Market Systems Development (MSD) offers a compelling framework for fostering economic resilience and inclusive growth, even within the challenging landscapes of fragile and conflict-affected settings (FCAS).
However, simply transplanting traditional MSD approaches into these contexts can be ineffective, or even harmful. It requires a thoughtful adaptation of core principles and a keen awareness of the unique dynamics at play. Violence, insecurity, governance deficits and social divides necessitate a different kind of engagement, where sensitivity to conflict and an unwavering commitment to ongoing learning are paramount.
MSD approaches to programming in fragile and conflict-affected situations provides case examples and recommendations for implementers and donors to ensure better outcomes as well as insights on how donors and implementers can work together and align short-term relief with long-term recovery goals.
Market systems development in thin and crisis prone markets offers tactics for practitioners and donors delivering market systems development programming in FCAS.
The unique challenges of fragile and conflict-affected markets
MSD programmes in FCAS face a range of challenges, such as.
- Security risks: conflict and violence can directly disrupt market activities, making it difficult for businesses to operate and for people to access markets. Security risks also limit access for programme staff and partners, hindering data collection, implementation and monitoring.
- Weak governance and rule of law: fragile states often have weak governance structures, limited capacity for enforcement of laws and regulations and high levels of corruption. This can create an unpredictable and uneven playing field for businesses, undermining trust and investment.
- Displacement and migration: conflict and violence often lead to displacement and migration, disrupting market relationships and creating new challenges for both displaced populations and host communities. Displacement may also lead to labour shortages.
- Social fragmentation and exclusion: conflict can exacerbate existing social divisions and create new ones, leading to exclusion and discrimination. Certain groups may be systematically excluded from accessing economic opportunities due to their ethnicity, religion, gender or other factors.
- Economic shocks and instability: conflict and violence can lead to economic shocks and instability, disrupting supply chains, reducing demand and increasing price volatility.
- Data scarcity: collecting reliable data in FCAS can be extremely challenging. Conflict and insecurity may limit access to certain areas and government records may be incomplete or unreliable.
Adapting core MSD principles
Operating in this type of environment requires adapting on the core principles of MSD. At the heart of every decision must lie a deep understanding of local and conflict dynamics. Your programme must begin with a comprehensive conflict analysis to identify the drivers and potential triggers for violence. This requires carefully assessing how interventions might inadvertently exacerbate existing tensions, reinforce inequalities or benefit actors involved in conflict. Throughout the programme cycle, conflict-sensitive principles should be integrated into design, implementation and monitoring, ensuring that activities actively promote peace and stability.
In FCAS , fostering local ownership becomes even more essential. Programmes must actively engage local communities and stakeholders in all aspects of the design and implementation process, from the initial needs assessment to the implementation of interventions. Transparency, accountability and responsiveness to local priorities are key to building trust and legitimacy.
Interventions should aim to strengthen the ability of individuals, communities and market systems to withstand shocks and stresses. This can be achieved by diversifying livelihoods, strengthening social networks and improving access to financial services. Flexible programme design is also crucial, allowing for adaptation to changing circumstances. Furthermore, robust monitoring and evaluation systems provide the means to track progress, identify emerging challenges and inform real-time adjustments.
Lastly, the safety and security of programme staff, partners and beneficiaries must be paramount. You should conduct thorough risk assessments, develop comprehensive security protocols and provide ongoing training to staff and partners on security awareness and risk management.
Market systems resilience helps development and humanitarian practitioners assess and improve how market systems adapt to shocks, ensuring they can continue supporting communities during and after crises.
The importance of coordination and collaboration
Effective MSD programming in FCAS situations requires strong coordination and collaboration amongst different actors. For example, this may involve ensuring that MSD programmes complement humanitarian efforts and avoid undermining humanitarian principles or working with peacebuilding organisations to ensure that interventions contribute to social cohesion and reconciliation. It should also involve close coordination and information sharing with local and national governments, as well regular communication with other donors to exchange information, lessons learned and emerging challenges.
Guide to market based livelihood interventions for refugees provides a programmatic example of how to build the nexus between humanitarian and development actions. It looks at paving the way for more market-oriented approaches to refugee livelihood programmes.
Pursuit of the practical and pragmatic explores opportunities and challenges MSD practitioners face working side-by-side with humanitarian actors in FCAS .
Working with partners in FCAS
Once a partner is identified in a thin market the principles of facilitation still apply. However, these principles need to be understood with a pragmatic understanding of market realities. Consider the following:
- Expanded use of cost-shared subsidies. You may have to support the expansion of a business by sharing costs through a grant, or at a level beyond what a ‘normal’ market would require.
- Intensified pilot support. Pilots in thin markets may include more support to the business, such as technical advice, capacity building/training, and financial support.
- Appropriate expectations. Outcomes and impacts of activities may take longer to be visible. It is therefore essential to set the right expectations with donors.
- Supporting businesses crowding-in. Given the lack of market players, it is important to support first-movers as well as any emerging competitors.
- Proactive outreach. Field staff must spend more time in the field searching for firms as well as have flexibility around selection criteria.
- Enabling environment support. This means building the capacity of local government service providers and providing more intense support to business service providers in high-potential sectors.
Primer on private sector engagement in fragile and conflict-affected situations offers guidance and real-world examples on how to strategically engage the private sector in FCAS.