ZOA Ethiopia Market Assessment for NFI Distribution Filtu, Liben Zone September 2018 1. Introduction ZOA is proposing an Emergency Shelter and NFI intervention to respond to newly displaced populations in the Somali – Oromo conflict, through the Rapid Response Fund of IOM. In the preparation of this intervention, this market assessment was done to assess whether the local market conditions are favorable towards cash / voucher modalities for distribution of NFI kits. The proposed intervention is located in Liben Zone of Somali Region, in particular Filtu and Deka Suftu Woreda. Since the NFI distribution is concentrating on newly displaced persons in Filtu, this market assessment is focusing on the market in Filtu only. The targeted IDPs are located within walking distance to Filtu Town, so the market of Filtu Town is subject of this assessment. The market assessment was carried out by ZOA on 15th of September 2018, with 5 sampled vendors in Filtu Town. 1.1. Purpose of the Assessment • The main purpose of the market assessment is to assess whether the voucher system is a suitable and appropriate modality for NFI distribution given the local market situation. • To find out whether all required NFI items are available at the local market in Filtu Town. • To find out the number of vendors of selected NFIs, how the market is functioning, and where the vendors get their products from. • To get a better understanding of market dynamics, including the risks, challenges and difficulties vendors face in order to operate in Filtu. • To provide key information on local market prices in the area of essential non-food items. • To make appropriate recommendations for actions to be taken. 2. Methodology Vendors were randomly sampled from the market in Filtu Town using a common randomized walk methodology. The tool that was used for this market assessment is the ‘Rapid Market Assessment – Vendor Questionnaire’ from IOM. See Annex 1 at the end of this document. The tool was made available by IOM contacts in Addis Ababa through e-mail. The tool was slightly altered and contextualized. For instance, since no costs for mosquito nets are eligible under this program, they were removed from the list in the questionnaire. Plastic sheets and ropes were removed as well, since they will part of the Emergency Shelter kit, which is to be provided to ZOA by IOM. Mattresses were added, as this was seen as a highly useful and appropriate item for the targeted beneficiaries. For data collection, two ZOA staff, the project coordinator and the operations officer, went to the market in Filtu Town to conduct the vendor questionnaires. The vendors were randomly selected and interviewed in their shops. Their consent to collaborate was asked and their privacy in regard to specific personal information was respected. All vendors were operating under the same market conditions and were interviewed on the same day. The objective of the assessment, being purely to assess the current market conditions, was clearly explained to each vendor individually. The assessment used a combination of both quantitative and qualitative approaches. The first part of the assessment mainly was about qualitative information in regards to the shop, availability of items, market developments, challenges and difficulties, and capacity of the vendor. The last part of the questionnaire was the local market prices, indicating the specific price per type of item. 3. Summary of key findings 3.1 Vendor Questionnaire One of the main findings of the assessment is that all the required non-food items are available at the market. In fact, all five vendors ensured that they were able to supply all required items if needed. Filtu Market The interviewed vendors were all involved in wholesale type of business. They also all reported that they consider the market in Filtu to be ‘’very well connected’’ with other markets and all of them said they bring goods and commodities from outside Ethiopia. The vendors purchase their goods and commodities from a variety of other markets, including Addis Ababa, Nairobi, Dollo Ado (and Mogadishu, Somalia), Mandera (Kenya), and even Dubai. In general, they re-stock their shop once every two weeks, some even once every week. Shocks All vendors reported that conflict was one of the main factors that made it difficult to continue to do business during shocks. Secondly, the rainy season was mentioned, which could cut off important access roads. Other factors that were hampering successful business were road safety (car accidents), inflation and exchange rate variations. Capacity In response to the question how long it would take the vendors to provide additional stocks to meet the increased demand, one vendor answered that this would possible at any day and any time. Another responded that he would need five days to one week. The other three could not give a clear timeframe, since it depends on the exact size of the order, type of item, situation on the road, and