The Approach to Inclusive Market Systems (AIMS)

Presentation | 16 October 2023
The Approach to Inclusive Market Systems (AIMS) has been developed in close collaboration with UNHCR to make livelihood interventions for refugees more sustainable and market-based. AIMS seeks to apply the market systems development (also called Making markets work for the poor or M4P) approach to the context of forced displacement.

Traditional approaches to refugee livelihoods often deliver a variety of goods and services to people in need directly. While this is time-efficient and effective to cover immediate needs, the approach often distorts the market and risks displacing local actors that offer these goods and services on a commercial basis. Moreover, direct delivery of goods and services can only be maintained as long as donor funding is available. Once project funding ends, service delivery ceases, and the situation of recipients has not improved sustainably.

The market systems development approach applies the idea of “doing development differently” and, instead of delivering goods and services directly, focuses on understanding the overall system in which people live and make a living and asks why certain groups struggle to access economic opportunities. Applying a market system approach often means doing things counter-intuitively, for instance by refraining from directly helping people with whatever goods and services they need, but instead taking a step back to understand the ‘root causes’ of people’s problems and design interventions to tackle these. This means that projects often do not work with the target group directly, but rather with a variety of public and private actors to incentivize and capacitate them to deliver goods and services sustainably.

To guarantee sustainability, projects seek to create win-win situations whereby both the actor delivering any good or service and the person receiving that service stand to gain from the transaction. For instance, instead of delivering seeds, fertilizers and other inputs to agricultural producers in marginalized rural areas, a market systems development project may work with input suppliers to help them develop a viable business model to sell required inputs to marginalized producers at an affordable price and with options to buy on credit. That way, instead of crowding out commercial suppliers and creating dependencies on donor funds, a win-win situation is created whereby marginalized farmers benefit from sustainable access to affordable inputs, while commercial input suppliers retain their jobs and make profits which might even result in them expanding and employing more people.

That said, the approach acknowledges that particularly vulnerable and marginalized population groups, such as refugees and IDPs, often face specific challenges and constraints that hinder them from fully integrating in labour markets, and therefore may need an additional ‘push’ to do so. AIMS is therefore applying a ‘push-pull approach’ that combines market systems interventions with more direct measures to support vulnerable groups and enable them to gain the skills and capacities needed for meaningful integration in the wider market system.

The ‘push-pull approach’ as applied through AIMS would then on the one hand seek to develop capacities and skills of the target group to engage with the market and make use of new opportunities (the ‘push’), while on the other hand focuses on developing markets and value chains to expand and diversify the opportunities available to the target group (the ‘pull’).

On the ‘push’ side, ILO often deploys well-tested tools including its entrepreneurship and financial education trainings to build the capacity of farmers and small businesses to more effectively manage their businesses and resources and recognize new market and investment opportunities. On the ‘pull’ side, ILO will use the market systems development approach to develop sectors and value chains with potential for inclusive growth and job creation, and, depending on specific sectoral constraints and opportunities, help actors increase productivity, make better use of inputs, gain access to new markets, and improve their overall competitiveness.