In the post below, the authors lay out how COVID19 has also become a positive disruptive force in some circumstances. Specifically, the need for physical distancing and limited travel have substantially amplified the value of digital solutions to various business practices/functions. With the amplified value came multiple opportunities to adapt these possibilities to new services and products. As the post also points out, with any disruption that creates opportunity, how the society/market systems respond will determine if the change will align with or catalyze ongoing movement toward a more inclusive economic system. An integral part of this conversation has to also include the interconnectedness of other systems like judicial systems, political systems, civil society systems, etc. How these systems interact and depend on each other effects how digitization will unfold and if it will lead to greater inclusiveness, competitiveness, and resilience.
With the unfolding COVID-19 crisis, countries like Kosovo will need to accelerate digital transformation for private sector development to increase resilience and optimize business processes. The impact of the crisis in the short term—but probably also in the long term—will shift the Kosovar economy towards a digital economy. It has already resulted in an increased offer of digital training providers. The increased digitization of the economy is happening by automating production processes.
How can development initiatives like the EYE project in Kosovo play a role in supporting the shift to the digital economy? A project of the Swiss Agency for Development and Cooperation (SDC), EYE is implemented by Helvetas and MDA.
Research and Investment in Digitalization
In January 2020, the EYE project conducted a study that found that it isn’t just the growth of exports in the information and communication technology (ICT) sector that will lead to sustainable economic growth. It also comes from the application of digital solutions to the wider economy (e.g. energy supply, finance, agriculture).
The COVID-19 crisis has motivated public and private education providers to develop digital training. Smart investment in R&D is essential to go beyond the ‘welfare package’ and support the training and education industry together with the labor market integration providers to adapt to the new post-COVID-19 environment.
There are promising examples that show how the market is changing in the face of the crisis. One of the partners of the EYE project, Pyper, has been operating in the primary data and research market in Kosovo for about a year and a half. It has been promoting the use of technology in research services and raising awareness on the importance of accurate information in decision-making of the business community, public sector, and the media.
According to Vigan Ramadani, co-founder of Pyper, the crisis has produced opportunities to move industries to adopt technology in research, and they’re doing their best to ride this wave and accelerate the trend towards digitalization. “During the COVID-19 crisis, we received many requests from different companies to collaborate and introduce them to the online research methods, which is a great development considering that in the past we have found it difficult to convince companies to research mobile or web-based tools,” said Ramadani. As a starter, the company just collaborated with some stakeholders, such as the Kosovo Chamber of Commerce, the American Chamber of Commerce, the Chamber of Doing Business in Kosovo, RIINVEST, and dua.com, to develop a research paper to pinpoint the difficulties that businesses are facing as a result of COVID-19. This research is now being used by businesses, policymakers, and development organizations to plan and adapt their interventions.
Linking Investment in Digitalization with Skills Development
Targeted investment, as shown above, builds connectivity in infrastructure, promotes digital firms, and supports the digitalization of the wider economy. This becomes meaningless without a nimble skills training sector twinned with smart job-matching services, both of which should focus on an increasingly digitalized economy that keeps pace with the acceleration of technological development. Fundamental in this is the ability to provide access to training through digitalization and blended learning, modular and flexible training, and investing in long-term sustainability.
Digitalization has increasingly progressed well in Kosovo, pushing for the growth of online training. Non-formal education is one of the sectors that the EYE project has worked extensively in. The demand for online training has surged. The project, therefore, is reorienting its support to digital services and working proactively with partners to identify opportunities.
KUTIA, is a Kosovo-based business that creates web applications and e-commerce platforms among a long list of other ICT services. EYE is supporting KUTIA to adopt an ICT training curriculum and deliver this training in Kosovo. In-class sessions are not possible due to the pandemic. Thus, the idea was to set up the necessary infrastructure to make the full digital transition to offering online training and improve accessibility. “We’re fully transitioning to online format due to the COVID-19 situation. We hope that the online courses will help adapt to the crisis,” says Merita Citaku, Coordinator at KUTIA for Beetroot Academy. The transition training has attracted the attention of 300 new potential participants so far.
Another tectonic shift is in recruitment and matching services. Organizations are becoming increasingly dependent on technology to make sure their teams work efficiently. The workforce is changing, and employers are progressively looking to hire more remote or freelance workers.
Kosovajob is an example. It is a digital job-matching platform that is establishing, through the support of the EYE project, a new software called SIMBA that will combine recruitment, career guidance, and labor market information into one platform. SIMBA was created long before the pandemic, but it has had a remarkable impact on businesses to adapt to the pandemic. The pandemic accelerated the digital transition and SIMBA not only simplified recruitment, but also helped keep everyone safe by removing any need for in-person recruitment. ‘I believe digital services are among the best investments that companies can make,’ stresses Arion Rizaj, the founder of Kosovajob and SIMBA.
Another digital transition that is being fast-tracked is in the business process outsourcing (BPO) sector in Kosovo. Due to its cheap labor, skilled workforce, and geographical proximity to Europe, Kosovo has become a regional nest for offshore outsourcing in recent years. Recently, EYE entered into a partnership with SPEEEX, the largest BPO provider in Kosovo, to support them in creating SPEEEX Education—which provides training and employment for young people. As a large company focusing on BPO in the telecommunication sector for the Swiss and German markets, SPEEEX’s Education component has quickly become a keystone of the organization: as it works to impart skills for hundreds of young people, it also creates a wider pool of job seekers with the right skillset to choose from.
But as the pandemic unfolded, this education provider was also quickly forced to make the digital transition. ‘The COVID-19 pandemic has impacted organizations across nearly every industry and changed how they deliver products and services,’ says Vigan Disha, Managing Director of SPEEEX Education.
The Way Forward
In another recent Helvetas blog on leveraging capabilities of newly acquired technologies because of the COVID-19 pandemic, our colleague Shawn Cunningham argued that “to fully benefit from the new capabilities that technologies provide, we have to let go and re-think our arrangements around the new technology. This is an iterative process. So, we adapt the technology, and then we re-model ourselves around it.”
Not everything is rosy. The risk is that the benefits from the above developments will not be equitable. Until now, EYE looked at increasing the offers of digital training. This also needs to shift to equitable access. As much as digitalization has spread to many parts of the world, knowledge isn’t just a mouse-click away for many young people in Kosovo. It’s important to keep in mind that disadvantaged and vulnerable groups and those already affected by other crises are in acutely precarious situations due to the COVID-19 pandemic.
To be able to represent the rapid change well, the EYE project must also change its internal knowledge management and learning. We’re increasing our investment and attention to digital technology to systematically make available key data and lessons-learned and to capture tacit knowledge and make it explicit.