availability at the market. Other factors that could make supply of large quantities more difficult, which were mentioned, were lack of cash and unclear contractual agreement with company or client. Access to credit All five vendors reported to have access to credit, including from government institution, Somali Micro Finance and the Commercial Bank of Ethiopia. Next to that, also all five vendors confirmed they hold a government business registration certificate. Price fluctuations The vendors reported that there is no specific time of the year when they increase commodity prices. The increment of prices is possible, but this usually depends on exchange rate, inflation and other shocks like conflict, road condition as mentioned above. Vendors do not expect any shortages or large price deviations in case a large number of NFI materials is purchased for the program by ZOA. Experience in humanitarian response All vendors confirmed they have participated in humanitarian response in the past, although most of them as suppliers of materials to NGOs, rather than supplying NFI items directly to affected displaced populations, through a voucher system. However, one of the suppliers has experience in working with IOM, while others worked with CCM, Handicap International, Save the Children and Pastoralist Concern. Risks of NFI distribution through voucher systems According to the vendors, the risk of distributing NFIs to IDPs is that it may not be enough to cover all the needs, and persons that have need receive create tensions in the community and towards to vendors. Clear selection criteria based on vulnerability is key, next to close collaboration with local government to ensure security. 3.2 Local Market Prices of NFIs As part of the questionnaire, the local market prices of key non-food items were collected from the different vendors. In the table below, an overview is provided. For future monitoring purposes, including PDM, this can be considered as baseline market price survey. This overview shows that all items are available at all vendors. Differences in pricing are, however, considerable, so negotiations on price and other factors needs to be done thoroughly before vendors are contracted. Vendor 1 Vendor 2 Vendor 3 Vendor 4 Vendor 5 Aluminium basin 400 300 260 300 380 Aluminium kettle 250 180 228 200 220 Aluminium cup 30 30 36 20 50 Aluminium cooking pot 400 250 410 150 270 Aluminium ladle 100 100 150 50 50 Aluminium plate 100 150 200 100 120 Jerrican (10 litre) 100 85 70 80 70 Jerrican (20 litre) 150 120 140 110 95 Sleeping mat 400 450 330 350 390 Mattress 1000 950 750 900 Blanket 800 300 300 300 450 Hassian bag 150 200 200 120 150 Laundry soap 13 12 11.50 10 9.50 Prices in Ethiopian Birr, excluding 15% VAT, collected on 15th of September 2018 Vendor 1 – Janay Wholesale Vendor 2 – Gandeyer Filtu/muse Vendor 3 – Hassan Abikar Wholesale Vendor 4 – Nishad Abdiwahli Purchasing Company Vendor 5 – Ahmad Mahamad Dahir Wholesale 4. Recommendations for implementation • It is concluded that the local market in Filtu for key non-food items (NFIs) is well functional. • All the key NFIs are available and there are sufficient vendors, with enough supply, including the capacity to scale up and respond to increased demand. • Therefore, the market seems favorable for distribution of NFIs through the modality of vouchers. • Different types of shocks, primarily conflict, rainy season and inaccessible roads and price fluctuations due to inflation or exchange, do affect the local market of Filtu, but are not considered as factors that could have a major negative impact on the functionality of the market. • Moreover, in spite of these shocks, the market still seems to be well connected to other markets, including markets in neighboring countries like Somalia and Kenya • Vendors happen to have experience in humanitarian response, including working with IOM. • The intervention of the procurement and distribution of 420 NFI kits in Filtu is therefore well recommended and justified. Annex 1: Rapid Market Assessment– Vendor Questionnaire Region: ____________________ Zone: _______________Woreda:__________Kebele_______________ Site: ____________ Data Collector’s Name: ________________ Date of data collection: _____________ i. Demographic data A. Indicate the total number of interviewees’ ____________ Sex: # Female ______ # Male_______ ii. Interview Questions 1. What is the name of this marketplace? ________________________________ 2. What type of business are you involved in? Whole sale Retail 3. Approximately how many vendors own businesses in this market? ______________ 4. How well is this market connected to other markets? Very well connected Fairly well connected not connected 5. Which three main markets do you purchase the goods/commodities that you sell in this market? (name markets) 1 2 3 6. Do you bring any goods/commodities from outside Ethiopia? Yes No If yes, specify countrie/s _______________________________________________ 7.