The SMILES project learning series, part one: integrating market systems development and the graduation approach in Western Uganda

The Sustainable Market Inclusive Livelihoods Pathways to Self-Reliance (SMILES) project, implemented in Uganda’s Kyaka II  and Kyangwali Refugee Settlements and surrounding  host communities in Kyegegwa and Kikuube Districts respectively, presents a learning opportunity of how integrating Market Systems Development and the Graduation approach can potentially improve the livelihoods of extremely poor refugee and host community households. This SMILES Project Learning Series will explore the key findings, challenges, and broader implications of this integrated approach as the project progresses. This first part reflects on initial insights on the Graduation and Market Systems Development Integration model at the end of the second year of the five-year project. 

The SMILES project operates in Western Uganda—a region that is home to some of Uganda’s most vulnerable populations, including refugees and members of the host community, who struggle with food insecurity, limited economic opportunities, and are faced with the negative effects of climate change. Targeting 14,000 households, the project aims to transition 70,000 individuals in two cohorts from "extreme poverty" to self-reliance and resilience.

The SMILES project is piloting the integration of Market Systems Development in a Graduation approach. The approach focuses on delivering structured, sequenced, and time-bound interventions that provide extremely poor households with the support they need to break free from poverty. The Graduation program typically offers a combination of interventions (Consumption Support, Coaching, Savings, Core Technical Skills Training, Asset Transfer, Linkages, Referrals, and Business Coaching) that support households to meet basic needs and build their self-reliance and resilience.

Market Systems Development, on the other hand, focuses on creating sustainable economic opportunities by addressing systemic challenges in market systems. Its interventions aim to improve market dynamics by strengthening the linkages between various market actors, making it easier for vulnerable populations to participate in and benefit from the market.

By integrating these two approaches, the SMILES project seeks to create a holistic model that addresses both the immediate needs of households and the broader systemic challenges in the market that hinder full participation of the extremely poor households in the market economy. This integrated approach is particularly relevant in refugee settings, where market systems are often underdeveloped, and the needs of the population are urgent.

The SMILES project utilizes a “push/pull” framework, simultaneously building the resilience of extremely poor households (push) and stimulating the development of market systems (pull). The Graduation program equips households with knowledge, skills and assets they need to engage in sustainable livelihoods, while Market Systems Development activities intend to create a supportive market environment.

A key part of this integrated approach is the engaging of both private and public sector players to drive access to markets, skills training and high-quality inputs such as fertilizers and certified seed. In the SMILES project, skills training is not just about imparting knowledge; it is also about building relationships between households and private sector actors. The project partners boast of several private sector actors who specialize in different agricultural value chains such as maize, soya, and horticulture. These establish demo gardens and collaborate with Community-based Trainers to conduct training sessions with participant households. This collaboration allows farmers to build trusted relationships with private sector actors, who can continue to provide inputs and market access after the program ends.

Another critical component of the integrated approach is the Asset Transfer. After seven months of Graduation activities, households receive a one-time cash payment to invest in income-generating activities. The Asset Transfer is timed to coincide with the start of the crop season. This, coupled with relationships between households and private sector actors, enables households to invest in productive assets and quality inputs such as high-quality seeds and agricultural tools.

One significant finding from the SMILES project is that the Graduation approach provides private sector actors with extensive information about the market and key stakeholders. In regions such as Western Uganda, where refugee settlements are often isolated and difficult to operate in, private sector actors face numerous challenges, including establishing relationships with key stakeholders. The SMILES project has found that its relationships with organizations such as the United Nations High Commissioner for Refugees (UNHCR) and the Office of the Prime Minister are of great value to private sector actors. By facilitating introductions and providing contextual information and market data, the project has supported private sector actors to operate more effectively and responsibly in these challenging environments.

Another key finding is the importance of Community-based Trainers and Coaches. These project staff serve as a liaison between households and private sector actors and often reside in the same communities as the project participants. They assist households in understanding and engaging with new market opportunities, and they give credibility to private sector actors, partly because they are perceived as neutral parties who do not have a financial stake in the business.

The SMILES project highlights the need for adapted Monitoring, Evaluation, and Learning systems to measure the success of integrated programs. The traditional Graduation approach typically focuses on household-level outcomes, while Market Systems Development interventions focus more on measuring systemic changes in the market. The SMILES project had to combine both to ensure that its Monitoring, Evaluation, and Learning system could accurately measure the impact of its integrated activities.

Finally, the project discovered that successful integration requires clear communication and expectation-setting with private sector actors who need a thorough orientation in order to comprehend and align their interventions with the timeline for Graduation activities. In the SMILES project, some private sector actors were onboarded much later after the Asset Transfer, resulting in lower-than-expected investments by households in private sector actor-related activities. Future programs can avoid this by providing private sector actors with detailed information sessions that cover the Graduation approach, including the timing of key activities such as the disbursement of the Asset Transfer.

While the integration of Graduation and Market Systems Development offers numerous benefits, it also presents several challenges, including aligning the timelines of Graduation and Market Systems Development activities, which requires meticulous planning. Working with numerous private sector actors, each with its own business model and priorities, can be complex and resource-intensive, and developing a Monitoring, Evaluation, and Learning system that accurately captures both household- and market-level outcomes is equally a challenge.

However, preliminary insights from the SMILES project provide multiple lessons for future programs and subsequent growth cycles of the five-year project. It is possible to ensure that the private sector actors are prepared to support households and that their activities are in line with the Graduation activities schedule by involving them early in the process. Streamlining correspondence with private sector actors by designating dedicated liaisons from the program team can reduce the burden on private sector actors. Building stronger relationships between private sector actors and participant households can be accomplished through collaboration in order to share pertinent data, such as household profiles, which can enhance targeting and reduce duplication of effort.

Throughout Uganda and East Africa, the Graduation and the Market Systems Development approaches have often been implemented by different organizations, in various communities, with several funders, and with varied expected outcomes—possibly maintaining siloed learning (which we explore in more detail here). With its Graduation and Market Systems Development Integration approach, the SMILES project offers an opportunity to share learning with the wider humanitarian and development communities on new approaches to refugee livelihoods’ development. As the project advances into its third year, we hope you will continue to follow along with this SMILES Project Learning Series.

The Sustainable Market Inclusive Livelihood Pathways to Self-Reliance (SMILES) project is a five-year (November, 2022 – October, 2027) initiative funded by the IKEA Foundation. The project works with 14,000 households (extremely poor refugee and host community) comprising 70,000 individuals in Kyaka II and Kyangwali Refugee Settlements in Western Uganda with the aim of supporting them to become resilient.

The project delivers a graduation model integrated with a Market System Development approach targeting women and youth and their household members. Key sectors include livelihoods, agriculture, food security, protection, energy and environment. The project is implemented by AVSI Foundation in partnership with UNHCR and the Office of the Prime Minister and in a consortium with Innovations for Poverty Action, Renewable Energy, Powering Agriculture and Rural Livelihoods Enhancement (REPARLE), Makerere University Kampala, and DAI Global LLC.