Key Highlights from MSS2022: Learnings to Propel the Industry

May 31, 2022

By Abigail Martuscello, Vikāra Institute

The fifth annual Market Systems Symposium was filled with thought-provoking dialogue and dynamic discussions around today’s market systems development challenges. Over 400 practitioners and donors from over 70 countries converged to meet, network, debate, discuss, and share in the highly anticipated event.

Although discussions will be further explored in the coming year through the global Communities of Practice and online blog series, this blog provides a rapid synthesis of the key themes from the Symposium. Excitement already surrounds the countdown to MSS2023, a combination of a virtual and in-person event to be held in Cape Town, South Africa!

MSS2022's central theme of Climate Adaption & Conservation in Market Systems explored how a significant effect of a system's resilience is its ability to address challenges associated with climate and conservation. While the risks from climate change and conservation are manifesting in ways that force many market actors and communities into action, practitioners noted that in other cases, the broader systems (social, political, and market) are not doing enough to deal with the underlying and rapidly growing risks. During a Turning the Tide and Deep Dive Discussion session on Integrating Climate Change into Market Systems Development, a major question that ran through most discussions was: how to catalyze a change in the profile of climate and conservation risks so that local actors and the market system perceive them as real and important enough that they get prioritized as something that deserves action?

Climate change will have a considerable impact on the growing patterns of what crops can be grown, which will affect food security, nutrition, and food safety, each major focal point of the Food Systems theme at MSS2022. Exploring Food Systems ground truths the necessity of analyzing market systems change relative to the value they provide to society, moving away from traditional indicators that relate value only to income and economic growth as the primary measures of market system performance. As we are becoming more conscious of this idea, food systems as a framework illuminates the importance of market systems in the overall wellbeing of society, which includes nutrition, inclusivity, and food security.

MSS2022 explored the Market Systems Resilience theme from a systemic level. Conversations among practitioners clarified that systemic resilience is more about how social and market systems manage risk over time, especially when recurrent, which is different from how those systems would manage the challenges from a specific shock or stress. Participants discussed various frameworks that help provide insights into how market systems identify, prioritize, and allocate resources in response to emergent and ongoing risks (including “slower-moving” risks such as climate change, inequality, etc.) Additional discussion emerged around how market actors and communities can manage specific shocks and stresses, such as drought, flood, conflict, etc., and specific ways to address the challenges that arise from these shocks and stresses. Practitioners noted that the range and frequency of shocks and stresses are increasing for many poor communities, breaking down traditional communal coping mechanisms.

Discussions focused on how market systems can better support communities as shocks and stresses emerge over time and how they can evolve to manage risks in ways that generate inclusive benefits and growth. Cases showed that risks in many environments are rarely just financial in nature, with risks related to social capital often superseding risks related to financial capital.

Social Inclusion was a cross-cutting theme that truly cut across MSS2022's core themes. Discussions centered around social inclusion being a central and systemic component of a competitive and resilient market system. Participants highlighted that social inclusion should no longer be seen solely as an "add-on" to market systems development programs. Instead, market forces must favor increased inclusivity for these systems to remain competitive and resilient over time. What is exciting is that practitioners are learning and developing innovative ways to better align market forces with greater inclusivity.

From a market systems development perspective, the continuing challenge with Monitoring, Evaluation, and Learning (MEL), another central theme for MSS2022, is how MEL can be used practically to address systemic change in a meaningful way. Currently, there still appears to be a strong evaluation bias that tracks easily influenceable indicators that often fail to have relevance as to whether systemic change is taking place or not. In response to this, discussions highlighted that there are exciting efforts from practitioners to create tools and frameworks to assist in identifying where systemic change might be emerging and how to adapt to strengthen those initial pockets of momentum as they emerge. An example was the use of pathways of change to build out how each change may occur in different parts of the market system to better illustrate "tipping points" within systems. Practitioners discussed the ongoing challenge of determining whether a change in an indicator is just a false signal or a signal of a deeper change occurring. Additionally, many discussions focused on how programs can get a greater sense of where there is an opportunity within the system to catalyze real and durable systemic change.

To support improved programming, discussions also revolved around Adaptive Management practices, including numerous examples of how staff reorganization, aligning administrative functions, improving/aligning HR, and improving and adapting procurement/contracting have all improved overall project performance.

Private Sector Engagement (PSE) and Financial Market Systems were explored throughout the agenda. The newly introduced MSD ‘Voices of Inspiration’ Talk Shows were a highlight for most participants. To gain insights into the evolution of how supply chains mature in emerging economies, we spoke to a senior supply chain and logistics expert from an emerging economy. She highlighted the importance of relationship-building to make supply chains resilient, competitive, and inclusive as a central element of effective supply chain management. She provided examples of managing shocks, such as widespread flooding or mass unrest, where prior investment in small-scale suppliers and high-level contingency planning allowed for rapid pivots and effective response to various oncoming challenges. Responses such as these not only enabled firms to manage the shock or stress but also allowed them to come out of the situation in better shape than their competitors.

In the ‘Voices of Inspiration’ session focused on Financial Market Systems, we spoke to a senior financial sector expert from an emerging economy. He focused on the centrality and increasing importance of behavior analysis to ground the transformation and systemic change of SME finance. Discussions involved moving SME finance away from collateralized lending to behavior-based scoring analysis, leading then to automated credit analysis. This shift is important because focusing on individualized and collateralized lending from banks to smallholders has proven very difficult, if not impossible, to be commercially viable in the long term. He noted that when economies began shifting to credit scoring, including the emergence of credit reference bureaus, the flow of finance to smallholders and SMEs also began to shift more dramatically. This shift was because financial services providers, including banks, could generate the volumes needed to make those segments attractive commercially.

Within the theme of Urban Market Systems, it was highlighted that an estimated two-thirds of all people will live in cities by 2050. It is becoming clear that urban populations and the quickening pace of urbanization are central to the competitiveness, inclusivity, and resilience of market systems. Here discussions focused on stresses and strains on health systems, utilities (water and electricity) systems, housing and construction systems, and the interconnection and interdependence between rural and urban spaces. This interconnection and interdependence mean that a re-evaluation is upon us when conceptualizing the nexus of where systemic change can both happen and respond to the host of complex and interdependent challenges of development. It was highlighted that urban areas, due to their population density, are now being seen as a key node in any systemic change, and some level of rebalancing will have to occur to focus on urban change.

Pulling together all the learning that has taken place, the Vikāra Institute will be publishing the annual MSS Learning Synthesis Report later this year. We look forward to seeing you virtually or in-person in Cape Town, South Africa, at MSS2023!