Attachment_22-Measuring_Achievements_of_Private_Sector_Development_in_Conflict_Affected_Environments.pdf

Measuring Achievements of Private Sector

Development in Conflict-Affected Environments

Practical Guidelines for Implementing the DCED Standard

Version 2, July 2013

By Ben Fowler and Adam Kessler MarketShare Associates

Front page photo credits (from left to right): morguefile.com; Rebuilding of a road and bridge in Tajikistan, by

Stefan Erber, GIZ; Vocational training of former child soldiers who benefitted from ILO’s International

Programme on the Elimination of Child Labour (IPEC) in DRC, © International Labour Organization/ Marcel

Crozet; UN cars and cattle dealer in Afghanistan, by Jochem Theis, GIZ; Survey for ILO’s JobNet Project in Sri

Lanka, © International Labour Organization/ Marcel Crozet.

These guidelines have been produced as a companion to the Donor Committee for Enterprise Development

(DCED) Standard for Results Measurement (hereafter referred to as the DCED Standard) and associated guidance documents.

The guidelines are based on extensive interviews with experts and field practitioners, desk research, and two cases studies based on country visits which analysed in depth programmes’ results measurement experiences in conflict-affected environments: The DFID-funded Sustainable Employment and Economic Development (SEED) programme in Somalia and the BMZ-funded Youth Employment programme implemented by GIZ in Sierra Leone.

The guidelines have been commissioned by the DCED Working Group on Private Sector Development (PSD) in

Conflict-Affected Environments (CAEs). It was produced by MarketShare Associates (MSA) and was written by

Ben Fowler and Adam Kessler. Feedback is welcome and should be sent to ben@marketshareassociates.com and adam@kessler.co.uk.

For more information on the DCED Standard for Results Measurement, please visit the DCED website at www.enterprise-development.org/page/measuring-and-reporting-results or contact the DCED at Coordinator@Enterprise-Development.org.

To view the DCED Knowledge Page on PSD in CAEs, including an online library with more than 450 documents, and guidance by various agencies, please go to www.enterprise-development.org/page/cae.

For more information about the activities of the DCED Working Group on PSD in CAEs, please refer to http://www.enterprise-development.org/page/caesg.

http://www.enterprise-development.org/page/download?id=2217 http://www.enterprise-development.org/page/download?id=2218 http://www.enterprise-development.org/page/download?id=2218 mailto:ben@marketshareassociates.com mailto:adam@kessler.com http://www.enterprise-development.org/page/measuring-and-reporting-results mailto:Coordinator@Enterprise-Development.org http://www.enterprise-development.org/page/cae http://www.enterprise-development.org/page/caesg

Measuring Achievements of Private Sector Development in Conflict-Affected Environments

1 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

Table of Contents

I. Introduction

II. How to Use these Guidelines

III. If You Are New to the DCED Standard

IV. Key Principles to Implementing the DCED Standard in CAEs

1 Articulating Results Chains

1.1 Incorporating conflict into results chains (Control Point 1.1-1.2)

1.2 Managing the results chain (Control Points 1.3 – 1.4)

1.3 Key resources

2 Defining Indicators of Change

2.1 Defining indicators for results chains (Control Point 2.1)

2.2 Measuring the universal impact indicators (Control Point 2.2)

2.3 Assessing likelihood of sustainable impact (Control Point 2.3)

2.4 Managing indicators (Control Point 2.4)

2.5 Projections (Control Points 2.5)

2.6 Key Resources

3 Measuring Changes in Indicators

3.1 Collecting baseline information (Control Point 3.1)

3.2 Good research practices (Control Point 3.2)

3.3 Qualitative information (Control Point 3.3)

3.4 Key resources

4 Estimating Attributable Changes

4.1 A clear and appropriate system for attribution is in place (Control Point 4.1)

4.2 Key resources

5 Capturing Wider Changes in the System or Market (Control Points 5.1)

6 Tracking Programme Costs (Control Points 6.1 – 6.2)

7 Reporting Results (Control Points 7.1 – 7.5)

8 Managing the System for Results Measurement

8.1 Establishing a clear system for results measurement (Control Points 8.1)

2 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

8.2 Human and financial resources (Control Point 8.2)

8.3 Key resources

Annex 1: Key Definitions

Annex 2: Acronyms and Abbreviations

Annex 3: Overall Resource List

List of Figures

FIGURE 1: MAPPING COMPLEX CONFLICTS…………………………………………………………………………………………………………………. 7

FIGURE 2: THE PSD-PEACEBUILDING CONTINUUM

FIGURE 3: MAPPING POSSIBLE NEGATIVE UNINTENTIONAL RESULTS

FIGURE 4: INDICATOR SELECTION TOOL…………………………………………………………………………………………………………………… 26

FIGURE 5: FACTORS REPORTEDLY CONTRIBUTING TO IMPROVED FOOD SECURITY

List of Tables

TABLE 1: SIMPLIFIED EXAMPLE RESULTS CHAINS OF HOW PSD CAN CONTRIBUTE TO PEACEBUILDING…..…………………………………...15

TABLE 2: CHALLENGING COMMON CONFLICT-RELATED ASSUMPTIONS

TABLE 3: DEFINING CONFLICT-SENSITIVE PSD INDICATORS

TABLE 4: DEFINING INDICATORS TO TEST CONFLICT-RELEVANT RISKS

TABLE 5: SAMPLE INDICATORS FOR MEASURING POSITIVE EFFECTS ON CONFLICT

Acknowledgements

The authors wish to thank the many interviewees who provided helpful guidance as we conducted our research. We are also grateful to the members of the Donor Committee for Enterprise Development

