In the following blog, the authors follow the case of easyHATCH, a poultry processing firm in Rwanda. Central to the success of easyHATCH has been its emerging relationship with its transaction advisor. Increasingly, transaction advisors have become an essential element of emerging entrepreneurial ecosystems as they play the role of bridging the disconnect between high potential firms and investment funds. Especially in immature entrepreneurial ecosystems, firms can struggle to understand and/or trust the intentions of impact, venture capital, angel, and private capital investors. Working closely with firms, transaction advisors support and prepare them for investment as they learn the cost-benefit of non-bank investment options. Central to effective transaction advisors is their ability to manage and support these firms as their own mindset shifts related to private capital - a limited view of private capital is often hinderance the emergence of more effective and dynamic entrepreneurial ecosystems.
In Rwanda, the business of poultry farming used to be laden with difficulties. With dependency on costly European imports and unpredictable supply chains, farmers had little opportunity to expand outside subsistence farming. Recognizing this market gap and need for domestic availability, easyHATCH became one of Rwanda’s first privately owned hatchery and poultry processors to provide local availability of day-old chicks and training on best practices for chicken rearing so farmers could move toward more viable and growth-oriented business models.
Themba Elias, easyHATCH’s owner, is a South African entrepreneur who was eager to launch his business idea in Rwanda. Having his market gap and target customers identified, Themba knew he must take full advantage of financing to maximize this opportunity. He used his own savings from South Africa to start the company and began operations in 2016. However, by 2019 he realized that the opportunities were far greater and needed to expand the business. He began applying for loans using guarantees from the Business Development Fund (BDF), a Rwandan government organization whose mission is to increase access to finance for entrepreneurs, especially those without access to collateral. But Themba soon learned that to qualify for funding from BDF, the proprietor must be Rwandan or have a Rwandan co-founder. Given his South African nationality, he could not fulfill these requirements and pursue expansion opportunities.
But then, in 2019, an introduction with USAID Rwanda Nguriza Nshore (RNN) shifted Themba’s fortunes. Through RNN’s support, Themba was connected with the transaction advisory firm BiD Capital and was assisted in preparing due diligence documents leading to a loan that enabled the localization of easyHATCH’s inputs in Rwanda. With BiD Capital, Themba increased his knowledge about opportunities related to private capital and began recognizing the value of a transaction advisory firm. Additionally, Themba wanted easyHATCH to make a positive social impact, but he knew that a transaction advisor might misrepresent and/or compromise his vision. It is worth noting that these concerns are not unique to Themba, but many entrepreneurs and start-up business owners share similar thought processes.
Moving past his hesitations, Themba embraced the prospect of continuing to work with BiD Capital as easyHATCH's transaction advisory firm and was further connected to RNN and BiD Capital's vast existing network of investors. Working closely with BiD Capital, the transaction advisory firm finds potential investors, initiates conversations. If there is a good fit/alignment between easyHATCH's vision and the potential investor, then Themba is brought into the conversation. Themba also notes that despite his fear that a transaction advisory firm could not adequately represent and articulate easyHATCH's vision to potential investors, he finds that BiD Capital has managed to do just that. Themba says, “Working with BiD Capital has changed the process of seeking investment. With a transaction advisory firm, I now have more time to focus on other aspects of the business and don’t need to participate in every aspect of searching for investments.”
Today, Themba reflects on the initial loan he received with RNN and BiD Capital’s support. Having the localized inputs and onsite hatchery is something that Themba greatly attributes to easyHATCH ability to withstand the shocks and stressors of the Covid-19 pandemic. Themba explains that before the pandemic, Rwanda's market for chicken was concentrated in the tourism and hospitality sector, with farmers supplying meat to restaurants and hotels. The lockdown in the spring of 2020 signaled a lack of market activity, leading to canceled orders and some farmers even losing their chickens. As things began to normalize around July of 2020, Themba noticed a curious thing: With international tourism still paused in Rwanda, he expected chicken sales to remain depressed, but, instead, he noticed an increase in sales, signaling that the domestic market for chicken consumption was growing, indicating a new end market customer segment.
Looking forward, Themba has big plans for easyHatch. In the next 2-3 years, Themba plans to expand in response to the growing demand in Rwanda and the region -- in fact, he’s already expanding into the Democratic Republic of Congo. Key to meeting increasing demand will be his efforts to improve his supply chain performance. In particular, Themba plans on increasing easyHATCH's veterinarian staff to support farmers as they raise and care for the chicks. In the hopes of making this service more accessible throughout the country, Themba plans on utilizing a decentralized model for access in each district.
With easyHATCH's partnership with RNN and BiD Capital, the prospects look good for Themba to achieve these goals and more. The story of easyHATCH seeking investment in Rwanda is a prime example of the value of working with a transaction advisory firm. Today, if you asked Themba what advice he would give to entrepreneurs, he says, "As long as there is alignment between the transaction advisory firm and the business, it is advisable to work with a transaction advisory firm as it enables the business owner to focus on the business side of things." Seeking investment is a process full of many requirements, and transaction advisory firms such as BiD Capital exist to support entrepreneurs and make this service more accessible.
Written by the Feed the Future Nguriza Nshore Team
While the story of Charis garners attention because of its creative and effective use of technology, from a systems thinking perspective the key elements here relate to the customer value and growth orientation of the firm in addition to the efforts of USAID’s Nguriza Nshore to apply systems thinking when catalyzing the emergence of an entrepreneurial eco-system. For entrepreneurship to become an engine of growth, increasingly entrepreneurs need to commit to this customer/growth orientation. Through the use of systems lenses, Nguriza Nshore has been able to catalyze service providers, transaction advisors, government, investors, etc. that make the eco-system better at identifying and prioritizing entrepreneurs with a committed mindset like Charis. As the entrepreneurial ecosystem in Rwanda becomes able to better target and support customer/growth-oriented firms, the overall competitive landscape will also begin to change as these newcomers capture larger and larger consumer segments through the value they deliver. As customers recognize they have a choice where certain firms are committed to providing them value, other firms will be forced to compete on the value they deliver to customers. It is through this process that Rwandan market systems are starting to become more competitive, inclusive, and resilient.
A revolutionary company on multiple fronts, Charis Unmanned Aerial Solutions (Charis UAS, or Charis) is Rwanda’s first-ever licensed drone company and leader in drone services. The company’s mission is to provide rapid and high-quality aerial imagery to support intelligent decision-making in pursuit of solving Africa’s biggest challenges. Currently working across a variety of industries, ranging from agriculture to construction, mining, energy, tourism, and beyond, Charis employs their fleet of drones to offer tailor-made and specialized results for every project. For example, Charis UAS provides agricultural solutions through monitoring large swathes of farmland to see how each farm is performing, mapping the land, and providing advisory services so that farmers may address problem areas of their land.