Zenebe B. Uraguchi, Programme Coordinator, Senior Advisor Zenebe Uraguchi is a development economist. Currently, he is at Helvetas working as rhe Regional Coordinator for Southeast and Eastern Europe and Senior Advisor for inclusive systems development. His professional experience spans more than 17 years and his areas of expertise include the design, management, and evaluation of private, public, and non-profit development initiatives, focusing on employment and income.
Lea Shllaku, Senior Intervention Manager for the Eye Project Lea Shllaku is the Senior Intervention Manager for the EYE project, covering the private sector development portfolio. Previously, she covered the skills development component of the EYE project. Her primary areas of expertise are in designing and managing interventions on skills development and private sector growth.
Lisar Morina, Communications Officer Lisar Morina is a media and communications professional working at the nexus of development and communication. He is currently engaged with Helvetas Kosovo in the EYE project.
In the post below, ACDI-VOCA provides an excellent summary of the first month’s sessions on market system resilience. An important distinction that is always worth reiterating is that when we are talking about resilience we are talking about a complex, multi-dimensional set of social processes. What this means in practice is that there are numerous ways in which a society can be resilient. In every country where I have worked, I am have been amazed at how resilient communities are when dealing with shocks and stresses. At the same time, their resilience capacity has evolved to be resident within informal community structures and mechanisms. While effective, such resilience capacity does seem to have trade-offs in terms of growth and inclusiveness as the responsibility for absorbing a shock or stress fully rests on a community that, as a consequence, requires community membership in order to access support. What we are learning is that for there to be alignment between competitiveness, inclusion and resilience, a society needs to rebalance it resilience capacity orientation from absorbing emergent risks via informal community structures/mechanisms and toward a combination of national, fair, and transparent social safety net/emergency response services and market mechanisms that can identify, prioritize and allocate resources to mitigate/neutralize risks as they emerge.
The global shock of COVID-19 has thrust market systems resilience (MSR), and systems thinking more generally, to the forefront of our development programming. It has never felt more urgent and relevant to come together around MSR. As the first month of this year’s Market Systems Symposium comes to a close, ACDI/VOCA is compiling the key takeaways and reflections.
MSR is Not a Trade-Off But a "Must Do" For Long-Term Competitiveness
USAID and it’s implementing partners have made significant progress over the last year developing definitions and conceptual frameworks to describe, assess, and measure MSR. This work has helped raise the importance and understanding of MSR and how it squares with the other two performance objectives of market systems development: competitiveness and inclusion.
We are quickly learning that without building system resilience capacities, social and economic development gains will remain fragile. MSR has often been framed as a trade-off that businesses and systems need to make between growth and value creation and protection from future shocks or stresses. It’s now a given that shocks and stresses are inevitable, and the systems that are best prepared to manage them will be the most competitive in the long run. There are still, however, only a handful of development programs applying these concepts intentionally. As an industry, we should be emphasizing systems resilience in our programs to protect against future shocks and build a more inclusive and competitive market system over time.
Context Should Inform the Determinants of MSR
As USAID’s Tatiana Pulido said, “Balance and context matter more than absolute measurements” when using the MSR framework. Case studies from the field helped mirror this point. For example, RTI’s Tracy Mitchell shared how their Growth, Enterprise, Employment, and Livelihoods (GEEL) program in Somalia selected the domains most suited to the local context to allow for a deeper dive into its measurement of systems resilience. Similarly, ACDI/VOCA’s Dun Grover shared how the USAID/Honduras Transforming Market Systems (TMS) Activity conducted stakeholder workshops and inferential analysis to understand the most important determinants and capacities to systems resilience.
Sometimes, the shock itself can reveal capacities (or lack thereof) at a systems level. Bernard Conlih de Beyssac, of Helvetas West Africa, shared in the community forum that, in Burkina Faso, the vulnerability of agricultural logistics quickly became apparent once passenger transport services halted. He cautioned against the instinct to immediately fix what seems broken and return to a pre-shock way of being, which he called “the old temptation to relieve rather than strengthen the system and its actors.”
Speed and Participation Inform Systems-Level Responses
While studies around the impact of COVID-19 on food and market systems have been robust, there are fewer examples of how the information is informing key decision makers and market actors. One such example came from Honduras. ACDI/VOCA’s Dun Grover shared how the TMS Activity’s relationships with a local university, chambers of commerce, and government institutions enabled them to conduct an enterprise survey just three weeks after a country-wide lockdown. The team collectively analyzed the data to understand the impacts of COVID-19 on enterprises across four sectors. In the tourism sector, this effort catalyzed a tourism roundtable, which then established a fund to support some 250,000 tourism sector employees financially and with online training and e-commerce support for their businesses. Similarly, in Uganda, MIT’s Courtney Blair shared how a systems pathway toolkit is serving as a valuable communications tool to help market actors understand systems health and the impacts of COVID-19 through systems mapping.
Build the Resilience of Systems—Not Individuals
Market systems, and arguably humanitarian efforts, should focus on systems-level risk. As USAID’s Kristin O’Planick said, “How can we help systems better manage their own risk?” For one, government policies and capacity are extremely important. Systems-level strengthening strategies shared by participants included the following:
Build the Ecosystem for Innovation and Entrepreneurship
The innovation and entrepreneurship panel brought to light the importance of a vibrant entrepreneurial ecosystem in building a resilient market system. The benefits of having diverse market channels, products, and market actors is that they allow systems to adapt to new suppliers or buyers during a shock. A diversity of enterprises also comes with a diversity of resilience-building solutions and innovations that can help firms better manage risk.
For example, in Honduras, e-commerce providers are helping enterprises move their business online. While, in Somalia, dairies are developing an innovative camel milk leasing scheme to ensure a steady milk supply during lean seasons.
A market system with a diversity of ideas and businesses will have greater ability to weather the next shock. At the same time, it is important to support small and growing firms to ensure a more equitable, inclusive market system and prevent further disparities between large and small firms after a shock.
Establish Social Safety Net Infrastructures
A healthy entrepreneurial ecosystem requires a formal and transparent social safety net infrastructure that is proactive in managing risk. This ecosystem involves more than just business development service providers; it involves policy, social safety net, cultural, and other institutions. Add to this a whole set of identity and social norms that encourage risk taking and entrepreneurial activity.
Communities and businesses cannot take on all the risk in a market system alone. Governments need to see that it is in their interest to provide transparent social safety net infrastructure and disaster risk services. This is a natural synergy point for humanitarian and development efforts to join forces to invest more in institutions and structures that provide emergency management, stimulus for vulnerable businesses, and business development services that can support and connect entrepreneurs.
Who to Bail Out and How?
As EcoVentures International’s Mike Field pointed out, the methodologies for understanding which enterprises are critical to maintaining market structures and functioning is a new area that we need to better understand. Within the Aspen Network of Development Entrepreneurs (ANDE), the focus is on supporting small and growing businesses, rather than necessity entrepreneurs, because they drive growth and innovation and pivot more quickly. Support systems need to help innovation speed up over time so that technologies and solutions can deal with the next challenge.