(DCED) for their support throughout, as well as Jim Tanburn and Melina Heinrich from the DCED

Secretariat. We dedicate these guidelines to the practitioners who are making the effort to design and implement rigorous results measurement systems in conflict affected environments and disseminate their results to the rest of the field. These efforts are invaluable to advancing our knowledge in an area where much remains to be learned.

3 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

I. Introduction This paper provides guidance for measuring results in conflict affected environments (CAEs) using the

Donor Committee for Enterprise Development (DCED) Standard for Results Measurement1. The DCED

Standard is a framework for measuring and managing the results of private sector development programmes. The guidelines follow the DCED’s definition of CAEs: “countries or regions where there is a high risk of violent conflict breaking out; that are in the midst of violent conflict; or have recently emerged from it, including countries classified as ‘post-conflict’”.2 Definitions for this and other commonly-used terms are provided in Annex 1, while acronyms and abbreviations are provided in

Annex 2.

Since 2008, the DCED Standard has been implemented by numerous private sector development (PSD) projects across Africa and Asia. Feedback from practitioners indicates that it helps monitor progress towards objectives and manage interventions. In complex, rapidly changing environments it is particularly important for programmes to monitor, learn from and adapt their approach.3 The emphasis of the DCED Standard on using monitoring data to improve implementation is thus particularly valuable in CAEs, supporting the management of complex programmes and reducing the risk of causing harm through inappropriate interventions. Nevertheless, the challenges of security, data availability, and staffing have limited the application of the DCED Standard in CAEs to date.

Donors are increasingly dedicating resources towards private sector development in CAEs, recognising the poor performance of CAEs towards meeting development objectives such as the Millennium

Development Goals. With greater funding, donors and implementers are being called upon to develop rigorous approaches for results measurement and reporting, in order to demonstrate impact and accountability. The DCED Standard is widely recognized as representing good practice in results measurement for PSD programming. Providing guidance in how to apply the Standard in CAEs can support practitioners to measure, manage and demonstrate results.

II. How to Use these Guidelines These guidelines are written for donors, project implementers, auditors and consultants who are applying the DCED Standard in CAEs or considering its use. They are structured around the eight elements of the DCED Standard. For each component they note the challenges that affect application in

CAEs, provide guidance on mitigation strategies and refer to additional resources. Resources listed in blue text link to a downloadable resource, and a full list of guidance documents are provided in Annex 3.

Guidance is provided on how to structure a Standard-compliant results measurement system that, at a minimum, avoids exacerbating conflict. For practitioners wishing to use private sector development

For more information about the DCED Standard, please refer to:

http://www.enterprise-development.org/page/measuring-and-reporting-results.

The Donor Committee for Enterprise Development, Private sector development in conflict affected environments: Key Resources for Practitioners, 2010. The CAE definition is understood to also encompass the concept of fragility.

Hummelbrunner, Richard and Jones, Harry, A guide for planning and strategy development in the face of complexity, 2013, Overseas Development Institute.

http://www.enterprise-development.org/page/measuring-and-reporting-results http://www.enterprise-development.org/download.aspx?id=1627

4 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013 programmes as a means to build peace and promote stability, these guidelines outline an approach for reflecting this aim within your results measurement system.

In light of the great diversity among CAEs, readers should use these guidelines as a resource in developing and implementing their monitoring system, rather than a prescriptive set of rules. Many of the recommendations are also relevant to PSD programming in humanitarian crises and other challenging contexts.

These guidelines assume that users have a basic knowledge of the DCED Standard and surrounding guidance, as described in the next section.

III. If You Are New to the DCED Standard The DCED is a forum for bilateral donors and multilateral agencies seeking to improve the effectiveness of their PSD programming.

The DCED has published a Standard for Measuring Results in Private Sector Development, which provides a framework for programme managers to monitor their progress and report credible results. It can be implemented by the programme team and audited by an independent assessor to verify the credibility of the system. There are eight elements to the Standard, listed below. Follow the hyperlinked bold text to download further guidance on each:

1. Articulating Results Chains. Results chains visually represents how project activities will create outputs, outcomes and impact, showing the causal links and relationships between them. The results chains clearly demonstrate what the project is doing and what changes are expected.

2. Defining indicators of change. An indicator specifies what you will measure in order to see whether change has occurred. By defining indicators, you clarify exactly how you will monitor your interventions. Indicators are specified for each expected change outlined in results chains.

3. Measuring changes in indicators. Once the indicators have been defined, they are regularly monitored to see what has changed to help projects manage accordingly.

