Participatory Market System Development (PMSD) is Practical Action’s approach to inclusive markets that reduce poverty on a large scale and protect the environment.

Markets, whether for crops, livestock or even technologies, can act as a powerful platform to give marginalised farmers in developing countries, and those who provide services to them, access to valuable networks, technologies, experiences and assets that can help them work their way out of poverty.

However, markets can be plagued with inefficiency and inequality between different groups of people, especially in contexts where poverty is acute. This can be caused by a number of things, for example a lack of access to critical information like the current price of crops, misunderstandings and conflicts between buyers and transporters, inefficient policies or just poor infrastructure.

Practical Action has been developing an approach called Participatory Market System Development (PMSD) to make markets more inclusive, reduce poverty on a large-scale and protect the environment.

PMSD is designed to bring all of the key people within a particular market together. These people are known as stakeholders, or market actors. The PMSD process works to build trust and a joint vision of change between these market actors, and helps them to collectively identify obstacles and opportunities affecting their market system. Facilitators trained in PMSD techniques support the group of market actors to come up with joint strategies and action plans that will overcome these obstacles, and take advantage of potential opportunities to improve market conditions for everyone. The approach, which has been developed over 12 years of fieldwork, is based on three broad principles: systems thinking, participation, and facilitation. You can read more about these principles further below.

  • Core Principles
  • Processes
  • Impact
  • Influence
PMSD is based on three core principles:

  • Systems thinking: Markets are complex systems that adapt to new information constantly. They are made up of large numbers of actors who are connected to one another and whose decisions are influenced by, and have an influence on each other. These “complex and adaptive” systems behave in ways that achieve more than the sum of their parts. In other words, we cannot predict how the system will behave by looking at the individual people or parts; we need to understand the relationships and the interactions.

  • Participation: Applying systems thinking to markets forces us to recognise that no single actor can determine how the system will change. Some very powerful actors can influence the trends or general direction of change, but how this change manifests in reality is a product of the decisions of all the actors. As a consequence, if we want to influence how a market system develops, we need to bring strategic players together to gain an understanding of the whole system, to jointly assess blockages and opportunities and to implement collaborative strategies and actions that will improve how the system functions.

  • Facilitation: Facilitation can be understood here as creating the conditions for public and private market actors to drive change themselves. If we want to become effective facilitators, we have to therefore avoid becoming actively involved in the market as market actors. Facilitators can provide support, and even use subsidies as a way to build trust and joint visions, and to contribute to the introduction and dissemination of new ideas, practices or business models; however this must always be as part of an exit strategy. Good facilitation is at the heart of sustainability, because it is underpinned by the ownership that the key actors have over their own process of change.
The above principles shape how we work on the ground. Whilst the reality of the process is messy, organic, and interactive, the following describes the typical sequence of steps that our field staff follow when carrying out PMSD.

The PMSD process starts with field staff analysing factors such as the potential to reach those most in need, and a particular market’s potential for growth, so that they can establish which markets within an area (for example, dairy or rice) provide the best opportunities for reducing poverty on a large scale. The next step is to get a better understanding of that market system, and the problems within it, by mapping out how the system fits together, and researching each connection and market actor in detail.

Facilitators then work to engage the key public and private actors within that market who can drive change – i.e. actually make the system work better – and find “hooks”, which are essentially just a set of convincing incentives that can motivate them to attend participatory workshops with all the actors within the market chain.

At the same time, the facilitators work to empower representatives of the marginalised actors so that they can engage with the rest of the actors in a meaningful way in these participatory workshops. By improving their business language and helping them to better understand the market, it puts them on a more capable and even footing to have an influence on how the process of change will take place.

Within the workshops, tools and activities are used to help the actors to visualise the market, and staff facilitate the market actors in understanding where the opportunities and blockages are within the market system. It is through these interactions that the market actors can develop a joint vision, to build trust, and to coordinate their actions and collaborate, to achieve positive changes within the market system.

As facilitators we support the actors throughout the process of strategic thinking, planning and action, in ways that help them to overcome potential conflict and risks. Throughout this time, we work to ensure that they steadily gain ownership of the process, so that once our intervention has come to an end, they can continue driving change in the future without us.

Examples of impact from our projects

Darfur Efficient Cookstove Project, Sudan

The Darfur Efficient Cookstove Project had its origins in research activity funded by the DFID and managed by Practical Action. DFID were looking to identify practical measures in developing countries that reduce indoor air pollution from cooking smoke. Practical Action set up a project introducing efficient liquefied petroleum gas (LPG) cookstoves to households in the town of Kassala.

