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growth potential are substantial. Hence, the selection of a value chain for development
should take into account not only the number of vulnerable individuals that it reaches
but also the prospects for significant income increases along the value chain. Some other
factors that may be important for selecting a sector for intervention are:
• The nature of the policy environment
• The potential for increasing the market participation of crisis-affected women
• The presence and interest of leading firms
• The availability of start-up assistance and microfinance
• Potential linkages with other development projects and programmes
• Environmental impacts of economic activity in the sector
• Issues of crisis and disaster-risk sensitivity
• Opportunities created by increased cash flow and purchasing power in households
and communities that have received livelihoods stabilization support (e.g., cash-forwork
programmes).
When value chain development is the objective, a crisis-sensitive value chain analysis
follows the selection of the sector. 44 In the value chain analysis, the key participants,
policies, regulations, governance issues, market trends, constraints, and opportunities
within the value chain are analyzed in consultation with stakeholders. The interests,
motivations, and power of various participants, their access to and control over key resources,
the positioning of crisis-affected people, and decision-making processes within
the value chain are considered. Programme entry points—areas in which improvements
in efficiency, competitiveness, quality, and product differentiation are feasible and would
expand employment and entrepreneurial opportunities within the chain—are identified.
This process provides an opportunity to bring together conflicting parties and establish
a common vision for sector development. A value chain analysis provides information
about a specific moment in time, whereas value chains themselves continuously shift as
communities and economies adjust to post-crisis circumstances. Continuing assessment
of market conditions is therefore necessary throughout the implementation of crisissensitive
value chain development initiatives.
Inclusive financial sector development. To design interventions for inclusive financial
sector development, information is needed on the policy and regulatory environment,
support infrastructure, the retail capacity of financial service providers, the potential demand
for various financial products and services, and the opportunities and constraints
to access for crisis-affected people. UNCDF has expertise in conducting diagnostics of
the financial sector in consultation with all the development partners that are involved.
Business development services. Market analysis, crisis-sensitive value chain analysis, and
diagnostics of the financial sector will all provide information on the types of services
that would benefit enterprises in sectors in which crisis-affected people are, or could be,
strongly represented. Information is also needed on the nature of any existing business
development services, the barriers to the establishment and expansion of these services,
and the demand for such services. Livelihoods and economic opportunities mapping or
other local socioeconomic surveys, carried out with community participation, can help
to identify economic opportunities of varying sizes, which business development service
providers can promote and use as models. Such opportunities may include an extensive
range, e.g., from informal roadside vending in the informal sector to manufacturing
ventures in the formal sector.
44 USAID (2008), Conflict-Sensitive Approaches to Value
Chain Development, provides a full explanation
of the conflict-sensitive value chain analysis. The
website of the Donor Committee for Enterprise
Development (http://www.enterprise-development.org/page/recent-documents)
provides a list
of recent documents on private sector development
in conflict-affected environments.
Livelihoods & Economic Recovery in Crisis Situations