4. Estimating attributable changes. Once a change is observed, you need to estimate what can be attributed to your project. For example, an increase in jobs may be due to your project – or because of the wider economic environment. Estimating attributable changes helps a project identify which interventions are working and which are not.

5. Capturing wider changes in the system or market. Many PSD programmes aim to affect entire market systems. Monitoring these changes gives a project a fuller picture of its impact, helps identify what is working and revise implementation strategies to maximize results.

6. Tracking programme costs. In order to assess the success of the project it is necessary to know how much was spent to achieve the results.

7. Reporting results. Findings are communicated clearly to funders, local stakeholders, and to the wider development community where possible.

8. Managing the system for results measurement. For a monitoring and results measurement system to be effective, it must be adequately resourced and integrated into all aspects of project management, informing the implementation and guiding the strategy.

http://www.enterprise-development.org/download.aspx?id=1833 http://www.enterprise-development.org/page/download?id=2132 http://enterprise-development.org/page/download?id=2111 http://www.enterprise-development.org/download.aspx?id=2012 http://enterprise-development.org/page/download?id=2113 http://enterprise-development.org/page/download?id=2114 http://enterprise-development.org/page/download?id=2115 http://enterprise-development.org/page/download?id=2116

5 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

The Standard divides each of these broad categories into control points and compliance criteria. The control points summarise the exact requirements, while the compliance criteria describe how an auditor will assess the programme.

Readers who are unfamiliar with the Standard can visit the DCED’s page on measuring results to learn more about the DCED Standard. You can also download the Standard itself, or read the comprehensive implementation guidelines downloadable through the above hyperlinks or from the website here. It is advisable to review those documents before reading these guidelines.

IV. Key Principles to Implementing the DCED Standard in CAEs Three principles underlie the application of the DCED Standard in conflict affected areas: simplicity, flexibility and sensitivity.

Simplicity. Personnel in CAEs are often overworked and under-resourced, with little training in results measurement. High staff turnover may reduce familiarity with the project and context. An overly complex results measurement system will not be successfully implemented, wasting project resources and reducing the willingness of staff to use it.

These guidelines highlight techniques for simplifying the results measurement system that enable it to be implemented even in challenging CAEs.

Flexibility. CAEs are unpredictable, complicated, and fast-changing. An inflexible results measurement system may monitor irrelevant indicators, fail to capture the positive impact of the project, and put staff and project clients at risk by ignoring negative consequences.

Consequently, your results measurement system should be flexible. Be aware that a results chain can never capture the full complexity of the situation, and may become rapidly outdated if not regularly reviewed. Be alert for positive and negative changes not captured by your indicators, and be prepared to modify the monitoring system accordingly. Again, these guidelines suggest ways to manage this complexity while implementing the DCED Standard.

Sensitivity. Inappropriate interventions in CAEs can endanger staff, partners and project clients while worsening the conflict. PSD projects must be particularly aware of potential negative impacts because conflicts are frequently driven by economic factors, which PSD interventions can either reinforce or reduce. For example, increasing the level of competition among firms can exacerbate conflict if one side perceives that their businesses are being displaced.

Accordingly, all projects working in CAEs should ’Do No Harm’. This means that they must understand the context in which they operate, understand the interaction between their activities and the context, and act upon this understanding to avoid negative impacts.4 The results measurement system should thus monitor potential negative effects of the project on the conflict. Some programmes may wish to go

4 Conflict Sensitive Approaches to Development, Humanitarian Assistance and Peacebuilding Resource Pack, 2004, 3.

http://www.enterprise-development.org/page/measuring-and-reporting-results http://www.enterprise-development.org/download.aspx?id=1449 http://www.enterprise-development.org/page/implementing-standard http://www.conflictsensitivity.org/sites/default/files/Conflict-Sensitive%20Approaches%20to%20Development,%20Humanitarian%20Assistance%20and%20Peacebuilding%20Resource%20Pack.pdf

6 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013 further and explicitly aim to promote peace and stability through PSD. In this case, they may also monitor positive effects of the project on the conflict, although this poses greater challenges. Moreover, the monitoring system must itself take the conflict into account. Asking politically sensitive questions in interviews or sharing identifiable information can put staff and beneficiaries at risk. These guidelines highlight ways to integrate conflict sensitivity into the results measurement system.

Note that the following sections will follow the sequence of the DCED Standard elements 1-8 and associated control points.

1 Articulating Results Chains Results chains visually articulate the activities, outputs, outcomes and impact of your project and the linkages between them. This demonstrates what the project is doing and what changes are expected as a result. If you have not worked with results chains before, you can download the DCED Results Chain guide here for a complete explanation.

Results chains are important tools for results measurement in all projects, including those implemented in a CAE. The process of designing results chains clarifies the logic of your project, forcing you to be explicit about what changes you expect to see and how they relate to the desired outcomes. This allows your assumptions to be closely examined and questioned, in order to check that the activities will plausibly lead to the planned results. Results chains also create the basis for results measurement. By articulating the logic of your intervention, the results chains outline expected results. This allows you to regularly check whether your project is on track.

