Linking Worlds: linking ‘small-scale’ producers into large and formal markets

Article, 15 January 2013

Small-scale producers and low-income consumers often struggle to participate in formal markets. IIED works to identify how organisations and networks can help overcome this by looking at successful innovations in the systems that link small-scale with large-scale markets and enterprises.

A smiling woman from Kenya sits beside her sewing machine.

Those innovations might be found in networks, intermediaries or facilitators. They may reduce poverty, offer broader livelihood benefits or ensure more sustainable natural resource use. Overall, they help tackle the marginalisation and exclusion small-scale producers and low-income consumers face in markets. Challenges like high transaction costs, difficulties in aggregating supplies and distributing goods, or power and information asymmetries between buyers and suppliers all work against small-scale operators.

We use the tools of ‘business models’ to understand how innovative links create and capture value – whether that value is economic, social or environmental.

We are sharing our findings through a series of publications. The first examines how the UN’s Sustainable Energy for All initiative might best reach the poorest of the poor.

This research on energy, together with ongoing work on textiles, payment for environmental services, agriculture and small scale mining, highlights several shared lessons:

  • Commonly used business model tools offer a framework for identifying ‘pro poor’ adjustments without compromising the key elements of a viable business, such as its ‘unique selling point’ or cost structure.
  • Private sector interventions alone often cannot reach the poorest of the poor. Even reaching those with existing business capabilities and assets may require ‘non-traditional’ business partners, such as government or non-governmental organisations, enterprise associations, social enterprises, communities and those operating in the informal sector.
  • Understanding socio-cultural context is important when designing business models that include the poor. It is not always possible to scale up or replicate models from one context to another.

For more information contact: Abbi Buxton

Read Abbi Buxton’s blog introducing the Linking Worlds research series

Read our blog on how to add value to the East African apparel sector

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