In 2014, when the company first started, there were no commercial drones in Rwanda and no regulations in place for unmanned aircraft systems. In Charis’ early days, they focused their operations on aerial photography and videography for two main client industries: events/receptions and tourism. After gaining a foothold in these sectors, they began to look for opportunities in other industries. Of their expansion, Mamy Ingabire, Managing Director of Charis says, “it was a lot of research and working with our customers or our potential customers, to really understand the issues that they have, for us to get the right aerial solutions for them. So, it was a lot of collaboration. We had to provide free services just to get to know what are the needs of our clients, or what are the needs of our potential clients. That really helped us to develop quite a number of solutions for them.” Through this process, Charis has honed their mission, and grown to offer drone-based solutions to a wide range of clients, from private sector actors such as farms and mines, to the public sector, working with governments across the African continent to address population concerns such as health, sanitation, urban planning, and transportation, among others. As an enterprise, Charis is constantly on the lookout for new ways to adapt their technology to serve/offer solutions for previously unaddressed problems and new client segments. For instance, they are eager to expand their operations to include surveillance work to combat poaching. “We are always excited to come in with new solutions. You know, communities and everything are just evolving every day, and new things are happening. Now, with the pandemic, you know, it’s another crisis, so we’ll come up with different solutions. We are a very innovative company,” said Mamy.
In addition to their clearly defined mission-driven orientation, and their focus on delivering value to their customers, Charis has been able to rapidly garner international attention and investment due to their particular approach to business growth. From early in their company history, Charis was willing, even eager, to give up shares of their business to external investors and advisors. This behavior is indicative of an evolving corporate culture predicated on the desire to build a business to outlive and expand larger than the individuals who created it. Of investment, Mamy says, “Looking at the opportunities, the possibilities that are out there, we can see that we are able to do big things. We just trust what we have and what we are providing, and having the right investors, the right partnership, and the right partners, we will get there.” Through investment readiness support provided by their contracted transaction advisory firm, Market Intelligence Africa (MIA), and facilitation support from Nguriza Nshore, Charis has been able to attend a number of investment conferences, receiving numerous offers for Series A investment.
It is significant to note that as a company, Charis is predominantly driven by young people, from the leadership down, a fact that Mamy spoke proudly of. Fadzayi Musanhu of MIA also highlighted this overall trend in behavior from younger African entrepreneurs of being keener on equity opportunities that may provide cash support but also technical and advisory support to establish a strong governance system, with a longer-term vision of growth 5, 10, and 15 years on, as opposed to being focused on access to capital to steer the business presently. “The good thing is there are more businesses now, most of the businesses now that are raising money are owned by the younger generations… Which is a good thing, because it means that the mindset is changing, and maybe in the long-term, we’ll see less and less of the older generation who just want to keep their business in their family, and aren’t really thinking about the wider growth prospects. The more we have these younger entrepreneurs up and coming, and the more we support them, the more we’ll find them outward-looking and willing to bring in different types of investment,” Fadzayi says.
As they look to the future, Charis is working towards establishing a factory in Rwanda to manufacture drones locally. Additionally, they have plans to expand and build more offices across the African continent, and potentially, the globe, adding to their existing offices in Rwanda, Tanzania, Uganda, the Democratic Republic of Congo, Gabon, and Côte d’Ivoire.
What once began as a family business has now grown to much more than that, none of which would have been possible without Charis’ carefully constructed corporate culture, and long-term growth-oriented behavior. Charis UAS is but one example of a company eager for equity investment and partnership. This is indicative of an evolving culture around entrepreneurship in Rwanda, one that is shifting away from the cash-capturing individual-ownership model, opening up to different types of investment mechanisms, particularly those that share ownership and benefits as a means to achieve greater long-term growth through the value delivered to customers.
Written by the Feed the Future Nguriza Nshore Team
JALI Finance presents a very interesting case example of an entrepreneur that is keen on delivering value to its customers. Maybe more important is that JALI is focused on delivering value to a client segment that is often un/underserved. Not all entrepreneurs are the same and many people in Rwanda (and around the world) often feel compelled to start a business as a way to access cash for their family’s needs. In contrast, as the story below outlines, JALI is on a mission to innovate financial services for initially lower-income clients that want to buy a motorcycle as a way to generate income, but with an intension to widen it's product offerings for other low-income customer segments. From a market systems perspective, JALI provides an example of the type of entrepreneurs that market systems should be catalyzing in larger and larger numbers.
Driven by their mission to promote impact for consumption of Rwandese products through credit, JALI Finance is a local start-up financial institution that offers an innovative lease-to-own program for motorcycles. By employing an approach that focuses on alternative measures of loan approval (beyond credit and collateral), flexible funding options, and affordable repayment terms, JALI has been able to unlock a previously underserved client segment -- young jobseekers in Kigali, who often migrate to the city from rural areas in search of greater opportunity, but who most often lack the financial literacy & resources to access products from a standard financial institution. The moto-leasing program has a cross-sectoral impact on the Rwandan economy; through expanding the number of moto-taxi providers, JALI is enabling transporters across value chains greater means & opportunities to perform their business activities, contributing to the agribusiness sector & beyond.
When the first case of COVID-19 hit Rwanda in March of 2020, and the country entered a national lockdown to combat the virus, motorcyclists across the country lost their source of income. One of JALI’s swift responses to the pandemic was a pause they placed on their loan repayment programs, offering drivers a much-needed reprieve. As infection rates in the country continued to decrease, and the government began easing travel restrictions and re-opening the economy, JALI followed, and was able to manage the economic shock of the pandemic without losing much business.
With demand for motorcycle financing far outpacing what JALI Finance is able to supply currently, JALI continues to seek additional financing to both expand current and new client segments. For example, the moto-taxi industry in Rwanda is a heavily male-dominated profession, and JALI is looking to expand their product offerings to target women looking to enter the field. Additionally, JALI is partnering with Ampersand to offer made-in-Rwanda electronic bikes among their leasing products, which will contribute to reducing CO2 emissions. Furthermore, JALI is keen on creating more packages focused on other products, such as consumer loans to finance products such as insurance, fuel & electricity.
In addition to working toward expanding their product offerings and client segments, JALI is also focused on increasing the sophistication of their internal business practices. Most of their advertising and marketing measures are driven by existing customers, through word of mouth testimonials and personal referrals through friends and family networks. Given this, JALI is looking to build & employ a scientific way to track customer satisfaction. Such a tool is essential for growth-oriented businesses that are, in large part, defined by a commitment to deliver value back to their consumers.
