 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. Authors 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.
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 Photo credit: Nevil Jackson 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:
AuthorThis 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.  Photo courtesy of Creative Associates International 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.
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AuthorsThe MSDHub Blog Series is authored by respected implementers and donors of market systems projects globally. 
Core Contributor Mike Field
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