How to stimulate systemic change in thin markets? Learning from Timor-Leste

Annie Major shares lessons from a recent ILO case study about making thin market systems work better for the poor.

Against a backdrop of long-standing conflict, Timor Leste is changing rapidly. Over the past two years the north coast of the island has become connected to the electricity grid; infrastructure in the capital, Dili, has been completely overhauled; and major arterial roads across the country are being rehabilitated. 

However, poverty is still prevalent, particularly in rural areas. Markets in Timor Leste remain 'thin': uncompetitive, with limited numbers of investors and entrepreneurial growth firms who have difficulty finding and transacting with each other at reasonable costs. 

In a recent case study, the International Labour Organization’s Business Opportunities and Support Services project (BOSS) reflected on its experiences working towards systemic change in value chains, with a focus on the horticulture sector.  

Key questions we wanted to answer included: Did we manage to identify the underlying reasons why market systems were under-performing? How could we better track the impact our facilitation work was having? Were new innovations and ways of doing business likely to be sustainable and lead to scale?  

BOSS therefore needed to understand changes in the incentives and behaviour of the market players in the system. Were our neatly-constructed theories of change always holding true in reality? Err, no.  

As the team gathered data from farmers and the partner firm, we found that, despite early successes, the logic leading to impact was coming 'unstuck' and the envisaged win-win scenario was no longer holding. An original assumption made about ongoing farmer motivation over multiple harvests was faltering, so BOSS dug away until the reasons became clear. Due to real-time results measurement, the project was able to catch issues early on, allowing us to respond, adjust and re-direct intervention activities.

What to find out more? Read Thin Markets, Thick Impact? (pdf) to explore the learning process BOSS went through to work towards maximizing its impact on Timor Leste’s rural market systems. The case study was supported by Market Systems Development for Decent Work - the Lab, an ILO initiative aimed at measuring and maximising employment outcomes through market systems development. 

Annie Major (anniemajor17@gmail.com) is a development practitioner with over 12 years experience managing and monitoring projects in the private, microfinance, governance, health and legal sectors in South East Asia. She returned to Australia last year, following 3 years working in Timor-Leste, where she trained and led national project teams. Her most recent role was on a private sector development project with the ILO, which included application of the DCED Standard. She's now consulting in the region, focusing on private sector development projects, and is particularly interested in supporting effective use of monitoring to improve team learning, project strategy and impact.