1. Energy Efficiency in Municipal District Heating
Market systems development in fragile contexts
Diane Johnson- The Springfield Centre

2. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Systems are multi-function, multi-player
SUPPORTING
FUNCTIONS
RULES
Standards
Information
Business
membership
organisations
Government
Private sector
Informal
networks
PLAYERS
Demand Supply
Financial
servicesR&D
Laws
Informal
rules &
norms
Civil Society GroupsAcademic bodies

3. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
...and interconnected

4. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Same framework- different sectors
Market Systems
Development
Framework
Vocational training- Labour
Governance
Education
Energy
Private Sector Development
Water-Sanitation
Financial Services
Health
Agriculture
Land

5. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
What makes the difference?
Market Systems Development Principles
 Context-specific & Systemic: understanding where
systems are failing to serve the needs of the poor-
constraints- and acting to correct those failings
 Large-scale Impact- explicitly aims to reach large
numbers of poor by harnessing the dynamism of the
market system- seeks leverage points, co-investment
and ‘crowding’ in of market players

6. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
1,000,000 500,000 20,000 2,000
Leverage
Market 1Market 2Market 3Market 4

7. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
 Learning & Adaptability: systems are dynamic -
interventions need to be! Iterative process of change
needs built-in learning to support flexible decision-making
and seize windows of opportunity.
 Facilitative role- Sustainable change: catalytic role of
development agent to stimulate, not displace, market
functions or players.
better aligning functions and players with the incentives
and capacities to work more effectively.

8. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Sustainability Matrix:
current and future vision
Functions Players Incentives
Who does? Who pays? Why?
CORE Market
RULES
SUPPORTING FUNCTIONS

9. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Direct Delivery
How can we
help to
solve these?
What problems
do poor people
and their
businesses and
institutions
have?
What problems do
poor people and
their businesses
and institutions
have?
Why isn’t their
market environment
providing solutions?
Why isn’t the market
system working for the
poor?
Market Systems
Development

10. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Market Systems…..
 impact poor people in fragile contexts-even more so!
 provide jobs, essential goods and services
 continue to function even if at reduced rates/ informal levels
and even when other institutions may have broken down
 rebound quickly
 ‘phases’ of relief, recovery, development interventions do not
reflect on- the-ground realities and may ‘do harm’
 may promote stability
Why utilize a
Market Systems
Development Framework in
Fragile Contexts??

11. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Market Systems Development & Fragile Contexts
Strategic principles are the SAME
however….
application of the strategy- tactics- requires
contextual adaptation

12. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
What is different in fragile contexts?
 Less partners for engagement
 Potential for increased importance of informal institutions/
players
 More intensive work with partners
 Limited sectors for engagement
 Increased use of subsidies
 Increased temporary direct interventions
 Longer timescale to achieve scale/ sustainability
 Pressure to demonstrate ‘quick-wins’

13. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
What is different in fragile contexts?
 Government may be weak, corrupt
 Potential presence of illicit markets
 Increased distortion from aid interventions
 Issue of lack of trust is paramount- affects social,
civic, and business relationships
 Need for integrated skill set of facilitation team

14. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Effective,
equitable
governance
Strong
institutions
Stable,
competitive
economy
Inclusive growth
Fragility
Geographic isolation
Low natural resources
Disaster/conflict prone
Poor governance
Social exclusion
ResilienceSpectrum of Weakness
different systems…..
same framework

15. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Context Analysis as starting point
Conflict
Crisis
Fragility
Market
Political
economy
Power dynamics in
institutions/ systems
are interlinked!

16. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Market-Integrated Relief
Early Economic Recovery
 meets basic needs
 minimizes market distortions
 targets crisis-affected populations
 jump-starts private sector
 promote re-emergence of essential markets
 builds platform (relationships, knowledge) for market
systems development (MICRO)

17. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Dividers
Negative drivers of change
Dynamics, players and
institutions/ systems that
divide people

18. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Connectors
Positive drivers of change
Dynamics, players and
institutions/ systems that
connect people

19. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Fragility SENSITIVE
 ‘Do No Harm’ as minimum standard
 Goal: poverty reduction or increased
well-being
 Understand systemic causes of fragility
 CSPM: increase connectors

20. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Fragility RELEVANT
 Assumes application of ‘Do No Harm’
 Goal: reduced fragility and/or poverty
reduction or increased well-being
 Understand and address systemic
causes of fragility

21. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Systemic
intervention
Poverty
reduction
Improved
growth and
access
System change-
increased access
to inputs
Strategic framework = Theory of Change
Systemic
intervention
Stability
Increased
negotiated
settlements
System change-
increased trustFocus on system change!

22. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Out of Fragility Vision- Theory of Change
 Does the program have a clear theory of change as to how
systemic intervention will lead to reduced fragility?
 Is a market development intervention the most effective
means of achieving the desired outcome?
 Does the theory of change have clear, logical indicators to
measure progress towards multiple goals?

23. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Why Market Systems Development IS a valid
framework in Fragile Contexts
 lens to consider complexity
 keeps strategic focus on the poor
 considers institutions, systems and power dynamics
 incorporates DO NO HARM principles
 forces focus on sustainability
 inherently flexible, dynamic – focus on learning
 framework to link relief »recovery» development
 applicable to multiple sectors

24. Springfield Centre | Making markets work
M4P IN BASIC SERVICES
Take Away Messages
 Context is the starting point
 Must consider POWER dynamics
 Focus on causes not symptoms
 Clarify programme goal(s) – and indicators of change
 Sustainability = facilitative role of development actor
 Flexibility, adaptability is key