Foster Connections and Broaden Participation Among Enterprises
When firms are connected, they are much better at managing stresses and shocks. Intermediary organizations, such as business accelerators, often act as a bridge. While accelerators may be good at connecting entrepreneurial networks, they also have built-in biases that cause them to exclude more marginalized entrepreneurs. To encourage diversity, we should look to broaden participation. For example, ANDE’s Matthew Guttentag pointed to research showing that accelerators with more women on selection committees resulted in higher levels of support to women entrepreneurs. Similarly, the types of mentors that accelerators select also reflect on who ends up participating in accelerator programs.
Social Norms Influence Risk Taking
Cultural and social norms also influence entrepreneurship. DTA Innovation’s Elizabeth Long underscored how communal norms are not always supportive of risk taking or put significant burdens on business owners to provide family or community safety nets. For example, women often face threats from how society perceives them as an entrepreneurs, which may lower their confidence, risk taking, or ability to obtain funding. Additionally, entrepreneurs are not always the decision makers, despite being the one interfacing with the accelerator. Support systems can address these concerns through social and behavior change efforts as well as their outreach and capacity building.
Gender and Social Inclusion Facilitation Tactics
Marginalized groups face higher barriers to entry when starting an enterprise or accessing benefits from the market system, as ACDI/VOCA’s Jenn Williamson noted. When a market system is inclusive, the structures within it facilitate equal access to resources. The structures also enable the decision making required for women, youth, people with disabilities, and other marginalized groups to have the agency to acquire those resources and to influence the systems in which they live. The inclusion panel discussed several needs that market systems development programs should consider:
This post was written by ACDI/VOCA
By Emmet Murphy, Senior Technical Advisor, Creative Associates International
In this piece, Emmet covers an interesting applied case of market systems resilience in Nigeria. The post highlights the importance of fast and slow moving variables, including the need to learn more about interdependence/interconnectivity of variables that are very easily influenced and variables that are not as easily influenced. The blog also points out that markets have limitations especially when faced with certain shocks, like Covid-19, and that government and civil society have a role in shaping how markets weather and emerge from such shocks. While Covid-19 has hit the Nigerian maize market hard, the shock also presents opportunities to catalyze change at a more fundamental level. For Emmet’s and other projects, capturing learning about when and how market systems changed during Covid-19 will be critically important.
As it interrupts supply chains and halts transport, the COVID-19 pandemic is exposing weaknesses in the resilience of market systems across the globe. This is true for the Nigerian maize market, which lays bare the need to strengthen market systems for post-pandemic recovery.
On March 30, the Nigerian government instituted a lockdown of the capital of Abuja and Lagos and Ogun states to contain the spread of new COVID-19 cases, and several other states also opted for various levels of lockdown. The restrictions on mobility and trade placed immense pressure on the country’s domestic production, which had already seen increased demand and prices due to the government’s reduction of imported cereals.
The pandemic also coincided with the crop planting period, contributing to the rise in input and maize costs by roughly 40 percent, according to the Nigerian Agricultural Policy Project. The immediate rise in key staple prices, which has implications for this season’s harvest and foreseeable impacts on GDP and poverty in Nigeria, highlight the maize market system’s lack of resilience to shocks.
Market systems resilience and proactivity
Market systems research and development interventions in the past few decades have attempted to unpack and address ways to bolster livelihood outcomes. The Market Systems Resilience framework released by USAID’s Bureau of Food Security in late 2018 went a step further to explore structural and behavioral characteristics of how markets do or don’t transform to shocks, including unforeseen events such as COVID-19.
The authors argue that markets range from reactive (inhibitive) to proactive (enabling) in their ability to absorb, adapt or transform in the face of shocks and stresses. They also make a distinction between fast-moving (e.g. prices and supply) and slow-moving (system-level) variables and point out that most development interventions focus on the fast-moving variables directly impacted by a shock like COVID-19.
However, there is a need to find ways to address slow-moving variables, such as market structure and gender norms, that can transform market systems in the long run.
A look at the Nigerian maize market
In 2018, the Nigeria Agriculture Policy Project undertook a survey of 1,400 maize traders to understand the structure of the maize value chain. They found that the rural-urban maize supply chain in Nigeria can be visualized as a massive hourglass, with tens of millions of small farmers growing maize, 100 million people buying maize and 10,000 urban maize traders and a well-developed third-party logistics services and warehouse rental market that guide market trends. The study found that farmers not participating in outgrower schemes receive practically no advances from traders at the onset of the planting season, thus most of the risk is concentrated with smallholder growers at the top of the hourglass.
In recent years, the Nigerian government has tried to rectify some of the issues in the maize market, in which power is concentrated in the hands of traders, informal rules prevail, there’s limited diversity and competition, and short-term margins drive decision making. These factors set the maize market up to be reactive — which is why it was hard hit by COVID-19.
Shortened market hours and restrictions on transit between states during the pandemic shutdown had a direct impact on various components of the maize value chain, including the production of poultry and fish feed. In rural areas, input costs for maize farmers increased. Poultry producers faced shortfalls due to logistics constraints. A range of actors such as food stall retailers, small shops, rural and urban wholesalers, trucking businesses, logistics firms and warehouse companies were widely impacted. This led to a substantial drop in income for those who depend on these industries for their livelihoods, not to mention inflation of food prices for a wide swath of Nigerians.
Addressing slow-moving variables
Given the example of the Nigeria maize value chain and other similar cases throughout the Global South, how can development actors impact slow-moving variables to make market systems more resilient and advance toward more proactive behavior?
This is a question that Creative hopes to address in the West Africa Trade and Investment Hub. In collaboration with USAID and private sector agribusinesses, the project has redirected a portion of USAID’s $60 million co-investment fund to bolster the local food supply and ensure that businesses working with smallholder farmers help them access key inputs and pre-financing, given the impacts of COVID-19 on farmer income, supply chains and other constraints. This contributes to building a proactive market system that is adaptable to future risk by developing new business models, norms and incentives among market actors.
We will be looking to enhance market behaviors that decentralize power of traders, potentially through technology and enhanced farmer networks, improved competition, and increased access to data that allows farmers and consumers to make better decisions. Most importantly, our ability to directly co-invest with innovating U.S. and Nigerian agribusinesses to adapt their business models in the maize, soy, rice, cowpea and aquaculture value chains, deliver value for customers and suppliers, and challenge gender norms within their own operations and broader supply chains will help make these market systems more resilient to shocks from future crises like COVID-19.