Results Chains and Theories of Change

The DCED Standard requires the use of results chains for each project intervention, whereas the peacebuilding community more frequently refers to theories of change. A theory of change is an approach to the design, monitoring and evaluation of social programmes. It requires a clear articulation of the activities of the project and how it expects them to interact with the context and key actors to lead to long-term change. This is referred to as the ‘logic’ of the project. It frequently includes a consideration of the context and key actors. Theories of change are sometimes depicted visually.

Results chains are one way to visualise a theory of change that represents the series of specific changes that link project activities to impacts using a series of boxes and arrows. Whether you speak of results chains or theories of change, the key to their successful use is to continually test the underlying assumptions and use that to improve the project.

There are several challenges to developing effective results chains in CAEs. These include:

Knowledge gaps about market systems in CAEs. A good results chain requires an in-depth knowledge of targeted market systems. For example, a PSD programme might seek to facilitate improvements in the quality of farmers’ produce, in order to increase the prices that the farmer receives. This relies on the assumption that market pricing is sensitive to product quality, which will not always be true. However, in a CAE it is often challenging to assess market systems, for a number http://www.enterprise-development.org/download.aspx?id=1833

7 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013 of reasons. There may be few people who understand market development in the local area, the market environment may have been rapidly changing as a result of the conflict, and it may be hard to gather new information due to a lack of secondary information or formal institutions.

Complexity. CAEs have multiple actors and numerous causes of conflict. This can result in a complex interaction between the project and the context. Expected results have multiple causes, and project activities can have multiple effects – not all of which are linear or predictable. However, the results chain design must balance complexity and usability. If it is overly simple, it will not capture the project logic. If it is overly complex, such as in the adjacent figure,5 it is difficult to read and monitor against. While this is true in every context, the presence of conflict introduces additional complications that make this balancing act particularly challenging.

Fast pace of change. Rapid change can render a results chain out of date. For example, intensification of a conflict may make market actors unwilling to continue participating in an intervention and thus invalidate that intervention’s results chain.

Knowledge gaps about the relationship between PSD and peacebuilding. While there are theories about the relationship between PSD interventions and peacebuilding, there is limited evidence on the detailed causal relationships, or the contexts in which those relationships hold.6 For example, a recent systematic review by the Overseas Development Institute found that, out of 9,558 articles reviewed, only one provided any evidence regarding whether or not employment creation promoted stability.7

1.1 Incorporating conflict into results chains (Control Point 1.1-1.2) Developing and maintaining results chains requires staff to continually examine their own assumptions and validate the linkages between levels of their results chains. This is important in a CAE, where links that are valid in a stable context may not hold. For example:

Assumption: adequate trust exists for economic relationships to be built. Economic engagement between members of different groups requires trust. The United States Agency for International

Development (USAID) found that ‘[b]ecause conflict breaks down trust between people, some forms of support and collaboration will only be possible when basic elements of trust are restored.’8

Diagram cited in Banyan Global, Enterprise Development, Poverty and Conflict, 2010.

Mercy Corps, Evaluation and Assessment of Poverty and Conflict Interventions. Conflict & Economics: Lessons

Learned on Measuring Impact, 2011, 6.

Holmes et al, What is the evidence on the impact of employment creation on stability and poverty reduction in fragile states: A systematic review, 2013, v.

USAID, Conflict and Livelihoods, 2005, 11.

This excerpt from a diagram of the Afghan context shows how complex any attempt to fully represent a conflict can be.

Figure 1: Mapping Complex Conflicts http://microlinks.kdid.org/sites/microlinks/files/gcontentadmin/files/Banyan_Global_Presentation.pdf http://www.mercycorps.org/sites/default/files/eapc_lessons_learned_on_measuring_impact_2011-07-28_final.pdf http://www.mercycorps.org/sites/default/files/eapc_lessons_learned_on_measuring_impact_2011-07-28_final.pdf http://transition.usaid.gov/our_work/cross-cutting_programs/conflict/publications/docs/CMM_Livelihoods_and_Conflict_Dec_2005.pdf

8 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

Assumption: the private sector is willing to engage. Private firms in CAEs may be less willing to participate in PSD initiatives than in other environments. Inter-group prejudices, security and other concerns can prevent the establishment of partnerships. The non-governmental organization (NGO)

International Alert, for instance, found that the private sector was “not overly enthusiastic” about providing employment opportunities to ex-combatants who had received vocational training but who represented a potential security risk.9 A long history of conflict may also have significantly deteriorated human capital as well; ex-combatants may not have basic skills required for employment (e.g. literacy).

The results chain design will depend on the project’s approach to addressing conflict. There are three broad approaches that PSD projects may use in CAEs:

Conflict Blind. Projects do not incorporate the conflict into their background research, design, implementation, or monitoring.

Do No Harm. Projects consciously look for and seek to avoid or mitigate negative impacts resulting from their activities.10 Doing No Harm requires the use of a conflict sensitive11 approach.

Peacebuilding. Projects explicitly design their PSD interventions to reduce conflict and build peace.

