Kate Fogelberg, Rob Hitchins, Rachel Shah

How MSD programmes are dealing with the economic crisis during the health crisis[1]

The COVID-19 crisis has generated numerous challenges for aid agencies as they wrestle with how to respond. Relative to other approaches, MSD is well suited to operating in and responding to the situation, and over the last three months, MSD programmes have been applying the guidance and tools at their disposal to support the markets they work in.

A particularly important aspect of MSD programming during the current crisis is working with market actors that have long-term stakes in the economy and enabling them to respond appropriately. Programme support to their partners has fallen into three categories: supporting the survival of partner firms to continue buying and selling, maintain cashflow, or pay wages; supporting partners to adapt their business models to the crisis and prepare for recovery; or supporting partners pivot to immediate opportunities and contribute to mitigation efforts.

Survival: A principle that underpins the MSD approach is that “it ain’t what you do, but the way that you do it.” No tactics are off the table, so long as they are based on deep analysis and pragmatic action, feasible opportunities and a sustainable exit plan. To keep firms trading during COVID-19 lockdowns, programmes are supporting business continuity measures for timebound periods. As governments roll out stimulus packages, MSD initiatives are working with them to better target support or to signpost it to the private sector.

Adaptation: Sometimes partners need support to adapt to the ‘new normal.’ From shifting from physical marketplaces to e-commerce and new business-to-consumer delivery models, there are emerging examples of businesses already starting to build back better as a result of targeted intelligence[2] and flexible support provided by MSD programmes. Some programmes are supporting agribusinesses, such as cocoa and coffee processors, concerned with both the health of their farmer suppliers and the continuation of their supply chains, to invest in communications campaigns on how to avoid COVID-19, redesigning their events and training their agents to operate safely. This type of support has enabled them to continue operating under the constrained circumstances of the crisis, while helping them to be better positioned for the post-pandemic recovery.

Pivot: There are several examples of MSD initiatives supporting partner manufacturers to re-purpose their production lines to supply personal protective equipment (PPE), such as masks or face visors, or hygiene products, such as hand sanitiser. Pivoting may also lead businesses to build on short- or medium-term adaptations to invest long-term in new and more resilient ways of doing business. Where needed, MSD programmes have a raft of tactics to support these kinds of responses.

Learning to live with COVID-19: opportunities to safeguard lives and livelihoods in the ‘new normal’

COVID-19 is not going to disappear soon, unfortunately. Scientists suggest that we are all going to have to learn to live with it until a vaccination or treatment is developed and distributed, or until the virus dies off. However, we’ve already seen that ‘dealing with it’ is anything but business as usual. New ways of working and getting goods to market are already emerging, accelerating trends like digital transactions and flexible working practices. Although there are risks inherent in these shifts, some sectors will offer inclusive growth opportunities to the growing numbers of vulnerable people. And the importance of investing in basic services, like water and sanitation, smartly and sustainably, will only become more critical in learning to live with COVID-19 – and avoiding future pandemics. In responding to new opportunities in the wake of COVID-19, MSD can offer practical guidance, as many existing programmes were already addressing these in pre-COVID-19 times.

  • Digitisation: Reducing contact between people is a key tool in the fight against the pandemic, yet this forced reduction in human contact results in massive supply chain disruptions, which are even more drastic for poor producers, workers and consumers. Finding ways to keep information, finances and goods flowing offers the opportunity to minimise negative impacts in the short term and enhance the possibility to build back smarter and more efficiently. For example, the expansion of e-commerce solutions, notably in business-to-customer services, was underway in many countries, but has sped up notably over the last few months. Similarly, the situation has forced training providers to expand and improve online training processes. With the likelihood of further waves of infection and changing patterns of work, increased digitisation is likely here to stay – the challenge will be how to influence its spread so that it is more inclusive.
  • Logistics: As countries try to maintain health protections, additional controls are likely to slow down logistics and drive up costs. Travel and airfreight prices are rising due to fewer passengers. Firms looking to build greater resilience into their supply chains might consciously fragment them, to spread risk and reduce vulnerability to shocks to one source. This will increase costs. Such changes might present opportunities for firms that know how to manage more diffuse supply chains efficiently. The challenge will be to keep supply chains efficient and competitive, especially in smaller and remoter nations.
  • Labour markets and entrepreneurship: With millions of people unemployed, underemployed, or struggling to run a small business, the needs for new or better skills and entrepreneurship will be heightened by COVID-19. As different sectors of the economy contract and others expand, ensuring that workers – and young people in particular – are equipped to adapt and take advantage of new economic realities will be important to managing recovery.
  • Water and sanitation: Increasing access to water and sanitation services and improving handwashing behaviours is already at the forefront of protection against a wide range of diseases. WASH will become more important in these pandemic-afflicted times. Having wrestled with the dual challenges of scale and sustainability long before COVID-19 hit us, several donors and implementers have already begun to apply systems approaches to the challenges of sustainable WASH and this is likely to grow.
  • Health: COVID-19 has increased awareness, political will, and investment in health systems, but it has also highlighted how fragile they can be. Beyond the immediate scramble to manage capacity, there is a need to understand how to change the way health systems work so that they are both more inclusive of underserved populations and more resilient to future shocks.

Poor and vulnerable men and women depend on a multitude of interconnected systems and private and public actors for their physical well-being, social support and economic livelihoods. COVID-19 and its aftermath threaten to disrupt these systems in unprecedented ways and will disadvantage these people still further. However, disruption can also create opportunities for positive change – building back better or working in entirely new ways – if it is anticipated and harnessed smartly. The intelligence, innovation, hard work and partnerships of MSD initiatives can help tip the balance from threat to opportunity.

[1] This paper draws on an internal document prepared by Market Development Facility (MDF), a DFAT-funded programme in the Asia-Pacific region, implemented by Palladium and Swisscontact. It was also enhanced by inputs from Swisscontact colleagues in other regions. Thanks to colleagues in both MDF and Swisscontact for your inputs.

[2] The hyperlinked document is the results of an assessment conducted by Swisscontact’s PPSE program in Kosovo on the potential impact of the pandemic on the HoReCa secto. The study has been shared with the the Minister of Finanice and Transfers, and PPSE is facilitating a series of discussions to follow up in cooperation with the Kosovo Chamber of Commerce. See: https://ppse-kosovo.org/file/repository/PPSE_Newsletter_May_2020_ENG.pdf

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