By the Nguriza Nshore team
Feed the Future Nguriza Nshore is applying systemic lenses and tactics to shift the orientation of the financial services market system in Rwanda. Nguriza Nshore is focusing on two major shifts in the financial services market system. The first is shifting the orientation of the banking and microfinance service providers toward the SME segment. This shift requires banks and micro-finance service providers to shift their operations and product offerings to accommodate the specific needs of SMEs and the SME segment. The second is shifting the overall balance of enterprise finance away from banks and microfinance service providers and toward private capital that can more effectively serve the growth capital needs of Rwandan entrepreneurs.
While most financial services projects focus only on bank or loan-based financing for SMEs, Feed the Future Rwanda Nguriza Nshore (Nguriza Nshore), a project funded by the United States Agency for International Development (USAID), is putting equal weight on other types of financial services. In particular, Nguriza Nshore is supporting the emergence of more robust private capital options. Private capital is when an organization or investor, such as angel investors, investment funds, impact investors, etc., use their private capital to invest in selected SMEs/firms. While traditional lending organizations make a margin from the difference between the cost of lending (including the cost of the funds lent) and the interest and fees charged to the borrowing SMEs, private capital investors tend to make revenue or a return through a share of the benefits in firm performance. Typically, this occurs through the value of the firm increasing over time, of which the investor owns a portion (i.e., shares in the firm/SME or equity).
In Rwanda, as in many developing countries, the perceptions, cultural norms and mechanisms that allow for private capital to emerge are nascent, making such investments rare. As a result, very few Rwandan SMEs or corporations access private capital financing beyond informal friends and family networks. At the same time, systemic shifts in support of private capital such as high levels of liquidity, high growth rates, shifting norms around ownership, etc. are emerging quickly. The pace and process of change in favor of private capital has been uncertain at times, which is why Nguriza Nshore is working to catalyze the emergence of private capital that is inclusive, fair, and merit based.
Nguriza Nshore is supporting initial transactions that can form an attractive demonstration to both SMEs and investors alike. Given that both SMEs and investors are limited in their understanding of risks and potential benefits of private capital in a Rwandan SME context, Nguriza Nshore has had to actively engage on both sides. For example, most SMEs in Rwanda are driven by short-term demands for cash including personal/family demands, which as a result encourage SMEs to act in ways that can limit their growth and value to an investor. Therefore, a vital issue is to help SMEs realize that they often need to restructure for longer-term growth. This encompasses many aspects of their business — customer orientation, brand value, alliances, data management, decision-making, etc., — but most important is how they manage their human capital. Finding and supporting SMEs that are hungry for growth and demonstrate an openness to partner with investors to achieve more than they can on their own, is of utmost importance to an SME becoming investment-ready.
While finding SMEs with the right mindset is essential, it is not sufficient. Additionally, there are many technical and practice performance improvements required for an SME to become investment-ready. Nguriza Nshore seeks to build the ability of local market actors to deliver needed technical assistance, but as the overall ecosystems are still evolving, Nguriza Nshore often has to step in to fill technical assistance gaps and generate a flow of viable transactions.
Dedicated technical assistance in areas that prepare SMEs to be investment-ready are crucial. Most SMEs are in critical need of improving business management, building a sustainable business model and ensuring value creation. Nguriza Nshore works with several business transaction advisors, who normally have a pipeline of business opportunities looking for financing. Once the businesses are registered with transaction advisors, and an assessment of their investment readiness or lack thereof is established, Nguriza Nshore comes in to provide the necessary technical support to close the deal. It should be noted that it is only those businesses that are judged to be close to concluding the deal that are facilitated and enabled to be investment-ready, as it is critical to catalyzing systemic change that early investments are successful and provide an attractive demonstration, building momentum for more SMEs, investors and technical advisors to enter the private capital market.
By the Nguriza Nshore team
The financial systems change wheel was developed to help the Feed the Future Nguriza Nshore staff track a more comprehensive set of factors influencing how the financial service market systems functions. Through the use of the wheel, the Nguriza Nshore team has been able to see how the EDP’s implementation is more important for increasing the inclusive growth potential of entrepreneurship in Rwanda than having a perfect written policy that never gets implemented effectively. Further, the wheel is helping the Nguriza Nshore team see how changing the banking and microfinance services also entails other interconnected systems. The wheel is also helping the Nguriza Nshore team track its progress towards systemic change.
Feed the Future Rwanda Nguriza Nshore (Nguriza Nshore), a project funded by the United States Agency for International Development (USAID), has been grounded in systems thinking from the start. The three project components, for example, are also interconnected and interdependent. Credit based finance is important, but not sufficient to catalyze a growing inclusive economy, so mobilizing private capital is also essential. At the same time, bank finance and private capital cannot effectively allocate financial resources if the rule of law and policy environment remain uncertain or highly biased against clear, consistent, and transparent rules of the game.
The Nguriza Nshore team realized the importance of the interconnectedness but did not have a way to define and highlight interconnectedness. As a result, the team, in concert with EcoVentures International, developed a financial services system change wheel (finance wheel). Based on the agricultural market system change wheel published by USAID, the finance wheel provides a graphic representation of the system and its interconnectedness. The team is using the tool to track their activities against wider systemic forces and dynamics allowing the team to adapt more effectively to emergent threats and opportunities. The finance wheel also provides a normative pathway to self-reliance that the team can use to gauge where momentum is growing and where change has stalled or needs more support. The combination of defining interconnectedness and a normative pathway gives the team an important tool in managing how best to work in and across their components.
View a draft of the Financial Services Market Systems Change Wheel below.
Written by ACDI/VOCA Transforming Market Systems Activity in Honduras
The blog focuses on some of the more near-term adaptations that firms have done/are doing to better weather the challenges resulting from covid-19. Certainly, shifting to known channels that are still operational, including on-line channels, is important, but from a systemic resilience perspective it only scratches the surface of what will be important to learn. It will be interesting to hear what TMS learns about connectivity, power and diversity and how these factors affect firm/industry resilience. For example, what supporting services are central to being able to adapt, especially to channels that were previously unknow to the firm. An additional important question for TMS would be, how does a shock also presents an opportunity for systemic change. For example, it could be assumed that connected and powerful firms will weather this shock better, which is likely to result in those firms coming out of covid-19 in a substantially improved competitive position. If this is a real possibility, should projects think more systemically about which firms should get assistance, focusing more on firms that could/would catalyze substantial shifts in the competitive landscape coming out the shock? TMS is at the forefront of thinking systemically and it exciting what they will learn as their research continues.
With the ongoing COVID-19 crisis, people and businesses around the world are facing unprecedented challenges. This is particularly evident in countries like Honduras that have fewer resources to cope with and adapt to the shock. For many businesses, social distancing measures mean lost revenues and forced decisions about how and whether to continue operations and retain employees.
