The Market Corner: Market Systems Approach in Conflict

This blogpost is one in a series of blogs sharing insights gained from the Market Systems Symposium 2023. The MSS blogpost provides a brief snapshot of key insights shared across a number of different sessions in MSS 2023 held in Cape Town between 13-15 November 2023.

In the dynamic landscape of international development, the intersection of market systems development (MSD) and conflict presents a unique set of challenges and opportunities. Several conversations on Day 1 at the Market Systems Symposium 2023 centered around MSD and conflict, drawing on experiences from Ukraine, Afghanistan, and Nigeria.

Ukraine: Responding Swiftly to War

When conflict erupted in Ukraine, the agility of the MSD lens became evident in the response led by the USAID agricultural activity, implemented by Chemonics. Having built the program with a focus on MSD, the team was able to pivot rapidly in the face of crisis. Immediate priorities included ensuring the safety of the team and partners, leading to successful evacuations, following which the activity underwent a significant shift. As the program had cast a wider net to explore partnerships early on, it was able to leverage existing partnerships within the MSD framework. By engaging with the market to identify immediate needs, the team could address urgent challenges. An agricultural project in Ukraine prior to the war would not focus on agricultural commodities, such as wheat. However, the war disrupted 90 percent of Ukraine's exports, including major commodities like wheat and corn. The focus of AGRO thus shifted to supporting affected commodities and territories to ensure the resilience of market systems.

Another USAID program in Ukraine, implemented by DAI, was also able to quickly pivot in the face of conflict. When the war disrupted traditional supply routes for exports, it necessitated creative solutions. The team worked on alternative export channels, such as overland transportation through Europe, demonstrating the adaptability of market systems resilience. Overcoming bottlenecks like rail transport limitations and border crossings became crucial elements of an agricultural resilience initiative.

Afghanistan: Building Creative Approaches Amidst Changing Dynamics

The case of Afghanistan presented a complex scenario, with conflict dynamics evolving over time. An ILO initiative focused on supporting entrepreneurship in Taliban-occupied territory. When the Taliban's influence expanded, challenges arose, particularly in sustaining businesses run by women. Women were not allowed to work outside their homes. The program was able to continue providing business development services, but with heightened scrutiny. Creative solutions were needed in this environment to support women and women-owned businesses. There program capitalized on the network of women already established and facilitated connections so women-owned enterprises could source their products from women who were confined within their homes. For example, a woman-owned MSME that produced embroidered hijabs employed women within their homes to produce them. Adapting the MSD approach also involved leveraging existing relationships with financial service providers, particularly with MFIs. The number of MFIs dwindled after Taliban takeover, because many did not comply with Sharia law. In this environment, the program channeled grant funding through MFIs to support women-led businesses, showcasing the importance of utilizing current infrastructure in times of crisis. The focus on partnerships and engaging actors at different levels, from large actors to the smallest enterprises, proved essential in navigating the evolving conflict context.

Nigeria: Addressing Multi-layered Conflicts

In Nigeria, conflict takes on multiple dimensions, involving extremist groups, conflicts between farmers and herders, and large-scale criminal activities. The effects are widespread, disrupting supply chains, eroding social fabrics, and creating an atmosphere of low trust. To address these challenges, a SIDA project explores the “commercial agent” model. Nigeria has many larger high-margin, low-investment firms, who would otherwise not reach remote parts of the country. The model showcased by the program encourages these firms to reach remote conflict affected parts by making the economic case of reaching an untapped market segment. The same approach could be applied to internally displaced persons in another conflict setting, and highlights the importance of innovative market-based solutions in conflict-ridden environments.

Key Learnings and Strategies

Throughout these experiences, several key learnings and strategies emerged:

• Building Relationships: The importance of building relationships before conflict is crucial. Cast a wide net to establish connections that can be leveraged in the event of or during crises.
• Adaptive Capacity: Implementing partners must possess solid MSD capacity. This is true in any setting, but particularly in conflict contexts. Prior experience in the particular fragile and conflict contexts is particularly helpful. Capacity within funding organizations is also crucial for a program to be part of a two-way relationship that allows for open dialogue and experimentation.
• Flexibility in Approach: Both donors and implementing partners need to be flexible in their approach, enabling adaptive programming and allowing for autonomy in decision-making.
• Long-term Vision: Despite short-term project cycles, acknowledging the need for longer-term perspectives within MSD is essential. From a donor perspective, balancing the risks of long-term engagement with one implementing partner with the practicalities of the situation is crucial.
• Humanitarian Assistance and MSD: Integrating humanitarian assistance with MSD requires patience and a deliberate effort to influence change. Deliberate decisions need to be made to navigate the gravity of the short-term urgency of humanitarian aid and a long-term holistic view of underlying systemic issues of market participants. Building business cases can empower displaced populations to access opportunities aligned with their skill sets.

The experiences shared at the symposium underscore the critical role of MSD principles in conflict contexts. The ability to adapt, build resilient market systems, and forge strategic partnerships becomes paramount when navigating the complex challenges posed by conflict.