Feed AFRICA N°1 - Rural Entrepreneurship

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Feed AFRICA, capitalization notes of the FIDAfrique/IFADAfrica network. – Dakar, October 2010.

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Feed AFRICA N°1 - Rural Entrepreneurship

  1. 1. CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETwOrk N°01 - October 2011©IFAD/Nana Kofi Acquah Rural entrepreneurship
  2. 2. SOMMAIRE 1. Editorial 3 2. Introduction to FIDAfrique 4 3. Rural micro and small enterprises: When risk- 5 sharing guarantees sustainable access to credit 4. Business development service: How to improve the 9 performance of micro and small rural enterprises 7. Equipment grant support to graduate apprentices: An effective scheme for business start-up and em- 14 ployment of rural youths in Ghana 8. District exhibitions and trade shows: A market access tool for rural MSE 18 9. Managing Business Development Challenges in Rural Ghana: Through decentralized Business 20 Advisory Centres and Rural Technology Facilities. Appreciation of nk the co-ordinators 10. Boubacar Keita, traditional baker: An example of 25 We would like to tha for the REP 2 projects economic and social empowerment the PROMER 2 and in the contributions of their respective teams 29 y firs t issue of « Feed 11. Resources publication of this ver n also goes to all the AFRI CA ». Our appreciatio ent r Knowledge Managem Communication and/o the FIDAfrique rtners of experts who are pa network . D). d for Agricultural Development (IFA nt N°.1035 of the International FunThis pub lication was realized thanks to Gra ssarily reflect the opin ion of IFAD. bility of the authors and do not neceIts contents are the sole responsi ork. – Dakar, October 2010. s of the FIDAfrique/IFADAfrica netwFeed AFRICA, capitalization note Editorial The policy of the Feed AFRICACoordination: Board is to ensure that cont ents of this issueAbdou FALL , only the are as exact as possible. HoweverEditorial Board: authors are responsible for the content of Hadj ers to pho-Abdou FALL, Foly AKOUSSAN, El each article. We encourage readKASSE, Anthony YOUDEO WEI, Mohamed tocopy and freely dist ribute the articles, but should beKEBBEH the authors and sources thereof mentioned. CONTACTGraphic design & Printing:Imprimerie Graphi-Plus Copyright FRAO 2011 WARF, FIDAfrique-IFADAfrica Tél. (221) 33 869 10 16 General Coordination Dakar - Senegal N° 10075, Sacre Cœur III VDN, CP 13 Dakar Fann – Sénégal Cover photo: ices Tel. (221) 33 865 00 60 Young people attend the Apprent Training Program me at the Ghana National Fax (221) 33 860 66 89 ion, Sefwi Email: contact@fidafrique.net Tailors and Dressmakers Associat Bekwai Branch (©IFAD/Susan Beccio) Site web: www.fidafrique.net 2 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK
  3. 3. EDITORIALDear members and partners of the FIDAfrique network,It is a great pleasure for us to share sale of products; the putting in placewith you the very first issue of ‘Feed of a conducive environment for theAFRICA’, a thematic newsletter of the establishment of a business councilIFADAfrica network. centre and equipment manufacturingThe present publication is an added workshops; sustainable access to loansupport to the dissemination of capita- facilities through an innovative risklization products of network members, distribution system.essentially IFAD financed projects in Still, as part of the drive to promoteWest and Central Africa. This first issue rural enterprises, this premier issue ofis devoted to promoting rural micro ‘Feed AFRICA’ describes the itineraryand small enterprises, a sector which of Boubacar Keïta, who, thanks to hisrepresents an important leverage for entrepreneurial spirit and support fromthe fight against poverty and which has PROMER 2 and its partners, especiallyenormous potentials for job creation the State technical departments, wasand for infusing economic dynamism able to modernize his traditionalin the rural areas. In effect, successful bakery business and in so doingrural micro and small enterprises can multiply his turnover eightfoldcontribute towards improving agricultu- within ten years only.ral productivity and to enhancing agri- We hope you will enjoy rea-cultural products through processing. ding this newsletter and weThrough a total of six articles, the ca- can’t wait to receive yourpitalization notes focuses on the expe- comments and contribu-rience of two projects geared towards tions.establishing, consolidating and ensu-ring the sustainability of rural microand small enterprises. The newsletterdescribes, analysis and draws lessonsfrom the various assistance and sup-port strategies given to rural micro andsmall enterprises through the Rural En-terprise Project (REP 2) in Ghana andthe Rural Entrepreneurship PromotionProject (PROMER 2) in Senegal. Thearticles were published thanks to IFA-DAfrica, which supported the concep-tion of the capitalization plans of theafore-mentioned. Fact findi ng mis-sions on identification of themes forpublication of articles, as well as theconvening of exchange and productionworkshops, enabled the projects criti-cally review their experiences and alsoshare, through the articles, the resultsand lessons learnt.The various experiences related tocapacity building and equipment Abdou Fall,subsidy served as a leverage to the Programme Officer at WARFdevelopment of rural micro and small FIDAfrique WCA Co-ordinatorenterprises; the organization of trade Email : contact@fidafrique.netfairs to facilitate market access and Dakar, Senegal.CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK • Feed Africa 3
  4. 4. Introducing FIDAfrique FIDAfrique is a network linking indi- concentrates on the whole of Sub- responsible for the general co-ordi- viduals, organizations and networks Saharan Africa. It has three technical nation of the Sub-Saharan network as and its objective is to promote learn- components: capacity building and well as the co-ordination of the West ing, sharing of experiences and inno- training; support for knowledge gath- and Central programme. The African vations in order to reduce rural pov- ering and sharing and communication Rural and Agricultural Credit Associa- erty in sub-Saharan Africa. and support for consultations on pub- tion (AFRACA), which is headquatered In its current format, FIDAfrique is a lic policies. in Nairobi, co-ordinates the Eastern programme funded by the Internation- It essentially aims at enhancing the and Southern Africa programme. al Fund for Agricultural Development efficacy of projects/programmes and The FIDAfrique-IFADAfrica Steering (IFAD) and its activities are co-ordi- policy consultations by identifying Committee, which is the main gover- nated by the West Africa Rural Foun- innovative learning and sharing pro- nance organ of the network, brings to- dation (WARF). The first two phases of cesses. In so doing, it incorporates the gether mainly farmer associations and the programme (1999-2007) centered vision of WARF and that of IFAD to platforms, but also government repre- exclusively on West and Central Af- strengthen themselves as knowledge- sentatives and international partners rica whilst the third phase, known as based organizations and to use that such IFAD, the International Develop- FIDAfrique-IFADAfrica, was launched knowledge for more efficiency in im- ment Research Center (IDRC) and the in April 2009 in Nairobi. This phase plementing development projects. Technical Center for Agricultural and covers a period of three years and The West Africa Rural Foundation is Rural Cooperation (CTA). ©FIDAfrique4 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK
