more efficiently and beneficially for poor women and men, and to achieve this, they work mostly with businesses. Alongside this work with the private sector however, partnerships with government ministries, departments and agencies are also an important part of MSD.
Globally, many MSD programs now have experience of working with government. Katalyst (Bangladesh, 2002-18) is one example; the program collaborated with public agencies on 17 interventions, improving the Government of Bangladesh’s role as policymaker, regulator and service provider to the country’s agriculture sector. ENABLE (Nigeria, 2008-17) is another example; it supported and persuaded government to increase its consultation of the private sector on policy, contributing to 147 new or improved public-private dialogues and 30 reforms. Other MSD programs which have worked with government include Alliances (Georgia), Propcom (Nigeria), Private Sector Development (two programs in Serbia) and the Samarth Nepal Market Development Programme.
Despite this growing experience of working with government, MSD practitioners worldwide frequently cite working with the public sector as one of the most difficult aspects of their work. Three common challenges are:
- How to influence government?
- How to strengthen government service delivery?
- How to help government and businesses work together more effectively?
This case study shares lessons from one MSD program, AIP-Rural, on addressing these three challenges. The case will interest MSD funders and implementers working with the public sector or thinking of doing so.
 MSD offers guidance on how to diagnose market-wide problems affecting poor women and men, and how to intervene to address these problems.
 As well as influencing economies at a ‘macro’ level, governments can influence how specific markets function in three key ways: setting and enforcing rules and regulations (such as import tariffs and food safety standards), providing public goods and services (such as large-scale irrigation, agricultural research and extension), and making, marketing and subsidising goods (such as low-cost fertiliser). Globally, there are heated debates on which of these roles governments should play. MSD programs have tended to take a pragmatic, context-specific view, assessing the effects of government activities on the welfare of poor women and men, and the capacity and incentives of public sector bodies to perform and sustain these activities. Where a role for government seems appropriate, MSD programs can support public sector agencies to improve their effectiveness; where government unintentionally undermines a market’s benefits for poor women and men, MSD programs can support governments to reform.
 See Katalyst (2018). Katalyst’s Experience in Market Systems Development: A Framework for Engagement with Public Agencies; DFID (2017). Enhancing Nigerian Advocacy for a Better Business Environment: Project Closure Report; Davies, (2017). Is a Genuinely Sustainable, Locally-Led, Politically-Smart Approach to Economic Governance and Business Environment Reform Possible? Lessons from 10 Years Implementing ENABLE in Nigeria.