Building inclusive markets in forced displacement settings

A new ILO report distils lessons learned for MSD in fragile and forced displacement settings.

It is based on a project piloting the Approach to Inclusive Market Systems (AIMS) for refugees and host communities in Jijiga, Ethiopia.

Driving down the dusty gravel roads outside Jijiga, there is rarely a person or dwelling in sight for miles. The small economy of Ethiopia’s remote Somali Region relies heavily on localised livestock trade and seasonal agriculture. Linkages to other urban centres are limited and local markets extremely thin. Add to that nearly 40,000 refugees from neighbouring Somalia that are not allowed to work or move outside their camps and Jijiga becomes a tough sell for MSD. Yet the region is also relatively characteristic of forced displacement settings.

Therefore, the ILO recently piloted its Approach to Inclusive Market Systems (AIMS) - co-developed with UNHCR through a BMZ-funded project - to enhance economic inclusion of Somali refugees and their host communities in Jijiga, Ethiopia.

AIMS adapts market systems development principles to forced displacement settings. The project worked in the livestock sector. It helped refugees and hosts access better economic opportunities by building linkages to regional traders and to a local export abattoir. It improved collaboration among local livestock herders for joint bulk sales of animals.

From analysis to implementation we found that MSD in forced displacement contexts requires a distinctive approach and the two-pronged strategy underlying AIMS proved to be particularly effective.

AIMS seeks to facilitate the inclusion of refugees and hosts into local value chains and sectors. It does so through interventions that improve their skills and capacities (push factors) as well as develop and improve the functioning of local value chains and the market system (pull factors). We derive three broader lessons for MSD in forced displacement contexts from Jijiga:

1. Seizing opportunities to complement humanitarian interventions
   In forced displacement settings, local market actors are often sparse to begin with or crowded out by the heavy influx of aid. We found it key to reflect such distortions in the analyses that form the basis of intervention design and to find ways for our MSD interventions to compliment ongoing humanitarian work.
   
   For example, in Jijiga, an export abattoir, which was pivotal to the growth potential of the local livestock value chain, had been funded partly by an international donor before being taken over by a private sector operator. The initial, large-scale investment was risky and required initial sup­port through aid, yet over time, provided an important strategy to boost local livestock markets.
    
2. Living and breathing flexibility
   Markets and trade flows can change rapidly in fragile settings. They require a constant re-assessment of whether interventions are still tar­geting the right people as well as key segments of the value chain and the market system. In Jijiga, we pivoted our interventions several times as trade flows shifted between markets due to ethnic tensions and during the transition of political power.
   
   Market-based interventions therefore need to ensure that even during implementation the team maintains a strong analytical capacity that provides the basis on which to pivot as needed.
    
3. Reaching refugees through host communities
   Many refugees, particularly when they are camp-based, are located in re­mote and resource-poor regions. Consequently, the local markets into which refugees could be integrated are often extremely thin and the host community struggles with a weak functioning market.
   
   So in Jijiga we also worked on strengthening the functioning of local livestock trader networks before working on integrating refugees in those markets. In other words, at the outset, refugees may not be front and centre of market-based liveli­hoods interventions but only benefit once the local host communities have been supported in building better-functioning markets.

For more information on the Approach to Inclusive Market Systems (AIMS), visit: www.ilo.org/aims