  5. 5. MICRO AND SMALL RURAL ENTERPRISESWhen risk-sharing guaranteessustainable access to creditAhmed Hady Seydi, ameth_hady@hotmail.comIbrahima Sory Diallo, sori02ibrahima@yahoo.frJoint guarantee, combined with risk-sharing, facilitates the sustainable access of ru- mark a real progress in the financing ofral entrepreneurs to the appropriate financial services and guarantees the security micro and small rural enterprises.of the loan portfolio that has been constituted. In the Senegalese experience of What does this risk-sharing strategy en-PROMER’s Rural Finance Support Service (SAFIR), close to 700 rural micro-entre- tail and how does it facilitate access topreneurs in Tambacounda and Thiénaba (region of Thiès) had access to financing credit? This article is meant to provideworth about 58 million francs CFA. The reimbursement rate estimated at over 98%, answers to these questions in the firstattests to the solidity of the portfolio. part. It then talks about the agreements that have been implemented with em-In the regions of Tambacounda and to financing, thanks to a concerted phasis on the experience of traditionalThiès, in Senegal, the micro and small financial risk-sharing. Within this fra- bakeries in the region of Tambacoun-rural enterprises (MSRE) are known mework, the MSRE formed joint ho- da.of Finally, the positive points andfor their inadequate assets (movables, mogenous groups to guarantee their limits noted during the implementationreal property, etc.). Though assisted credibility in their contacts with DFS. of agreements are reviewed and les-by PROMER, the Project for the Pro- The tripartite partnership – between sons drawn.motion of Rural Entrepreneurship, they groups of MSRE, DFS and PROMER –find it difficult to access investment resulting from it , constitutes the ba- A three-actor partnershipcredit and working capital provided sis of a risk-sharing guided by the res- Risk-sharing is a global strategy inby financial institutions, two levers that ponsibility which each party will take which the actor plays a decisive role.are essential for their development. in the perspective of securing a loan. The success of its implementation de-These institutions consider that the ab- Here, there are real innovations illus- pends on the definition of certain pre-sence or scarcity of material guarantees trated by the terms and conditions of conditions which constitute the basicconstitute high financial risks. the participation of each of the three principles (identification of actors,For this reason, the Rural Finance Sup- parties in the global risk, on the one constitution of the group for joint gua-port Service (SAFIR), a PROMER com- hand, and the individual responsibi- rantees).ponent, initiated strategies to resolve lity of MSRE in securing loans, on the Three key actors intervene in the im-this problem with the aim of promoting other. The notions of «joint guarantee» plemented agreements. These aresustainable relations, based on securi- and «risk-sharing», as stated in the si- PROMER, DFS in partnership with SA-ty, confidence and partnership, among gned agreements (DFS/PROMER and FIR, and the joint guarantee group.others. To facilitate the access of micro MSRE/DFS joint guarantee groups),and small enterprises to financing, SA-FIR relies on its partnership with fivedecentralized financial systems (DFS) PROMER 2/ DECENTRALIZEDwhich benefit from a WADB billion FINANCIAL SAFIRfranc CFA line of credit. As a result of PARTNERStheir proximity and flexibility, these Risks related Coverage of debts abandoned byDFS − UIMCEC, URMECS, CAURIE- Decrease in interest rates, in the Guarantee Fund SAFIR (50 to exemptions of the observation to loansMF, lCPS/ASACASE and MEC Dimba- period for needed 70% of debt registering more than a membership... year’s delay in reimbursement).lante –, are the best financial domicilesfor micro and small rural enterprises. Annual coverage of a part of late debt by the guarantee fund of the group (x% of the funds from 3 to 12 months late).The DFS/MSRE partnership, with PRO-MER’s involvement, is based on a com-mon vision in which each party advo- GUARANTEE GROUPcates a secured and sustainable accessCAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK • Feed Africa 5
  6. 6. With its different components, its non- The joint guarantee group draws up a member, within the framework offinancial service providers and its tech- a MSRE membership charter, defines joint guarantee, is the moral responsi-nical and financial partners, PROMER the terms and conditions of joint gua- bility of the entire group that exertsprovides beneficiaries with capacity rantees and mobilises a guarantee fund social pressure on the beneficiary ofbuilding support. It set up a guarantee meant to cover part of the portfolio’s the loan. However, to be efficient,fund in charge of covering 50 to 75% bad debts (the level of coverage will joint guarantee entails the possibilityof bad debts (loans registering more be defined in the agreement which of fines in case of failure to reimbursethan a year’s delay in reimbursement) binds the group to the DFS). loans. It is the raison d’être of the gua-from the portfolio constituted through rantee fund set up by members. Asthe WADB line of credit. Security and guarantee a way of sharing the risks incurred byThe DFS, partners of PROMER – cur- the joint guarantee group, it is meant Joint guarantee has facilitated the di-rently UIMCEC and URMECS –, re- to cover part of the bad debts. sadvantaged populations’ access toceive financial support thanks to the financial services all over the world. While the guarantee funds are oftenline of credit. They are the financial In the experiences of Tambacounda considered as demobilising cash re-domiciles of the joint guarantee group and Thies, the joint guarantee group serves – examples of dilapidation ofwith which they sign a partnership is based on the principle of joint gua- these funds are commonplace −, itagreement. They process the finan- rantee which is a response to the non is admitted that for them to functioncing application, grant loans and en- existence of real estates to offer as properly, they are required to be insure follow-up. They also manage the guarantee, transaction costs for the line