PMSD has been efficiently used in the Darfur Efficient Cookstove Project design and implementation. The approach enabled all the stakeholders to identify specific barriers and a range of interventions after proceeding to LPG market mapping workshops. Practical Action used PMSD as a way to raise awareness, create stronger relationships among the market actors and trigger change and dialogue.

Practical Action has been partnering with Carbon Clear in its mission to help businesses understand and tackle the challenges posed by climate change. Carbon Clear provided “100%” of the investment for the Darfur Low-Smoke Stoves project and led the certification to a reputable carbon credit standard. They trained the team on high quality GHG monitoring and assist the team in regards to the management of the project.

Practical Action managed the implementation of the project on the ground in Sudan and provided training and assistance to local employees and women-based associations to manage micro-funding and deliver the stoves. The Darfur Efficient Cookstove project is the only project in Sudan that has Gold Standard accreditation and that is actually issuing carbon credits (through CarbonClear).

A similar process has been taking place in Rwanda for biomass cookstoves, in Ethiopia for the ICS programme, and in Malawi and in Zambia, both on solar PV lanterns.

Urban WASH
Sustainable Faecal Sludge Management system in Faridpur, Bangladesh

Faridpur is one of the secondary cities in Bangladesh where 129,000 people live; 94% have access to adequate sanitation. There is currently no piped sewerage network and it is unrealistic to expect this in the near or medium term future.

Pit empting service in Faridpur remains a semi-formal service, and only used by 55 % of individuals and 81% of institutions. Informal, private pit emptying is also active and partially fills the service gap in an unregulated manner, and provides an undesirable yet relatively profitable occupation.

The objectives of this project are to conduct a comprehensive situation analysis of Faridpur’s sludge management system and the relationship between key public and private stakeholders.

It utilises PMSD approaches to analyze key existing and potential actors in city sludge management, their capacities, relationships, supporting inputs and services on which they rely as well as the framework environment that shapes the system functions. This includes in particular exploration of the business environment and the current private sector involvement in service provision.

Also based on the detailed analysis, Phase 1 is designing and proposing of a second phase, staged program of catalytic interventions to enable binding service level agreements on a result-based contracting basis to develop and deliver a sustainable city-wide system for sanitation services to ensure equitable benefits, especially to marginalized populations. Interventions developed will address the institutional and political framework, capacity development needs and market facilitation necessary to promote an innovative service delivery mechanism in Faridpur.

Examples of influencing at scale

Inclusive Markets
Christian Aid using PMSD approach in their Inclusive Markets Development projects

With most previous interventions having failed in the honey sector in Kenya, Christian Aid has chosen to take a holistic approach, engaging market stakeholders from across the honey sector in order to embed any interventions within the sector itself.

The PMSD process has been key in this – taking time to bring the actors together has not only enabled us to design a sector changing intervention, but has brokered relationships, and raised awareness and ownership of issues in the sector across the honey supply chain that have stimulated better market functioning for the long term under the guidance of Kenya Honey Council. Specific efforts were made to equip and empower marginalised honey farmers.

Through the PMSD process a common understanding and appreciation of the issues facing all sector players were identified, and links and networks were formed. Most importantly, the sector players prioritised addressing the challenge of poor coordination to unlock the potential of the sector to the benefit of all players. This is targeting 10,000 poor and marginalised honey producers across four of Kenya’s most hard-to reach counties.

Partnership with the Zurich Foundation on Market Vulnerability Assessment in flood-prone areas

Practical Action and Zurich Insurance Group (Zurich) have formed an Alliance in building community resilience to disasters, especially flooding which affects more people globally than any other natural hazard. Practical Actions’ role in the alliance is to focus on smaller-scale community programs to serve as incubators for innovation, knowledge-sharing and to better understand the impact of climate change.

The Zurich Alliance is currently looking at developing and redefining in depth a framework for disaster risk reduction in urban areas. This framework is a set of tools helping practitioners to carry out a better situation analysis before a disaster strikes. There has been a growing realization that the best opportunities for assisting communities in emergency situations may be missed unless resilience building interventions are designed with a good understanding of critical market systems that play a vital role in supplying critical goods and services to ensure survival and protect livelihoods, both in the immediate aftermath of a disaster and in the longer term.

Practical Action is leading some action-research in Bangladesh and Peru to look at market systems vulnerability and resilience in disaster-prone areas. Practical Action is using the PMSD approach and disaster risk reduction methodologies to design a new methodology to assess market systems vulnerabilities in rural and urban flood-prone areas.

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