16 Dec 2015

How to boil market systems down to their essence without diluting them

Mike Klassen introduces the BEAM snapshots and how you can contribute.

If I had a dollar for every time I had to explain what I meant by 'market facilitation' or 'market systems' I could set up my own donor agency. 

It takes time and effort to spread new practices from the early adopters to the majority. You want the approach (in this case market systems) to be clear, coherent and differentiated from the status quo, which requires excellent communication and storytelling. 

Since July 2015, I have been working with BEAM Exchange to develop short, jargon-free snapshots of what market systems approaches look like in practice. The purpose is to reach development practitioners who are not familiar with market systems approaches to make the approaches more intuitive and accessible. 

Each snapshot starts with context and programme goals then pinpoints the key market failures before moving to a vision of a sustainable set of outcomes. Next they trace the process of partner selection and intervention development, including learning and adaptation. The snapshots close with a summary of the changes observed to date. 

To keep the snapshots short, they each focus on a single intervention. This was a conscious decision to value clarity and focus over articulating the multiple parallel interventions that are crucial to programme strategy. 

Interesting patterns

This work as a whole should not be mistaken as research. Participating programmes put forward suggested mini case studies based on their own interest and motivation. Our primary goal was to capture and clarify interesting examples rather than create a representative sample to analyse and draw conclusions from. However, my inner engineer and researcher would kick myself if I didn't highlight some of the patterns (however statistically insignificant) in the set of snapshots.

1. Sectors

Of the three main sectors represented ‒ agriculture, infrastructure and health ‒ agriculture is by far the most common sector, which is no surprise given the historical roots of M4P programmes and agriculture's importance to so many of the world’s rural poor. Programmes ranged from MDF's work on agricultural lime production (Fiji) to the work on animal fodder supply by KMAP (Kenya), PRIME (Ethiopia) and GEMS1 (Nigeria).

The next most common sector is infrastructure and transportation. This includes specialised vehicle design in Bangladesh (M4C), coordination of river transportation in DRC (ELAN RDC), and financing road construction in Uganda (CrossRoads). 

The third sector that shows up multiple ties is health, with a focus on quality products and information in retail pharmacies and clinics by ABIF (Afghanistan) and PSP4H (Kenya). 

Other sectors include GOAL‘s work on water borehole maintenance service (basic services) in Uganda and MarketMakers’ work with the IT/software sector (professional services) in Bosnia.

2. Market failures

Each snapshot goes beyond surface level symptoms to articulate one or two market failures, borrowing the technical language from economists. Information asymmetry is prevalent in more than half of the cases, and equally affected agriculture and non-agriculture programmes. This failure showed up on both supply and demand sides of markets: buyers lacked access to information about what products/services were available, and suppliers lacked information about the level of demand, especially among the poor. 

The other common market failure is poor coordination. Different actors in a market system often act within a narrow definition of self-interest and miss opportunities to partner to produce better outcomes for both sides of a deal (and ultimately for the poor). 

Taken together, these two market failures present development practitioners with a very different problem statement than the typical, symptomatic focus on beneficiary poverty and its negative effects. They cause us to ask questions about why information isn't flowing, and why market actors are failing to coordinate, which can lead to a different set of interventions than simply providing information or training.

3. Partner selection (function within market system)

Retailers selling pharmaceuticals (ABIF and PSP4H), veterinary drugs (Alliances), tractor parts (SDA) or vegetable seeds (Horti-Sempre) were the most common type of market actors that programmes worked with. This is an important pattern, as retailers often can be a leverage point for changing the way information flows to consumers and how that influences consumer behaviour. This is a departure from traditional notions of solving capacity (or information flow) problems by directly filling the gap and providing information and training. 

Manufacturers are another common actor type, whether they make pharmaceuticals, vehicles, agricultural lime and animal fodder. Manufacturers have even greater incentives than retailers for building a trusted brand with their customer base. Other partners include banks who finance local construction companies (CrossRoads), associations of river traders (ELAN RDC) and networks/hubs of software companies (MarketMakers).

Next steps

Now that 14 of these snapshots are published, it seems apt to look at where and how we can best use these new resources.

  • Read the snapshots and familiarise yourself. If you are new to market systems approaches, then use the specific examples as starting points for situating the great resources on strategy and tactics in real world examples. If you are a veteran, then look for channels to share these snapshots with new audiences. Hopefully this can deepen your war chest of anecdotes that you draw from when explaining market systems to others.
  • Build some open-source experiential learning workshops based on the snapshots to better illustrate what it means to take a systems approach in some sort of simulated fashion. Use the snapshots to introduce market systems to a wider range of staff beyond those who work explicitly on markets and economic development. 
  • Write your own snapshot. We want to hear about your programme and how it has adopted market systems approaches. Email BEAM for more information.

Mike Klassen is the Leadership Programming Consultant at the Institute for Leadership Education in Engineering. He led on the collaboration of the BEAM programme snapshots.

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