Adding Value to Value Chains: Unlocking the Poverty-Fighting Potential of Value Chains

Adding Value to Value Chains: Unlocking the Poverty-Fighting Potential of Value Chains

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We’ve identified four major issues we think need to be addressed in order to enable more poor people to participate effectively and sustainably in market systems and value chains, enabling them to work their way out of poverty. Donors, private sector partners, governments and NGOs need to come together to recognize these fundamental challenges, and find ways in which we can work together to overcome them.

Poor people shoulder the biggest risks in market systems and value chains. If crops fail, prices drop, or there is an illness in the household, they may have nothing to fall back on. These disproportionate risks, and their inability to mitigate them, prevent poor people from effectively participating in markets. This also weakens and destabilises value chains for actors who process, distribute and retail the products. Creative solutions that work with all stakeholders in the value chain are needed to alleviate the burden of risk from the poor. Investing in a risk-management ecosystem will benefit people at the bottom of the pyramid while building a more resilient and reliable value chain.

Poor people face multiple barriers to participating in markets. These can be social or educational as well as economic and infrastructural. Complex, inter-related issues are systemic and need to be tackled as a whole. By looking holistically at the system that poor people operate in, we can identify the key levers for change.

The development sector needs more space to try new approaches without the pressure to deliver to specific targets. Small-scale trial and error is an efficient way of identifying what works, but (donor) budgets typically don’t allow for this. We need the freedom to fail constructively so we can identify new and cost-effective solutions rather than becoming overly reliant on a few models that as yet haven’t solved the global problem.

The scale of the challenge of eradicating poverty means we also need large-scale solutions. But what does scale mean? We think it means collaborating with and leveraging the reach of public and private sector partners on the design of policies and interventions. Only by working together in this way can we lift millions, rather than thousands, of people out of poverty.

We don’t know all the answers, though we do have some examples from our work to show how development organisations can successfully work with donors, governments and the private sector to overcome these challenges. CARE believes many more poor people can be empowered to lift themselves out of poverty, but we need to work together to speed up the process. This report is an opportunity to open up a dialogue on how to do it.

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