Fragile and Conflict-affected states (FCS) are not only the world’s toughest markets: they are the most challenging places to live and thrive.
FCS are countries where access to basic services – education, health, infrastructure – is minimal and worsened by the absence of security and rule of law. These dynamics not only have immediate effects on lives and livelihoods, they affect generations to come. The World Bank expects around 80% of the global extreme poor to be living in FCS by 2030.
Due to the role fragility plays in inequality between countries, FCS are increasingly in the spotlight of development financial institutions (DFIs) as needing attention. Investing in FCS is one of the core strategic pillars of MASSIF, the Dutch government fund managed by FMO, to support MSMEs in low income countries (LICs) and fragile and conflict-affected states.
FMO has commissioned NIRAS and TrustWorks Global to conduct a study on the conditions for successful investing in Fragile and Conflict-affected States. The study relied for a large part on external sources of knowledge, through a literature review and interviews with experts and investors with experience in fragile contexts. Additionally, the study included case studies of six customers funded through MASSIF, to understand where we currently stand in its approach in fragile contexts.
While there is no widely agreed-upon definition of “fragility”, actors within the international community generically refer to it as a continuum rather than a binary concept, namely “the degree to which the state power is unable and/or unwilling to deliver core functions to the majority of its people: security, protection of property, basic public services, and essential infrastructure.” Despite this overarching concept, caution is warranted at treating fragile states as one homogenous whole. There is no one-size-fits all approach for situations affected by fragility, violence or risk. In any case, the literature suggests that internal implementation factors play a more important role than external factors in influencing projects. In other words, irrespective of the context, with the appropriate design and implementation, projects tend to be successful.