In Honduras, compelling data gathered by the USAID/Honduras Transforming Market Systems (TMS) Activity shows how well businesses are adapting to these challenges. The data was gathered through a survey of 1,178 enterprises from 16 out of the 18 departments in Honduras and across 17 economic activities. The survey demonstrated that the resilience of a business was closely aligned with their willingness to adapt their business model. This has widespread implications for the evidence-based decisions that public organizations, entrepreneurs, and the government will need to take to mitigate losses and support recovery.
Coping With Distribution Chain Disruptions
The TMS Activity is working closely with Honduran businesses, their chambers of commerce, and the government to identify solutions to the unique problems stemming from the COVID-19 crisis. Our approach involves looking at the entire value chain to determine what changes, improvements, and relationships can be initiated that will affect not only the large distributors in Honduras but also the small farmers at the beginning of the chain. This means acting and adapting quickly to develop interventions that will help businesses be more efficient and well-positioned to expand by connecting distribution channels and offering relevant and timely technical training.
Earlier this year, with support from the TMS Activity, JJ-Agro inaugurated the first hydroponic strawberry production unit in Honduras through a $200,000 investment in greenhouses. JJ-Agro is a major supplier of potato, cabbage, broccoli, and cauliflower for Walmart and several Honduran supermarkets. The planting of 54,000 strawberry mother plants offered export potential and the opportunity to diversify revenue streams. However, shortly after the first strawberry harvest, the COVID-19 crisis struck, and export channels were blocked.
KEY TAKEAWAY 1: Manufacturers in Honduras are more likely to be affected and less able to cope with the impacts of COVID-19.
To quickly adapt to the crisis, the TMS Activity helped JJ-Agro rapidly diversify its distribution channels. We linked JJ Agro with a Tegucigalpa-based produce delivery service, Pyflor, and a San Pedro Sula-based produce delivery service, Yojoa Trading Company, to sell their first harvest of strawberries. Over the last two weeks, JJ-Agro was able to sell 3,000 pounds of strawberries through these services, avoiding product and job losses and opening relationships and growth pathways.
“Our clients are extremely satisfied with our product and we are now sold out of our first batch of strawberries. We are launching our first marketing campaign this week, and everything is thanks to the work and support of [the TMS Activity].” — a JJ-AGRO manager
KEY TAKEAWAY 2: Transformative resilience capacities, such as the capacity to find new buyers, are linked to the level of confidence a Honduran business has to recover from COVID-19.
Overcoming Disruptions Via E-Commerce
Yojoa Trading Company, one of the services that offered a lifeline to JJ-Agro, also received support from the TMS Activity when they launched their online sales platform a month ago. The company began using the electronic payment platform of another TMS Activity partner, Sube Latinoamérica. Sube Latinoamérica provides an integrated e-commerce solution for small- and medium-sized businesses. To help businesses learn how to transact online, Sube Latinoamérica provides webinars, workshops, access to logistics carriers nationwide, and ongoing consultation services as part of its service offer.
KEY TAKEAWAY 3: Honduran businesses selling online cope better with the COVID-19 crisis. An estimated 19.5 percent of businesses surveyed are changing their business models to sell products and services online.
Thanks to online sales and new home delivery services, Yojoa Trading Company experienced rapid growth in just 10 days. The company can now sell and deliver fresh produce directly to consumers, bypassing intermediaries, such as grocery stores, while still offering fair prices and reducing food insecurity in the two largest Honduran cities. Given the observed success of these new and improved distribution models, other businesses, such as Pyflor, are also considering expansion into new e-commerce channels through Sube Latinoamérica.
KEY TAKEAWAY 4: Commerce enterprises in Honduras, especially those using online selling platforms, are more resilient to the COVID-19 crisis.
Transforming Business Models
This story is more than anecdotal; it represents the type and profile of businesses that are statistically coping better with the negative impacts of COVID-19. More than half of the businesses surveyed are proactively changing to their business models to adapt to the COVID-19 situation. They are building their resilience capacities by taking sales online, diversifying their products and services, and implementing strategies to operate in a post-COVID19 reality. As a result, these enterprises are losing fewer sales and laying off fewer staff.
The TMS Activity is paving the way for these businesses by applying our systemic, market-based approaches to reduce the barriers they face in adopting e-commerce solutions. We are facilitating new patterns of supply chain distribution and supporting businesses as they test and validate new products, services, and business models so that these outliers may become the new norm.
Honduras, like most countries, will face uncertainty and difficulty in the months and years ahead. But, with support from the TMS Activity and its market systems approach to building business resiliency, many Honduran enterprises will weather the storm and be prepared to hit the ground running when the clouds roll away.
Access the USAID/Honduras TMS Activity's COVID-19 Business Resilience Analysis via the link below.
By Hayden Aaronson and Mark Sevier, ACDI/VOCA
In this blog Hayden and Mark provide some very useful guidance for projects as they support market systems in their response to covid-19. While the advice does provide effective guidance to common emergent challenges, it is also useful to integrate good systems thinking. Maybe, most importantly, is to maintain an understanding that while covid-19 is a shock that is very problematic, it is also a disrupting force that could be harnessed to catalyze systemic change. As a result, it is important to think about how could any response do both address an immediate need, and catalyze/amplify a systemic change process. For example, as stated in the second strategy it is critical to improve the connectivity between government and the private sector, but it is also important to integrate into such efforts thinking on how the government and private sector should cooperate more effectively coming out of and beyond the covid-19 shock. Additionally, when engaging a market actor to help shift channels, it will be critical to also think about how support to that firm (as opposed to other firms) may have a greater effect on the competitive landscape during covid-19. Firms that come out of this shock in good financial shape will have a substantial competitive advantage giving them lots of influencing power. As a result, having a sense of how the competitive landscape could be improved coming out of covid-19 would be important when designing interventions to immediate weather this storm. From a systemic resilience perspective, it is important to consider both the immediate need to weather the storm, and the capacity of the system to identify, prioritize, and allocate resources in ways that more effectively neutralize and mitigate risks before they have to be absorbed.
COVID-19 is challenging the world to adapt, and, in doing so, causing two major problems in our food and agricultural systems:
1. Agricultural productivity and demand are shifting quickly and simultaneously. People are buying less because of lost jobs and lockdowns. Supply is also being disrupted by bottlenecks, closed marketplaces, and a lack of services, such as mechanization and transport. The result is unstable food prices, less access to nutritious food, lower incomes, and less long-term profitability.
2. Many consumers have poor access to health information and products. Amid this breakdown in connectivity, they face exploitation, a loss of trust, and potential health risks.
How do we fix these two seemingly disastrous problems? By adapting. At ACDI/VOCA, our inclusive market systems approach has always aimed to take on big, systemic problems and find ways to make markets work better for poor and marginalized people. Now, that approach is shifting to support the recovery of people and businesses affected by COVID-19.
