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Promoting Inclusive Markets and Financial Systems

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Why Recovery Programs in Somalia Need to be More Market-Based

by on Dec 18, 2013  |  posted in Enterprise Development, Value Chain  |  0 Comments
As I write this blog from Somaliland, I’m thinking back to SEEP’s Minimum Economic Recovery Standards (MERS) training. It makes me wonder, are we really doing enough to live up to these standards in the field?

MERS’s guiding principle is that donors and economic recovery program implementers must factor local market dynamics into their designs.[1] Practitioners from a broad range of programs—women’s livelihoods, livestock/agriculture value chains, post-crisis savings and microcredit, and so on—could all benefit from taking the MERS training. The two-day training walks participants through the MERS Handbook in a structured way that facilitates group discussions and role-play, so that real-world experiences can be shared. It also engages participants in a comparative case study approach, pulling from the experiences of the 60+ organizations that developed the Standards, and which are now internationally recognized as a complement to the Sphere Handbook Hu­manitarian Charter.

Working as an manger of the DAI-implemented Somali Partnership for Economic Growth program—USAID’s first economic growth program in Somalia in more than 20 years—I’ve seen firsthand that there is still a gap between the guiding principles and their practical application in crisis and post-crisis settings.[2]

I have seen what happens when market-based principles are used, but not implemented fully. For example, in unstable environments market assessments have to be conducted frequently to adjust activities to constantly changing market realities. Without ongoing market monitoring, youth-focused livelihoods and vocational training programs sometimes end up providing training in skills that are not marketable. Microfinance programs can fail to grasp the nuances and cultural sensitivities of local consumer preferences, not engage in proper cost recovery, or tie loans and grants together in ways that distort clients’ goals and undermine credit discipline.

While there appears to be universal agreement that food aid distributions should not happen during harvest seasons in staple food-growing communities, they still do—undercutting farmer incentives. Payments in cash-for-work programs should be standardized, but that does not always happen, either. Different NGOs apply differing levels of subsidies to agricultural inputs. Some pay farmers to attend trainings; others do not. I’ve seen several other cases where good practices explicitly outlined in the MERS Handbook are not reflected on the ground.

In the Partnership for Economic Growth, we have struggled with the impact of this uneven implementation. We are implementing Somaliland’s first small and medium enterprise (SME) business plan competition, focusing on productive agriculture and livestock, and working to ensure each partner has a sound business plan that can achieve strong financial and development results through targeted co-investments. The program combines SME support with community-based extension services, horticulture and fodder seed variety testing, and investment promotion activities focusing on diaspora investors. The program has been guided by the MERS principles of financial viability, market development, and value chain facilitation to ensure that the goals of sustainable employment generation and business growth are demonstrated. This functions as a mechanism to attract much needed private investment into key sectors of the Somali economy. As the program expands to South-Central Somalia in the coming year, the team will need to coordinate closely with other development and humanitarian organizations to support resilience mechanisms in targeted agro-pastoralist communities. Will we see the MERS principles fully implemented or only partly honored?

The program team shares the enthusiasm of USAID, other donors, bilateral agencies, and investors for the prospects of sound economic development as a driver of stability in the Horn of Africa. For these inbound resources to be optimally utilized, project design must be firmly grounded in the market principles outlined in MERS. In Somalia, as elsewhere, this ideal has for too long been the exception rather than the rule. I strongly recommend that the MERS training be rolled out to the broad array of practitioners whose unquestionable dedication to supporting economic recovery programs in Somalia is not always matched by the full application of sound market-based principles.
[2] http://dai.com/our-work/projects/somalia%E2%80%94partnership-economic-growth-program

Zaki Raheem, Development Specialist, Inclusive Economic Growth Unit, DAI. Mr. Raheem is a private sector development specialist with 10 years of research, training, project design, and project management experience in post-conflict economic development programming, agribusiness value chain development, and related access to finance and investment promotion research. He recently completed a two-year field assignment as the Private Sector Specialist/Deputy Chief of Party for the USAID/Partnership for Economic Growth program in Somalia, and now advises the project from Washington, D.C.

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