A peacebuilding project will aim to identify and address the underlying cause(s) of conflict.

Figure 2: The PSD-Peacebuilding Continuum12

Godnick, William and Diana Klein, The challenges of supporting ‘alternative’ economic opportunities for peacebuilding – Perspectives from Colombia, 2009, 25.

Interpeace, What is Peacebuilding?, 2010.

A conflict sensitive project understands the context in which it works, comprehends the interaction between its actions and the context and acts upon this understanding in order to avoid negative impacts and maximise positive ones.

Prepared by the authors, adapted from Dalberg Global Development Advisors, Adapting IFC M&E approaches for projects in conflict affected countries, Phase 1: Formative research and key issue diagnosis, undated, 28.

Focus on Conflict Resolution and Peacebuilding

Conflict Blind Do No Harm Peacebuilding

Does not take conflict into account in design, implementation, monitoring, or evaluation

Risks failing to meet objectives, and potentially causing harm

Understands the conflict and conflict drivers

Seeks to minimize potential project harm by monitoring unintended adverse effects of project on conflict

Results chain articulates expected positive impacts of project on reducing conflict

Incorporates indicators to test positive impacts of project on conflict

Private Sector Development Programming http://www.international-alert.org/fr/resources/publications/challenges-supporting-alternative-economic-opportunities-peacebuilding-%E2%80%93-pers http://www.international-alert.org/fr/resources/publications/challenges-supporting-alternative-economic-opportunities-peacebuilding-%E2%80%93-pers http://www.interpeace.org/index.php/publications/doc_download/146-what-is-peacebuilding-do-no-harm-conflict-sensitivity-and-peacebuilding

9 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

A “conflict blind” project may not achieve its objectives, due to unanticipated conflict-related factors, or inadvertently worsen the conflict. The next two sections therefore explore how the project logic can incorporate Do No Harm and peacebuilding principles.

1.1.1 Do No Harm

At a minimum, projects in CAEs should aim to “Do No Harm”. They must be built on a comprehensive conflict analysis, and consider potential negative interactions between the conflict and the context.

1.1.1.1 Conflict Analysis

“At the beginning of the project, I was not convinced by peace and conflict analysis. I thought that I don’t have time for it. But

I’ve discovered that, if I make the time, we avoid a lot of trouble. A good conflict analysis is vital to success.” – Liane Hryca, GIZ Afghanistan13

To be effective in a CAE, the project logic needs to be based on an understanding of the conflict. This should be done through a conflict analysis, which is a systematic study of the profile, causes, actors, and dynamics of conflict.14 In particular, the conflict analysis should identify the drivers (i.e. underlying causes) of conflict. For a selection of conflict analysis guidelines, see the key resources section below.

Key Questions for Conflict Analysis15

Conflict profile

What is the political, economic, and socio-cultural context?

What are the emergent political, economic, ecological and social issues?

What specific conflict prone/affected areas can be situated within this context?

Is there a history of conflict?

Conflict causes

What are structural causes of conflict?

What issues can be considered as proximate causes of conflict?

What triggers can contribute to the outbreak/further escalation of conflict?

Interview with Liane Hryca (GIZ Afghanistan), September 28, 2012.

Conflict Sensitivity Consortium, How To Guide to Conflict Sensitivity, 2012.

Conflict Sensitivity Consortium, How To Guide to Conflict Sensitivity, 2012.

Impact of EU engagement in Afar Region, Ethiopia

Afar is an insecure region in the East of Ethiopia, where regional insecurity, weak regional government, loss of access to livelihood resources, and marginalization of minority groups, in particular pastoralist communities, all risk creating physical conflict.

The EU provided approximately two billion Euros between 1976 and 1994 in aid to Ethiopia. In the Afar region, this included large-scale irrigation projects on more than 40,000 ha of land.

A report by Saferworld concluded that these projects have excluded pastoralists from planning and implementation, depriving them of grazing land and increasing the risk of conflict between pastoralists, agriculturalists and the state.

http://www.conflictsensitivity.org/sites/default/files/1/6602_HowToGuide_CSF_WEB_3.pdf

10 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

Conflict actors

Who are the main actors?

What are their main interest, goals, positions, capacities, and relationships?

What institutional capacities for peace can be identified?

What actors can be identified as (potential) spoilers? Why? What are their incentives?

Conflict dynamics

What are the current conflict trends?

What are windows of opportunity?

What scenarios can be developed from the analysis of the conflict profile, causes and actors?