with an agreement which calls forfunds kept in their accounts. Moreo- provision of financing and the high consistent, transparent and collectivever, within the framework of risk-sha- risks of loans, three key factors that management. The funds thus kept in aring, the DFS grant derogations to joint explain the exclusion of the poor from term account will be mobilised accor-guarantee group on certain provisions the financing market. ding to the terms and conditions de-which block access to loans: the man- fined in the agreement which moreo- Indeed, the financial institutions havedatory waiting period, the interest rate, ver fixes the interest rate and types of always considered that the financingthe collateral process, etc. loans that will be backed by it. of the poor was incompatible withAs the third actor, the joint guarantee their viability requirement. Based ongroup is composed of micro and small the principle of solidarity and mutual Securitizing Instrumentrural enterprises that are PROMER assistance, joint guarantee brought fi- In South-Eastern Senegal, the risk-beneficiaries. They are clients of de- nancial institutions closer to their poor sharing strategy, initiated by the jointcentralised financial systems working clients. It was an alternative to the ab- guarantee group of members of thein partnership with the project. The sence of real estates to serve as a gua- professional organisation of traditionaljoint guarantee group whose condi- rantee to secure financing. In a way, it bakers of the region of Tambacounda,tions of creation are defined below, is a method adopted by micro-finance was a response to the crisis whichwill provide a guarantee to the debtor to establish confidence between them opposed it to a financial institution,MSRE. It is represented by an office and their poor clients. UIMCEC. Following the negative out-that is a signatory of the agreement come of a collective financing granted Joint guarantee is underpinned by awith the DFS. The office approves in August 2007, the relations between homogenous and organized group.the financing request issued by the the institution and the professional or- In this nucleus, the personal and reci-MSRE and supports the DFS to recover ganisation deteriorated seriously: The procal acquaintance of members is aoutstanding debts. 7 million CFA francs used to finance key element. The debts incurred by 42 micro and small rural enterprises, were reimbursed with over a year’s delay, after being transformed into waived debts. After the regularization of this situa- tion, SAFIR invited the different parties – professional organisation, financial institution and PROMER’s Southern branch – to come together and reflect on the causes of such a setback. De- lays in payment were due to the fact that the purpose of the loan was se- riously diverted and debtors were not properly monitored. There was thus ©PROMER 2 need to rapidly remedy this situation so as to provide micro and small rural enterprises with access to financing in order to carry out their activities suc- cessfully.6 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK
  7. 7. The financial institution was no lon-ger prepared to renew the financingin the same conditions as before –thesaying has it that “once burned, twiceshy”. SAFIR, which sought to facilitatethe sustainable access of MSRE to fi-nancial services, then proposed a so-lution: risk-sharing among the institu-tion, the professional organisation andPROMER. The guarantee fund emana-ting from the WADB line of credit wasto serve as a loan securing instrument.This original approach marked a total ©PROMER 2break with what existed before then.The participation of the professionalorganisation in the risk incurred byfuture financing supposed the organi-sation of its members into joint gua- In the region of Tambacounda, the fi- request for financing, in the form of arantee group. The funding will thus nancing of traditional bakers has be- letter of credit. This is a very impor-be done within the framework of an come a reality. The President of the tant stage and represents an innova-agreement signed between the finan- professional organisation, Bouba- tion as the first level of control of thecial institution and the joint guarantee car Keïta, was pleased with the glo- relevance of the request. It is also thegroup. This agreement defines the spe- bally fruitful results of the first finan- first milestone of a participation in se-cific provisions for the provision and cing cycle of close to 8 000 000 CFA curing the loan and sharing risks. It ismanagement of the loan. francs. The group’s satisfaction was thus tantamount to the caution that theBeyond the conditions linked to the group provides to the member MSRE, particularly due to the possibility it hasnotion of joint guarantee on which it is in accordance with the terms and to directly negotiate its members’ ac-based, the formation of the joint gua- conditions of the joint guarantee. cess to financial services. Three otherrantee group of bakers of the Tamba agreements are being finalized (two After the approval of the loan appli-region complied with specific provi- in Thiénaba and one in Tambacoun- cation by the Loan Committee of thesions. The group opened a collective da). This triggered enthusiasm among DFS, the micro enterprise receives theaccount at UIMCEC and urged mem- MSRE benefitting from PROMER, as information and goes to the counterber MSRE to do so as well. A guarantee well as the adherence of financial ins- of the financial institution, signs anfund to which each MSRE contributed, titutions to this approach. individual loan contract and pays thewas kept there. The guarantee fund Thanks to this approach, access to application fee. The loan amount willwill be mobilised in compliance with financing was facilitated for close to be paid into his account to ensure thethe provisions defined in the agree- 693 people. They received a total of traceability of the funds and the indivi-ment signed by the two sides, and ac- 58 200 000 CFA francs. The interest of dual accountability of the MSRE. Thecording to the level of commitment of the approach also lies in the fact that latter is fully responsible for reimbur-the MSRE. The group provides the de- the most vulnerable populations may sements and will not receive any gua-btors with moral support. The « joint have access to financing. For example, rantee except in cases where failure toguarantee group/DFS » agreement 93% of MSRE regrouped into joint pay is established. Then the guaranteewhich incorporates the «Refinancing/ guarantee groups and benefiting from fund is mobilised according to the pro-Guarantee Fund» links PROMER to the loans are women. In addition to the visions stipulated in the agreement (co-financial institution. amount provided, the quality of the verage of part of the loans registeringThe joint guarantee group will have a delay of between 3 to 12 months). portfolio is an important