Market systems-based intervention in protracted crises: What works for sustainable impact

Agora Working Paper 19.1

This working paper was prepared by Agora for the Markets in Crisis community of practice with collaboration from Ekram Elhouni and Alexandre Gachoud. Evidence was widely solicited from the development and humanitarian communities. While positive examples were few, there were sufficient to develop this paper and the hypotheses within it, which we encourage others to test and refine. We would also consider this an on-going project and seek further inputs where available.


Introduction

The humanitarian field is used to dealing with imperatives. Fixing problems because the consequences of not fixing them are seen to be too grave. But the ways in which the problems have been ‘fixed’ has not addressed the root causes of the crises and, moreover, has been done in a way that perpetuates or exacerbates the problems themselves. Many crises are not resolved quickly, so whatever the ‘fix’ is, those providing it have been locked into delivering it for years and sometimes decades.


Displacement, within and between countries, is one area where crises are commonly protracted. In Jijiga, Ethiopia, many of the refugees from the Somali crisis in the mid-1990s have been living in camp for almost three decades. Indeed, globally, the duration of displacement has been increasing and in 2015, the average period of displacement had risen to 26 years.


Recent work attempting to intervene through markets in crisis situations has attempted at least to ensure that problems are not worsened and significant work in the development field over the last two decades has gone further in attempts to leverage market systems to facilitate sustainable and large-scale impact.


Recognising that many crises, and particularly those related to refugees and IDPs, are becoming increasingly protracted, many funders, implementers, and advisors have begun to set large-scale sustainable change as the objective of intervening in these areas. However, when compared with a development context, protracted displacement crises present unique challenges and opportunities.


Evidence of sustainable, large-scale impact from intervention in displacement situations is limited. Indeed, that’s one of the reasons a call for evidence was solicited to develop this paper. Of the six questions we identified in the introductory blog, none were answered in sufficient detail to draw robust conclusions. It’s fair to say that, in all cases, case studies illustrate interventions and modes of working that are more sustainable, affecting larger numbers of people. In this emerging field evidence to date is of better, rather than best, practice. However, piecing together what little is available allows us to develop some hypotheses.

Before engaging the hypotheses, developing a brief typology of interventions involving markets is necessary in order to more clearly define the vision of market systems interventions.


A brief typology of market-related interventions in protracted crises


Type 1: Free, direct provision of externally sourced goods and services – impacting on local markets

This business-as-usual model involves the direct provision of goods and services outside of local market institutions. There’s always an element of this in humanitarian aid programmes but it is notable here for the effect that it has on local markets. It disincentivises production of certain goods, artificially increases or decreases prices of others, and ultimately undermines the sustainability of markets for host communities and displaced populations.


Type 2: Sourcing from local markets

This still involves free provision of goods and services but those are sourced, where possible, from local markets. This has an impact of providing an income to local producers with subsequent economic multipliers, but can also distort local markets with resources geared to serving the aid community, often at higher prices.


Type 3: Market-utilising interventions

These interventions are becoming far more common including through the provision of cash and vouchers to refugees. These interventions effectively provide a demand-side stimulus to markets as refugees exercise free choice and use local producers and retailers to fulfil their consumption needs. This has a far clearer impact on local economies as supply-side actors respond to the demand stimulus. Jobs are created as, for example, retailers are established in the areas where people are receiving aid.


Type 4: Supporting target groups to engage with markets

This has been the mainstay of ‘livelihoods programming’ which is often a component of humanitarian intervention in protracted crises. It commonly involves training of target groups or grants to start up small businesses in and around camps. While this serves to consider refugees as economic actors beyond their role as consumers, it fails to truly engage with markets beyond the small-scale camp economies and struggles with scale as it can be very expensive.


Type 5: Market-systems interventions

These interventions consider refugees and IDPs more comprehensively as economic actors – consumers, producers, and labourers. It considers economic systems within and outside of camps and looks at how the position of target groups can be improved in a sustainable way. Often this will involve working to develop new business models or altering rules and regulations to increase the benefits refugees get from engagement with markets.


The remainder of the paper now details three hypotheses which were developed based on a wide ranging stakeholder consultation and call for evidence through the markets in crisis community of practice.

Hypothesis 1: Systemic intervention can address a wide range of development objectives for target groups


Evidence gathered demonstrates that indications of sustainable impact have been seen with respect to income increases, reduced incidence of conflict, nutrition, and a reduction in local environmental degradation. The most successful interventions achieve multiple goals simultaneously.


