Is Building Resilience Synonymous with Market Systems Development?

March 16, 2015

As a development approach, resilience seeks to build the capacity of a family or community to withstand shocks in a way that minimizes long-term developmental consequences. And where chronic poverty overlaps with recurrent shocks and stresses, market-based development would appear the best answer to deep-seated vulnerability. 

But are resilience and market development synonymous?

Economic development can enhance a household’s ability to manage shocks. It’s a finding we’ve seen elsewhere. In the Philippines, for instance, availability of formal and informal financial tools was positively associated with a family’s ability to recover following Typhoon Yolanda. Among adolescent women in Kenya, interventions that broadened livelihood skills contributed to the food security and resilience of households. Mercy Corps’ work in Myanmar’s Southern Shan state suggested investing in new agricultural techniques could be an important engine for growth and reduce vulnerability among smallholder farmers. If we do analyze shocks and stresses and then identify the market system interventions that can help the poor both sustainably increase their incomes and reduce their vulnerability, market system development can be a powerful tool for increasing resilience. 

In Uganda’s Karamoja sub-region, the USAID-funded “Growth, Health and Governance” (GHG) program works to grow incomes and reduce vulnerability through a “light-touch” market facilitation approach, leveraging resources to make markets work better and more sustainably for the poor. 

In Karamoja, livestock are central to regional livelihoods, and livestock health is a priority sector for GHG. We’ve worked with community animal health workers (CAHWs), vet shops and large drug suppliers to reduce inefficiencies and increase the supply of affordable, customer-driven veterinary medicine. On the basis of GHG pitches to drug suppliers, Norbrook – a global veterinary company – entered the Karamoja market, offering free drug delivery and credit to local drug distributors. As of December 2014, Norbrook had shipped 6.5 million Ugandan shillings’ worth of drugs to Karamoja. Offering wholesale drug prices to vet shops reduced prices for the end user. For example, the Jie Community Animal Health Workers Association in Kotido cut retail prices 20 to 30 percent. Vaccines and supplements are now cheaper and more widely available. This should help reduce pastoralist vulnerability to disease, which is now the leading threat to herds. 

Nevertheless, we shouldn’t automatically equate market development with building resilience. In fact, market development can create new vulnerabilities.

For example, in the neighboring Acholi sub-region, the USDA-funded “Revitalizing Agricultural Incomes in New Markets” (RAIN) program is a market development program that has measurably grown incomes for households and communities. Through RAIN, Mercy Corps facilitated the entry of the Gulu Agriculture Development Company (GADCO), which has been purchasing sesame from smallholder farmers. To capitalize on local markets, GADCO provided consistent pricing information and invested in post-harvest handling and transportation. This helped catalyze the current sesame boom: seeds grown on smallholder farms in rural Uganda are ending up on buns in Europe. Local agricultural incomes are growing and more acres are under cultivation.

This is all good. But it comes with a risk: if farmers focus too heavily on sesame, they may not be growing a diverse supply of food. In the event of a crash in global sesame prices, this could be disastrous for both farmer incomes and their food security.  While we have been attempting to address this income vulnerability by increasing the diversity of cash crops – facilitating the cultivation of chia, for instance – multiple income streams do not necessarily build resilience when they are not independent. Generally speaking, chia and sesame are equally susceptible to drought. In order to build resilience and reduce risk, we need to help farmers diversify their sources of income and/or grow a variety of food and cash crops that they can sell to a range of buyers. Both RAIN and GHG are focusing on helping smallholder farmers see farming as a business opportunity and to also understand the inherent risks and vulnerabilities.

Market development is vital to building resilience but not in itself sufficient. Resilience requires treating disasters not as “acts of God” outside our planning scope, but as recurrent, inevitable, and central to our strategies and interventions. Applying a resilience lens to market development programs like GHG and RAIN requires that we focus on more than growing incomes and overcoming the roots of poverty. Ultimately, good resilience programming must anticipate unintended consequences in market, social, and ecological systems; expand people’s opportunities; and build the capacity of communities, businesses, and governments to adapt in the face of crisis. 

Otherwise, we may just be trading one vulnerability for another.