reason for sa-access to financing under a certain tisfaction. On the whole, the declarednumber of conditions. To be eligible 98% reimbursement rate reimbursement rate is over 98% for afor a loan, member MSRE should, be- portfolio with close to zero risk forforehand, be PROMER partners and The strategy consisting in facilitating more than 90 days.members of the decentralised finan- MSRE’s access to credit through their joint guarantee groups has become From the viewpoint of the group’s or-cial system and have an account there. ganisation, the participation of the dif- increasingly relevant judging by theThey should moreover benefit from results obtained. At this stage of the ferent actors in the risks incurred whenprior support (pre-diagnosis and dia- implementation of PROMER’s pro- the loans are put in place enhance thegnosis) and be a member of the joint gramme dubbed «Access to finan- establishment of confidence. The indi-guarantee group according to the cial services», three agreements have vidual accountability of debtor MSREconditions defined. Besides, their been jointly signed between guarantee which agree to share the risk promotesrequests for financing should be va- groups and DFS partners of the pro- the sustainability of the arrangementlid and their financial needs justified. ject (one in Tambacounda, one in Kao- and the securing of financing.The bureau of the group validates the lack and one in Thiénaba).CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK • Feed Africa 7
  8. 8. However, the implementation of therisk-sharing strategy by PROMER, DFSand Joint guarantee groups, came upagainst difficulties like lack of involve-ment of the majority of members in theactivities of the joint guarantee group.There were also problems linked tothe effective dissemination of informa-tion. Finally, the relationship betweenDFS and Joint guarantee groups occursin an environment marked by the dif- ©PROMER 2ferent levels of technical capacities.Thus, the partnership is not managedwith the same level of appreciation.Providing services to a neglectedclientele mobilising funds at least cost (interest BIBLIOGRAPHY:Risk-sharing as a tool to facilitate ac- rate of 2 to 3%), steady savings which PROMER II Strategic and Operationalcess to credit by PROMER beneficiary enables the counter to practice sustai- GuideMSREs needs to be replicated in IFAD nable financing».(International Fund for agricultural Partnership Agreement Professional Beyond access to credit and the se-Development) projects’ intervention Organisation of Bakers and UIMCEC curity of granted loans, risk-sharingareas. However, its success entails its guarantees the durability of relations Partnership Agreement Cashew Nutsimplementation through joint gua- between the DFS and the MSRE. In- Women Processsors of Thiènéba/rantee groups. Seen from this angle, deed, as was said by Ibrahima Sory URMECSit represents real prospects for pro- Diallo, provider in charge of financial «Refinancing/Guarantee Fund »fessional organisations that constitute support to the Tambacounda Ope- Agreement, PROMER/UIMCECnaturally homogeneous and organised rational Unit, « if it is effectively ma-groups. naged, the guarantee fund set up byThe approach is all the more credible joint guarantee groups will outlivesince in addition to access to finan- PROMER which is a fixed durationcing, the securing of funds is at play. project. As long as this fund exists, the relationship with the financial institu-This is the real issue perceived by DFS, Visit tion will continue ».which consider this process as a way www.fidafrique.net/?lang=enof serving an abandoned clientele. The joint guarantee group, which de-Moreover, the concerted action for the pends on professional organisationsdefinition of the terms and conditions are important stages in the establish-of risk-sharing and the validation of ment of surety companies which willMRSE applications were a real innova- be coordinated by inter-sector consul-tion in the management of their needs tation frameworks. There is need toin financial services. explore this axis to ensure an effectiveEl Hadji Moussa Diongue, URMECS and appropriate financing of operatorsDirector, said he was pleased with the of the sectors.agreement signed with women activein the processing of cashew nuts in ABBREVIATIONS ANDSThiénaba, adding: « In initiating this ACRONYMS:approach, SAFIR did well since it is SAFIR: Service d’Appui à la Financea way of securing loans. By partici- Rurale/Rural Finance Support Servicepating in the group’s guarantee fund,each debtor feels responsible for the BOAD /WADB: West African Deve-reimbursement of the loans. By pre- lopment Bankserving their guarantee fund which DFS: Decentralized Financial Systemshould cover 15% of loans registering MSRE: Micro and Small Rural Enter-repayment delays of three to twelve prisesmonths, they ensure the security ofPROMER’s guarantee fund which is PO: Professional Organisationsmobilised to cover loans with over a IFAD: International Fund for Agricul-year’s reimbursement delay. Further- tural Developmentmore, the guarantee fund (15% of theloan amount) is an efficient way of8 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK
  9. 9. BUSINESS DEVELOPMENT SERVICEHow to improve the performance ofmicro and small rural enterprisesFatoumata Sané Guissé, atoumata.sane@promer-sn.orgOusseynou Ndiaye, osendiaye@yahoo.frHawa Diarra, masagne58@yahoo.frA quality business development service guarantees the performance and competi- These advisers were selected on thetiveness of micro and small rural enterprises (MSRE). The experience of business basis of a call for candidatures and in-development service markets launched within the Project for the promotion of rural terviews.entrepreneurship of Senegal (PROMER) shows that the availability of service pro-viders with established skills, methodological tools and the appropriate standards The lessons learnt from this expe-can bring about an increase in MSRE productivity and jobs. It also improves the rience, at the end of PROMER I, ledquality of products, facilitates access to local markets and provides opportunities in the project to externalize this functionnational and regional markets. during its second phase. The latter thus sought to go further by granting autonomy and a sense of responsibi- lity to non-financial service providers with the aim of perpetuating a quality close-by offer for the development of MSRE. Fortified by this conviction, PROMER considers that a high-qua- lity business development service fa- cilitates the effective performance and competitiveness of micro and small rural enterprises defined as businesses established in the rural areas and em- ploying not more than 20 people with a turnover of not more than 25 million CFAF for service providers, or ©PROMER 2 50 million CFAF for operators involved in the delivery of goods. The principle of implementing PRO- MER support is based on «getting something