JALI aims to grow through new product lines, accessing new client segments, and by leveraging current loyal customers. To help fuel these plans for growth, investment is needed. In 2019, through the USAID Rwanda Nguriza Nshore Project JALI began working with a transaction advisory firm with offices in Kigali, BiD Capital Partners. Although JALI had successfully received investment financing in the past on their own, through their partnership with BiD and other advisors, they have been pursuing more, and larger, offers for investment. As Felix Nkundimana, CEO of JALI says, “When you dream to build a financial institution, it’s really something big enough to always be in need of financing. I don’t see us ever in a situation where we say, ‘Oh, today we don’t need any investment.’ I used to tell people, ‘Even big banks are still always looking for investment.’ So, when we look at the investment, we look at almost everything. By ‘almost everything,’ I mean our business can work well with loans, grants, & equity.” This sentiment exemplifies JALI’s commitment to grow based on the value they deliver to their client segments that have been historically un/underserved. JALI’s openness to find the best type of investment for their company and their customers is critical to achieving their longer term growth objectives.
JALI’s vision for the future is inspiring -- through their continued commitment to reach and deliver value to underserved populations in Rwanda, as well as their hunger to expand their operations and product offerings through external investment, JALI recognizes their potential for growth. With sights set on transitioning to become a pan-African digital bank one day, nothing is out of reach.
Written by the Feed the Future Nguriza Nshore Team
In the following post, Richard Choularton (Tetra Tech) provides a critically important lens into the immediate and real challenges climate change is placing on farming communities worldwide. In addition to defining some of the most pressing issues, such as changing agronomic conditions that shift what is possible to be grown in specific locations, the author also highlights that many farming communities are living and working in wider social and market systems that do not have the capacity to effectively adapt. Even in the country cases the author cites as being effective at adapting, not all the communities in those countries have similar access the knowledge, financing, market connections, etc., needed to adapt to the changing conditions in their fields. It is also important to add that while the author does a good job of outlining how farming communities will have to change in regard to near-term challenges, the level of inclusiveness and the ability to reduce the pace of climate change will determine if any near-term change in what is being farmed will have lasting value.
Agricultural market systems are transforming because of climate change. In India, apples are moving upslope and pomegranates are being grown instead. In Central America, coffee is moving up and out and being replaced by cacao and citrus. In Bangladesh, farmers have switched from rice to aquaculture. Farmers and agribusiness have made these adaptations on their own as their principal traditional crops become less viable due to precipitation and temperature changes, shifts in pest and disease prevalence, and changes in water availability.
Although each transformation is unique, they occur in places where there are adequate market systems and institutional capacity to enable them to adapt. These examples offer critical insights into what farmers, communities, the private sector, and governments need to do to make agriculture and food systems climate-resilient. They also stand in contrast to the places where this capacity is lacking and where the failure of agricultural and food systems can have more significant consequences: food crises, out migration, and violent conflict.
Over the last three years, I have worked with colleagues at the World Resources Institute to look at how policymakers can accelerate transformative climate change adaptation approaches in agriculture. As climate change accelerates, the viability of crop and livestock production systems in some areas will diminish. To build climate resilience, new crops will have to be introduced, production moved to more suitable areas, and production systems changed fundamentally. These changes are challenging, especially for the most vulnerable populations.
In case studies from India, Ethiopia, Bangladesh, and Costa Rica, we found several common elements:
In other words, each of these places had adequate adaptation capacity within the market system to respond to the challenges climate change posed to their agricultural systems. However, there are also many places where the most vulnerable households face severe adaptation deficits and do not have adequate capacities to manage and thrive given the current climate risks. We found that adaptation deficits are systemic and institutional. For example, without the research capacity to identify what alternative crops will thrive in a changed climate, the extension capacity to support farmers to switch crops, the value chain finance to support the switch, and the marketing capacity to store, transport and sell new crops, transformative adaptation isn’t possible.
Inclusive market systems approaches offer a critical tool for overcoming systemic and institutional adaptation deficits. Better integrating climate change impact and options analysis into the market systems development process is a start. Better analysis can help market actors and policymakers envision a more climate-resilient, inclusive, and sustainable market. Better analysis can also inform real investments in the capacities needed in the public and private sector to support locally driven, market-based adaptation pathways that promote inclusion and equity.
Policymakers, researchers, and funders can take steps to accelerate transformative adaptation action. In June 2021, the World Resources Institute published their solutions in a research article titled: Food Systems at Risk: Why Transformative Adaptation is Needed for Long-Term Food Security. The article provides specific recommendations on actions stakeholders can take to make our food system climate resilient. Some of the most important recommendations include: the need to support the development of policy and planning tools that allow governments, businesses, and communities to better integrate transformative adaptation pathways into their policies and plans, supporting inclusion, equity and sustainability.
For more information:
Food Systems at Risk: Why Transformative Adaptation is Needed for Long-Term Food Security (Online Event: June 23, 2021: 9:00-10:30am EDT)
Food Systems at Risk: Transformative Adaptation for Long-Term Food Security (Report)
The authors discuss their application of USAID’s Market Systems Resilience (MSR) Framework. The authors focus on the use of the tool to assess the resilience of the market system itself in a Somalian context, including an exploration of how market systems, in a few circumstances, provided support/opportunities that helped communities better weather COVID and other stresses. While the blog provides a good overview, the team’s work in using the market system resilience framework continues in other countries developing insights and learning that are expected to be shared with the wider community.
Somalia, like the rest of the world, was not ready. As the shock of the COVID-19 pandemic rocked global markets, Somalia saw temporary closures of offices, schools, and airports as well as fewer events, which also had less in-person participation. For over a year the world experienced restrictions that were extended over and over again, and while the restrictions in Somalia were fewer and shorter compared to other countries, the negative impact reverberated across the nation.
The Hajj—the annual Muslim pilgrimage to the holy city of Mecca—usually attracts two million pilgrims from around the world. According to a Veterinary Medicine and Science report, Saudi Arabia imported more than three million goats, sheep, cattle, and camels during the 2019 Hajj season. In 2020, the Hajj was cancelled due to COVID, resulting in the loss of an estimated $500 million in livestock exports from Somalia.
The setback came as the country’s livestock sector – which engages more than 65% of the population and accounts for up to 75% of exports and 40% of GDP – had been making impressive gains in strengthening resilience and managing risk. Decades of conflict, periodic droughts, and pest infestations have all made it difficult for Somalia’s economy to grow.
Zoom in to the individuals that depend on income from the livestock sector and now faced the unprecedented market shock from COVID. As it turned out, livestock exporters lost their main market and didn’t have relationships with buyers in other countries. Similarly, livestock traders didn’t have back-up plans to help them continue operations. Somalia’s livestock market system essentially shut down, forcing herders to sell at depressed prices and people to lose their livestock-related jobs. While Somalia’s livestock production systems may be resilient to many shocks, the market system they depend on was not.
Why was the market system so vulnerable? What can be done to strengthen the market system so it can better respond to and recover from shocks?
A New Methodology
Resilience is not a new concept; individual, household, and community-level resilience has been defined and researched by USAID and its partners for years. Less clear has been resilience at the systems level.
