The SMILES project, implemented in Uganda’s Kyaka II and Kyangwali refugee settlements and surrounding host communities in Kyegegwa and Kikuube districts, offers an opportunity to explore how integrating market systems development (MSD) and the graduation approach can potentially improve the livelihoods of extremely poor refugee and host-community households. In this article—the first in a SMILES Learning Series that will analyze the key findings, challenges, and broader implications of this integrated approach—we provide initial insights on the Graduation + MSD Integration model as the five-year project comes to the end of its second year.
Transforming Lives: The SMILES Project
The Sustainable Market Inclusive Livelihood Pathways to Self-Reliance project (SMILES) operates in the Kikuube and Kyegegwa districts of western Uganda. This region 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 the negative effects of climate change. The project targets 14,000 of these households and is expected to reach 70,000, helping households “graduate” from “extreme poverty” status and transition from food insecurity and fragile livelihoods to self-reliance and resilience.
The SMILES project is piloting integration of the graduation approach and MSD. The graduation approach focuses on delivering structured, sequenced, and time-bound interventions that provide extremely poor households with the support they need to escape poverty. These programs typically offer a combination of interventions that support households to meet basic needs and build self-reliance. This can include help meeting basic consumption needs, technical and entrepreneurial skills training, asset transfer to kickstart economic activity, business coaching, and ongoing mentorship.
MSD, on the other hand, focuses on creating sustainable economic opportunities by addressing systemic challenges in market systems. MSD 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, SMILES seeks to create a holistic model that addresses both the immediate needs of households and broader systemic challenges in the market that hinder extremely poor households’ full participation 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.
How Graduation + MSD Integration Works
The SMILES project uses 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 the knowledge, skills, and assets they need to engage in sustainable livelihoods, while MSD activities work to create a supportive market environment.
A key part of this integrated approach is engaging both private and public sector players to drive access to agricultural inputs (such as fertilizers), skills training, and markets. In the SMILES project, skills training is not just about imparting knowledge; it is also about building relationships between households and private sector actors (PSAs). The project partners with several PSAs who specialize in different agricultural value chains. These PSAs 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 PSAs, who can continue to provide inputs and market access after the program ends.
Another critical component of the integrated approach is asset transfers. After seven months of graduation activities, households receive one-time cash payments to invest in income-generating activities. The asset transfer is timed to coincide with the start of the crop season. This, coupled with the relationships between households and PSAs, enables households to invest in productive, high-quality assets—such as high-quality seeds and agricultural tools.
Key Findings from the SMILES Project
One significant finding from the SMILES project is that the graduation approach provides PSAs with extensive information about the market and key stakeholders. In regions like western Uganda, where refugee settlements are often isolated and difficult to operate in, PSAs face numerous challenges, including establishing relationships with key stakeholders. The SMILES project has found that its relationships with organizations such as the UN High Commissioner for Refugees (UNHCR) and the Office of the Prime Minister are of great value to PSAs. By facilitating introductions and providing contextual information and market data, the project has supported PSAs 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, often from the same communities as the project’s participants, bridge the gap between households and PSAs. They support households to understand and engage with new market opportunities, and they give credibility to PSAs, in part because they are seen as neutral parties who do not have a financial stake in the business.
The SMILES project also highlights the need for adapted monitoring, evaluation, and learning (MEL) systems to measure the success of integrated programs. The traditional graduation approach typically focuses on household-level outcomes, while MSD interventions focus more on measuring systemic changes in the market. The SMILES project had to combine both to ensure that its MEL system could accurately measure the impact of its integrated activities.
Finally, the project found that clear communication and expectation-setting with PSAs are crucial for successful integration. PSAs need a robust orientation to fully understand how to align their interventions with the timeline for graduation activities. In the SMILES project, some PSAs were not consulted during preparation for the asset transfer, resulting in lower-than-expected investments by households in goods and services offered by PSAs. Future programs can avoid this shortfall by providing PSAs with detailed information sessions that cover the graduation approach, including the timing of key activities such as asset transfers, to ensure that PSAs are ready to respond to an increase in market demand as a result of the project-sponsored asset transfer.
Challenges and Opportunities
While the integration of graduation and MSD offers numerous benefits, it also presents several challenges. Aligning the timelines of graduation and MSD activities requires meticulous planning. Working with numerous PSAs, each with its own business model and priorities, can be complex and resource intensive. Developing a MEL system that accurately captures both household- and market-level outcomes is a challenge.
Yet initial learning from the SMILES project offers several lessons for future programs and for future growing seasons. Engaging PSAs early in the process can help align their activities with the timeline for graduation activities and ensure that they are fully prepared to support households. Streamlining communication with PSAs by assigning dedicated liaisons from the program team can reduce the burden on PSAs. Collaborating with PSAs to share relevant data, such as household profiles, can improve targeting and reduce duplication of effort, building stronger relationships between PSAs and participant households.
Conclusion
Throughout Uganda and East Africa, the graduation approach and the MSD approach have often been implemented by different organizations, in different communities, with different funders, and with different expected outcomes—possibly keeping learning siloed (which we explore in more detail here). With its Graduation + MSD Integration approach, SMILES offers an opportunity to share learning with the wider humanitarian and development communities on new approaches to refugee livelihoods’ development. We hope you will follow this SMILES Learning Series as the project continues into Year 3.
