Measuring Market Systems Resilience in Somalia

Mitigating, adapting to, and recovering from shocks and stresses is a critical part of building resilience and, in turn, reducing chronic vulnerability and facilitating inclusive economic growth.

Market systems play a key role in supporting individuals, households, and communities during shocks, but only if the market systems are also resilient to shocks and stresses. Measuring system-level resilience, however, is a nascent area, and there is little research on the relationship between market systems resilience and the resilience of those who rely on those markets.

To fill this gap, RTI recently completed research with internal funding to measure and assess the resilience of livestock and grain market systems in the South West State of Somalia.

Adapting a Resilience Framework to Somalia’s Context

In Somalia, about 60% of the population are pastoralists and make a living herding livestock. Agro-pastoralism, or when crop production is combined with livestock herding, also represents a large livelihood for Somalis. In recent years, both pastoralists and agro-pastoralists have faced recurrent and compounded shocks—from droughts to insecurity stemming from the militant group Al-Shabab—making it challenging to improve their livelihoods and food security.

Drawing on our field-based expertise in resilience programming through the USAID Growth, Enterprise, Employment, and Livelihoods (GEEL) project— including research on the role of the private sector in building resilience through camel leasing—we set out to create a baseline measure of market systems resilience in South West Somalia by exploring two questions:

1. How do we measure whether a market system is resilient?
2. Which characteristics of a resilient market system are most important for pastoralist and agro-pastoralist households in Somalia?

To answer these research questions we adapted and operationalized USAID’s Market Systems Resilience framework to Somalia’s context using a locally led process to ensure that findings are relevant for future programming.

We customized the MSR framework with input from GEEL staff and local consultants, for example, by selecting markets and their participants for sampling, adapting indicators within the eight structural and behavioral domains of the MSR framework, and creating data collection instruments.

Working with Savana Consultancy and Research Service Ltd., we developed qualitative and quantitative tools that would adequately capture nuances and variations in key variables in South West State’s context and that would also yield information most useful to implementers for resilience programming decisions and design.

In total, 507 market actors were interviewed within the grain and livestock market systems of Baidoa and Hudur districts, representing various types of businesses for each market system—such as fodder producers, petty livestock and grain traders, small/medium livestock and grain traders, and milk sellers, among others.

Measuring Market Systems Resilience Capacities

The research found that businesses were impacted by a variety of shocks—insecurity, road closures, COVID-19-related market closures, and reduced grain and livestock supply due to natural disasters, as illustrated below.

The MSR framework’s structural domains examine:  

• how connected market participants are
• how diverse and inclusive they are
• who holds power within the system, and
• whether rules and laws provide a level playing field for all market participants.

Behavioral domains examine:

• types of cooperation within the system
• whether competition ultimately provides value to customers, and
• whether market participants have proactive business strategies and use information to make informed decisions. 

Market Systems Resilience Assessment Findings Show Significant Vulnerabilities

Domains focused on market participants’ competitiveness and connectivity indicate that both the grain and livestock market systems are vulnerable to shocks and stresses due to high barriers to entry of marginalized groups, especially women and disadvantaged sub-clans. As a result, concentration of social and financial capital among a sub-set of market participants threatens the ability of the whole market system to bounce back from shocks.

Although the legal framework, tax structure, and capacity of different participants to enforce agreements have a similar effect on the resilience of both market systems, power dynamics vary significantly by city due to the Al-Shabaab siege of Hudur. As a result, both livestock and grain market systems in Hudur are less resilient to shocks due to greater involvement of Al-Shabaab and being physically cut off from end-markets.

Data collected through the diversity domain indicates that access to family and business networks and diversified income sources are key resilience capacities for market participants to be able to recover from market shocks, such as insecurity along roads between markets, or interruptions in end-markets or supply chains.

As the table below illustrates, study results indicated that the grain market system is more resilient within three key domains: business strategy, diversity, and connectivity. Overall, however, both market systems are only somewhat resilient, indicating a problematic degree of vulnerability in an environment rife with shocks and stresses on many fronts.

Next Steps Toward Building Market Systems Resilience

Understanding the vulnerabilities within each market system is an important first step to adapting program interventions in a way that builds market systems resilience.  For example, the livestock market system relies on traditional clan structures to facilitate access to many services and markets, yet these structures exclude marginalized sub-clans.  Findings showed that business committees could provide these same services in a more inclusive manner if they had more capacity.

As the first organization to fully operationalize the MSR framework, the results from our assessment on the resilience of the dairy and grain market systems in southwest Somalia validated the usefulness of the framework. In doing so, we developed a method for mapping businesses in thin markets to fill information gaps and ensure data collection activities include marginalized market participants, thereby enhancing inclusivity and creating a catalyst for self-reliance.

While we were able to benchmark market systems comparatively, the full capability of the MSR framework comes into play when measuring change over time. Assessing how the market system changes—and ideally improves and becomes more inclusive—over time because of successful development programming is an area we hope to explore in the future.