Engineered inclusive growth

The ABIF combination of an M4P strategy and an investment challenge fund machanism opens up significant potential for the project to achieve sustainable changes in the way that market systems work and impact on target beneficiaries at a level of scale that has been largely missed in Afghanistan until now.

There are two key foundations to the ABIF approach:

1. The challenge fund investment strategy that provides a market based rationale for public support to offset the public risk that impedes investment; and
2. The market development strategy that ensures that investment projects bring measurable benefits to the project's target beneficiary groups.

This approach distinguishes ABIF from much of what has gone before. While there have been projects that have successfully encouraged private sector investment (e.g. ASMED), they have not applied the same kind of project selection principles. And there are many other projects which have focused on rural development (most of ABIF's target beneficiaries live in rural areas), but they have not had the same focus on bringing sustainable change to market systems.

Through the challenge fund, ABIF has the potential to support "anchor investments" in innovative businesses and business models through the challenge fund investment that will simultaneously:

1. Contribute to the restructuring of the economy that is an essential precondition for growth; and 
2. Ensure that growth reaches out into market systems where our target beneficiaries are present. 

In other words, the investment project becomes the driver for systemic change in related markets because achieving systemic change is built into the very business model that ABIF is supporting. To give just one illustrative example, ABIF could support investment in a new food processing facility linked through a contract farming mechanism to a large number of farmers.

While at present we do not have the size of funds required, it is not so difficult to imagine how initial ABIF investments could be extended through the implementation of a carefully designed scaling up strategy. Spontaneous "crowding in" rarely happens, and so having the means to build on the anchor investment could further enhance the impact of the project. That is something for the future!

This model (it seems to me) if fully exploited, could make a significant contribution to Afghanistan's development. It provides the impetus for investment and it ensures that the nature of the growth associated with that investment is inclusive. This kind of engineered inclusive private sector led growth has not been attempted in Afghanistan until now, but just by looking around, reading the library of reports already out there and meeting with Afghan business people the potential is clear.