Stage 2: Research
M4P programmes are underpinned by a robust understanding and analysis of how market systems operate, and how they affect the poor. Only through such analysis can a M4P programme distinguish root causes of a market systems’ under-performance from the symptoms.
Thorough market systems analysis is an iterative process through which the programme team builds a picture of the wider socio-economic context of the poor before filtering and focussing investigation on the constraints to those market systems most important to them.
Investigation need not, and should not, be disproportionate but should tell the team what they need to know in order to act, but no more. The aim of the process is to uncover only the information needed to support decision-making and action. At the heart of good M4P analysis is purposeful curiosity, continually asking ‘why’ until the real causes of market systems under-performance are understood.
Diagnosing the root cause(s) of under-performance (or failure) of market systems to address the needs of the poor is fundamental to the M4P approach. The diagnostic process encompasses the detection of specific market systems important to the poor and where pro-poor opportunities exist, the identification of why those market systems may be failing the poor (symptoms), and the isolation of underlying reasons (causes) of market system under-performance and potential entry points for intervention. The diagnostic process may be viewed in terms of three primary steps:
Step 1: Understanding the poor and their context
M4P programmes build a profile of the poor and their livelihoods in order to understanding how the poor engage (as producers, consumers or employees) in market systems important to their social and economic well-being. By profiling the poor, the M4P programme identifies where potential opportunity lies for economic growth and poverty reduction.
Step 2: Mapping the market system
Potential opportunities need investigation. This next step requires building a detailed understanding of how key market system(s) work, who the major players in those market systems are, and (if appropriate) how those market systems are changing. Importantly, the mapping process assesses the position of the poor within the market system and determines exactly what is (or is not) happening for the market system to fail to meet the needs of the poor.
Step 3: Identifying systemic constraints
Having identified the ‘symptoms’ of market system(s) under-performance, the final diagnostic step is to identify specific ‘causes’ of that under-performance. This step moves from an understanding of ‘what’ is happening to knowing ‘why’ it is happening and requires in-depth analysis of the relationships, capacities and incentives of market players and the ‘rules’ and ‘functions’ that support the core market system.
A more detailed guide to understanding how market systems affect the poor can be found in section 3B (pp.19-30) of The Operational Guide for the Making Markets Work for the Poor (M4P) Approach.