A conflict analysis for a PSD programme should pay particular attention to how economic factors divide and connect parties in a conflict, and examine the role played by economic actors. For example, in long-term conflicts warlords often effectively become business people, controlling natural resources and providing employment. The conflict analysis should examine who benefits and loses economically from the conflict, and how external intervention is likely to affect and be affected by the conflict. It should also examine the potential for the private sector to be a participant in the peace process, by offering jobs to ex-combatants or supporting negotiations between different parties.16

The conflict analysis can be incorporated into other analyses that PSD projects typically carry out to inform their design, such as market systems analysis or value chain analysis. The DCED publication PSD in CAEs: Key Resources for Practitioners17 describes seven tools that practitioners can use to design conflict-sensitive PSD programmes in CAEs. For example, GIZ in Sierra Leone has incorporated conflict sensitivity into their selection of value chains. As well as evaluating economic potential, participatory workshops in each district explore the extent to which the value chains bring different groups together, and the risks of fostering increased competition on conflict.18

Findings from the conflict analysis will allow you to minimise negative impacts on conflict and maximize positive ones by incorporating them into the project design and results measurement system. This establishes an accurate programme logic, enables the development of conflict-sensitive indicators, and ensures that changes in the context can be monitored and reflected in project design and the monitoring system. This may be easier to achieve if staff conduct and analyse the conflict analysis, rather than outsourcing it.19 Ideally the initial conflict analysis should be conducted prior to or during the programme design phase, so that its findings can inform the programme. Critically, the conflict analysis must be regularly updated to detect any changes in the context and adjust interventions that may exacerbate the conflict.

One useful checklist is GTZ, Checklist: Economic Aspects of a Conflict

DCED, Private Sector Development in Conflicted Affected Areas: Key Resources for Practitioners, 2010.

Interview with Beatrice Tschinkel (GIZ), September 17, 2012

Conflict Sensitivity Consortium, How To Guide to Conflict Sensitivity, 2012, 5.

http://www.enterprise-development.org/download.aspx?id=1627 http://www.enterprise-development.org/download.aspx?id=1627

11 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

1.1.1.2 Considering a project’s potential negative effects through results chains

A PSD project can create or exacerbate conflict in various ways, including:

Real or perceived bias in the distribution of project resources, support or employment

Resource transfers to parties to the conflict

Enabling a diversion of other resources to conflict (e.g. warring parties are freed from their obligation to support civilians)

Contributing to inflation

Changing existing power structures, for example by increasing competition in a market.

Reducing the capacity of local structures. For example, recruiting local government staff or activists

(either formally or through payment of per diems for project work) or setting up parallel bodies.20

Consequently, it is essential for each project to consider its possible negative consequences. One well-established methodology for doing this is the Do No Harm (DNH) approach. This is “an effort to identify the ways in which international development assistance given in conflict settings may be provided so that, rather than exacerbating and worsening the conflict, it helps local people disengage from fighting and develop systems for settling the problems which prompt conflict within their societies.” The methodology has been widely applied and has a large amount of guidance available.21

Private sector development programmes working in CAEs should adopt the DNH approach or a similar methodology to help them think about their effects on conflict. Several ways to incorporate the DNH approach in the creation of results chains are highlighted below.

Case Study: Applying a Do No Harm Approach to PSD Interventions in Somaliland

The USAID-funded Partnership for Economic Growth project, implemented by DAI in Somaliland, is focused on promoting private sector development while using a Do No Harm approach. The project uses a multi-pronged approach to minimize potential negative impacts of the project on clan-based tensions:

1. During any market research and project design stages, the team conducts an ‘analysis of local political economy’. This maps potential scenarios in which project resources will inflame clan tensions, such as by intervening in value chains that are dominated by specific clans. This analysis allows the project to test that its interventions will properly support competitiveness strategies while ensuring clan balance.

2. The project’s Communications and Community Outreach Officer and the security focal point continually inform the project team of any possible land conflicts or related tensions in and around project intervention areas and work closely with local government agencies and civil society stakeholders to ensure that all project activities are supported by neighbouring communities.

Anderson and Olson. Confronting War: Critical Lessons for Peace Practitioners, 2003, 22-28.

See http://www.cdainc.com/cdawww/project_profile.php?pid=DNH&pname=Do%20No%20Harm http://www.cdainc.com/cdawww/project_profile.php?pid=DNH&pname=Do%20No%20Harm http://www.cdainc.com/cdawww/pdf/book/confrontingwar_Pdf1.pdf http://www.cdainc.com/cdawww/project_profile.php?pid=DNH&pname=Do%20No%20Harm

12 Practical Guidelines for Implementing the DCED Standard. Version 2, July 2013

3. The project will not directly support a business in a sector where there is a great deal of competition already (and therefore tensions may be exacerbated) or where donor support risks creating unfair advantages for business owners in one clan over those in another.

4. During the project’s business matching grants competition, all short-listed finalists are requested to submit a “Business Risks and Assumptions Report” to be reviewed by the project team. Within this report, the grantee is required to lay out their “Do No Harm approach” during the business expansion activity that the project will be supporting. Through site visits and follow up with key industry stakeholders, this report is verified before business matching grants activities begin.

5. The project uses formal (e.g. through government) and informal (e.g. between non-governmental organizations and local communities) communication approaches to explain the importance of indirect benefits (e.g. new employment creation) arising from PSD interventions and to therefore reduce pressure for direct project interventions with all households.

