1.7 Market-Based Programming

Humanitarian actors can have a significant impact on the local economy. Their interventions cannot be market-neutral. MBP offers a set of modalities, including Cash and Voucher Assistance (CVA), that are based on understanding and supporting local sanitation market systems.

In times of crisis or disaster, markets can provide access to goods and services that are necessary for survival, such as hygiene products, water, or transportation. Market systems can also provide jobs and opportunities for income and livelihoods. They play a crucial role in ensuring that local market actors can generate revenue. MBP might promote faster economic recovery and resilience building due to economic multiplier effects, enabling the transition from humanitarian to development programming (HD-Nexus).

There is some emerging evidence on the positive effect of market-based modalities for WASH outcomes, especially in the recovery phase and protracted crisis contexts. Especially with CVA modalities, such as vouchers or conditional tranched payments for latrine construction during recovery, and vouchers for latrine desludging services, a positive effect on indicators for sanitation access and quality has been observed (Barbiche & Collins 2020). For individuals and communities, MBP and especially CVA provides more dignity and choice. Cash grants for latrine construction allow beneficiaries to choose their own design and oversee the construction themselves, leading to greater ownership (CRS 2016; UNHCR 2018).

MBP can engage with and influence markets to different degrees. On the most basic level, programmes should be aware of markets and consider how delivering humanitarian assistance can affect the local markets and take steps to reduce or avoid negative effects on local markets.

Preparing an intervention and choosing the right modalities
Appropriate levels of market and technical WASH assessments and analysis, along with multi-sector needs assessments and response analysis, should form the foundations of all humanitarian sanitation programmes to ensure that they are responsive to realities on the ground, rather than being predetermined by standard approaches and assumptions (Gensch et al.). The choice of the appropriate MBP modalities depend on the availibilty and functioning of local WASH markets as well as on usual factors like WASH needs and vulnerabilities, humanitarian context, type and phase of an emergency and the knowledge, attitude and practice of the affected population.

Market Demand and Supply

A distinction is often made between how interventions involve markets, i.e. whether one simply uses markets, or supports them in a targeted way, or even engages in longer term market systems change. Both the demand and supply sides of a market chain can be targeted, even though the effects are observed on both sides due to their interconnectivity. Interventions can also aim to improve the market regulatory framework and/or to support secondary market services and infrastructure.

Strengthen Market Demand and Access

• On the demand side, using markets means to use existing markets when assisting people affected by crisis. This can entail CVA to increase the purchasing power of people affected to purchase WASH services and goods at local markets.
• Consumers or other entities in the market system might need temporary market support so that users can adequately access goods and service. An example is enabling digital payments by providing smart cards to the beneficiaries.
• It is also possible to create new demand by changing market systems through longer-term interventions that introduce and market new products such as improved latrine types. Sanitation marketing, including behavior change communication methods, can be used to motivate a target group to change consumption patterns and adopt a specific behavior such as the use of latrine.

Strengthening Market Supply and Availability

• On the supply side, using markets entails the local/regional procurement of goods and services to deliver immediate humanitarian assistance.
• Supporting markets means to support specific market actors such as vendors or traders. An example is to provide grants to companies who offer sanitation services, so they can re-establish their business following a crisis.
• Strengthening market systems and the resilience of market actors on the supply side requires longer-term interventions that focus on improving their business plans, optimise production (inputs, process, outputs) and value chains. One example is to assist local market actors to produce relevant sanitation products like concrete slabs, create new business plans or marketing plans for their sale.

Improve Market Regulatory Framework
In order to help markets recover, humanitarian interventions can also include a range of activities aiming to reform the regulatory frameworks of relevant markets. This could be through advocacy for improved regulations or standards, like the approval of permanent infrastructure for wastewater treatment in a refugee camp setting, a direct engagement in policy-making processes or by building capacities of involved actors, like governments, regulators or utilities.

Improve Market Services and Infrastructure
To allow functioning of critical market systems, the broader market services and infrastructure might need to be supported, restored or developed. This could include loan guarantees for microfinance institutions, the provision of digital cash delivery technologies, and support to improved market information as well as the rehabilitation of roads, transportation and telecommunication networks.

Despite the opportunities of using MBP and its modalities, risks and challenges must be considered. Sanitation infrastructure is technically complex, often subject to regulation, relatively expensive (high capital expenditure) and dangerous if implemented poorly. Working through markets partly shifts the handling of quality and safety risks to local market actors and beneficiaries, resulting in less control over construction quality in a cash for latrine construction programme (e.g. when beneficiaries use less skilled labour and fewer salvaged materials to build latrines). Providing beneficiary choice does not negate the responsibility of humanitarian implementers to ensure access to sanitation facilities and services are safe, inclusive, clean and well maintained and meet minimum humanitarian standards. Design of market-based programmes should therefore include a risk analysis and risk mitigation strategies (e.g., use of conditionality or restriction of cash transfers) as well as enabling activities such as technical support, capacity building and regular monitoring.

Where sanitation programmes have identified risk factors related to knowledge, attitude and practice, these need to be addressed with appropriate complementary activities, like community engagement and sanitation marketing that seek to understand socio-cultural issues, build accountability and support healthy behaviour.