Market systems thinking in inclusive finance: influencing the influencers
The inclusive finance community is proud to have attracted private capital over the last decade. However, most funding is used to finance loans and minimal investment is made to understand the underlying causes of market failure and to address constraints that inhibit development of markets to benefit the poor. As the primary donor consortium for inclusive finance, CGAP set out to develop new guidelines for funders to support greater inclusion for the poor. Alan Gibson was instrumental in CGAP’s decision to promote the market systems approach and continued to influence and support CGAP until his death. While many funders appear to support the approach, there has been limited progress and the current political economy of aid does not support good practice. For more funders to understand and adopt this approach we need to demonstrate and document success; use language that resonates with non-experts; and support capacity building of donor agency staff.