In 2019, the global resilience community was abuzz with excitement – and curiosity – when USAID released the Market Systems Resilience (MSR) Framework. Brimming with potential to address some of the questions we’d been struggling with for decades, people wondered whether and how the MSR Framework could help identify what market system capacities are needed to absorb, adapt, or transform in the face of shocks and stresses.
A resilient market system can buffer the impact of shocks on producers, the workforce, other market actors, and even consumers. But, to use an old adage, the system is only as strong as its weakest link. The MSR Framework helps identify the weakest links in a market system by assessing eight structural and behavioral characteristics of market system resilience to identify weak areas. The data gathered within the MSR Framework then helps inform market system interventions that facilitate the direction of market system change away from being reactive and toward being more proactive to shocks and stresses.
RTI International tapped its internal Research and Development funds to put the MSR Framework to the test in Somalia, assessing both the livestock and grain market systems in the Bay and Bakool regions. The results were shared with the USAID Somalia Growth, Enterprise, Employment, and Livelihoods (GEEL) program to inform their assessment of current activities and adapt future programming to strengthen the weak links in these market systems.
The MSR Framework assessment identified that the livestock market system in the Bay and Bakool regions was overall “Somewhat Resilient” (Level 2 out of 4) because there was a variety of products and services flowing through the market, but competition and business planning was limited, while access to services and products was not inclusive.
Overall, the MSR Framework provided an incredibly helpful diagnostic of where the market system was weak and why – pointing to focal areas for future programming. Some of our lessons learned using the MSR Framework include:
Based on RTI’s MSR Framework findings, the GEEL team is developing recommendations about current market system interventions that warrant scaling and new areas of programming that are needed to build market system resilience. The RTI team is also conducting an MSR assessment with USAID’s Feed the Future Kenya Crops and Dairy Market System Activity.
Reflecting on the presentations made at the Market Systems Symposium, it was clear that there is a significant interest in the MSR Framework. USAID recognized that “market systems resilience is a relatively unexplored area in development” and that their framework is exploratory for further testing, ground-truthing, and refining. This made the Market Systems Symposium a perfect platform to discuss and share the experiences, and we look forward to sharing more about our experiences at next year’s symposium.
Learn more about RTI’s food security, nutrition, and resilience work here.
In the following post, Kristin Beyard raises the importance of the role of MNCs and the increasingly aligned interests between MNCs and international development objectives. As she points out, MNCs, for a range of reasons, are realizing that their longer-term ability to compete and grow is dependent on more and more countries moving toward middle-income status. As a result, MNCs are, for their own interests, engaging in efforts to catalyze change that aligns with international development, and it presents an important opportunity for development practitioners to leverage the interests and capacity of various MNCs. One key for effectively leveraging the interest and capacity of MNCs is to remain focused on the systemic change objectives and not just the outcomes from where the MNC is heading.
Market systems shape and dictate how we produce, distribute, and consume goods and services. These systems are also key to development impact: To create meaningful economic opportunity in emerging markets, end global poverty, and grow sustainable, productive value chains, we need to transform market systems.
Today, multinational corporations (MNCs) are more motivated than ever to engage in market systems development (MSD)—that is, addressing market failures in a way that creates transformational and lasting benefits for the poor. In fact, many leading companies are already doing this work; they just call it by a different name. For MNCs, market systems development is about advancing their supply chain and corporate sustainability goals around the world.
Leading MNCs are acting to make progress on many of the same market systems challenges as the global development community, including stimulating and promoting better functioning local ecosystems of enterprises; identifying new ways to diversify and increase income for smallholder farmers; improving on-farm productivity and resilience; and opening up new markets to expand affordable goods and services for underserved populations.
In their efforts to transform markets, traditionally, the global development community has sought out ways to engage with and bring in the private sector. But we can also meet companies where they are, complementing and adding to their existing market systems development efforts.
To do this, it’s helpful to understand what motivates leading MNCs and the actions they are taking to drive market transformation.
Why and How Multinational Corporations are Engaging in Market Systems Development
We suggest three key ways that companies are advancing market systems development:
Companies exert influence within their supply chains and on local business partners.
MNCs are increasingly realizing that global risks—from climate change to COVID-19 to poor infrastructure in emerging markets—affect their ability to operate and thrive. Simultaneously, workforce and consumer demands are pressuring these companies to not just talk about what they will do, but take real, targeted action toward transforming their supply chains for greater sustainability.
As a result, a shift has emerged in how leading MNCs are approaching sustainability and social impact issues. Whereas before it was about developing a Corporate Social Responsibility (CSR) mission, today it is about integrating sustainability goals into core business strategy. For many MNCs, leading in sustainability and social impact is a means of seizing market opportunity and getting ahead of multiple supply chain and systemic risks.
To achieve this, MNCs are increasingly putting their energy, effort, and focus on their supply chains, to exert influence toward making the first mile more sustainable. These initiatives on the part of MNCs have reverberations up and down supply chains, and across industries: By pushing their suppliers and local businesses to adopt new and better practices, MNCs are shifting the system and creating changes that will also be seen across other overlapping corporate supply chains.
For instance, PepsiCo’s recent Global Development Alliance (GDA) with USAID seeks ways to integrate more women into the company’s agricultural supply chains and the businesses they work with. PepsiCo hopes to demonstrate the business case for these investments among peer companies, local partners, and other PepsiCo offices around the world. The partners hope to prove that leading in women's empowerment is also good business, by realizing previously untapped market potential.
MNCs look for ways to incentivize and engage a growing range of ecosystem actors.
Beyond focusing on their existing supply chains, MNCs are increasingly looking to form partnerships with other ecosystem actors who can help them solve some of the more complex social and market challenges they face. MNCs often have a comparative advantage in areas such as buying and production, but on stickier issues such as land rights and human rights, they need other actors to help them find and implement solutions.
As a result, we see MNCs innovating on the best ways to “crowd in” new ecosystem actors that are not part of their current supply chain yet can help fill critical knowledge, networking, or resource gaps.
An example: Through its acquisition of Pioneer Foods in South Africa, PepsiCo has set up an innovative development fund that has invited local NGOs and other market actors to approach the company with specific market challenges, proposed solutions, and lists of critical partners. Proposed challenges range from education to incubation/acceleration services for start-ups to helping transform farmers from subsistence to commercial farming. From there, Pioneer Foods is setting up consortiums of local actors who will implement new activities collectively.
This approach allows local actors to come up with the ideas—rather than the other way around—with the aim of building a stronger long-term market for PepsiCo to do business in and for the entire system to thrive.
MNCs invest in market systems analyses and stakeholder mapping in new markets to identify the right entry points and key partners.
More and more, we see that before an MNC will commit to entering a new market or investing in a new sustainability initiative, they want to know what the ecosystem looks like, who the current players are, the business motivations that will affect behavior and systems change, which sustainability challenges are ripe for tackling, and how specific projects and investments will further their goals. While the upfront investment in mapping and analyzing market systems may be greater, it helps companies identify and recruit the right partners to work on the right initiative, which leads to greater progress and more substantive market transformation.
