Markets in crises: The implications for humanitarian action
This report (PDF), by the Humanitarian Policy Group (HPG) at the Overseas Development Institute (ODI), collates findings across three case studies on what actually happens to the institutions around markets during and after crises, and explores how humanitarian policies and interventions can be best used to maximize the potential of markets to support the household resilience of people living in situations of crises. Results show that the direct impact of a crisis did not stop markets from functioning: as long as demand existed, markets continued to function and prices rose to ensure supply continued. Markets’ ability to function was hit most by the breakdown in credit. Crises also changed the power structures and incentives behind market governance. The same conflict affected different market sectors in different ways, due to differences in institutional structures. The ways in which humanitarian aid was delivered had huger, often negative, impacts on markets. Most aid was given in-kind, which replaced demand for goods in the markets. This constrained recovery of the markets. The ways in which aid agencies purchased in-kind aid was unsuitable for the ways in which markets worked in those countries. Better understanding of the many different ways in which crises and aid change markets enables agencies to take action before a crisis to help strengthen the resilience of market systems to crises. Taking markets in crises seriously means the end of the humanitarian livelihoods sector as we know it. Although the increasing engagement of humanitarian agencies with market analysis is an extremely positive development, the aid sector needs to make radical changes in how it incorporates market awareness into its planning, and how it thinks about the private sector and its role in crises.