Markets are conventionally seen as the aid’s solution to improving livelihoods and, indeed, many of the submissions to the call related to this objective. Good Neighbours Tanzania (GNTZ) intervened to build a market on the periphery of refugee camps. This helped raise the incomes of traders. The Norwegian Refugee Council’s interventions in Somalia helped to raise the incomes of fisher folk in the coastal regions by improving cold chain facilities.


GNTZ have also targeted financial inclusion through the facilitation of both savings and loans. Intervening through some initial training and provision of basic materials, GNTZ have helped to circumvent restrictions placed on the engagement of refugees with the formal financial system through the creation of rotational savings groups.

NRC’s work with fisheries in targeted increased incomes for fisher folk, but also had impacts on increasing nutrition as post-harvest loss was cut by 50% and 8,000 people had increased access to protein.


It was also demonstrated through the evidence gathered that systemic intervention in protracted crises can have impacts on a wide range of target groups. Some interventions can achieve multiple complimentary goals for different groups. Displaced people need to engage in markets to supplement their income and obtain important commodities to improve nutrition and quality of life. Host communities can benefit from this as an income generating opportunity, but can also, in some circumstances, benefit from the resources of the displaced populations including surplus rations, labour, surplus produce such as milk, and in some cases, disposable incomes. Where programmes can facilitate such interaction it is possible for intervention to benefit both groups significantly.


Hypothesis 2: There are certain structural conditions for success including the timing since the crisis occurred, cultural proximity, and policy environment.


If a systems analysis of relevant markets in was conducted, it would analyse factors such has history, momentum, and scale of the market as key determinants of potential impact. It would then look at underperformance of the markets by looking at how supporting functions and rules are, or are not, working. The relevant markets for refugees and IDPs are no different. These factors still matter, but it seems fair to state that some take on a greater degree of importance.


2.1 History and momentum of markets and institutions

Crises are defined as resulting from an event. While the subject matter here is protracted crises, the upper end of our timeframe runs to a few decades. Compare that to a market which was ripe for systemic change such as vegetable production in Bangladesh, which had be practiced for thousands of years. Nevertheless, the amount of time that a market has existed in some form is a critical determinant of its potential to develop. This is not just important for the market itself but for the context. Displacement situations that have existed for many years are more likely to be have developed stable institutions.


Good Neighbours in Tanzania facilitated the creation and sustainable operation of a market place for the exchange of goods and services for refugees and host communities. Part of the success of the intervention is attributed to the fact that refugee had already been informally trading commodities for two decades. Similarly, the early successes seen in Oxfam’s work in introducing briquettes are partially attributable to working with the fuel wood value chain, where there was an established market.

Momentum is also important and presents an exciting opportunity in displacement contexts. As populations are introduced to an area, many different product and service markets grow. Identifying which these are or are likely to be is important to achieving impact. Other factors too can create momentum. Changes in government or donor policy or changes in production or trading conditions in a certain sector, making the task of generating sustainable impact far easier.

In NRC’s work in Somalia, the Ministry of Fisheries had recently been given the mandate to grow the sector, which was a change in the policy environment which generated momentum for the sector. Their 5-year plan changed their incentives so that they were more supportive of the change NRC were attempting to facilitate.


2.2 Key supporting functions and rules

Supporting functions and rules are market and context dependent. However, evidence to date has demonstrated that there are certain supporting functions and formal and informal rules which take on increased prominence in displacement contexts and should receive special attention in any analysis.


2.2.1 Informal norms on language and culture

Cultural and linguistic proximity allows quicker assimilation often brings quicker engagement in market opportunities. This can be because of similarities with the place of origin or it can be learned, as some displacement crises last for decades and cultural integration begins to occur.


In Tanzania, many of the Congolese refugees have been in camps for 20 years and have learned Kiswahili making it easier for them to engage in markets. In Jijiga, Ethiopia, many some refugees are now third generation and there are many people with one Ethiopian parent. Here, market engagement has been organic and beyond the structural conditions of camp boundaries and rations, refugees are very easily able to interact with host populations with whom they share a language and culture.

Contrast that with Gambella in Ethiopia, where both language and culture differ between Anuak, Nuer, and highland populations. Here, tensions have frequently arisen and there remains much clearer economic and social segregation. A good example is the cultural attitudes towards livestock which are seen as family, rather than asset, in Nuer culture while highland traders are often seen as attempting to exploit them as an asset which prevents the building of trust.


