PIMS Project Officer, inspecting the canal and bridge rehabilitation work in the Shabelle Valley

The prospect of disaster will never change, but our approach to resilience can.

While the nature of shocks is uncertain and unpredictable, we can comfortably predict that they will continue to threaten the lives of the world’s poorest. Our traditional approach to disaster in the form of emergency aid is short-term. While this is essential, recent programming is testing how a market systems approach can engender improved resilience in fragile states, addressing both short and longer-term needs. Building resilient households, communities and markets is critical given both the anticipated population growth of people in conflict-affected areas (World Bank, 2019) and the anticipated increase in the frequency of climate-induced disasters. Market Systems Resilience (MSR) provides a framework to build resilience in coordination with market systems interventions.

3 Lessons; 2 Programs

At the 2019 SEEP Annual Conference, we presented two DFID-funded programs to explore lessons learned through MSR approaches.

1. The 4-year Promoting Inclusive Markets in Somalia (PIMS) program ended in 2019, with market systems interventions focused on dairy, sesame and fisheries value chains. PIMS was faced with an unprecedented drought in 2017, which led to an estimated 30% livestock loss (FAO, 2017), extreme food insecurity and impending risk of famine.
2. The 4-year DaNa Facility (DaNa) in Myanmar started in 2016 and is currently ongoing. DaNa works to improve the business environment at the SME and producer level, focusing on the development of the vegetable sector. In early 2019, a new conflict in Central Rakhine state between a local insurgency group and Myanmar security forces dramatically increased instability and access to critical DaNa interventions.

James Naughton presenting at the 2019 SEEP Annual Conference

Lesson 1: Design

When market systems projects are being designed, employing a resilience lens to screen sectors and develop interventions can enable markets that are better able to respond to disaster.

Embedding resilience measurement components into the projects’ Monitoring and Results Measurement (MRM) frameworks can help us understand the resilience of systems, and whether communities and households are now less vulnerable. Incorporating building blocks of market-level resilience into program design early on can inform inventions later and help with understanding the implications of shocks should the program be affected by a climate-related disaster or conflict

DaNa’s vegetable sector engagement in Central Rakhine focused on 240 villages that exhibited low risk of conflict early on. This approach promised sustainable and profitable small-scale production in a fragile and undeveloped market context while catalyzing a competitive input market. Yet the emergence of conflict meant that design assumptions had to be revisited and reassessed to understand how resilience to the conflict could be incorporated into program design.

Lesson 2: Adaptation

Market systems programming can be evaluated and adapted to make interventions more responsive to shocks.

Market systems programs must adapt and pivot to potential stresses and shocks. Confronted by the drought, PIMS pivoted its Cash for Work (CfW) workstream, rapidly utilizing an MSR lens on CfW interventions to combine the short-term impact of this emergency response alongside the longer-term impact of improved sustainability of infrastructural assets and increased market resilience. This meant that PIMS was inclined to select interventions based on a sustainability, impact, and response (SIR) framework.

PIMS’ approach longer-term, economic approach to a humanitarian crisis was unconventional, but the results were fascinating. While injecting liquidity into devastated households, the approach generated over $3.5 million in net additional income through the creation of 5000 ha of new productive land. Indeed, the canal work offered a form of “pre-insurance” as a livelihood mitigation measure. A future crisis is probable, which is why this sustainable, long-sighted approach is essential.

Similarly, DaNa was forced to rapidly assess and adapt its vegetable sector interventions. As a result, DaNa reduced the level of engagement to villages with no active conflict or military presence at all, yet deepen the interventions in these selected villages, which led to strengthened local networks despite the emergence of conflict. The interventions navigated conflict dynamics to formally include marginalized Rohingya Muslim communities in Central Rakhine into value chains.

DaNa introduced lower-cost input interventions in the vegetable sector, overcoming an emerging barrier that farmers were becoming reluctant to invest in interventions, due to fears of imminent displacement resulting from escalated conflict. This enabled DaNa to improve input supply through greater shock resilience to the deteriorating food security in the state of Rakhine.

Lesson 3: Integration

Market systems programs should be fluid and have the room to complement other strategies.

Integration is frequently cited as crucial, but in practice, how to do it remains a real dilemma for donors, implementors and other actors alike.

PIMS navigated aid coordination during the drought, and while aid provision was certainly needed, it led to the distortion of PIMS’ markets. For example, communities, where PIMS was attempting to stimulate private sector activity, were offered free milk pails and vaccinations. There are complex factors at work here and difficult conversations that go beyond the scope of this blog, but this example usefully illustrates how strategies can work against each other, and why integration is ever more critical. DaNa had more success in integrating into their revised operational framework with the Mercy Corps humanitarian engagement, relying on Mercy Corps coordination activities with a wider development sector cohort to adapt continued operations.

The integration of market systems programming with other strategies needs to be tailored and nuanced, considering governmental strategies and approaches by local actors.

PIMS and DaNa provide credible evidence that applying a resilience lens to market systems can work. We need to continue to document further lessons to develop an accepted understanding of the MSR approach.

James Naughton has significant economic development expertise from private, non-profit sectors and academia with experience working in 19 countries. James is currently working on a technically-focused investment and trade portfolio. James has deep expertise in facilitating, structuring and catalyzing investment into East Africa through blended finance and private investment. James has an academic development background and is presently undertaking a Ph.D. course in Economics focused on the evolution of concessional lending and the macro implications on trade and investment.

Rosa Tarling is an experienced manager currently working on an economic growth portfolio that includes programs spanning investment promotion, market systems development and business environment reform. Rosa has helped to deliver results in challenging contexts, having managed programs in several fragile conflict-affected states with technical expertise in research surrounding delivering market systems in thin markets and deepening financial intermediation in fragile states. Rosa has also led multi-stakeholder research projects in Uganda.