In the post below, ACDI-VOCA provides an excellent summary of the first month’s sessions on market system resilience. An important distinction that is always worth reiterating is that when we are talking about resilience we are talking about a complex, multi-dimensional set of social processes. What this means in practice is that there are numerous ways in which a society can be resilient. In every country where I have worked, I am have been amazed at how resilient communities are when dealing with shocks and stresses. At the same time, their resilience capacity has evolved to be resident within informal community structures and mechanisms. While effective, such resilience capacity does seem to have trade-offs in terms of growth and inclusiveness as the responsibility for absorbing a shock or stress fully rests on a community that, as a consequence, requires community membership in order to access support. What we are learning is that for there to be alignment between competitiveness, inclusion and resilience, a society needs to rebalance it resilience capacity orientation from absorbing emergent risks via informal community structures/mechanisms and toward a combination of national, fair, and transparent social safety net/emergency response services and market mechanisms that can identify, prioritize and allocate resources to mitigate/neutralize risks as they emerge.
The global shock of COVID-19 has thrust market systems resilience (MSR), and systems thinking more generally, to the forefront of our development programming. It has never felt more urgent and relevant to come together around MSR. As the first month of this year’s Market Systems Symposium comes to a close, ACDI/VOCA is compiling the key takeaways and reflections.
MSR is Not a Trade-Off But a "Must Do" For Long-Term Competitiveness
USAID and it’s implementing partners have made significant progress over the last year developing definitions and conceptual frameworks to describe, assess, and measure MSR. This work has helped raise the importance and understanding of MSR and how it squares with the other two performance objectives of market systems development: competitiveness and inclusion.
We are quickly learning that without building system resilience capacities, social and economic development gains will remain fragile. MSR has often been framed as a trade-off that businesses and systems need to make between growth and value creation and protection from future shocks or stresses. It’s now a given that shocks and stresses are inevitable, and the systems that are best prepared to manage them will be the most competitive in the long run. There are still, however, only a handful of development programs applying these concepts intentionally. As an industry, we should be emphasizing systems resilience in our programs to protect against future shocks and build a more inclusive and competitive market system over time.
Context Should Inform the Determinants of MSR
As USAID’s Tatiana Pulido said, “Balance and context matter more than absolute measurements” when using the MSR framework. Case studies from the field helped mirror this point. For example, RTI’s Tracy Mitchell shared how their Growth, Enterprise, Employment, and Livelihoods (GEEL) program in Somalia selected the domains most suited to the local context to allow for a deeper dive into its measurement of systems resilience. Similarly, ACDI/VOCA’s Dun Grover shared how the USAID/Honduras Transforming Market Systems (TMS) Activity conducted stakeholder workshops and inferential analysis to understand the most important determinants and capacities to systems resilience.
Sometimes, the shock itself can reveal capacities (or lack thereof) at a systems level. Bernard Conlih de Beyssac, of Helvetas West Africa, shared in the community forum that, in Burkina Faso, the vulnerability of agricultural logistics quickly became apparent once passenger transport services halted. He cautioned against the instinct to immediately fix what seems broken and return to a pre-shock way of being, which he called “the old temptation to relieve rather than strengthen the system and its actors.”
Speed and Participation Inform Systems-Level Responses
While studies around the impact of COVID-19 on food and market systems have been robust, there are fewer examples of how the information is informing key decision makers and market actors. One such example came from Honduras. ACDI/VOCA’s Dun Grover shared how the TMS Activity’s relationships with a local university, chambers of commerce, and government institutions enabled them to conduct an enterprise survey just three weeks after a country-wide lockdown. The team collectively analyzed the data to understand the impacts of COVID-19 on enterprises across four sectors. In the tourism sector, this effort catalyzed a tourism roundtable, which then established a fund to support some 250,000 tourism sector employees financially and with online training and e-commerce support for their businesses. Similarly, in Uganda, MIT’s Courtney Blair shared how a systems pathway toolkit is serving as a valuable communications tool to help market actors understand systems health and the impacts of COVID-19 through systems mapping.
