Good Governance and Market Facilitation

Good governance is no doubt an agenda for market facilitation. Good governance ensures that there exist better structures and conducive environment to attract and foster market facilitation. This paper will give definitions of good governance, give characteristics of good governance, the universal principles of good governance and market facilitation and discuss the manner in which good governance provides and acts as an important agenda for market facilitation.

Scholars define governance as the relation in which government as well as other social organizations interacts how the citizens relate and generally, how crucial decisions at all levels are taken in a complex world. Therefore, governance refers to a process whereby organizations and other societal structures make vital decisions, decide whom to involve in such procedures and processes and the manner in which they give an account. Good governance therefore can be defined as a well-structured approach in which a government integrates all other sections of the society and its organizations in order to achieve common goals that benefit all the sectors of a country’s wellbeing (Graham, Amos, & Plumptre, 2003).

Good governance as a concept is applicable in varying contexts such as global, national, and institutional as well as the community. It is much easier to understand good governance at the national level when one considers different entity types occupying the social and economic landscape. Usually, there are four societal sectors existing among the entire citizens. These sectors include; business, civil society institutions, media and the government. Governance concerns mainly with strategic steering aspects. It involves the direction to follow and indicates the party to be involved in making decisions and in what capacity. The concept of governance is relevant in four areas namely governance in global space which handles issues outside the jurisdiction of individual governments, governance in national space, organization or institutional governance and community governance.

Five Principles of Good Governance

The following are the five principles of good governance according to The United Nations Development Programme (UNDP) “Governance and sustainable Human Development 1997.”

  1. Legitimacy and Voice: This principle emphasizes the need for everyone to participate and have their voices in decision making either directly or indirectly through intermediate institutions representing their intentions. This broad participation comes from the freedom of association and speech and capacities to participate in a constructive manner. Legitimacy and voice as a principle of good governance also involve consensus orientation that calls for mediation of varying interests to agree for the interest of the entire group.
  2. Direction: the leaders and the public need have strategic vision and big vision on good governance, human development and the requisites for such developments. This also calls for deep understanding cultural, historical and social intricacies in which such perspectives is ground.
  3. Performance: Good governance requires that institutions and processes provide service to all the stakeholders in a responsive manner. Further to this, good governance puts emphasis on effectiveness and efficiency ensuring that processes and institutions utilize resources effectively and provide results that meet the needs.
  4. Accountability: good governance requires that decision makers at whichever stage, be it government, private sector or civil society gives an account to the public. Transparency based on the free flow of information concerning institutions and processes to all the relevant stakeholders is emphasised so as to enable the concerned parties understand and monitor the processes.
  5. Fairness: good governance puts more emphasis on equity under which everyone has equal improve and maintain their wellbeing  and  rule of law under which legal frameworks should be implemented impartially especially those dealing with human rights.

Market Facilitation

Market facilitation refers to a form of market intervention, action or agent that stimulates the markets while remaining outside the markets. Market facilitation aims of relationships, incentives, ownership, light touch intervention as well as continuous exit strategy. By improving commercial relationships between market actors and the actors seeing such new relationships and activities as useful, then market facilitators tend to invest in resilient interventions. These incentives can therefore be used to purchase down risk although careful consideration must be on the impact of stimulation on the entire system (routestoroots, 2012). Usually, market facilitators evaluate market intervention strategies, getting various actors to change behaviour in a manner that leads to on-going increased competitiveness and upgrading.

 Good governance as an agenda for market facilitation

Markets undoubtedly play a vital role enabling and stimulating economic development. We are more likely to experience rapid economic development in a case where markets mediating resource allocation is more efficient. Good governance addresses numerous aspects that are vital in fostering market facilitation. The discussion below explains the ways in which good governance plays a major role in market facilitation.

Good governance, especially at the national level encourages and ensures that a given country is politically stable with lasting peace. Such political stability and peace play an important factor in market facilitation. Within the country, the citizens are free to participate in many economic activities. More business activities are conducted opening up more and more markets. This is a crucial aspect of market facilitation. Further, peace and stability with other neighbouring countries occasioned by existence of good governance leads to regional integration. Through integration, one country opens up the market for its products to other countries within the regional integration. Market facilitation therefore comes into play.