1. Assess the Impact Of COVID-19
The first step many of our programs took was assessing the potential damage. For example, the USAID/Honduras Transforming Market Systems (TMS) Activity surveyed 1,178 enterprises from 16 of Honduras’s 18 departments and found that most businesses in Honduras will close within three months unless they receive emergency financial assistance. This data informed proposals collectively drafted by the Honduran government, National Tourism Reactivation Board, Chamber of Tourism, and National Institute of Tourism.
Other programs, like the USAID-funded Feed the Future Kenya Livestock Market Systems Activity, are supporting local partners, such as the Turkana Chamber of Commerce, to survey businesses and collect data of their own.
2. Collaborate with Governments on Recovery Policies
Rapid assessments can inform governments as they consider policies supporting COVID-19 recovery, like in Honduras, where the program’s assessment informed the government’s decision to pay employees suspended from their tourism-related jobs a monthly salary for six months.
In Bangladesh, the USAID-funded Feed the Future Bangladesh Rice and Diversified Crops (RDC) Activity team is working with the private sector to report bottlenecks in supply chains to policymakers. The team is also coaching businesses to lobby for the lifting of import restrictions on certain agricultural inputs and permits to allow them to transport inputs and commodities into areas under lockdown — both of which will help stabilize prices and markets.
3. Offer Financial and Technical Assistance
Many local enterprises will require grants to get back on their feet. But many will also need technical assistance to become resistant to ongoing shocks. The Feed the Future Ghana Agricultural Development and Value Chain Enhancement II Project, funded by USAID, is strengthening networks of outgrower businesses to organize the supply of inputs, such as fertilizers, and procurement of commodities.
4. Digitize Business Models
As people adapt to a socially distanced world, many businesses will rely on new distribution channels. In Bangladesh, the Feed the Future Bangladesh Livestock Production for Improved Nutrition Activity expanded the Android app Shurokkha, developed by its partner mPower Social Enterprises, to provide remote veterinary services to local livestock service providers.
The same program in Honduras is also helping enterprises diversify their distribution channels and move toward e-commerce.
5. Ease the Flow of Information through Existing Networks
Businesses have a moral and financial incentive to protect consumers’ health. To ensure consumers have access to health information and products, existing partnerships, supply chain infrastructures, and other pathways should be leveraged.
In Burkina Faso, a worsening security situation meant that the Victory against Malnutrition Plus (ViMPlus) Activity, funded by USAID’s Office of Food for Peace, already had a system for disseminating audio recordings in local languages to communes via telephone or mobile devices.
In Colombia, the USAID-funded Emergency Response in Arauca II Program is providing advice over the telephone about family protection and access to care, such as emergency aid programs implemented by the government and other agencies.
In Tanzania, the Feed the Future Tanzania Nafaka II Activity team is providing tablets preloaded with training materials on good agricultural practices to more than 50 of its most active and engaged participants.
Looking Toward the Future
COVID-19 has created a resilience stress test for food and market systems around the world. While the focus in many countries is still on the outbreak itself, market systems approaches that leverage business resources and incentives will aid the economic recovery phase that is sure to follow.
Hayden Aaronson is a senior technical director of market systems at ACDI/VOCA, where he leads the technical design of programs and supports Collaborating, Learning, and Adapting (CLA) strategies. He is a former chief of party in field offices and has worked in many technical areas, from economic development in the Balkans to post-conflict recovery in Northern Uganda.
By: Elizabeth Fustos and Amy Ostrander, Chemonics
The blog highlights some important shifts that are foundational when applying a systems thinking approach. First and maybe most important is developing a solid understanding of why the system and individual actors work/behave the way they do. In more traditional approaches, there is an assumption that actors lack capacity or just 'do not know better,' but in reality, local actors and systems evolve to fit the local contexts. A second shift that is critical is developing insights into why an actor, and eventually a whole industry, would see value in changing the way they are currently working. Any durable shift has to come from the perspective of the local system and actors. Another shift that is not expressly included in the blog, but is critical, is the need for aligned change in interconnected systems. For example, it was crucial that ARDS understand the contexts in the financial services market system and equipment market system in relation to other firms and the overall system adapting to European markets that are more stringent in terms of grades and standards. Helping one firm access equipment has to be done with the intention of easing the risks/smoothing the path for other firms to be able to do the same. The new AGRO program is designed to build off of its predecessor’s lessons from both failures and successes.
Focusing Project Design on MSD
The facilitative, systems approach required for market systems development (MSD) is not always intuitive to project staff. Those accustomed to working on traditional development programming have focused on training for beneficiaries, and those coming from the private sector have focused on one business, not an entire system. That challenge became clear when a Chemonics-led team created the first work plan for the USAID Agriculture and Rural Development Support project (ARDS) in Ukraine in 2016. Despite feeling that the project team had a good grounding in the theory of the market systems approach, the work plan quickly filled with training and workshops. Chief of Party Patrick Rader and Deputy Chief of Party Kseniya Sydorkina decided to pause and develop a tool that would help the entire team think through market systems and create a more flexible plan.
The result was the MSD Analysis Framework, which we include with this blog post to promote greater sharing of practical tools for MSD implementation. The tool includes three straightforward stages as a framework to walk a team through the analysis of a market system: a) Background (identify opportunities and system constraints); b) Analysis Framework (identify needs and gaps in the system); and c) Strategic Framework (identify behaviors and processes that need to change, key outcomes, and solutions and interventions). In introducing the team to the tool to guide data and analysis driven implementation, Rader and Sydorkina developed four main principles to follow when using it.
1. Focus on incentives
Through the tool, Rader and Sydorkina coached the team to focus on understanding behaviors as the core of their analysis: What are the incentives and motivations behind the behaviors of the many actors involved? This is where the team had their “aha moment.” They discussed how they could approach getting key actors to do something different, and most importantly, keep doing it. They planned for long-term behavior change for sustainability from the very first day. By identifying and targeting incentives to encourage the crucial actions needed to improve the system, the team would ensure that the new, beneficial behavior remains a part of the system long after the project is over.
2. Involve the project team
For project success, the entire team needs to understand, buy into, and execute the strategy. This is particularly true in market systems work, where staff are expected to identify what is working and what is not and help redirect as needed. It is critical to carry out the early analysis using the MSD Analysis Framework collaboratively with the project team. It is an opportunity to encourage them to question themselves and their understanding of how single businesses or value chains function within a wider system, to think through behaviors and incentives together to get a clearer picture of reality. Done well, this step can foster deeper understanding of the work ahead and greater buy-in across the team.
3. Establish adaptive management systems
Using the information gathered through the tool, the ARDS team created deliverables and key milestones. They met every quarter to review what they’d accomplished during the previous quarter, identify changes needed, and plan for the next quarter. This adaptive management approach enabled them to lead with data, responding to what they saw happening in the system, and not simply following the original plan exactly as they’d laid it out. They consistently returned to analyzing behaviors and incentives that can drive sustainable change.
