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Uganda: Demonstrating a Market Systems Approach in Bidibidi and Palorinya Settlements, December 2018

Source: Mercy Corps
Country: South Sudan, Uganda

Executive Summary

According to the UNHCR Livelihoods Socio-Economic Assessment in the Refugee Hosting Districts published in 2017, the influx of refugees and challenges that they face with regards to livelihoods was, and remains, a major source of concern for the Government of Uganda and humanitarian agencies. Refugee challenges are exacerbated by the fact that most lack human capital: 29 percent have no formal education and 67 percent do not have any trade skills. One-third of refugees do not engage in any specific economic activity. Refugees in Bidibidi Settlement in West Nile are most commonly engaged in small business activities, with 17 percent engaged in such activities. Refugees report receiving about 20 percent each of their total income from business and farming activities (UNHCR, 2017). 27 percent of the population in the West Nile lives below the regional poverty line.

Recognising the lack of sustainability of a traditional in-kind response strategy to address its refugee crisis, Uganda has adopted a progressive approach to refugee hosting, offering significant opportunities to integrate longer-term resilience and development approaches within refugee and host population assistance.

Understanding the need to identify a more durable solution to the refugee crisis, a small number of aid actors are exploring a market systems approach to strengthen the ability of displaced groups to engage with and benefit from markets. In this context, in July 2017 the Department for International Development (DFID) contracted Mercy Corps, the Palladium Group and DanChurchAid (DCA) to deliver a 12-month pilot programme, Demonstrating a Market System Approach in Bidibidi and Palorinya Settlements (referred to as “the pilot” in the remainder of this document) in the West Nile region of Northern Uganda with the goal of increasing refugee and host community farmers’ incomes (economic welfare) through growth of the agribusiness sector. Importantly, the pilot was not meant to replace any livelihoods/social safety net projects, nor was it intended to target all farmer households. The goal was to identify and increase access for those households who could and wanted to, produce commercially for market. The primary purpose of the Pilot endline evaluation was to provide tactical recommendations for evidence-based decision making related to programme design, targeting, and implementation of future market-systems development (MSD) programmes.

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The ambitious pilot saw considerable success within the 12-month period, demonstrating early market systems change in the form of behavioural shifts among actors at all stages of the agricultural value chain and demonstrated potential to increasing farmers’ agricultural incomes in the region in the long-term. While the evaluation found mixed evidence surrounding increases to farmers’ incomes from baseline to endline, at endline over half of farmers engaged in selling produce compared to less than 15 percent of farmers at baseline, indicating more farmers had entered the market though were selling relatively small volumes at endline. At the same time, the limited scope and timeframe of the pilot, highlighted many remaining market challenges and information gaps. If such challenges and gaps are addressed through a longer-term strategy, deeper systemic change across the agribusiness sector in the West Nile region is likely.

This report synthesises the successes, challenges and additional considerations brought forth from the pilot and provides key recommendations based on the lessons learned to assist the donor, implementing organisations and the community in understanding and adapting programming to a more market-based and a sustainable alternative to direct aid. The report is organised around several themes which emerged through the evaluation, which speak to both the challenges and opportunities in the region, as well as with using a market-based model to humanitarian assistance, with the key findings highlighted as follows.

The pilot demonstrated mixed evidence regarding increased agricultural income but signs of increased market engagement. Among farmers who reported selling any produce in the previous year, median agricultural income was $175 PPP among farmers at endline. At baseline, median agricultural income among farmers that had sold produce was $383. Market sales participation increased from 15 percent among farmers at baseline to over 50 percent among farmers at endline.

The pilot incentivised host community farmers to give land to refugee farmers by offering free tillage services on one acre of their land for every five acres given to refugee farmers. Refugee farmers felt the pilot played a significant role in supporting them to talk to host community landlords to acquire land; 53 percent of refugees accessed land off settlement at endline.