Political stability within a country, for instance, encourages foreign investors to come and invest in a given country. Investment policies developed as a result of good governance are not punitive but instead tend to attract investors. Projects brought by foreigners benefit the local people as well as the local markets. Through such activities, a given nation is recognized on an international platform, opening up even more market opportunities in the global market. According to Mushtaq Khan, a professor of economics at the University of London’s School of Oriental and African Studies, “good governance is perceived as a market enhancing policy but not an end in itself. This is to say that good governance plays a major role in market facilitation. In addition, Khan describes good governance as a precondition for economic growth.”

Good governance comes up with policies that are designed to improve the lives of citizens and other stakeholders. Well structured and articulated policies on education ensure that every child acquires quality education and training. This ensures that a given nation has quality human resource that can play important roles in contributing to the economic development. Such quality training promises the citizens employment even in other countries. This means that the market facilitation for human capital appreciates paying more dividends to the citizens (SAHNI & VAYUNANDAN, 2009, p. 63).

Good governance is guided by principles that encourage fairness to everyone and respect for the rule of law. Such principles help come up with strong institutions that adhere to the country’s constitution. Strong and reliable institutions especially financial institutions gain the trust of many people. As such, they tend to invest in such institutions to help them grow further and make them have higher and unquestionable reputation. This in its broader perspective is an aspect of market facilitation occasioned by good governance.  For instance, if a given law is applied without discrimination to everyone governed by such law, then the people’s confidence in the judicial system improves. As such people are encouraged to believe the structures and systems put in place and therefore can take a further step of exploiting the existing markets as well as establishing newer markets.

The existence of good systems of governance ensures that a given government sets up economic policies that are aimed at increasing the economic growth and development of a country. Such strategies and policies help to establish strong financial service institutions that can be relied upon. With the conducive economic environment brought about by peace and political stability, such institutions concentrate on improving the social and economic welfare of citizens by providing financial assistance and advice to customers that wish to invest in the economy. In so doing, the witnessed sound governance provides an avenue for such institutions to explore the market.

Since good governance is an important aspect, a micro approach that has been proposed to create incentives for sound governance includes grants for leaders, usually provided by the private sector. As an example, Sudanese billionaire Ibrahim Mo established a foundation aimed at rewarding Achievement in African Leadership. The world’s largest prize of leadership will be reserved for a democratically elected leader from Sub Saharan African country that will receive the highest score on a performance scale in areas of security, rule of law, political freedom and economic opportunity. The hope of Mo Ibrahim is for the prize to serve as an incentive for leaders to govern honestly and beneficently and relinquish their positions when their time is up.

It is seen that market facilitation goes a step ahead beyond normal arrangements for tendering, supply management as well as capacity building through various activities relevant on local markets and the avenues that Local authorities wish to pursue in terms of market. Usually, market facilitation requires the following to be accomplished (Huther & Shah, 1998, p. 43).

Development of evidence based understanding of the need and demand: one needs to understand clearly need and demand in order to have an influence on the market

Sufficient and appropriate provision: this ensures availability of enough volume of service for every person that has assessed needs. This demands that commissioners and other stakeholders have a clear perspective concerning the works and wants of people.

Right Price: this requires quotation of rightful price of the buyer irrespective of whether is an individual or commissioning body as well as the position of the provider too. For instance, when a contract price is set too low then in the long run the supply might be reduced or some people pushed out of the business. Right price means profitable, sustainable and able to give expected quality and outcomes.

Delivery of effective outcomes: involves changing focus of purchasing from outputs in terms of beds, days and hours to procure by the outcomes desired from the intervention.

Present and the future: understanding of the current situation of demand will act as a baseline for provisions in the future. It is usually recommended that activities involving market facilitation begin at an overall picture of the market and the demand that is supposed to fulfil.

Market intelligence: this includes advancement of a common and shared perspective of supply and demand that leads to an evidenced published market position statement for any given market. 


In conclusion, it can be said that good governance is an agenda for market facilitation. The various principles on which good governance is built upon as seen above create an environment that encourages the process of market facilitation. Governance also opens individual’s minds to understand that a certain group in society may have to play an additional role in addressing problems other than the government.

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