4. Measure behaviors and adapt
The final key was to align monitoring and evaluation planning with this tool, measuring not just immediate outputs and outcomes, but also changes in behaviors, adapting and updating approaches as the system evolved. With data on hand, the team could see what improved and what did not budge, and they could adjust their approaches and support accordingly.
The Pay-Off: Results in Action
Using this approach, ARDS successfully fostered and supported long-term behavior change in key market actors. In one example, Triada, a berry processor that had previously sold only to Russia saw its market close during hostilities between the countries in 2014. The ARDS team co-invested with Triada to purchase processing equipment — doubling its processing capacity and shifting its focus to higher-quality products for the European market. Triada dramatically increased its procurement, which supports small rural growers, and now invest in ensuring product quality to meet the higher international standards. The market incentive will ensure that these practices continue long after ARDS has closed.
Transferring Knowledge & Adapting the Tool
As ARDS nears close-out, the MSD Analysis Framework has also helped with institutional memory. The team can look back at their initial analysis because they documented it and can see what they’ve tried already and what has led them to where they are now. This can be especially important for transitions to new projects and developing new proposals and work plans.
In November 2019, Chemonics started implementing the USAID Agriculture Growing Rural Opportunities (AGRO) activity, which will build on various elements of the ARDS program and explore new areas of market systems programming in eastern and southern Ukraine. In designing an initial rapid assessment to inform the value chain and geographic focus for the new activity, the team decided to revisit the MSD Analysis Framework from ARDS rather than start from scratch. They reviewed the completed tools and developed a format for the assessment and report that similarly identified constraints and opportunities, priority outcomes, desired changes in behaviors, and potential solutions and interventions for each potential value chain. The team’s interview questions, survey design, and discussions with activity staff and stakeholders focused on gathering information to inform system-level thinking from the beginning.
Given AGRO’s mandate to support additional value chains beyond ARDS’ focus on dairy, meat, fruits, and vegetables, the design of this assessment was flexible enough to allow the AGRO team to verify the ARDS market systems solutions that worked or the components that needed adapting, with the goal of scaling up to new geographies or across value chains. In addition, the assessment’s flexibility allowed the team to start the process of identifying constraints, opportunities, behaviors, and potential solutions for new value chains.
Sharing and Improving
We’re sharing an example of a completed analysis framework tool used under ARDS for the fruit and vegetables value chains. The MSD Analysis Framework is easy to adapt for any context and program by choosing a value chain or system issue to focus on and then inserting the most relevant actors in each section. ARDS, for example, used the framework tool to understand the dairy and fruits and vegetables value chains, their supporting functions, as well as agri-food controls.
Chemonics is sharing this tool to build the collective toolkit for MSD, and kick-off more tool sharing throughout the course of the upcoming Market Systems Symposium. We hope that your teams find this tool to be a useful way to make market systems theories work in practice, we are excited to see it adapted for other programs. Chemonics looks forward to using this tool on other programs around the world, adapting and improving it as we go. What tools are your teams using to put theory into practice and how can we foster a culture of sharing and collaboration to ensure stronger market systems across the globe?
By Melissa Scudo Gasmi, Eileen Hoffman, Tracy Shanks (Chemonics)
In the following post on private sector engagement, the authors provide three examples of working with private sector actors. In the first intervention, a project works with a segment of the tourism industry in Jordan to help them connect to international marketing platforms. In the second, a project works with a specific business on how to commercialize a new product related to reducing aflatoxins in crops, and in the third, a project facilitates public-private partnerships related to entrepreneurial support services. While all the examples give some good ideas on ways to work with private sector, from a systems perspective there are important questions that practitioners should be asking and testing when applying any of these tactics.
Donor agencies, such as the U.S. Agency for International Development and the U.K. Department for International Development, have made private sector engagement, or PSE, a key element of their development strategies. Being more intentional about including the private sector in development is good news. Over the years, we in the development community have come to recognize that the success of the private sector depends on strong development outcomes. Both parties succeed when there is a healthy, well-educated, and skilled workforce, efficient and productive supply chains, better business environments, and stronger economies that drive more domestic commerce and international trade.
At Chemonics, we have learned there is value and opportunity for PSE in any other sector and at any stage of development. In the past, PSE often occurred once activities had been fully designed. Now, the private sector is active from the design and establishment of shared objectives to implementation and evaluation of outcomes to ensure we’re achieving sustainable results for all.
So what is the implementers’ role today? We believe our role is to bring partners together find ideas based on shared risk and shared reward, create sustainable and long-term impact, and test and scale up solutions. There is no one-size-fits-all approach to do this, but these are three PSE models that we have tried and tested in different parts of the world and with which we have seen some success.
The traditional model: Finding the sweet spot
Worldwide, travel and tourism is one of the largest economic sectors, supporting 1 in 10 jobs and generating more than 10% of global GDP. In the last five years, 1 in 5 new jobs were created in the tourism sector. For lower-income countries, this represents a significant opportunity for job creation and export growth, particularly among local businesses that provide services where large multinationals have little presence.
In Jordan, local small- and medium-sized hospitality companies outside of the capital of Amman struggled to attract tourists and grow their businesses. Traditional marketing techniques such as word-of-mouth, printed brochures, and basic websites were not generating enough growth. As the implementer of a tourism development program, we worked with the Jordan Tourism Board to increase sales and jobs in the industry. We recognized the untapped potential of local businesses and knew it could be realized if the tourism industry could successfully reach an international audience. We engaged the world’s largest travel technology companies, TripAdvisor and Expedia, to help identify solutions that would give the websites with more global tourism offerings, provide small Jordanian hospitality businesses with access to global tourists, and contribute to our development goals.
As the implementing partner, we facilitated collaboration between the travel technology companies and the Jordan Tourism Board. Through these partnerships, the Jordan Tourism Board was able to take steps to reach a new, broader audience of international travelers, showcasing what Jordan has to offer as a travel destination. Activities included Expedia holding a half-day workshop in Amman to teach local hospitality businesses how to create effective accounts. Additionally, TripAdvisor signed on to an agreement with the Jordan Tourism Board to provide support valued at $250,000.
The private sector direct model: Scaling innovations developed through research institutions
Aflatoxins — toxins produced by soil fungi that can infect commodity crops — threaten food security, health, and trade in many low- and middle-income countries, particularly in Africa. They contaminate food supply chains, and aflatoxin management has cost an estimated $1 billion per year in just the Philippines, Thailand, and Indonesia. They can also cause stunting in children and lead to liver cancer. After more than a decade of research, the International Institute of Tropical Agriculture developed Aflasafe, a natural product that combats aflatoxins. However, getting this product to the market was another challenge.
