Delivering Resilient Enterprises and Market Systems (DREAMS)

"What’s unique about DREAMS for Refugees is that it isn’t a short-term solution. Support for refugees often focuses on immediate needs, such as providing shelter or food assistance. While that approach is extremely important, our aim is to equip refugees with the tools and resources so they can launch their own sustainable businesses, earn higher incomes for themselves and their families, build assets, savings and resilience, and ultimately live happier and healthier lives."

- Dianne Calvi, CEO and President of Village Enterprise

The project in brief

The project is implemented by Mercy Corps and Village Enterprise in Ethiopia and Uganda. DREAMS is a 5-year program that began in September 2021 and will end in August 2026. However, we are actively working to deepen our work in existing geographies and expand into new ones.

Mercy Corps and Village Enterprise are reimagining how refugee assistance is delivered through DREAMS, an innovative model that combines poverty graduation with market systems development in refugee and host community settlements.

DREAMS is operational in Uganda and Ethiopia and is being rigorously evaluated by IDinsight for impact and cost-effectiveness. We will advocate for systemic change by using evidence from DREAMS to influence humanitarian actors to invest in self-reliance approaches in protracted refugee contexts.

DREAMS aims to build the self-reliance of refugees and their host communities to allow ultra-poor households to regain the security and dignity that comes from providing for one’s family. DREAMS aims to reimagine how self-reliance is created and funded in situations of long-term displacement, persuading additional humanitarian and development donors that investing in sustainable, market-driven livelihoods could offer a long-term solution to build the self-reliance of refugees in protracted humanitarian contexts.

Main activities of the Good Practice

DREAMS combines both market ‘push’ and ‘pull’ components to support refugees to achieve economic self-reliance. The ‘push’ is Village Enterprise’s poverty graduation model, which provides the skills, connections, and capital to push poor households into markets, and the ‘pull’ is Mercy Corps’ market systems development approach, which drives inclusive market growth that pulls small businesses into a dynamic economy through market incentives.

The program engages poor households in poverty graduation activities, a structured and sequenced set of activities that generally includes group-based savings, asset transfers, and business training/mentorship to support poor households in launching successful small enterprises. There is significant evidence that poverty graduation leads to sustained poverty reduction. The model produces an average return on investment of 540%, meaning that for every $1 invested, entrepreneurs can generate $5.40 in additional income.

Despite the success of graduation in supporting poor households to establish viable microbusinesses, more is needed to fully lift families out of poverty and eliminate their need for external assistance. In response to this challenge, DREAMS will layer a second approach to strengthen local value chains and increase poor households' access to market services, deliberately connecting ‘graduates’ to market opportunities to create sustainable pathways to continued business growth.

Through rigorous evaluation, we are generating evidence that DREAMS’ approach to self-reliance is possible and more cost-effective than long-term food assistance. Using this evidence, we will create more systemic change by advocating that humanitarian donors prioritize funding for self-reliance approaches in protracted refugee contexts.

© Jjumba Martin for Mercy Corps

Elements which helped facilitate the implementation of the good practice

We have built two Randomised Control Trials into the design of DREAMS (one in Uganda and one in Ethiopia). Each evaluation seeks to answer slightly different research questions to contribute to the body of evidence behind DREAMS. We have worked closely with IDinsight - the evaluation partner - in the design of the evaluations, as well as the IKEA Foundation (who has expertise in this area), also working closely with national refugee agencies to secure approval and support for data collection.

Partners involved

• Village Enterprise
• Mercy Corps

What challenges were encountered in delivering the project and how were they overcome?

Challenges

One significant challenge was to design an evaluation that could effectively assess the impact of DREAMS and could not be far too costly to implement. We originally started with a match design, but this was prohibitively expensive.

Our final design is a Randomized Control Trial. RCTs can be a challenge with market systems development because RCTs do not want to have spillover effects into the control groups, but MSD’s success is very much based on those spillover successes impacting broader systems change within the market.

How they were overcome

There is a lot of debate between the impact measurement experts within our consortium and consultations with experts in other agencies. We developed an RCT where the design works for the number of households we work with and the number of questions we want to ask. In Ethiopia, this meant we had to change how we conducted the randomization to get the level of data we needed.

To get around the MSD challenge, our hypothesis is that households living in extreme poverty cannot access MSD without the support of DREAMS. This means that in the control areas, MSD should still be able to be functional (just not reaching the most extremely poor refugees).

© Jjumba Martin for Mercy Corps

Results of the Good Practice

• The evaluation plan directly responds to feedback from development partners during the design process. For example, FCDO said they needed more evidence on self-reliance initiatives before channeling their limited funds away from food assistance in Uganda.
• Our evaluations seek to build a body of evidence - not just for us - but for self-reliance programs more broadly in the refugee and host community space. Through this, we can encourage increased funding around self-reliance and supporting refugees and host communities to be less dependent on aid.
• We will also share our lessons and results with the sector through partners, including PAC and RSRI.

In what way does the good practice meet one or more of the four objectives of the Global Compact on Refugees?

Objective 1: Ease the pressures on host countries

Building self-reliance of refugees and host communities can help host countries prioritize their limited resources to address the most urgent needs of newly displaced people and the most vulnerable, while unlocking the economic potential of refugees to contribute to local economic development.

Objective 2: Enhance refugee self-reliance

This solution can unlock permanent solutions to enable refugees and host communities to build sustainable livelihoods and market linkages, build their self-reliance, and lift households out of poverty.

Next steps

The current project will continue for an additional two years and add more value chains and graduation participants to the program. We also plan to extend the program to work with naturalized refugees living in Tanzania beginning in early 2024 and are building out the longer-term scale plan for DREAMS.

Are there areas in which support would be required to continue and/or scale up your good practice?

We would benefit from UNHCR networks sharing the evaluations and lessons broadly once they are ready.