6.2 Market monitoring
Market monitoring should be part of the monitoring, evaluation, accountability, and learning (MEAL) framework when the project entails repeated payments, though is not implemented for one-off payments. In these cases, markets should be assessed at preparedness and design stages, to determine whether CVA is appropriate, with market impacts assessed as part of the final evaluation. Market monitoring is the co-responsibility of the logistics and programs team and should:
- Ensure the grant amount will adequately cover the identified needs or MEB;
- Ensure the quality and availability of goods is at least as good as it was at project onset;
- Assess the continued appropriateness of the chosen delivery modality;
- Ensure the project is not creating inflation or doing any other harm to the market.
If a country program has done a pre-crisis market analysis, results should be shared with the wider team. Market monitoring should allow for assessment of multiplier effects of the project on the local economy. In this case, the multiplier effect is an indirect benefit of CVA, whereby money distributed to beneficiaries and later spent in local markets results in benefits to local traders. This positive effect cascades down to other market actors, beyond direct CVA beneficiaries. When assessing the multiplier effect, trading results from women and men should be separated, to make sure that indirect positive economic impacts benefit both. For more on how to calculate the multiplier effect, refer to the Social Accounting Matrix (SAM)or to the simplified qualitative approach to the multiplier effect analysis suggested by P.Creti.
Market monitoring frequency should be determined by and will vary depending on the context. In volatile contexts, market monitoring can be implemented once a month. In more stable environments, it may be done every three months. MARKitcan be used to inform which market places and actors should be consulted during monitoring.
Market indicators for monitoring will depend on the modality chosen to deliver the project, with common indicators including:
For any type of modality:
- Household access (physical, social, financial) to market to purchase key commodities;
- Availability, price, and quality of key commodities in different types of markets (source markets, central markets, etc.);
- The power dynamic between traders (cartel, etc.).
When cash grants or value vouchers are used:
- Prices of commodities used to determine grant/value voucher amount.
When commodity vouchers are used:
- Availability and price of goods covered by vouchers for beneficiaries and non-beneficiaries;
- Presence of traders not involved in the voucher scheme.
When the project uses the CfW approach:
- Beneficiaries dropping out of lower paying but more sustainable work for inclusion in the CfW/Food for Work;
- Availability of workers for traditional daily labor employers;
- The daily rate of unskilled labor.
Market monitoring should include strict minimum price monitoring, as sharing data collected for price monitoring may help support the entire response community. Other humanitarian agencies may be carrying out similar responses in nearby areas, and it may be important to understand how changes in nearby markets are conveyed to one another. Humanitarian clusters may also use this data for decision-making.
In some cases, it may be helpful for different actors providing CVA to monitor markets collaboratively. In addition to providing an opportunity for joint decision-making, added transparency regarding price and market monitoring results can build trust and understanding.
Guiding principles of price monitoring include:
- Ensure consistency: When collecting prices, make sure they use the same units of measurement for items of similar characteristics, quality, variety, etc. Ideally, visit the same trader each time.
- Check for irregularities: If one price is much higher or lower than the others, it is likely that there has been an error. In this case:
- Double-check to see if the price was converted to the correct unit of measurement;
- If the price was converted correctly, check to see if the reported price is correct, possibly by asking a key informant from the market;
- If the price is correct, speak with traders to understand the reason other price difference.
- Plot the average commodity prices: across markets over time.
- Be aware of seasonality: Prices change along with seasonal patterns, so when monitoring prices, it is critical to use the seasonal calendar you have drawn. This tool allows comparison of price changes in a reference year and helps determine whether any observed price fluctuations are normal for that time of year.
- Be aware of the difference between indicated and true prices: Negotiation and bargaining may lead to a discrepancy between prices used for monitoring inflation/grant appropriateness and the actual price paid to a vendor. This can be moderated by cross-checking prices with buyers.
- Combine price monitoring with volume monitoring: as it is difficult to analyze market price trends without volume trends.
More information regarding price monitoring (although limited to food price monitoring) can be found in the MARKit: http://www.crs.org/our-work-overseas/research-publications/markit
P. Cretti (2010), The Impact of Cash Transfers on Local Markets, A case study of unstructed markets in Northern Uganda, CaLP.