Microsoft, under their Airband initiative, is bringing high-speed internet and connectivity to the most rural areas of the world. To achieve this ambitious goal, they are trying to build demand for services by partnering with and building up local internet service providers, energy access providers, telecom equipment makers, and other entrepreneurs in targeted countries to ready local systems, build more demand for their work, and design contextually relevant, cost-effective apps and services. Resonance has supported Microsoft in the mapping and analysis of new markets, helping to identify strategic entry points that would strengthen a country’s ICT enterprise ecosystem.
Driving Greater Impact on Market Systems Development
The global development community has an opportunity to work with the private sector to advance market systems development. By considering why and how the private sector is currently engaging in this work, we are better positioned to approach and partner with companies strategically and effectively.
We’d argue that the global development community can engage the private sector in market systems development in three primary ways:
For market systems development, the impact we can unlock by strategically engaging with the private sector is unlimited. By forging new partnerships and combining knowledge and resources with companies, the global development community can drive greater innovation and make more progress toward market transformation and sustainable, inclusive development.
In this post, Lizan Kuster (from Habitat for Humanity’s Terwilliger Center for Innovation in Shelter) provides important insights into the role and importance of accelerators. Maybe more significantly, though, is the influence well-run accelerators have on relational networks and the competitive landscape. While the author starts with the more immediate effects of a business rolling out innovative products, systems thinkers are starting to realize that the more important disruption is likely to come from the building of more trusted and robust social networks around entrepreneurship and innovation. In particular, the efforts the author discusses related to mentorship and peer-to-peer networks, when they take hold, provide the foundation on which many market systems start to shift toward being more value-based. More specifically, the discussion around improving markets would benefit from an understanding of competitive landscapes and how entrepreneurial networks can shape the way society favors or not certain market behaviors. In this context, while critically important for entrepreneurs to deliver value to owners, staff, suppliers and most importantly customers, they also, along with other market actors, have to intentionally push changes in the market system to push/force other firms to compete on valued delivered. For on going benefits to accrue to low income communities over time, there will need to many cycles of entrepreneurs harnessing new technologies to deliver real value.
How accelerators’ growing focus on mentorship can benefit the whole housing sector
Many entrepreneurs get their jumpstart through an accelerator program, compressing strategic business lessons into a few months. Accelerators have become an essential avenue for startups to connect with investors and funds that allow them to scale their businesses.
For impact-focused accelerators like Habitat for Humanity’s ShelterTech, building a supportive entrepreneurial ecosystem is particularly critical to the program’s goal of fostering successful, disruptive housing innovations. In designing the ShelterTech program, the Terwilliger Center knew it was critical not only to connect startups with peers and funders, but also with experts and mentors from a wide range of sectors and business expertise. The benefits of mentorship for start-ups are well established – one survey found that 70 percent of small businesses that receive mentorship survive more than five years, double the survival rate of those who do not.
But bringing mentorship into social-impact accelerator programs does not just benefit the startups. Corporations, foundations, and other ecosystem partners have much to gain, both directly and from the stronger and innovative markets that these partnerships help create.
Gaining energy from an entrepreneurial approach to problem-solving
Mentorship enables companies to have personal and unique insights into new markets, as well as access to emerging disruptive technologies that can lead to new businesses or open new avenues for innovation. The Hilti Foundation and Dow are two of the partners helping mentor the current ShelterTech accelerator cohorts in Southeast Asia and the Andean region of South America. As Johann Baar, member of the executive board at The Hilti Foundation, explained, mentors from the Hilti Group are “excited to learn from the startups because the way they drive innovation is probably a little bit different of how an established enterprise, like Hilti, drives its operations and its business.” He also added that this is a learning journey for the mentors, giving them new opportunities to apply business solutions from their daily work.
This new energy and learning opportunities are also what motivated Nataly Acosta, a Marketing Manager at Dow based in Brazil, to volunteer as a mentor for ShelterTech’s Andean Region. Acosta is mentoring Terroformaciones, an Ecuadorian startup founded in 2020 that produces eco-friendly bricks made of stabilized soil and cement, which are more cost-effective and earthquake resilient than traditional ceramic bricks. Being a ShelterTech mentor gives Acosta a different lens through which to observe how the market is changing, and Terroformaciones’ experience shows both the challenges and opportunities of a different market segment. As she explains, “it is valuable to understand what startups’ offer the market because it might also influence our business. I also look at how they are building networks and addressing new challenges for the sector.”
Peer-to-peer learning with other firms in the ecosystem
Just like the startups, ShelterTech mentors also benefit from peer learning and discussions as members of the accelerator’s entrepreneurial ecosystem through community events, resource sharing and networking. Furthermore, startups are paired with multiple mentors, which enables more robust conversation and insights for everyone involved. Acosta, for example, is one of three mentors supporting Terroformaciones, with other mentors representing different industries and areas of expertise. "The benefits are mutual. It has been valuable to connect with other professionals in the group,” Acosta says. “It is nice to learn what other people within the value chain think.”
With COVID-19 normalizing digital community and work-from-anywhere tools, the potential for connection and peer-to-peer leaning is endless. Mentors for the current ShelterTech cohort span four continents, bringing global insights to the startups and each other. Peer-to-peer learning can extend beyond a time-bound mentorship program, to productive business relationships. A strong entrepreneurial network and digital community engagement spaces can help ensure continued meaningful connection.
Building better functioning markets
Each of the ShelterTech startups focuses different aspects of housing innovation, all in service of a lofty but critical goal: creating better housing opportunities for the 1.6 billion people globally who live in inadequate shelter. These families spend more than US$700 billion per year on housing yet are severely underserved by global housing markets.
By supporting social-impact accelerators, corporations and foundations can help expand and strengthen the markets providing critical products and services to these communities. According to Baar, for the mentors, “it’s not just about business, it’s about the social impact that they want to create through supporting these startups.” One of the most exciting aspects of supporting the ShelterTech accelerators is the opportunity to “think about how, besides setting up a proper business, can I make sure it also creates the best impact.”
The sentiment is shared by Acosta: “by supporting the startups you are not just supporting a business, but a venture that is solving a global problem. So, you are having more impact that way.” Over 100 startups have already joined the ShelterTech accelerator program, going on to find international acclaim and pilot trailblazing technologies in their local markets. Through its current cohorts, ShelterTech has engaged almost 50 mentors to support 20 startups across ten countries and has already secured around 800 hours of mentorship, providing the jumpstart that these ventures need to answer today’s most pressing shelter challenges. Through engagements like these, organizations at all stages can contribute to fostering more inclusive housing markets that better meet the needs of low-income households.
In 2002, Timor-Leste became one of the world’s youngest countries. With independence came significant new challenges: How to build prosperity, basic infrastructure, and agricultural systems that can feed and support a growing population?