done». It seeks to develop a permanent and sustainable market of financial and non-financial supportPrior to the implementation of the first (MSRE), emerged with the advent services. The approach consists inphase of the Project for the promotion of PROMER. During its first phase,of rural micro-enterprises (PROMER), identifying, selecting and strengthe- PROMER had a pool of 24 internalthe business development service was ning local providers to enable them business advisers disseminated in aspractically non-existent. The few of- to offer quality services, accessible to many Proximity Business Advisoryfers available in this sector came from MSRE. These services translated into Service Zones (ZAEP). They wereurban centres to the rural areas. There an improvement of productivity in the responsible for sensitization and pro-was a real problem to match the sup- various sub-sectors in which PROMER viding guidance about the opportu-ply and the demand and this impeded intervenes (best turnover and job crea- nities, opening of current and savingsthe productivity and competitiveness tion) and competitiveness of products accounts, identification of proponentsof rural enterprises. of concerned businesses (availability of business initiatives, providing themThe business development service, and access to local, regional and na- with support to prepare project docu-for micro and small rural enterprises tional markets). ments and their monitoring-assistance.CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK • Feed Africa 9
  10. 10. training modules: GERME level 1, GERME classical and TRIE/CREE and Follow-up. Providers undergo trai- ners’ training courses taught by ILO experts and are then coached up to certification. Providers also undergo training in dia- gnosis techniques to acquire the abi- lity to effectively conduct a business diagnosis, a key phase of the rural en- terprise assistance mechanism. Some providers benefit from enhanced ©PROMER 2 training in specific areas like gender, marketing, quality control and the ma- nagement of supplies. Moreover, res- killing workshops are regularly held to inform and sensitize providers about the different sub-sectors, the MSRE Evaluation of service providers by a BIT trainer focusing on quality and PROMER environment or, more generally, to strengthen their capaci-This article is intended to show how based on objective criteria. The pro- ties.PROMER provided its support and vider of non-financial service provider The training of providers and microguidance to put in place an offer adap- (NFSP) is an independent professional and small rural enterprises is a keyted to the MSRE development service consultant or a group of consultants component in the PROMER strategy.in order to draw the necessary lessons (research consultancy, firm, associa- It includes several aspects: businessfor possible replication. The in-depth tion, training structure) specialized in management, capacitation of profes-analysis of the SDE/PROMER issue as a providing business advice services (in- sional organisations, pre-diagnosistool likely to boost the development of formation, diagnosis, assistance, mo- and diagnosis techniques… Moreover,micro rural enterprises will then lead nitoring.), training services (technical, PROMER II rapidly understood that into the review of the quality offer, the management, literacy) and specific addition to strengthening the capacityimprovement of MSRE performance, support services (commercial innova- of providers, there was need –to makethe competitiveness and sustainability tion, commercial promotion, technical them more operational- to increaseprospects. and technological innovation). their level of equipment. For this rea- The process begins with the identifica- son, these providers are assisted toTraining of Trainers tion of non-financial service providers. access credit. Thierno Ibrahima Dial-The development of micro-enterprises Applicants fill an information form on lo, a non-financial service provider inin the rural areas is a wonderful op- their profile (firm, specialized training Kaolack thus obtained a credit of 1portunity for poverty reduction in the institution, independent consultant, 755 000 CFAF which he used to buy aSenegalese countryside. It can pro- corporate name, address, contacts, motorcycle, computers (desk top andmote the emergence of proximity ser- legal form, trade registration number, portable) and office furniture.vices and facilitate access to inputs. human resources, physical resources, experience, references). A technical Meeting the needs of ruralPROMER I helped to develop andadapt methodological tools in support commission then selects applicants on populationsof rural micro enterprises (RME) es- the basis of criteria listed in a grid. The The actors participating in this initia-sentially based on communication and final selection is done by a committee tive – PROMER, non-financial serviceguidance, the identification of propo- comprising representatives of ILO (In- providers, micro and small rural en-nents of business initiatives, pre-dia- ternational Labour Office) and PRO- terprises, professional organisationsgnosis, diagnosis, monitoring and sup- MER, with the help of a guide. The – contributed to the success and pro-port counselling. The second phase selection criteria are based on the le- gress registered.is meant to consolidate the accom- vel of education, experience in mana- gement and setting up a business, the PROMER informs and sensitizes mi-plishments of the pilot experience by understanding of the stages of business cro and small rural enterprises aboutimplementing the « getting something creation and management, training ac- the importance of the business de-done» strategy. By organizing the tivities performed, motivation, availa- velopment service. It also identi-supply and secured demand, this ap- bility and ability to take initiatives. fies the providers with whom it hasproach brought about the emergence contract-based links to meet the sup-and consolidation of services offered The selected providers undergo a se- port needs of enterprises. To that end,to micro and small rural enterprises ries of training. The training of trainers it strengthens their capacity before(MSRE) to ensure their sustenance. prepares them to assist proponents entrusting them with pre-diagnosis,Thus, a system of service providers of business initiatives and micro and diagnosis, support in the definitionwas set up using a selection process small rural enterprises in the pursuing of financing and training plans. After10 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK
  11. 11. undergoing the appropriate training, sufficiently equipped to offer quality, The effects of this project supportthese providers may also provide trai- accessible and permanent services to are perceptible among entrepreneursning and management support. micro and small rural enterprises. through their familiarity with instru-At the technical level, non-financial In fact, the quality approach, which ments and processes used to processservice providers assist proponents underpins this innovative approach, and preserve products. The informa-of business initiatives and micro and partly contributed to the performance tion deriving from the monitoring-as-small rural enterprises. The assistance of PROMER-backed MSREs, marked sistance of 48 % of MSRE reveal theranges from diagnosing their follow- by an increase in their productivity creation of 427 new rural jobs andup activities to training and support- and turnover. This situation is illustra- the consolidation of 1977 others, andcounselling. The providers are located ted by the quantitative, qualitative and a 26% increase in the turnover of en-in 6 regions, 12 concentration zones impact analysis of PROMER’s techni- trepreneurs between September 2009and 33 rural communities. cal achievements report for 2010. A and September 2010. The accumu- network of 71 non-financial service lated turnover rose from 1 030 787Micro and small rural enterprises are providers formed since the commen- 969 FCFA to 1 298 939596 CFAF, anthe receptacle of all the support pro- cement of the project (including 47 increase of 268 151 627 CFAF in ab-vided by PROMER through its opera- operational NFSP) contributed to solute terms.tional partners. The MSRE include pro- achieving the following results.ponents of business initiatives, income Despite the innovations and advan-generating activities, rural micro enter- At the quantitative level, 352 MSRE out tages introduced by this approachprises) and small rural enterprises. The of an initial target of 405 were set up which promotes the emergence andMSREs deliver a service as well as and consolidated in 2010, i.e. an 87 % availability of a local quality service of-products of quality to meet the needs accomplishment rate which brings the fer leading to enhanced performance,of the rural populations. They seek to global portfolio of supported MSRE a few social and economic difficultiesperpetuate the offer by satisfying the (setting up and consolidation) to 1101 are observed. Illiteracy is still very highdemand. MSRE out of the project’s global target and there are real difficulties to access of 1330, i.e. a 83 % accomplishment investment financing.The actors also include professional rate two years away from the end oforganisations, a regrouping of people the project. At the qualitative level, Increase in competitivenessor rural micro enterprises around the the use of non-financial support in Here, the competitiveness of MSREsame chain. The professional organisa- technical training, management and corresponds to their capacity to satisfytion or PO is a platform for the capa- apprenticeship, promoted the deve- the local and national market both incity building of its members. It is also lopment of a strong MSRE network, quality and in quantity. Actually, thea credible point of contact for political the structuring of short distribution implementation of PROMER I, like itsauthorities and development partners, chains in the intervention areas as well second phase, helped create favou-in the defence of the interest of its as the emergence of local professional rable conditions which enabled mi-members. organisations and the effectiveness of cro and small rural enterprises to takeWithin the framework of a partnership frameworks for sub and inter-sector advantage of all market opportunities.agreement, the International Labour consultations. The RME shop, in the first phase andOffice, between 2006 and Septem-ber 2010, provided methodologicalsupport in the application of GERMEstandards for the acquisition of a po-tentially profitable marketfor the bene-fit of providers.427 new rural jobsThe key missions of PROMER2 in-cludes support for the emergence andconsolidation of the non-financialservices offer to MSRE through theorganisation of demand and supplyand the sustainable development of ©PROMER 2an appropriate support service mar-ket for MSRE. The implementationof this recommendation, drawn fromthe lessons of PROMER I, is based onthe establishment of contractual linkswith non-financial service providers.The approach consists in making athorough selection of local providersCAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK • Feed Africa 11
  12. 12. then the commercial/chain infrastruc- food products and the preparation of representing an increase of over 45%.ture, in the second phase, falls within guides for good practices stepped up This qualitative leap is due to the qua-this framework. the competitiveness of MSRE products lity assistance given to MSREs by non-The actions taken generated noticeable at both local and regional levels, as il- financial service providers, which mo-results in terms of improving the com- lustrated in the cases referred to. At the nitor them regularly.petitiveness of MSRE. For example, national and sub-regional levels, tradein the region of Kolda, the analysis of fairs and professional meetings are MSREs ready to pay for servicesreports on the monitoring-assistance important barometers to measure the The sustainability of the supply andof local milk processing units shows competitiveness of MSRE products. demand is measured through the MS-that the support received from PRO- The participation of PROMER-backed RE’s contribution to the costs of ser-MER for the acquisition of equipment MSRE in the twelve editions of the vices and the providers’ access to theand financing, but especially for com- FIARA ( International Fair for Agri- market. The evaluation of the situationmercial support (packaging, develop- culture and Animal Resources ), a shows an insignificant participation ofment of a logo and event concept to showcase for the promotion of MSRE MSREs to the costs of services. Prior tolaunch new products) helped increase products at national and sub-regional PROMER’s mid-course review, no mo-their annual earnings by about 30 % in level, attests to PROMER’s commit- nitoring-assistance activity had been2010. The annual turnover estimated at ment to promote these products. The undertaken by the project because7 300 000 CFA F reached 9 490 000 last two FIARA editions, in 2010 and in the MSREs had to pay up to 33% ofwith daily earnings of 30 000 to 35 2011, registered an increase in turno- costs during the first year, 66% during000. Today, thanks to PROMER’s com- ver. The turnover of MSREs during the the second year and 100% in the thirdmercial support, quality improvement, 2010 FIARA was 2 776 875 CFAF and year. The activity was able to kick-offthe financing of microbiological tests several contacts were established. In only after the IFAD mission decided toto obtain authorisation to fabricate 2011, it rose to about 3 900 000 CFAF, provide monitoring-assistance free of TRAINING FOR PERFORMANCE The training of providers and micro fessional organisations to better as- niques. The MSRE diagnosis