The gap between a scientific discovery and its commercialization is known as the innovation “valley of death,” a nod to common hurdles that stand between innovative solutions and practical scalability. The problem facing Aflasafe’s commercialization is that the product does not have a direct impact on agricultural yields. And, the negative effects of aflatoxins in the body can take years to manifest, resulting in very low awareness among farmers because they are often invisible to the naked eye. We knew commercialization of Aflasafe depended on a market-driven approach and leveraging private sector assets, so IITA set up the Aflasafe Technology Transfer and Commercialization Project and implemented it in partnership with Chemonics and Dalberg Advisors.
To reach the necessary number of farmers and ensure Aflasafe would be viable, ATTC developed a five-phase commercialization methodology for taking science to scale, focused on analyzing and presenting market analysis to private investors and business opportunities to manufacturers. Since November 2015, ATTC has seen six market assessment strategies, four technology transfer agreement licenses, two distribution licenses, and three actively operational manufacturing plants. This commercialization methodology can be adapted by research institutions or donors seeking to leverage the resources of private business to get new innovations on store shelves and in the hands of users who will benefit.
. See a larger version of the image here. Image by: Chemonics
The multiple partner/complex model
Private sector growth in LMICs is often stymied by a workforce with insufficient skills and technical training, resulting in youths and entrepreneurs unprepared for today’s tech-driven economy. Local companies are challenged to use modern technology solutions that would help them compete in lucrative markets, and global technology companies’ products are not utilized to their full potential in these markets.
To tackle these challenges in Moldova, we applied a collaboration model known in Europe as the “golden triangle,” bringing together industry, government, and academia to develop innovation centers based on the needs of the private sector. Multinational technology company Microsoft approached the development community with an interest in building an information technology training center in Moldova. We took the initial concept and evolved it through co-creation with Microsoft, IBM, the Technical University of Moldova, and the Moldovan Association of Information and Communications Technology Companies into an ICT Center of Excellence.
Using a similar co-creation process, we have since transformed business ideas from numerous companies into six other university-based excellence centers, which include shared learning spaces, coworking and startup zones, globally recognized training programs for cutting-edge and in-demand technologies, and collaborative production facilities with equipment, tools, and software for rapid prototyping.
As the development implementer, we identified the shared business and development interests among all the partners. We convened private sector companies with similar business needs and ideas as well as academic institutions with shared technical interests and long-term commitments to training and education. Global and local companies contributed technical know-how, software, hardware, training programs, and trainers to ensure the global relevance and quality of services. Universities provided physical spaces and long-term management, while local private sector associations provided business planning, management systems and support, and continual input on private sector business needs to ensure sustainability.
Meanwhile, donor, university, and industry association representatives serve on the centers’ boards of directors for balanced oversight. Having strong, credible partners and using proven global approaches convinced the Moldovan government that these centers would be well-funded and managed and would achieve both business and development objectives, ensuring long-term critical government support.
Through the centers, 180 teams and startups have benefited from acceleration programs in technology, fashion, and digital business. Some 34,000 youths and professionals have developed in-demand technical skills in coding, cybersecurity, the “internet of things,” electronics, fashion pattern-making, design, and robotics. We project that, by the end of 2020, the centers will have improved the skills of 40,000 youths.
We know that doing good and doing well are not mutually exclusive. If we are to make achieving the Sustainable Development Goals profitable for the private sector, we must understand the needs and strengths of all partners and design projects on this foundation of shared value to transform development outcomes. Whether the role of the development community is to identify opportunities, convene stakeholders, facilitate partnerships, provide technical guidance, or measure impact, development practitioners should adapt their involvement according to unique circumstances and opportunities. Only then can we facilitate the right partnerships that will bridge private sector interests and development goals.
Melissa Scudo Gasmi
By Kristin O'Planick, Market Systems Specialist, USAID
In this blog, Kristin provides an excellent overview of the emerging importance of applying resilience lenses in market systems approaches. Besides providing an excellent summary of where we are and the challenges going forward, she raises a critical point about need to see markets relative to the value they provide back to society and, in the case of resilience, support community’s ability to weather/mitigate the effects of shocks and stresses. In this this context the resilience of a market system is important, but its resilience has to be understood also in the context of how it supports/provides value to actors/communities participating in the system. Looking forward to part 2, and to the discussions that will be had on this topic at MSS2020.
The market systems community has been circling around the idea of market systems resilience (MSR) for some time now. The topic has gotten some play in larger fora over the past year. There was an MSR track at the Market Systems Symposium, sessions at the most recent SEEP Conference, and a smaller roundtable conversation digging into questions of measurement. Yet we are still very much in an emergent space. The U.S. Agency for International Development (USAID)’s goal is to reach a place where the application of a resilience lens is the default posture in market systems programming.
Where do things stand?
Over the past year or so, some guidance and tools have come out. A few programs are iterating attempts to program for and measure MSR. This community is actively exploring various methodological approaches to measurement. This is great news, as there is unlikely one “right” way to do this given the heterogeneity of contexts and resource levels with which we work. To facilitate greater use and adaptation of this first wave of MSR measurement resources, they can now be found in the Tools section of Marketlinks. Exploring these documents will provide a foundational understanding of what we think to-date.
For those who want the upshot now:
One working definition of MSR is “the ability of a market system to respond to disturbance in a way that allows consistency and sustainability, or that leads to improvement, in the market system’s functioning.” Bearing in mind that we care about the market system’s functioning in terms of how it provides protection or enhancement of population well-being (e.g. by providing income or affordable goods and services, etc). We don’t care about the resilience of the market system per se, but what outcomes are achieved through it.
Any good economist or complex adaptive systems thinker will know that market systems are inherently resilient: they are self-organizing systems that will reorganize in response to shocks and stresses. This is why movement of goods in Haiti shifted from trucks to motorcycles to donkeys when roads were destroyed by Hurricane Matthew, why refugee camps have pop-up markets with rather diverse goods, and why it is still possible to purchase anything in Syria if you have the money. What USAID is trying to do through MSR programming is influence the characteristics that shape this self-organization such that the reorganization post-disturbance adds value from a development objective perspective (more inclusive, poverty-reducing, etc).
Those of us who have put forth resources thus far seem to be on the same page in terms of what the general characteristics (or principles or determinants) are that underpin resilience capacity in a market system to absorb, adapt, and transform in response to a disturbance. As a sampling:
To be sure, we must continue to build an evidence base for these and a practice around their practical use on the ground. Related, we know that monitoring trends in these characteristics is more important than measuring absolutes. What is the “right” amount of connectivity? Too much and a disturbance impacts the whole market system. Too little and the ability to tap resources and new customers is insufficient in the face of a disturbance. Each context may require a different “ideal” point on the spectrum.
Read Part 2 of this blog to explore lessons so far and critical learning areas yet to be explored.
The MSDHub Blog Series is authored by respected implementers and donors of market systems projects globally.