Resilience and market systems: What we can learn from resilient markets in Ethiopia

by 12th Apr 2016
Sindayo, a sheep farmer in Tigray, Ethiopia Sindayo, a sheep farmer in Tigray, Ethiopia

Last month I visited Tigray, Northern Ethiopia, to interview farmers and livestock traders faced with the drought effects of one of the most devastating El Niños in 50 years. What are their coping strategies in the face of extreme weather patterns? How are those strategies linked to national and international market systems? And how, through these systems, can we bring about a better deal for those in the supply chain typically made more vulnerable by drought – namely, women?

CARE has been operating in Ethiopia since 1984, working alongside other international and national organisations to bring solutions to those whose livelihoods are invested in agriculture, and who by default are affected by regular market ‘shocks’. At CARE, we talk a lot about ‘empowering’ women and girls, and one of four key focus areas in our five-year strategy up to 2020 is on improving access to economic resources for women and, crucially, increasing their control over those resources.

One of CARE’s USAID-funded programmes in Ethiopia is called GRAD and builds on the Government of Ethiopia’s long-term ‘protective safety net’ initiative (PSNP). GRAD’s objective is to “significantly contribute to sustained food security of chronically and transitory poor insecure households in rural Ethiopia” and to do this CARE partners with other organisations, including a main implementing partner, REST (The Relief Society of Tigray).

Resilience strategies and value chains

In our interviews with GRAD beneficiaries, and seeking out examples of ‘resilience’ building, we asked a set of questions. For example:

  • Has the programme intervened in a way that has left farmers with more options to earn income than before?
  • Have farmers been given new skills and capabilities to control how they manage their income, in order to be better prepared for future ‘shocks’?
  • And, ultimately, what correlation exists between these market systems and the economic development of farmers?

Could it be, in fact, that a more resilient and economically empowered woman operating in a livestock value chain will, through her resilience strategies, contribute to strengthening that value chain, and improve the way the system itself copes with market disruptions?

Borrowing USAID’s language, resilience within a market system takes on different capacities: absorptive; adaptive; and transformative. In Tigray, we met three female-headed households, all GRAD beneficiaries, all livestock farmers, and each taking on one of these capacities.

The role of savings and loans

Before I explain the differences in these capacities, it is useful to consider the issue of financial inclusion. Access to loans, and to credit and savings products, are core enablers when it comes to resilience. One of the key interventions around financial inclusion within GRAD has been the establishment of VESAs – Village Economic Savings Associations – providing savings and loans options to beneficiary groups.

Financial associations such as VESAs have become national policy in Ethiopia and are fully embedded in the current PSNP programme, targeting 8 million people. Within GRAD, VESAs have been enhanced to add in resilience-building support, including: examining climate change adaption techniques; advice on gender issues; and more general agricultural improvements for farmers.

So, let's turn back to the female-headed households interviewed in Tigray...

Sindayo, a farmer in Ethiopia, holding a harness she made

‘Absorptive’ resilience

Sindayo (pictured above) is a sheep farmer, divorced and supporting six children. In Sindayo’s case, she used the VESA, as well as other loan products, to purchase veterinary inputs and feed, and to grow her stock of sheep. Sindayo can typically make $25 per sheep, once reared and sold, and her particular coping strategy, her resilience, therefore could be said to have taken on an ‘absorptive’ capacity.

Not only have these loans helped consolidate and then grow her livestock wealth, she has also been able to devote time to setting up a new income-generating activity, namely making traditional baby harnesses. These take one month to make, and the profit potential for each is around $50 net. Sindayo told us: “At the beginning, I didn’t know about sheep’s profitability (only cattle). GRAD helped me get knowledge about profitability. Before GRAD, I couldn't afford to feed my kids properly, and school them. Now I am able to make decisions about their education and their health.”

Etalam, a farmer in Ethiopia, pictured at her drinks business

‘Adaptive’ resilience

We then met Etalam (pictured above) who also borrowed loans to support her sheep stocks. She used the first loan to buy inputs (such as feed) and, with the second, along with business training skills received from GRAD, she set up a drinks business.

Different to Sindayo, Etalam chose to ‘adapt’ her livelihood options. She reduced her dependency on livestock sales and, instead, put more time into the drinks business, selling locally brewed beer as well as a range of soft drinks. Unlike Sindayo, Etalam’s new livelihood, on the one hand, could be argued to be slightly less vulnerable to drought because she has invested more substantially in a non-livestock value chain. However, Etalam’s new income sources do remain linked to drought, particularly the beer sales, given their reliance on harvesting grain and on customers’ spending power (which tends to decrease during a drought).