2.2.2 Coordination function

In comparison with citizens and residents of a place, there are a far greater number of actors with a say over the rights of displaced people. Host country governments at different levels, humanitarian actors, and private sector actors all influence how refugees and IDPs engage in transactions. In order to deliver impact, actors will have to change the role that they play and must have bought into the process in such a way that they continue this change in behaviour after intervention has ended. Coordinating these actors is an active role that needs to be engaged in from the beginning to deliver sustainable impact.


NRC saw this as one of the critical reasons for their success in growing the fisheries industry in Somalia. Sharing information between all of those who had a stake in the success of the industry helped to secure buy-in to the intervention and eventually lead to the scaling up of impact.


2.2.3 Formal rules on movement and market engagement

These many actors that influence the lives of displaced people often do so by enforcing rules on their movement or on which markets they engage in. These rules have a critical impact on how and to what degree displaced people can see a sustainable development impact.


In Tanzania, refugees had previously engaged in local markets informally and in contravention of the rules prohibiting their movement. GNTZ’s work in creating a legitimate market vastly increased the numbers of people with access to it.


In Gambella, Ethiopia, Labour markets do not function effectively owing to existence and enforcement of restrictions placed on the movement of refugees. Shortages of capable and willing labour exist in some areas of the region but crossing some Woreda boundaries is not permitted and refugees are prohibited from filling vacancies, even for day rate work.


Hypothesis 3: Scale and sustainability are more likely to be achieved through capital expenditure than would be the case in situations which are not protracted crises


A general rule when trying to achieve systemic change is that direct finance, including the procurement of capital equipment and infrastructure, should be an option of last resort. This is because, under normal circumstances, it distorts incentives and capacity for maintenance questioning sustainability and does not put in place mechanisms for replication, questioning scale.


In protracted crises, there are some particular circumstances that mean cash investment can be both less problematic and more necessary. In terms of necessity, while they are a highly varied group, many refugees and IDPs have a very low resource base, limiting their capacity to invest. While concentrations of displaced people represent an opportunity to private sector actors in a country actors with investment capacity often have clearer investment priorities. Given the low resource base, relatively low spending power, and location of displaced populations which is often in peripheral and challenging areas, investors understandably see better investment opportunities elsewhere.


There are also particular merits of capital investments as a form of aid intervention to achieve sustainability and scale in protracted displacement crises. Displacement crises tend to create agglomerations of people, commonly in camps, which means that, significant scale can sometimes be achieved without replication.


Another advantage of protracted crises which makes direct investments more viable is the heavy presence of institutional actors with mandatory involvement who have the potential to deliver those recurrent functions. Domestic governments and domestic and international aid actors have a mandated and long-term presence in these crisis situations and have an interest in delivering functions such as the maintenance of capital equipment if it will help them achieve their objectives.


These factors come together when one considers Good Neighbours’ work in Tanzania. GNTZ, supported by the government of Korea, paid for the construction of a market stall and storage facilities and the initial training of market operators. This relatively direct investment has led to the on-going provision of incomes for around 3,000 traders where the market an average of 10,000 customers per day. That means increased incomes for 3,000 local households and increased access to nutrition, goods, and services for the camp’s 156,000 refugees. Scale is built into the intervention design as it is addressing a systemic constraint – markets access – that affects a large and concentrated group. Further, there is organic growth in different development impacts as organic growth in the market place increases variety and drives down prices, increasing the number of host community members benefitting from increased incomes and also for refugees who see reduced prices allowing more disposable income to be saved or spent on further improving nutrition, for example.


Sustainability comes from the intervention design which incorporated key stakeholders who would have a role in the on-going delivery of services. Local government was involved from the outset in dialogue and development and a model was developed where they could charge a levy for the use of the market on traders, with which they could then provide maintenance including cleaning and other services.


Conclusion

The original intention of this paper was to provide a much more comprehensive review of evidence and develop common themes behind successful interventions. However, this type of programming is still appreciably rare and, of the typology of market related interventions outlined above, the vast majority remains focused on type 1, and 2, with a significant recent push into type 3. Therefore, the hypotheses developed here are based on a small number of examples where these common themes have been identified but they are put forward as hypotheses to be tested as organisations engage in further programming in this area.

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