Over the past two decades, Timor-Leste has embarked on the monumental task of building a sustainable and productive agricultural system—complete with new infrastructure, diverse value chains, and market connections—essentially from the ground up.
To help invest in agricultural development in Timor-Leste, Resonance partnered with Cardno on USAID’s Avansa Agrikultura Project. From this work, we offer three lessons on how to tap partnerships as powerful tool to advance sustainable agriculture in emerging markets.
3 Tips for Building Better Partnerships for Sustainable Agriculture
Cross-sector and value-chain partnerships are critical tools to advance strong market systems and sustainable agriculture. From our experience in Timor-Leste, we’ve distilled three key lessons on how to forge and deploy partnerships that strengthen sustainable agricultural systems in emerging markets.
1. Map and Forge Partnerships Across the Market System
In very thin markets, it’s critical to create a robust local ecosystem as soon as possible. On the Avansa project, within the first six months, we rapidly appraised and mapped the existing and potential partner landscape. We conducted in-depth interviews and analysis with dozens of diverse stakeholders, including farmers, buyers, collectors, traders, technology providers, input providers, and financial institutions.
With each stakeholder, we looked at their business needs, their pain points and challenges, their motivations and goals, and how potential agricultural development initiatives could leverage their expertise and knowledge. This early mapping helped us forge important partnerships across the market system and identify market linkages that we otherwise might not have explored.
For example, given limited market opportunities and scant export markets in Timor Leste, we knew we’d have to forge new market avenues and partnerships to help farmers sell their products. Three opportunities came up in our partnership assessment: supermarkets, the hospitality sector, and food processors.
We facilitated connections between farmer groups and twelve supermarkets, two hotels in the hospitality sector, and 18 food processors. The resulting partnerships opened new markets for farmers to sell their products and incentivized them to continue growing high-value horticulture crops. Not only did these partnerships help farmers expand their market opportunities, but they also opened channels for local customers to access fresh, local produce (which had previously been imported or simply unavailable) and helped the hospitality sector market to foreign tourists.
Mapping and forging relationships are key steps in building a robust market ecosystem. Through market and agribusiness linkages and improved production practices, Avansa-supported farming households significantly increased annual earnings. These linkages have also created greater resiliency to market disruptions for all stakeholders.
We are now applying this model of early partnership mapping to a new USAID/Timor-Leste-funded project, the NGO Advocacy for Good Governance activity, led by Counterpart International.
2. Connect Financial Institutions, Companies, and Farmers for Smarter Finance Solutions
Access to appropriate finance is critical—and success is not just about designing the right financing products. It often comes down to securing the right partnerships.
Across the globe, farmers consistently struggle to access the financing and capital they need to invest in more sustainable or productive practices, equipment, and inputs. Most financial institutions see small farmers as risky investments and are either unwilling to lend to them, or set unaffordable high interest rates and unrealistic collateral requirements. Private investors also often see agricultural markets as too risky.
In Timor-Leste, all of this was true, and farmers faced a unique challenge: due to the underdeveloped private sector, formal financing infrastructure was nonexistent for the smallholder sector, and most farmers didn’t have a bank account. In the initial stages of the Avansa project, major input suppliers provided their own financing (in the form of input credit) to farmers. Yet, suppliers were unable to assess farmers’ risk profiles, lacked the field staff and reach to recover payments, and struggled to keep track of outstanding loans. Further, for lenders, there was little to no legal recourse or enforcement in remote rural areas if farmers defaulted on loans.
Banks and lending institutions needed to be involved. To set things in motion, we secured a strategic partnership with a Timor-Leste financial institution (FI), Kaebauk Investimentu no Finansas. Listening to their needs and concerns, we worked with them to build a pilot lending program that would benefit farmers, the FI, and the private sector. As our partner, the FI co-led financial literacy training for farmers—which built trust between farmers and the FI—and developed and offered a new input credit product for smallholders in partnership with two leading input providers (Vind Patel and Kmanek). It took a few years to get going, but eventually farmers were able to access capital so they could buy higher-quality inputs, acquire more land, and scale their farms more sustainably. These partnerships are successful and evolving—continuing past the Avansa project.
As we consider how to get critical financing and capital to farmers in other markets, we’ve seen that a combination of strategic partnerships between financial institutions, input suppliers, and farmers; tailored training for both farmers and FIs; and innovative and appropriate financing mechanisms can help unlock sustainability and growth.
3. Tap Trusted Partnerships To Mitigate Market Shocks
When COVID-19 hit, many feared that farmers in Timor-Leste would see their incomes and revenues slashed. In a report we recently conducted, Analysis of Market Demand and Supply for Agricultural Inputs and Provision of Agribusiness Services to Farmers in Timor-Leste, we found that while there were initial shocks to Timorese inputs and services, the market quickly normalized.
Why? Our answer: Trusted partnerships and access to technology.
In interviews, we discovered that because of the strong partnerships formed between farmers, collectors, traders, input providers, and buyers during the Avansa project, the market ecosystem was able to quickly pivot to e-commerce-based transactions.
Digital technology combined with trusted relationships allowed Timorese buyers and farmers to continue to buy and sell during the pandemic, evolving commerce to new platforms. Collectors also used SMS and WhatsApp for socially distant coordination of purchases and delivery during lockdowns. In our interviews, we found that market actors were eager to continue using digital platforms and tools because it made information sharing and trading much easier.
As we look ahead, companies and the global development community can continue to accelerate the transition to the digital economy by building and testing new market platforms and apps—such as Connected Farmer and DeHaat—that allow farmers, traders, collectors, and input providers to buy and sell with greater transparency and efficiency. More investment is needed, as well, to bridge the global digital divide, ensuring farmers have access to mobile phones and reliable internet.
Ye, we’d also argue that this shift toward the digital marketplace is most likely to be successful in the context of a strong and resilient market ecosystem, made up of diverse actors engaged in trusted partnerships.
The Future of Strategic Partnerships for Sustainable Agriculture in Emerging Markets
The Avansa project in Timor-Leste was unique. Building a strong, reliable, and sustainable agriculture system, especially from the ground up, takes time. In Timor-Leste, much work still needs to be done—but the foundation is being laid.
Even more encouraging: The lessons we’ve learned about harnessing strategic partnerships and building market ecosystems can be applied with impact to other emerging markets around the world.
In the following blog the authors highlight the importance of relationships as central to inclusive and resilient market systems. For farmers, traders, buyer, processes, supermarkets, etc. to move past transactional thinking (i.e., often with an intent to capture as much margin as possible) they have to engage each other and evolve a level of mutual understanding that their joints interest are worthwhile pursuing. This is often a tricky and difficult process, and particularly difficult when there is a history of winners, losers, and perceptions of unfairness. In the case of East Timor where interactions have not yet engrained mistrust, pushing interventions that focus on relationship building from the start has been critically important. A thread that will run through all the sessions at the Market System Symposium is that without such relational foundations, market systems struggle to adapt effectively whether from demand signals from poor consumers or in the face of shocks/stresses.