Build the Resilience of Systems—Not Individuals
Market systems, and arguably humanitarian efforts, should focus on systems-level risk. As USAID’s Kristin O’Planick said, “How can we help systems better manage their own risk?” For one, government policies and capacity are extremely important. Systems-level strengthening strategies shared by participants included the following:
Build the Ecosystem for Innovation and Entrepreneurship
The innovation and entrepreneurship panel brought to light the importance of a vibrant entrepreneurial ecosystem in building a resilient market system. The benefits of having diverse market channels, products, and market actors is that they allow systems to adapt to new suppliers or buyers during a shock. A diversity of enterprises also comes with a diversity of resilience-building solutions and innovations that can help firms better manage risk.
For example, in Honduras, e-commerce providers are helping enterprises move their business online. While, in Somalia, dairies are developing an innovative camel milk leasing scheme to ensure a steady milk supply during lean seasons.
A market system with a diversity of ideas and businesses will have greater ability to weather the next shock. At the same time, it is important to support small and growing firms to ensure a more equitable, inclusive market system and prevent further disparities between large and small firms after a shock.
Establish Social Safety Net Infrastructures
A healthy entrepreneurial ecosystem requires a formal and transparent social safety net infrastructure that is proactive in managing risk. This ecosystem involves more than just business development service providers; it involves policy, social safety net, cultural, and other institutions. Add to this a whole set of identity and social norms that encourage risk taking and entrepreneurial activity.
Communities and businesses cannot take on all the risk in a market system alone. Governments need to see that it is in their interest to provide transparent social safety net infrastructure and disaster risk services. This is a natural synergy point for humanitarian and development efforts to join forces to invest more in institutions and structures that provide emergency management, stimulus for vulnerable businesses, and business development services that can support and connect entrepreneurs.
Who to Bail Out and How?
As EcoVentures International’s Mike Field pointed out, the methodologies for understanding which enterprises are critical to maintaining market structures and functioning is a new area that we need to better understand. Within the Aspen Network of Development Entrepreneurs (ANDE), the focus is on supporting small and growing businesses, rather than necessity entrepreneurs, because they drive growth and innovation and pivot more quickly. Support systems need to help innovation speed up over time so that technologies and solutions can deal with the next challenge.
Foster Connections and Broaden Participation Among Enterprises
When firms are connected, they are much better at managing stresses and shocks. Intermediary organizations, such as business accelerators, often act as a bridge. While accelerators may be good at connecting entrepreneurial networks, they also have built-in biases that cause them to exclude more marginalized entrepreneurs. To encourage diversity, we should look to broaden participation. For example, ANDE’s Matthew Guttentag pointed to research showing that accelerators with more women on selection committees resulted in higher levels of support to women entrepreneurs. Similarly, the types of mentors that accelerators select also reflect on who ends up participating in accelerator programs.
Social Norms Influence Risk Taking
Cultural and social norms also influence entrepreneurship. DTA Innovation’s Elizabeth Long underscored how communal norms are not always supportive of risk taking or put significant burdens on business owners to provide family or community safety nets. For example, women often face threats from how society perceives them as an entrepreneurs, which may lower their confidence, risk taking, or ability to obtain funding. Additionally, entrepreneurs are not always the decision makers, despite being the one interfacing with the accelerator. Support systems can address these concerns through social and behavior change efforts as well as their outreach and capacity building.
Gender and Social Inclusion Facilitation Tactics
Marginalized groups face higher barriers to entry when starting an enterprise or accessing benefits from the market system, as ACDI/VOCA’s Jenn Williamson noted. When a market system is inclusive, the structures within it facilitate equal access to resources. The structures also enable the decision making required for women, youth, people with disabilities, and other marginalized groups to have the agency to acquire those resources and to influence the systems in which they live. The inclusion panel discussed several needs that market systems development programs should consider:
This post was written by ACDI/VOCA
The MSDHub Blog Series is authored by respected implementers and donors of market systems projects globally.