Identify conflict-related risks at each level of results chains

Developing results chains can help think through the conflict-related risks at all levels, from activity to impact. While researching these guidelines, the authors found that practitioners tended to effectively consider short term risks caused by activities, such as conflict over distribution of resources. However, it is rarer for practitioners to consider how the outputs and outcomes of their projects might affect conflict. This step is essential in order to fully understand and manage the risks of the project.

For example, risks created by the activities of a programme might include:

Step in Results Chain Conflict Related Risks

Non-participants feel that the selection process was unfair.

Potential participants compete over who gets selected.

Local conflict parties require space in training for their own supporters.

At the outcome level, risks might include:

Step in Results Chain Conflict Related Risks

New businesses conflict with existing businesses in same sector.

New businesses pay taxes to local warlord, providing resources that fuel conflict.

Participants can’t start businesses due to other constraints, and feel frustrated due to raised expectations.

Organisation provides entrepeneurship training to participants

Organisation identifies participants in training session

Participants start up their own businesses

Participants increase knowledge on how to start a business

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Visually depict serious risks alongside results chains

Serious risks can be represented more fully by creating a secondary strand in a results chain. This will allow you to either adjust your activities to address the risk or – if you think the potential risk is small and the impact low – to assign indicators to ensure that these risks are closely monitored. For example, the following figure presents one example from East Timor. The project developed an agreement with the village community on the use of land and water, enabling young people to cultivate land and integrate into communal life. This was expected to reduce the potential for conflict. However, the agreements would reduce the overall land available for each villager, potentially creating a new source of conflict, as identified on the left side of the results chain.22

Figure 3: Mapping Possible Negative Unintentional Results

As serious risks are identified, it may be necessary to adjust existing activities or develop additional activities to mitigate the sources of conflict. These adjustments and their results should be incorporated during subsequent updates to your results chains.

Be aware that results chains often cannot capture all of the complex interactions between conflict and your project. Be alert for unanticipated negative effects, and responsive to feedback from the field staff and community.

Lange, Ralf et al.: Results and Results-based Monitoring of the Contributions made by Vocational Education & Training and the Promotion of Employment to Social (Re-)Integration in (Post-)Conflict Situations. Draft version – Unpublished, 2011, BMZ/GIZ, 11.

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1.1.1.3 Considering potential negative effects of conflict through results chains

In addition to examining a project’s positive or negative impacts on conflict, it is also important to consider the conflict’s potential impact on project activities. These may include:

Direct attacks on or threats to staff members or the project, limiting their potential for engagement

Beneficiaries chose not to participate in the project, because they do not see it as neutral or do not consider it safe to do so

Inability to access project location, hindering implementation and monitoring

Project assets stolen by warring groups

Initial project design rendered irrelevant by intensification of conflict (e.g. project beneficiaries are forced to move)

Such risks to project performance can be incorporated within the risks and assumptions section of your project design documents. Once identified, they should inform the choice of project interventions and strategies to mitigate their impacts.

1.1.2 Incorporating Peacebuilding into PSD

Conflict is often driven by economic factors23, and so PSD may play a critical role in creating the conditions for a stable society. It can address the causes or escalating factors of conflict, such as unemployment or poverty. It can also support peacebuilding and reconciliation processes, for example by supporting the business community to negotiate between different parties to the conflict.

Projects may consequently wish to build their programme logic around contributing to peacebuilding.

However, not all projects should try to capture their impact on conflict, as this requires adequate staff capacity, time, and funding. Few PSD projects have thus far been able to do so effectively. With sufficient resources, however, it is a very valuable project outcome to monitor.

If projects did wish to capture their impact on stability, they should first outline their theory of change, or results chain, explaining how they expect to have a positive impact on the conflict. This should be rooted in the conflict analysis, and aim to address the identified drivers of conflict. To inform the development of peacebuilding results chains, consider the following list, which presents several of the most recognized ways in which PSD can contribute to peacebuilding.24 In practice, results chains are likely to be far more complex than these examples, with multiple levels and branches. For one example, see the DCED case study of GIZ in Sierra Leone.

Love, Roy, Economic Drivers of Conflict and Cooperation in the Horn of Africa: A Regional Perspective and Overview, 2009.

24 Drawn and adapted from The Donor Committee for Enterprise Development, Private Sector Development in

Conflict-Affected Environments – A Framework of Peacebuilding Impacts, 2010; Rachel Goldwyn, Livelihoods and Peacebuilding – what are current approaches to contributing to peacebuilding through livelihoods interventions (unpublished); Church, Cheyanne and Mark M. Roberts, Designing for Results: Integrating M&E in Conflict Transformation Programmes, 2006; Mercy Corps. Evaluation and Assessment of Poverty and Conflict Interventions. Conflict & Economics: Lessons Learned on Measuring Impact. Undated.

http://www.enterprise-development.org/page/download?id=2218 http://www.chathamhouse.org/sites/default/files/public/Research/Africa/bp1209horn.pdf http://www.chathamhouse.org/sites/default/files/public/Research/Africa/bp1209horn.pdf http://www.enterprise-development.org/download.aspx?id=1880 http://www.enterprise-development.org/download.aspx?id=1880 http://www.sfcg.org/programmes/ilt/ilt_manualpage.html http://www.sfcg.org/programmes/ilt/ilt_manualpage.html http://www.mercycorps.org/sites/default/files/eapc_lessons_learned_on_measuring_impact_2011-07-28_final.pdf http://www.mercycorps.org/sites/default/files/eapc_lessons_learned_on_measuring_impact_2011-07-28_final.pdf

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Table 1: Simplified example results chains of how PSD can contribute to peacebuilding

Simplified Results Chain Explanation

PSD interventions foster greater economic interaction among parties to a conflict, which creates economic incentives for peace and reduces the desire for conflict.

