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Timor-Leste Market Development Facility Phase II Investment Design

7 November 2016

Summary of publication

This document outlines the focus of Phase II of the Market Development Facility (MDF), including key approaches and lessons learnt from Phase I.

The Market Development Facility (MDF) was one of DFAT's first market systems development programs. It was designed and structured to enable multiple country programs to trial a new approach to development with centralised technical and risk management support from a Canberra hub to promote institutional learning across countries and within DFAT.

The expansion of MDF from Fiji in 2011 to Timor-Leste (2012), Pakistan (2013) and PNG and Sri Lanka in 2015 is evidence of its success and growing importance to DFAT. This is due in part to MDF's strong alignment with Australia's Aid Policy - evidenced by the Foreign Minister's statement in 2014 that MDF was 'at the very heart of Australia's new aid policy which seeks to achieve better development outcomes in partnership with the private sector'. MDF has helped give practical meaning to DFAT strategies including the Gender Equality Strategy, 'Creating Shared Value through Partnership' and country Aid Investment Plans.

Phase II seeks to maintain the excellent start, build on MDF's strengths, and update MDF's governance to better fit with the DFAT of today and tomorrow. MDF has learned many lessons, started to achieve results and is now poised to deliver systemic change. Maintaining continuity is important; continuity of both the MDF staff – who have been carefully recruited and trained – and of the MDF partnerships that have been nurtured in Phase I. A key strength of MDF has been its capacity as a program to evolve and adapt as circumstances demand, and this must be sustained and fostered going forward.

The key changes in Phase II include an increased emphasis on systemic change and striving for results at scale, clearer communication about how MDF addresses gender issues, and more robust efforts to drive learning in DFAT about the approach MDF employs. Governance and management has also been strengthened with the creation of a Program Managers Forum where all country programs are represented and able to collectively discuss and resolve strategic and operational issues in the program. Clear processes by which country programs can join or leave the MDF have been established, along with more explicit links between MDF and country financial contributions and their strategic priorities. Importantly, additional staff positions for the MDF implementation team have been created to maximise the likelihood of continued MDF success and even closer alignment to DFAT policy priorities.

Full publication

Last Updated: 26 April 2018

Category: Aid

Regions: East Asia

Countries: Timor-Leste