‘Transformative’ resilience

To highlight a final example of ‘transformative’ resilience, we visited a third female-headed household. Alemtsehay followed a similar path as Sindayo and Etalam. However, in her case, and again supported by access to financial products, she chose to drop her livestock-rearing completely and injected all her resources into setting up a café and a shop.

Her story illustrates a complete change in risk profile, in comparison to Sindayo and Etalam, although Alemtsehay remains indirectly affected by drought due to the overall impact the drought would continue to have on the country’s/region’s economy. But hers is a case where a complete change in livelihood option carries with it other benefits, in terms of enhancing her social standing within the community, as she grows lines of business more traditionally associated with men.

Piecing the links together

From examining how access and control over economic resources plays a role in building resilience for these woman in Tigray, it became clear that savings and loans provided an important piece of the puzzle.

However, the market ‘system’ (within which the day-to-day transactions of livestock trading are connected) contains many more links to it which also need to address disruptions caused by drought. And, without understanding how these links in the chain cope with drought and market shocks, the end goal for an entity such as CARE – to strengthen that system and the women’s role in it – cannot be fully achieved.

We therefore then met other individuals and organisations connected in the livestock value chain, and learnt how GRAD helps engage them.

Amanuel, a livestock trader in Ethiopia, talking to a group

Amanuel (pictured above), a livestock trader, works for Raya Farm, an Addis-based exporter which sells livestock on to an international market (in Saudi Arabia). He spoke to us about his business model for buying, fattening and exporting livestock.

We learned that information sharing between local, national and international actors about their respective resilience ‘tactics’, whilst not always easy to do, would stand to benefit both the producers and the distributors in the value chain.

For a livestock producer in Tigray such as Sindayo, the focus on resilience is limited to making a decision about selling supply today, and making assumptions about the weather changes in the short term. A ‘shock’ felt because of a change in global oil prices, which affects the Saudi demand side of the market, and in turn affects Raya Farm’s purchasing strategy, is not something Sindayo and her peers are yet able to consider.

So where to from here?

To achieve sustainable results, it is an NGO’s duty not to become a long-term link in a value chain. Instead, by looking at ways of providing access to financial products, by offering business training, and by facilitating linkages between the different entities up and down a supply chain (and understanding how each copes with drought), the contribution of an NGO can bring about positive changes for all parties – although in the case of CARE, especially for women.

In Ethiopia, there are still many millions of drought-affected population groups. And so other innovations and interventions which address the resilience of market systems must be tried and tested. At the same time, the resilience capacities of those women and men who are beholden to those systems need to be acknowledged.

All organisations and institutions must play a role in this. Micro-finance institutions, for example, can pilot new products responding to shocks. The development sector itself is already sharing learning on resilience capacities (as stated above from the USAID Market systems for resilience report) and other tools already exist which support market systems work, such as the Cash Learning Partnership (CaLP) market mapping tools EMMA and PCMMA.

A market system is dynamic, prone to changes and flux. There are inherent risks within such dynamism, but also opportunities – for men and for women. And, within these complex contexts of ‘crisis’, such as is unfolding in Ethiopia right now, a longer term proposition that we at CARE will seek to prove (or disprove) returns us to one of the original questions asked above: is there correlation between resilience at the individual level and resilience of the market system itself?

My hunch is that there is, and I look forward to writing about this again soon.

Tim Bishop

Based in Ho Chi Minh City, Vietnam, my role involves supporting programme quality for CARE’s women’s economic empowerment work across the Asia Pacific region, providing strategy development and capacity building for teams, and convening and facilitating partnerships with the private sector. I also lead on various external affairs initiatives in the region.

I joined CARE International UK in September 2006 to set up their Private Sector Engagement Team, which initiated a range of global partnerships and sustainable development initiatives for CARE. In the time since, I have led several internal initiatives aimed at improving CARE’s programme quality and global connectivity. Most recently this has included the establishment of a new area of programming called Resilient Market Systems, analysing how to improve CARE’s women’s economic empowerment work within the context of humanitarian crises.

Prior to joining CARE, I spent 10 years in London, working in public, private and non-profit sector roles, largely specialising in corporate communications, fundraising and marketing functions.

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More than good intentions by Dean Karlan and Jacob Appel. It’s a refreshingly honest look at what works and what doesn’t work, based on years of analysis and lots of genuine commitment to the truth and the facts by its authors.

Email: bishop@careinternational.org