By Doug Graham, PROPEL Project Director
“Disruptive Innovation. Trigger innovation and market stimulus from the sidelines. Avoid being in the middle of a transaction.” Key words of wisdom for the implementation of a market systems approach (MSA).
Over the last few years, I have heard increasing buzz about the application of MSA in development. As the Project Director of the Promotion of Regional Opportunities for Produce through Enterprises and Linkages (PROPEL) project, I had the opportunity to attend an MSA training program. I traveled with Munish, Deputy Director of PROPEL, to the Springfield Training Centre to attend the program and learn more about this approach.
This two-week training program focused on making “markets work for the poor” (M4P)—also known as the market systems approach. The Springfield Training Centre developed the M4P approach with support from UKAid and the Swiss Development Cooperation. Munish and I had gone right to the source and were learning from the best.
Going into the training, we felt that MSA could be an appropriate implementation approach for PROPEL, a WUSC initiative in the Caribbean promoting sustainable economic growth in the agriculture sector. The training came at the halfway point of the project—a natural time to reflect both on where the project had come from and what direction we wanted the project to go in.
How does MSA work?
Since we have neither two weeks nor a training course to share with you, here are the basics of MSA:
- MSA expands on a value chain view of the world (i.e. beyond the central players in a chain of transactions).
- Organizations, businesses, and structures that provide supporting functions to a market system, such as training institutions and financial service providers, play significant roles.
- Norms, rules and regulatory providers must be considered. A market without governmental policies or industry standards is not a market.
Understanding the relationships between these factors and players is crucial. An MSA considers the overall market context and the relationships between market players in a cyclic, holistic way—instead of the traditional one-directional, transaction-driven value chain.
Learning the system and seeing the potential
Springfield’s program was an eye-opening experience for both Munish and myself. We went from MSA novices to full-fledged MSA advocates in two weeks.
The opportunity to learn more about a development approach that had considerable relevance to our work in PROPEL has led to a fundamental revolution in WUSC’s presence in the Caribbean. We both saw the potential such a shift in program facilitation could create. We returned to the PROPEL team with new perspectives and new possibilities.
And then the challenges came.
How could we incorporate key aspects of this new approach into a project that was ongoing? How could we bring our team up to speed on the approach that took us two weeks attending full-time training to learn? How could we get the diverse market actors, such as producers, distributors, buyers, financial institutions, and governments on board?
To make the fundamental concepts of MSA more accessible to staff working on PROPEL, Munish and I adapted the “M4P donut” from Springfield for the purposes of PROPEL’s fresh produce market system.
You may have noticed WUSC’s position in the donut. Or, should I say, outside of the donut.
We are facilitators, not implementers
One of the most crucial facets of bringing an MSA perspective into the project is that the PROPEL team is a facilitator as opposed to an implementer. We take a hands-off role. This tactic has been pivotal to ensuring buy-in and ownership by market actors, greatly improving the potential for sustainability. If WUSC and our staff are central to any initiatives, who would continue to fill that role once the project is over?
During this past year of integrating MSA principles into PROPEL functions, the team has discovered that facilitating in lieu of implementing can be difficult. It is a real shift from traditional development work, not to mention a relatively foreign concept for the development scene in the Caribbean.
So how do we check ourselves to make sure we stay outside of that donut? We use two simple questions:
“Who does? Who pays?”
Four words, tremendous analysis. These two questions can help ensure that the project is not intervening too far and is not funding too much. The WUSC donut and the “Who does? Who pays?” test determine where WUSC stands in relation to the market systems that we are supporting.
Supporting new ideas for market actors
PROPEL’s key application of facilitation is through disruptive innovation. We have developed pilots with key actors engaged from the outset to trigger an innovation that would not have occurred unless the project supported it. Springfield calls this “disruptive innovation” and considers it a fundamental starting point to facilitating both behavioural and systemic change.
Disruptive innovation relies on demonstrating different, yet effective, practices. The engaged key actors can then take the concept or the practice and make it their own.
But what do disruptive innovation and MSA look like in the real world, with real people and real money?
In Dominica, one pilot trialled high-quality potato seed varieties. In collaboration with the Dominican Government, PROPEL provided the extra funds needed for the Government to purchase and import a higher-than-normal-quality seed for the yearly planting. In essence, this was a one-time investment to test the impact of quality seeds on the yields of everyday Dominican producers.
The result? More seeds arriving, better quality of produce, and increased quantities of potatoes reaped. In agriculture, those are some massive victories. Other actors, including private sector buyers and credit institutions, have noticed. Superior produce on the shelves and more financially successful and stable producers are good for everyone!
What happens next? Attracting other market actors
With this insight and foresight, market system players have been inspired to continue to work closer with producers, ensuring future crops will be planted and harvested at a larger scale. Let us return to our check and balance:
Who did? WUSC researched and facilitated the importation of superior seeds into Dominica.
Who paid? Primarily the Government of Dominica, with a top-up from WUSC.
Who will do? The Government of Dominica, who is now equipped with evidence of the benefits of a higher front-end investment yielding a greatly superior return.
Who will pay? The Government of Dominica, with the recovery of costs from producers.
Given this successful example of disruptive innovation, the Dominican Government has indicated it will continue to import the higher-quality planting material in the future and has done so for the ongoing planting cycle.
The process of having other market actors enter a market system after a point of disruptive innovation is known in the MSA literature as “crowding in”. When success is demonstrated, other actors will be attracted to the opportunity and will replicate, join in, and provide additional services if they see the opportunity for benefit.
Back in Dominica, commercial retailers and credit providers have become more engaged in the domestic potato market. Credit will be provided to producers to buy more inputs (e.g. seed and fertilizers) if they can demonstrate that they have an agreement from the supermarket to buy all of the potatoes they will harvest. This market driven engagement and these arrangements between market actors will lead to a more sustainable and functional potato market in Dominica.
Once a produce market reaches this stage, WUSC can back away and turn to new opportunities to enhance the prospects for economic growth and sustainability. Although, keeping an eye on the functionality of the market system to assess whether there are any enabling environment barriers to address is a further step towards ensuring sustainability.
In the remaining 18 months of the PROPEL project, we predict many more opportunities for growth in the fresh produce markets of each of the five countries where the project operates, more effective facilitation between key actors and local producers, and a greater economic success and sustainability for all involved.
Our example from Dominica is just one. A year has passed since the MSA training from Springfield, and the PROPEL team has greatly increased their collaboration with local market players. We now have several other cases of disruptive innovation in Guyana, Jamaica, St. Lucia, and Barbados. Each month, our sustainable impact continues to grow.