The authors raise a critically important point about the need to integrate resilience lenses into market systems approaches. Increasingly, a healthy market system has to include resilience as a central element or capacity. At the same time, resilience is not a single, easily definable capacity. For example, as a society develops, the way it manages risks will change over time, including how they share/define responsibilities related to responding to shocks and stresses. For development practitioners, how to balance immediate support to ensure people/market actors can make it through a shock with building the capacity of the system to better share/manage risks related to shocks over the longer term can be a tricky. As the blog suggests, and will be a key thread through the Market Systems Symposium, understanding resilience in a systemic context is an iterative learning journey that is about ongoing change, as opposed to a definable solution.
The supply of goods and services can often be disrupted not only in normal times, but in times of crisis when they are needed most. This happens when socioeconomic systems are not performing well, or not at all. Many of you may have experienced this firsthand at some time in your life. Shocks and stresses impact on socioeconomic systems, and reverse hard-earned development gains disproportionately affecting the poorest and most vulnerable.
At GOAL, we believe that the ability of vulnerable populations to be resilient to shocks and stresses is associated with how productive, inclusive and resilient critical socioeconomic systems are to ensure they are functional not only in normal times, but also during and after times of crisis.
The COVID-19 pandemic has shown us how interconnected and vulnerable our societies and systems are. Now more than ever we need to work towards more inclusive and resilient societies. We need to go beyond addressing short-term needs to provide longer-term solutions for the wellbeing of people and making sure that no one is left behind.
“At GOAL, we believe that the ability of vulnerable populations to be resilient to shocks and stresses is associated with how well critical socioeconomic systems are functioning in normal times, as well as during and after times of crisis”.
GOAL’s approach to Resilience Building
GOAL has developed the Resilience for Social Systems Approach, or R4S, to inform a resilience approach for humanitarian and development interventions by improving the understanding of socioeconomic systems and how they react to shocks and stresses. The R4S is a step-by-step guide, structured into five key components, to identify, map, and synthesize socioeconomic systems against risk scenarios. One of the central innovations in R4S is its system mapping tool which aims to improve understanding of complex socioeconomic systems and how they would react to different shocks and stresses. R4S also provides new guidance on analysing determinant factors of systemic resilience.
The R4S approach has been applied by GOAL across a range of socioeconomic systems in different contexts and programmes in Latin America and Africa. Some countries where the R4S has been applied are Honduras, Guatemala, El Salvador, Colombia and Sierra Leone.
How does the R4S Approach work?
The R4S comprises 5 key components.
Practical examples of R4S approach
The R4S has been implemented in “Barrio Resiliente”, an urban resilience programme funded by USAID and implemented by GOAL in Tegucigalpa, Honduras, and most recently, in Colombia. The R4S has facilitated GOAL’s systems approach to build the resilience of informal urban settlements by identifying, understanding, and implementing interventions in critical socioeconomic areas (e.g., social housing, drainage, etc.) which are relevant to build resilience.
Another example in an urban programme is the Fecal Sludge Management System (FSM) in Freetown, Sierra Leone. GOAL worked to identify and prioritise risk scenarios which could potentially affect the FSM, in addition to a vulnerability and resilience assessment carried out through a participative process with system actors. As a result, recommendations on how to strengthen the system’s resilience were built to influence future interventions on FSM by GOAL or other key systems stakeholders.
Other examples of the R4S approach are its application in the artisanal fishery system in northern Honduras, which has guided the design and implementation process of the “Resilience of the Blue Economy Programme” since 2016. This programme targets marginalised indigenous and afro-descendant populations and seeks to improve the competitiveness of artisanal fishing companies, organizations and fishermen and women to ensure an economic integration to the market while still preserving the mangrove ecosystem and increasing their resilience to climate change. During the nationwide lockdown in Honduras in 2020 due to COVID-19, the GOAL team and partners working on the Resilience of the Blue Economy programme assessed the vulnerability of the artisanal fishery system by using the R4S. This analysis helped to understand the reaction and the impact of the COVID-19 pandemic on this system. It was discovered that 83% of system functions and operability were interrupted totally or partially. Furthermore, it informed the programme team and systems actors to quickly adapt and advocate for the system’s response and recovery support among different stakeholders and government actors.
Finally, GOAL is rolling out the R4S Approach as part of a diagnostic market research that is being led by the The Young Africa Works in Uganda: Markets for Youth programme in Uganda. The Markets for Youth programme, funded by the Mastercard Foundation, is being implemented by GOAL, private sector partners and three Ugandan Civil Society Organizations. This is an agricultural market systems development intervention designed to enable 300,000 rural young women and men, refugees and people living with disabilities to access dignified and fulfilling work over a five-year period. The R4S Approach will help develop recommendations on key interventions to build the different systems resilience to main risk scenarios triggered by drought, climate change, and other factors.
Humanitarian and development programmes that do not account for the resilience of vulnerable groups, or the socioeconomic systems they depend on, are much more likely to experience unintended negative consequences in the short and/or long-term. Therefore, we need to strengthen our understanding of systems’ dynamics between its different components (stakeholders - including the Target Group - resources, regulations) and assess the potential impacts from actual and future risk scenarios. This will ultimately improve the well-being of the most vulnerable populations, despite shocks and stresses.
For more information about the R4S, please visit: https://resiliencenexus.org/r4s/
For more information about GOAL programmes, please visit: https://www.goalglobal.org/
If interested on a Massive Online Open Course (MOOC) about the R4S, please complete this form to receive an invite and course details once its launched.
Latin America Regional Director and Deputy Director Programme Innovation, GOAL
A Chartered engineer with a Master’s Degree in Engineering Science, Bernard has over 24 years' experience in private sector consulting and international humanitarian and development programming. Bernard is the inspiration behind GOAL’s Resilience Innovation and Learning Hub and led the development of the Resilience for Social Systems (R4S) Approach and the Analysis of the Resilience of Communities to Disasters (ARC-D) Toolkit. Bernard has also guided the development of GOAL’s programmes in the LAC region, targeting resilience of informal urban settlements (Barrio Resiliente) and Resilience of the Blue Economy.
Gabriela Cáceres Resilience Innovation and Learning Hub Coordinator, GOAL
A Chartered Environmental Engineer with a Master’s Degree in Demography and Development, Gabriela has ten years’ experience in monitoring, evaluation, learning and accountability of development programmes. She has vast knowledge and experience in resilience in informal urban settlements, local planning for development, training and providing technical advice on resilience at community and system’s level. Gabriela collaborated in the development for GOAL of the of the Resilience for Social Systems (R4S) Approach and the Analysis of the Resilience of Communities to Disasters (ARC-D) Toolkit. Write something about yourself. No need to be fancy, just an overview.
