The foundation of any effective MEL framework is a well-articulated theory of change. The programme’s theory of change should be regularly reviewed and updated to reflect ongoing learning and adaptation. It provides the roadmap for the MEL framework, guiding the selection of indicators and the design of data collection methods.
What is theory of change? is an online resource that offers practical and conceptual guidance with a particular focus on theory of change, with a particular focus on its use in international development and sustainability.
Elements of a theory of change
Theories of change are usually presented as a single document with the following elements:
- A description of the long-term goal that the programme seeks to achieve.
- An explanation of the context for the programme.
- An explanation of the sequence of change that is expected to achieve that goal.
- A description of the assumptions between each link in the sequence of change.
- A conceptual diagram which outlines the key causal links from programme activities through to impacts.
The theory of change should also answer the following questions on what the programme is setting out to achieve:
- How are programme interventions expected to change the behaviour of market actors or drive change in the wider system?
- How will these changes in the market system promote inclusive growth or improved access to services?
- How is inclusive growth or access to services expected to contribute to development outcomes?
These questions can be described as measurement questions and provide the context for defining individual programme interventions. In other words, when planning an intervention it should be clear how it will answer one of these questions.
Steps for developing a theory of change
The process of developing a theory of change should include the following steps:
- Define the programme vision
Your vision describes the ultimate impact on the target population that the programme intends to achieve. While this will typically be lower income sections of society, it is important for objectives to focus in some detail on a particular target group, as defined for instance by geography and economic activity. It is good practice to set a single, clearly defined goal, rather than have multiple goals which run the risk of making it less clear where priorities lie. For more on developing a vision, see Establishing the vision for change. - Identify opportunities to benefit the target group
This step identifies the areas with the greatest potential for the target population to benefit from changes in the market. Many market systems programmes have traditional economic development goals such as boosting income or employment. However, market systems approaches have also been developed to improve provision of key services such as access to healthcare or clean water. - Define how changing the system will create these opportunities
This step sets out what changes are needed in the system for the target population to access opportunities, such as the diffusion of new technologies or new business models. It is important to consider whether achieving desired change is feasible. This involves developing a good understanding of what different market players currently gain from participating in the market, and making a realistic assessment of the incentives that might drive them to behave differently in the future. - Formulate assumptions and contextual factors
All programme theories rest on assumptions of the different steps from inputs through to impacts. Explicitly setting out these assumptions in the theory of change is important for monitoring purposes, and also provides an initial credibility check for the programme. Assumptions include how different interventions will lead to systemic change, and how external factors and the wider context may facilitate or constrain this.
In complex contexts it is also possible that different stakeholders or members of the programme team will have conflicting assumptions. Such differences can be an asset, given the uncertainty about what will work. In this case it makes sense to record all assumptions in order to provide a collection of hypotheses that can be tested during implementation. Given that it is not possible to know in advance what factors will influence a programme, it is important to revisit the assumptions and to update the theory of change as implementation progresses. - Define areas for intervention
This step involves describing likely areas for intervention based on the hypotheses already developed. This does not mean specifying a detailed activity plan, but rather setting out the forms of intervention that will lead to changes in the system. This could include the kinds of partnerships or collaborations that will be undertaken, particular forms of technical assistance or financial support, or other tools and processes that the programme team will use to work with market actors. - Develop indicators
This final step involves defining a small number of indicators to test the assumptions that underpin the relationships between different levels of the theory of change. Good indicators help the programme team understand what is and is not happening in the market, and also provide the basis to discuss trends with market actors. Indicators should therefore include benchmarks for the current position, and the projected levels expected to be reached in future. While the latter need not necessarily be adopted as formal targets, it is important to be able to assess how much progress has been made towards the goal.
USAID Theory of change workbook includes a five-step process for developing the theory of change that overlaps closely with the guidance provided here.
Using a logframe with the theory of change
A logframe is a matrix, in the form of a table, which illustrates the key outputs, outcomes and impact for the programme. It provides an overall summary of the programme in a single diagram, and as such needs to reflect the programme's theory of change.
While a logframe is a useful tool to define what a programme sets out to deliver, there is a potential risk that it becomes rigid and limits the planning of interventions in a flexible and adaptive way. Where significant uncertainty is expected (i.e. with most, if not all, market systems programmes), it is important to make sure that the potential implications of applying the logframe too rigidly are discussed between the programme and the donor teams.