The pilot raised awareness of improved seed varieties and supported increased uptake of improved varieties. Many farmers specifically referenced the Pilot’s subsidy scheme, as well as seed fairs hosted by NGOs, as the main ways they found out about and accessed improved seeds.
Of the 77 percent of farmers that purchased seeds at baseline, 43 percent purchased an improved variety. At endline 79 percent of farmers purchased seed, of which 90 percent purchased an improved variety.

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Pilot farmers cited improved access to inputs, including improved seeds. At endline 41 percent of farmers reported an improvement in their ability to access inputs (seeds, fertiliser, etc.) from the previous growing season, with refugees significantly more likely to report an improvement (49 percent) compared to host community farmers (36 percent).

The pilot strengthened relationships between seed companies and agro-dealers, inspired agro-dealers to engage in more marketing activities and illustrated market opportunity to agro-dealers. Under the pilot, Palladium supported agro-dealers by mobilising farmers through the voucher activities and co-delivered and co-funded public awareness activities for improved seeds and inputs in host markets while Mercy Corps and DCA supported the agro-dealers delivery of awareness activities in refugee settlements. Palladium also connected and helped build relationships between the agro-dealers and larger seed companies such as East Africa Seeds, NASECO and Farmers Service, all based in Kampala.

The pilot’s partial subsidies were an effective incentive to increase uptake of improved seeds and land preparation services among farmers, though willingness to pay market price for such products and services was unclear. Only 8 percent of farmers at endline purchased seeds at full market price yet 42 percent of farmers indicated they knew farmers who purchased improved seeds without a discount.

Changed behaviours were positive indications of early market systems changes. Behaviour changes were observed among all market actors. Farmers accessed and used improved seeds and land preparation services at greater rates. Agro-dealers increased the availability and range of products offered (including new and improved seed varieties). Agro-agent expanded their models, both in terms of personnel and services offered (provision of extension services to farmers). Seed companies began working with multiple agrodealers to try and overcome transportation challenges, while agro-dealers leveraged bulk orders to negotiate better prices. Offtakers started developing and testing new models which aimed to bring West Nile farmers closer to their supply-chain.

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Improving market opportunities requires a multiyear approach. Within the 12-months, the pilot achieved significant results, especially relating to farmers increased use of improved inputs and increased engagement in markets. Results also showed, however, that there may be unexplored sales channels that offer greater market opportunities, and more importantly, greater profitability to farmers than those targeted under the pilot. Though further analysis and assessment is required, filling these market information gaps, as well as collecting data on yields, losses, prices, etc. (from programmes like the pilot) could help support the business case for farming as a worthwhile livelihood strategy.

The pilot highlighted gaps in understanding of market dynamics and sales channels with greatest potential for farmers in West Nile. Additionally, Pilot farmers showed a significant reliance on informal sources for market information. Farmers most commonly obtained market price information from agrodealers (30 percent), traders (29 percent) and host community family and friends (29 percent); refugees, specifically, most commonly obtained market price information from NGOs (38 percent). While farmers have some understanding of market dynamics and pricing structure, an improved understanding among private actors and NGO partners may help develop a more compelling business case to farmers and enable farmers to make more informed decisions on which sales channels are best for them.

The pilot clearly demonstrated the need for future programming to address cross-cutting constraints such as access to finance, climate change and transport issues related to poor infrastructure. Whilst the pilot covered a number of components critical to driving systemic change within the agricultural sector, there were additional areas outside the scope of the pilot that, if successfully addressed, would support farmers and other market actors in contexts similar to that of the West Nile. For instance, while the pilot promoted climate smart technologies in West Nile through use of improved seeds, climatic conditions remain a significant challenge that requires a more holistic approach and far greater resources.

Overall, the pilot provided a greater understanding of what is possible, raised critical issues about which components of a market-based approach work well in this context, and where investment is required to support further learning on market-based information gathering, change and development.

[source: https://reliefweb.int/report/uganda/demonstrating-market-systems-approach-bidibidi-and-palorinya-settlements-december-2018]

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