In the following post, Katie Niemeyer of Land O' Lakes Venture37 discusses an interesting case of conservation agriculture. For years, conservation agriculture has been pushed by donors for its clear benefits in terms of soil fertility, increased productivity, crop diversity, etc. As the post describes, conservation farming practices can also have a positive effect on resilience at the household level, as improved soil is central to increasing the ability to produce crops even when faced with pest and/or weather shocks/stresses. At the same time, there has been little uptake in many countries. The post highlights the importance of taking a more holistic or systemic perspective, that can leverage market forces and factors to increase the attractiveness to farmers of taking on these new practices. One challenge to this case, and all of development writ large, is that helping smallholders increase maize production, often for consumption, is only a starting point-- not an end point. Increasingly, it is important to think about how such initial and beneficial changes can catalyze the next change and the change after that, leading to an increasingly faster pace of the journey to self reliance. Register for & join the Market Systems Symposium for more on this topic.
Climate Adaptation and Conservation in Market Systems as a key theme at this year’s Market Systems Symposium presents a unique opportunity for us as market systems development practitioners to think more dynamically about the concept of resilience. At Land O’Lakes Venture37, we are exploring how market-driven climate smart agriculture can strengthen farm-household systems, and how that relates to market systems resilience.
A farm system is the way in which farm resources are used and tailored to the physical, biological, and socioeconomic realities of local agro-ecological contexts. A farm-household system also incorporates individual household needs and desires that drive decision making. Climate smart and conservation agriculture provide an opportunity to strengthen the resilience of the whole farm-household system. However, to achieve this at scale market systems resilience must also be strengthened to enable systemic change in the way farmers produce.
Connecting the dots: market, farm, and household resilience through climate adaptation
Now, some ground setting on climate smart and conservation agriculture. Climate smart agriculture (CSA) is an integrated approach to farming that aims to increase productivity and incomes in a way that enables adaptation and builds resilience to climate change while reducing emissions. Conservation agriculture is a subset of CSA. It incorporates the tenets of minimum tillage, soil cover, and greater plant diversity through crop rotation or intercropping. Taking a farm-household system view, Land O’Lakes Venture37 works with the private sector and other local partners that have the ability to enable resilient agriculture – they use CSA (including conservation) technologies that drive farm, household and market system resilience.
Now that I’ve satiated all of the aggies out there, let’s turn to the development theorists.
A quick refresh on USAID’s Resilience Frameworks
USAID defines resilience as the ability of people, households, communities, countries, and systems to mitigate, adapt to, and recover from shocks and stresses in a manner that reduces chronic vulnerability and facilitates inclusive growth.
This definition of resilience is demonstrated through a set of absorptive, adaptive, and transformative capacities that enable continued progress toward improved outcomes despite shocks and stresses.
USAID’s Market Systems Resilience framework views these capacities through the lens of proactive versus reactive market systems orientations. While a market system with a proactive orientation has the ability to absorb, adapt, and transform in response to shocks or stresses, reactive orientations leave the market system unable to transform due to limited diversity and unbalanced power, which contributes to system stagnancy or fragile functional states.
We can use this resilience framework to think about a resilient farm-household system. In conventional land-based agriculture, the soil is a good place to start. Evidence shows that resilient (conservation) agriculture practices build healthier soils that strengthen farm-household system absorptive capacity by helping crops withstand severe weather events. Accumulation of soil organic matter improves soil structure and aggregate stability, while also actively sequestering carbon and mitigating the effects of climate change. Resilient agriculture also enables the adaptive capacity of the farm-household system by maintaining or improving soil fertility, bulk density, water holding capacity and infiltration so that the soil can support different types of crops without the need to incorporate expensive inputs into the cropping schedule.
Resilient agriculture also contributes to resilience of the “household” in the farm-household system by diversifying production and strengthening absorptive and adaptive capacities. For example, if a farm-household system incorporates cover and/or intercropping of legumes, the resilience outcome is four-fold:
But how can we scale adoption of resilient agriculture?
This brings us to the critical role that market systems resilience plays in enabling the transformative capacity of the farm-household system. Agricultural support networks must be able to provide the tailored innovations, technologies and advisory services that are needed to support resilient agriculture. But this should be viewed as an opportunity to catalyze investment that facilitates greater market system diversity and connectivity and foster a more proactive market system orientation. And as more farm households adopt resilient agriculture and are able to withstand and thrive through climate shocks and stresses, other market actors ranging from input supply companies, agrodealers, service providers, and offtakers benefit from the mutually-reinforcing effects of more consistent supply and demand.
You might be thinking – that’s great in theory, but given that resilient and conservation agriculture often promote low-input systems and require time before productivity benefits can be realized – where are the market incentives for adoption, replication, and scale?
Let’s look at a case study from Mozambique demonstrating market incentives for resilient agriculture
Mozambique is highly vulnerable to climate change. While Cyclones Idai, Kenneth, and Eloise caught international headlines, increasingly erratic rainfall, reduced growing seasons (by up to two days/year), and soil degradation continue to intensify as the primary drivers of vulnerability. Climate-adapted hybrid seed varieties alone cannot be a panacea for the Mozambique agriculture sector because degraded soils limit the ability of farm-household systems to achieve the full production potential of hybrid seeds in order to receive a return on investment. And, despite millions of dollars of donor funding, the formal seed market remains relatively small. A recent seed system survey conducted by Venture37 on the Feed the Future Resilient Agricultural Markets Activity – Beria Corridor (RAMA-BC) suggests that only 6% of seed is sourced from agrodealers, compared to 78% of community sourced seed.
Some input supply market actors are realizing that to capture the smallholder farmer markets in Mozambique, they need different solutions and are starting to respond to the market incentives of resilient agriculture.
RAMA-BC partners with input supply networks (seed companies and agrodealers) throughout northern Mozambique to pilot and scale input product innovations and embedded services that support resilient agriculture, particularly in climate smart maize production systems. One of those partnerships is with Phoenix Seeds, an independent first-mover seed company in the space of cover crop and intercropping input products that, even before the RAMA-BC partnership, had started introducing lablab and sunhemp legumes into the local market. Phoenix Seeds and Venture37 have partnered to successfully test the use of jackbean as a cover crop (which Phoenix has independently scaled to commercial seed production), pilot promotional seed kits that bundle drought-tolerant maize seed with complementary legume cover crop seeds, test the efficacy of using legume intercrops to control fall armyworm through integrated pest management (IPM), and demonstrate resilient agriculture practices and the resultant productivity gains through demonstration plots in partnership with local agrodealers and commercially-oriented lead farmers.
What was the Impact on Resilience?
As we enter the exciting time of sharing, learning, and creating together at this year’s Symposium, I challenge us all to step out of our “resilience silos” and draw connections between private sector-led approaches that achieve market system, farm system, and farm-household system resilience outcomes.
The MSDHub Blog Series is authored by respected implementers and donors of market systems projects globally.