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VSLAs and Enterprise Development: Practical Lessons from CARE Ethiopia and Bangladesh

VSLAs and Enterprise Development: Practical Lessons from CARE Ethiopia and Bangladesh



SEEP Conference 2011

SEEP Conference 2011



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    VSLAs and Enterprise Development: Practical Lessons from CARE Ethiopia and Bangladesh VSLAs and Enterprise Development: Practical Lessons from CARE Ethiopia and Bangladesh Presentation Transcript

    • VSLAs and Enterprise DevelopmentPractical Lessons from CARE Ethiopia and Bangladesh
    • VSLA and Market Engagement @ CARE Market Engagement Strategy Promoting poverty reduction of 10 million HHs by 2015 through market-based, value chain approach Access Africa Pursuing financial inclusion for 30,000,000 poor HHs across Africa by 2018
    • Continuum of ExperienceFinancial Inclusion Integrated Approach Market Engagement Emphasis on: Emphasis on: Emphasis on: enterprisesavings-led financial deliberate sequencing development and inclusion of VSLA and enterprise value chains development Observation: Observations: Observation: organic joint complex but high organic joint marketing potential, more than savings one way to do it
    • Continuum of ExperienceStrengthening the Dairy Value Integrated Approach Financial Inclusion Chain (SDVC) Market EngagementProject: Doubling the dairy-related incomes of35,000 rural smallholding and landless households VSLA Initiatives in West Productive Safety Net Strengthening the Dairyin Bangladesh.Africa Project Plus in Ethiopia Value Chain Strategies: 1. Improving milk production and collection system 2. Improving access to input and output markets 3. Improving the milk transportation network 4. Ensuring access to quality services 5. Improving the policy environment
    • Bangladesh Dairy Value Chain
    • Market Engagement Progress SDVC Performance Current Target Aug, 2011Participating Households 36,020 35,000Farmer Leaders 3,294 3,500Milk Collectors 283 350Livestock Health Workers (LHW) 201 165Information Service Centers (ISC) 49 50Community Agri-Shops (CAS) 100 -Artificial Insemination (AI) 9,136 12,000HHs Avg. production (lit/day) 1.70 2.40HHs milk consumption (lit/day) 0.39 -HHs Avg. milk sales income (Tk/day) 35 45
    • Savings Emergence in SDVC• Initially organic, then project promoted• 1,182 producer groups representing 36,020 producers (83% women)• 63% groups formalizing savings activities (n=863)• Nearly 50% of savings groups invest exclusively in dairy sector
    • Key Savings Stats • Total savings: $58,734 • Re-investment in 40% - Dairy- dairy sector:45% - Cash on related $23,834 hand activities • Other investment: $8,646 15% - Non- • Collective cushion: dairy-related $34,900 investments
    • Savings Promotion ModelVSLA-lite model developed to provide groups withkey guidelines and avoid promoter overload Producer group promoters trained in savings promotion Promoters introduced savings through existing producer groups Savings adoption and savings rates integrated into participatory performance tracker used by groups Ongoing monitoring analyzed savings application
    • Successes, Challenges, LessonsSuccesses and Lessons Challenges and LessonsHigh-rates of reinvestment in dairy  Organic emergence of savings led tohelping to overcome critical constraints to non-uniform promotion and adoptionupgrading  Management and governance quality Increased groups coherence and varies across groups and key principlescapacity to participate in dairy sector such as rotating governance not always pursued Reduced cannibalization of key valuechain assets to respond to short-term  Producer groups sometimes largercash flow needs and/or shocks than optimal savings group size, driving challenges Emergence of new hybrid group /individual enterprises with women co-  Blend of most poor and less poorinvesting in improved breeds members demands more sophisticated share system to be successful The bottom line: Savings groups support VC promotion but require deliberate strategy
    • Continuum of Experience Financial Inclusion Integrated Approach Market EngagementVSLA Initiatives in West Productive Safety Net Strengthening the Dairy Africa Project Plus in Ethiopia Value Chain