Mercy Corps’ Building Bridges to Peace program in Uganda supported joint economic initiatives such as farming and marketplace rehabilitation between groups that had previously clashed in the Northeast Karamoja region.

Compared with communities that did not receive project activities, the targeted villages reported had better economic opportunities, reduced perceptions of insecurity and stronger interaction between ethnic groups.25

PSD interventions create income and employment opportunities that reduce the incentives to engage in conflict.

For individuals with no income or jobs, conflict may be the only way to support themselves or their families. Even if they do not fight themselves, they may participate in war economies, such as by growing drugs. Employment opportunities in peaceful vocations reduce this incentive to go to war. This theory is often applied by ex-combatant reintegration programmes. For example, a reintegration programme in Colombia reviewed by International Alert 26 offered ex-combatants grants for livelihoods projects, employment, or further education. They reported that over 14,300 ex-combatants had found employment.

PSD interventions increase economic opportunities that do not rely on over-exploited resources, thereby reducing a key driver of conflict.

Conflicts are often driven by inadequate access to resources that are critical to livelihoods (e.g. water, grazing land).

Negotiated agreements over the use of such resources are most sustainable where groups have other economic opportunities. In Somalia, Mercy Corps supported the negotiation of eight agreements to limit competition for scarce resources including trees while simultaneously supporting alternative economic opportunities such as nursery management. These alternative livelihood opportunities can reduce the prevalence of economic activities that put a strain on over-exploited resources (e.g. charcoal production).27

Mercy Corps, Peacebuilding through Economic Development Approach, 2011, 2.

Godnick and Klein, The challenges of supporting ‘Alternative’ economic opportunities for peacebuilding – perspectives from Colombia, 2009, 24

Mercy Corps, Peacebuilding through Economic Development Approach, 2011, 3.

Reduced levels of conflict

Fewer young people out of work

Improved economic opportunities for young people

PSD intervention

Reduced conflict over resources

Greater economic opportunities that do not rely on over-exploited resources

PSD intervention

Increased economic incentives for peace

Higher levels of trust

Greater economic interaction among parties to conflict

PSD Intervention

Reduced conflict http://www.mercycorps.org/sites/default/files/mc_peacebuilding_through_economic_devt_approach_2011-11-18.pdf http://www.mercycorps.org/sites/default/files/mc_peacebuilding_through_economic_devt_approach_2011-11-18.pdf

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Simplified Results Chain Explanation

PSD interventions improve the governance of the private sector, which in turn puts pressure on the state to improve its own governance and support conflict reduction. As a major societal actor, the decisions and behaviour of the private sector has a major role in influencing government behaviour and actions. Initiatives such as the Extractive Industries Transparency Initiative encourage private firms to behave responsibly and transparently in their relations with the state, reporting what payments are made and to whom. This can reduce conflict both directly, by denying combatants the funds needed to fuel conflict, and indirectly, as the private sector increases use of formal state channels and processes – rather than circumventing these processes through paying bribes. A stronger and better resourced government is in a stronger position to reduce conflict. However, in many contexts the government is also a cause of context – so this assumption (as with the others listed here) would have to be validated through a conflict analysis.

PSD interventions reduce inequality between parties to a conflict, thus reducing resentment and the likelihood of conflict. Where conflict is driven by resentment and anger over inequitable distribution of resources, PSD interventions that support economic improvements by marginalized populations may reduce these tensions and thus support peace.

Each of the above theories is based on assumptions about the underlying causes of conflict, which will not hold true in every situation. The logic of the results chain should be informed by a rigorous conflict analysis that identifies the drivers of conflict and analyses how the project can best address them.

Results chains will make these assumptions explicit. PSD interventions do not automatically have a positive impact on a conflict,28 so your monitoring system should research and test them. The table below presents common parts of peacebuilding results chains and examines the assumptions underlying them.

Gündüz, Canan and Diane Klein, Conflict Sensitive Approaches To Value Chain Development, 2008, 21.

Reduced conflict

Reduced tension between different groups

Reduced inequality

PSD intervention

PSD Intervention

Increased flow of resources to government (e.g.

through tax)

Reduced diversion of resources to parties to the conflict

Private sector improves governance

Reduced conflict http://www.international-alert.org/sites/default/files/publications/C_s_approaches_to_value_chain_devel.pdf

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Table 1: Challenging Common Conflict-Related Assumptions

Step in Results Chain Assumptions

Economic interaction will build trust. Economic interactions may reduce rather than increase levels of trust where they increase competition.