MSD Approach

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MSD Approach 2017-03-06T10:31:48+00:00

What is Market Systems Development (MSD)?

MSD  is a new development aid approach which has recently been applied by different  aid agencies especially donors such as the Swiss Agency for Development  Cooperation (SDC) and the Department for International Development (DFID).

This  approach aims to make the market system function better in order to increase the quality of life of poor people.

The  key features of the MSD approach include:

  1. Systemic action – understanding where market  systems are failing to serve the needs of the poor, and acting to correct those  failings;
  2. Sustainable change – delivering sustainable   outcomes by better aligning key market functions and players with the incentives and capacity to work more effectively;
  3. Facilitative role – determining a catalytic purpose  for the development agent that stimulates, but does not displace, market  functions or players.

Why MSD?

Economic   development is highly dependent on well functional markets. Markets that  function well have stimulate investment and encourage firms to innovate, reduce  costs and provide better quality jobs, goods and services to more people. The  involvement of poor people in economic growth is the best way to get people out  of poverty. The last few years have seen an upsurge of interest in market development  approaches amongst aid agencies, especially to donors such as the Swiss Agency  for Development Cooperation (SDC) and the Department for International Development  (DFID).

How to implement MSD?

MSD emphasizes explicitly that the role of  intervention is temporary and catalytic. Agencies should avoid performing  market roles directly and try to facilitate market players to perform more  effectively. Interventions therefore need to be sensitive to local market  conditions and seek to stimulate deeper and larger change by “crowding in”  other players to improve the functioning of the market system. Successful  facilitation, although not a fixed model, requires organizations that have  credibility, independence and relevant knowledge and skill.

Taken from:

Operational Guide for  the Market System Develpoment (MSD) approach

Donor Committee for  Enterprise Development (DCED)