    • Integrated Approach Market FocusProductive Safety Net Project Plus (P+): Improvingresiliency and asset base of 47,000 chronically foodinsecure households as a means to facilitate theirgraduation to food security Strategies: 1. Push CFI HHs upward via VSLA promotion, producer marketing group formation, microleasing arrangements, financial literacy, business skills and advanced business skills training 2. Pull CFI HHs upward via private sector engagement in multi-stakeholder platforms, forward and backward linkages and new financial product development 3. Purposeful VC selection, intervention sequencing and combination in order to enhance resilience and asset building
    • P+ Goal and Objectives GOAL Livelihood assets increased & Graduation resiliency enhanced from food aidPSNP HOUSEHOLDS Objectives Access to Access to Access to Learning and Microfinance Markets Water, Sanitation Sharing (Financial assets (Engaged in functioning (Health &productivity (Enabling environment increased) markets) improved) enhanced
    • Modified P+ Causal Model *Transition out of participant *Transition out of Food SecureAsset Accumulation relationships participant relationships 3 * Support financial services *Increase linkages to providers to reach down market formal financial services Food Insecure * Increase linkages between SMEs * Provide advanced 2 and output markets business skills training| *Increase capacity of extension services. * Support on- and off-farm enterprise selection * Support multi stakeholder platforms *Create linkages to extension services * Provide basic businessAsset Stabilization * Support input suppliers and tech service providers to reach * Increase use of skills training via SPM Chronically 1 down market technology and inputs Food Insecure *Increase Financial literacy *Establish / strengthen * Enhance market producer groups information systems * Promote VSLAs PSNP Beneficiaries PSNP Transfers (Consumption Support)
    • P+ Results to DateImpact• Nearly 1,000 HHs have graduated from PSNP• In P+ areas, 60 and 80% of all HHs achieving graduation have been supported by P+Outcomes• Financial Inclusion – 2,000 P+ VSLAs with 37,224 members – Total savings of over $285,188 – MFI linkages for 8,232 VSLA HHs, 30,301 people• Market Inclusion – 13,454 farmers organized into 648 PMGs around target value chains – 85% HHs reporting they have the knowledge they need to manage their enterprises
    • The Model in PracticeAto Gediso ShiloSoyama, Dale, Sidama• Household composition: – Married, 3 children – PSNP since 2005, P+ since 2009• Microfinance Linkages: – Both Ato and wife are VSLA members – HH savings of ~3/ month – Linked to Sidama MFI, successfully repaid $170 loan• Market Linkages: – Investing in maize, red bean and shoat fattening VCs – Petty trading as IGA• Key Outcomes: – No longer homeless – Sending first daughter to school – Improved food availability – Increased assets – Investing in additional income streams
    • Integrated Promotion Model Microfinance Linkages Market Linkages Formal VSLA trainings and ToTs for all implementing Market and VC analysis conducted at regional and partners national level VC promoters market opportunities and producer VSLA promoters market VSLA opportunity to P+ target marketing groups to P+ HHs exclusively. HHs. Word of mouth promotes non-P+ HH adoption. VC promoters organize interested HHs into producer marketing groups (PMGs) of 15-35 members.VSLA promoters organize interested HHs into groups of 15- 25 members and trainings commence. PMG members trained on technical aspects of VC. SPM and Financial Literacy trainings provided based on group performance Microlease translation completed.AdvancedFinancial Literacy trainings providedabased onSPM and Business Skills training provided on demand- PMGMicroleasing arrangement explainedmeet leasing members engage in VC activity and to PMG group performance driven basis. terms members. PMG members pursue VC activity, VSLA / MFI linkages facilitated Demand-driven repay microlease post-harvest based on demand and group advanced business maturity skills training offered
    • Key Findings on DeliveryThe Importance of Targeting, Sequencing the Impact Egg and Combination  Starting with VSLA VC Supporters improves outcomes for most vulnerable VC Actors  Self-selection for VSLA is vital to success 12,000 providers Target Group  Market aggressively to Members more vulnerable HHs 25,000 HHs  May be minimum tipping point to support Direct Impact Group FHHs Very poor, primarily women  Promote VSLA / group 50,000 HHs enterprise separation but respect member choice
    • THANK YOU Christian PennottiTechnical Advisor, Economic Development Unit Email: cpennotti@care.org Phone: 404.979.9195 Skype: cpennotti http://edu.care.org