Market actors are people, too: is MSD reflexively conflict-averse?

Do MSD interventions shy away from entrenched political interests or latent social conflict and miss opportunities for systemic impact?

We often think about market systems as monoliths, and about market actors as having a single face. But that smallholder farmer is also a mother. The owner of that logistics firm ran for public office last year. The chamber of commerce in this small city is a networking platform for members of that religious minority.

MSD mostly looks at economic behaviour - the economic transactions at the centre of the M4P doughnut. However, people routinely sacrifice economic utility for the sake of their families, religions, ethnicities or politics. Those other identities are often more important than being a homo oeconomicus. Profits, productivity and growth aren’t everything to everyone. This is truer than ever in the economic sectors most critical for meeting people’s basic needs.

The MSD approach usually summarises facilitation as temporarily leveraging market incentives in strategic parts of an economy to nudge the system in a desirable direction - a light-touch method unsuited for pushing against strong political interests or deep cultural identities. But if the most important global economic challenges are often intensely politicised, then do MSD programmes avoid latent social and political conflict to their peril?

Practitioners have recently been rethinking the canonical guidance on facilitation, and the question of whether MSD is too conflict-averse is one of many questions on the agenda for the upcoming DCED Global Seminar in Nairobi.

Roadblocks in northeast Nigeria

The Nigeria Rural Resilience Activity found the orthodox MSD toolkit wasn’t up to the task of addressing the main market failure in the country’s northeast, where weak transportation drives high transaction costs that disproportionately affect poor households. The World Bank calculates that logistics inefficiencies raise the cost of manufactured goods by up to 320 per cent in Sub-Saharan Africa, compared to about 90 per cent in Europe. Nigerian consumers and producers alike feel the effects of fragmented and informal trucking markets, empty backhauls, infrastructure gaps, weak coordination among actors and high variable costs.

The programme sought to catalyse better logistics models that reduced costs and improved market access through more efficient routes, stronger transporter coordination and less friction in pricing and contracting. These were technically sound entry points, but the intervention faltered because it did not account for entrenched interests. Influential actors fill structural gaps and sustain inefficiency when it benefits them. In northeast Nigeria, powerful transport unions and politically connected associations prefer the status quo of collusive pricing arrangements and informal control over access to routes and contracts.

As these dynamics became clear, programme staff grew cautious and ultimately decided to drop the intervention rather than cause unintended harm or deal with backlash from those unions and associations. This was a missed opportunity to make products more affordable to people who dearly needed them, and it showed the limits of a market lens when used on its own.

An unavoidable conflict system in eastern Congo

In contrast, if the Strengthening Livelihoods and Resilience (SLR) programme in DRC had dropped every intervention with entrenched interests or latent conflict, it would have had no interventions at all. Sometimes, the team explicitly built conflict analysis into their programming. An analysis of farmer-herder conflict and a community co-creation process in one lakeside town, for example, informed an intervention that tied renewed agricultural and livestock productivity to the end of longstanding land-title disputes and associated interethnic violence.

Sometimes, though, it did not explicitly map the conflict system. This was a risk: without good luck, proactive partners and savvy staff, these two cases of backlash against one SLR initiative could have ended up much worse. As this recent Working with the Private Sector for Resilience paper reflects, examining the political economy of humanitarian maize flour supply might have led to 'prophylactic' engagement of the cross-border traders - discouraging them from undermining the initiative – as in the second backlash example illustrates.

Well-designed MSD interventions may lose traction in the market systems that matter most - like transport in northeast Nigeria, or staple foods in the eastern DRC - unless teams are equipped to understand and intervene in social, political and conflict dynamics.

Green gold in Uganda

The Revitalizing Vanilla in Uganda programme encountered both entrenched political interests and potential violent side effects in its efforts to improving Uganda’s lucrative but disorderly vanilla market system. In 2015, firms like Unilever were buying premium vanilla for products such as Ben & Jerry’s ice cream, but Chinese buyers also purchased unripe vanilla beans for synthetic products. This created an incentive for crop theft, which in turn prompted premature harvesting. Violence increased around this 'green gold' and Ugandan vanilla was driven towards a lower-value market channel. Senior Ugandan politicians had investments in the Chinese companies buying low-quality vanilla, so the programme’s initial by-the-book efforts gained little traction.

Recognising its own weak position within the political system - politicians saw donor-funded projects as temporary and unaccountable - the programme helped reactivate an industry platform called VanEx. Instead of pushing policy reform directly, it helped vanilla processors successfully advocate for harvesting and processing regulation reform.

Systems thinking to the rescue?

Systems thinking offers the opportunity to see the social and political faces of market actors, not just their economic ones. Can MSD practitioners - already very familiar with systems thinking - borrow systems-based approaches from academic disciplines like political science or psychology, or practitioner fields like conflict stabilisation and governance? DRC's SLR developed its approach in an iterative and sometimes idiosyncratic way, not based on an established toolkit. The Ugandan vanilla programme arrived at its politically aware formula through trial and error. What do MSD programmes need to do in order to consistently think and work more systemically around politics and conflict? (Hint: it’s not 'more inception-phase deliverables.')

The Navigating risk through insight: facing power and conflict in market systems session at the DCED Global Seminar will explore some of these questions.

Do we need more pluralistic approaches within one integrated programme, or better coordination between separate economic, governance and humanitarian initiatives? More comprehensive planning tools, or more flexible management structures? More multidisciplinary teams, or better participative sense-making with community partners?

We welcome contributions to this important conversation.

Thanks to Robert Okello Omach for his contributions to this blog.