mission and small rural enterprises is a key sume their roles and responsibilities consists in an objective evaluation component in the PROMER strategy. as platforms of services for micro and of the characteristics and functions It includes several aspects: business small enterprises in the rural areas. It of enterprises which results in an management, empowerment of pro- is a reference tool for the Ministry of operational and realistic plan. It is fessional organisations, pre-diagnosis Agriculture and Rural Development, intended to conduct an in-depth ana- and diagnosis techniques…. the International Fund for Agricultu- lysis of the enterprise by examining Better Manage your Business. This ral Development (IFAD) and the ILO all its functions (supply, production, training addressed to both poten- sub-regional Office for the Sahel in human resource management, finan- tial entrepreneurs and those already Dakar, which strives to provide sup- cing, marketing) and its environment in activity, seeks to sustainably im- port in training with a view to equip- (market, competition). The obstacles prove MSRE performance. The to- ping professional organisations with and solutionsshould be identified and ols used, according to a participatory tools and documents to help them analysed in a participatory manner. approach, are simple, practical and carry out training activities for their The purpose of the exercise is to adapted to reality. There is a comple- members. give a sense of responsibility to MSRE mentary tool based on the corporate Today, the PACTE is implemented in and autonomy to carry out activities game. In order to adapt the tools to more than nine countries. Its metho- at all levels with minimum outside in- PROMER targets, GERME level 1 dology is based on a three-phase tervention. They should be made to (training in business management triangular approach: learn to know us feel responsible for its successes and adapted to entrepreneurs with low better ; reflect together on solutions failures, and this encourages them literacy skills) was initiated. It consists to our problems ; act to progress to- to undergo training in order to make in a set of modules addressed to tar- gether. This triangular approach, fun- progress with regard to its results. gets with low literacy skills engaged damentally participatory with a view The MSRE’s autonomy is also reflec- in income-generating type (IGA) mi- to creating a collective dynamics, ted in the financing of activities if, cro-activities and intending to mi- should be fully understood by PACTE from the onset, financial or mate- grate towards an enterprise. trainer advisers and be taken into ac- rial support is necessary to launch Partnership for concerted actions count in the development of the to- the activities. Monitoring leads the through transfers and exchanges ols. Training, based on the demand, MSRE to enhance the support by in- (PACTE). PACTE is a training meant is done using a package of modules. creasing profits in order to be able to strengthen the capacities of pro- Pre diagnosis and diagnosis tech- to reinvest in the activities.12 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK
  13. 13. The second lesson to be learnt from the emergence of a business develop- ment service market in the rural areas is the fact that providers of non-finan- cial services are empowered to take ownership of the tools and adapt them to the needs of PROMER targets, ac- cording to their level of education and literacy. Thus, the need to manage with greater care the selection of non- financial service providers. Finally, GERME level 1 is a benefi- cial innovation in PROMER’s SDE ©PROMER 2 approach, since it takes into account in its support strategy, those who are literate in local languages. However, for it to be more efficient, it should be translated into local languages. The totally illiterate targets, who have not yet been catered for in the bu-charge for the first time. In any case, PROMER. There is room for hope siness management training, need tothe payment of the service, especially since, from 2007 to 2010, there has be given special attention within thefor the first time, is inherent in the qua- been a net increase in the amounts of research/development framework oflity of the services rendered and thus providers’ benefits, as shown in the training modules meant to completeto the provider’s capacity to develop graph below. PROMER’s support strategy.the entrepreneur’s activity.The interviewed MSREs said they A beneficial innovationwould gladly pay for the service if they The availability of a quality business BIBLIOGRAPHY:matched their interests. An MSRE like development service offer in the rural 1. PROMER 2 Pre-evaluation Report (RPE)Sira Fofana said it was ready to pay areas guarantees the emergence and 2. Operational Strategy Guidefor the service because it addressed viability of micro and small enterprises (GUISOP)its concerns, notably its training and that are either freshly set up or beingpackaging needs through the provi- consolidated. However, to ensure that 3. Manual of Technical Operationsder assisting it. Entrepreneur Wassa the perpetuation of the service, the (MET)Senghor of Dassilamé Socé, who is training modules should, at all times, 4. MSRE Monitoring-Assistanceengaged in the processing of cashew be adapted to the context and targets. Reports 4 (Sud- East Kolda Branch)nuts, said he was prepared to pay for In other words, the best developmentthe service provided that the expertise 5. PROMER 2 Annual Report 2010 strategy is the one that adapts to theacquired would help him develop his realities of the environment and not 6. Final External Evaluation Reportactivity. Boubacar Keita, of the Tam- the one that would expect the envi- on the Impact of the Non-Financialbacounda bakers MSRE said he too ronment to adapt to it. This is the first Service Providers’ interventionwas ready to pay for it even after the lesson that we wanted to demonstrate 7. Report of the PROMER II Mid-project ends because « monitoring-as- and share through the PROMER expe- Course Reviewsistance enables the MSRE to apply ac- rience within the context of the SDEcounting rules and hygiene and quality approach.standards ».According to the non-financial ser-vice provider, Thierno Abdoul Diallo, Evolu on of amounts paid to the NFSP by PROMER 2 2007 à 2010to ensure perpetuation of the service 35000000even after the end of the project, 30000000there was need to « establish a rela- 25000000tionship of confidence by encouraging Amount 20000000the MSREs to consider the NFSP as Amount 15000000advisers and not as simple providers Year». This work can involve chairmen of 10000000rural councils. There is also need to 50000000reinforce/recycle the technical and 0institutional skills of providers. The lat- 2007 2008 2009 2010ter should also diversify their income Yearby accessing other markets outsideCAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK • Feed Africa 13
  14. 14. EqUIPMENT GRANT SUPPORT TO GRADUATE APPRENTICESAn Effective Scheme for BusinessStart-up and Employment of RuralYouths in GhanaCletus Kayenwee, cletuskayenwee@gmail.comFelix Appiah Gambrah, gambeegh@gmail.comJustice Darko, justicedarko@gmail.com ©REP2 The workshop of graduate apprentice supported by REP in Juaso, Asante Akim South DistrictThe provision of equipment grant support to graduate apprentices facilitates early establishment, development and promotion ofbusinesses. This had been realised since 2006 through collaboration between the REP, the District Assemblies and the graduateapprentices in the project intervention districts. Support consisted of procurement of the start-up equipment through a cost-sharing arrangement involving the Project and the District Assemblies and complemented by commitments from the youths.Since 2006, the Rural Enterprises themselves after successfully complet- equipment grant support scheme toProject (REP) has supported graduate ing apprenticeships. The inability of the graduate apprentices is to facilitateapprentices with basic equipment and graduate apprentices to start their own business establishment, create job op-tools to start their businesses in rural businesses is due to the lack of start- portunities, improve standards of liv-areas of Ghana. In rural communi- up capital, which is a consequence ing and ultimately reduce poverty inties of Ghana,, many young people of the relatively high poverty levels in the rural areas.face serious challenges to establish the rural areas. The objective of the14 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK
  15. 15. Equipment grant support to graduateapprentices was part of the integrat-ed activities of the Rural EnterprisesProject. This activity was targeted atyoung people who successfully gradu-ate from traditional apprenticeship inall the sixty-six (66) Project districts inthe 10 regions of Ghana. To benefitfrom this facility the Project developedstandard criteria for grant allocation tointerested individual graduate appren-tices aimed at achieving effectivenessand sustainability. ©REP2The experience of REP with this ini-tiative strongly suggests that providingequipment as grant to graduate ap-prentices in the rural areas of Ghanafacilitates business establishment, de- A graduate apprentice supported by REP II at his Bicycle repairer shop in Donkorkromvelopment and promotion. also targeted at the families of the reci- GRATIS Foundation. The MLGRD pro-Traditional Apprenticeship and pient graduate apprentices who would vided strategic direction in Project im-Youth Targeting otherwise have had to find resources plementation and served on the pro- to set up their wards in business. ject steering committee. The GRATISIn Ghana, apprenticeship has been or- Foundation was the key Implementingganized mainly through the traditional Stakeholders and Develop- Agency for the provision of techno-system where the youth are attached ment Partners logy promotion and apprenticeshipto master crafts persons to acquire training.skills through learning on the job. The The major stakeholders involved in theduration of traditional apprenticeship Category 3 comprised the Project equipment grant support intervention beneficiaries, including the participa-ranged from 2 to 3 years, with the and their roles can be grouped into ting District Assemblies (DAs) whichcosts involved usually borne by the three categorises as follows. were the seat of Project implementa-apprentices themselves and/or their Category 1 comprised the major fi- tion, and provided counterpart fun-guardians or sponsors. nanciers of the Project, namely the ding; Local Business AssociationsOn the successful completion of the Ministry of Trade and Industry (MOTI), (LBAs) which helped to identify bene-apprenticeship, opportunities become the International Fund for Agricultural ficiaries and Project clients who wereavailable for employment in existing Development (IFAD) and the African the eventual owners of the Project. Development Bank (AfDB). MOTIestablishments or through the estab- Finally a key stakeholder was the Pro- was the Executing Agency and Super-lishment of their own business. How- ject management which had responsi- vising Ministry for the Project, provi-ever, in the rural areas where poverty bility for the overall management of ding policy and strategic directions forlevels are relatively high, many gradu- project implementation. Project implementation. MOTI alsoate apprentices are unable to acquire chaired the Project Steering Com- The Project specifically targeted thethe equipment to set-up their own mittee meetings (PSC). IFAD was a vulnerable rural youth who demons-businesses. Consequently some of key development partner providing trated commitment through skills ac-these young graduate apprentices con- development assistance funds for the quisition. A cost sharing arrangementtinue to remain attached to their mas- Business Development Services, Rural was established between the Projectters even for several years after gradu- Financial Services, Institutional De- and DAs for financing the grant equip-ation, while others accept menial jobs velopment and Project Management ment awarded to beneficiary graduatein unrelated trades or migrate to the components of REP II. AfDB was also apprentices. The beneficiaries provi-urban centres to hassle in the hope of a key development partner which pro- ded their own working space and wor- vided funding for the Technology Pro- king capital as an indication of theirfinding some form of employment. motion and Support to Apprenticeship readiness to benefit from the scheme.To address these challenges, REP’s component and Business Develop- Implementing the equipment grantintervention targeted the vulnerable ment Services for the implementation support protocol involved sensitiza-rural traditional graduate apprentices of REP II. in some districts. tion of participating District Assem-between the ages of 18 - 30 years who blies, assessment of equipment needs Category 2 consisted of representativesdemonstrated potentials to use the of the Government of Ghana, from the of the graduate apprentices by theskills obtained from training to improve Ministry of Local Government and BACs/RTFs, selection of the beneficia-their communities. REP activities were Rural Development (MLGRD) and the ries by the District Assemblies throughCAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK • Feed Africa 15
  16. 16. ©REP2 The Monitoring and Evaluation Officer of REP in a hand shake with a graduate apprentice at his workshop at Sogakope in the Volta Regionthe BACs and RTFs, procurement of ment grant support at the district level For example, many of the beneficiariesthe equipment by the Project.Distribu- generated growing interest among the of this programme are currently offe-tion of grant equipment to beneficia- youth to undertake apprenticeship trai- ring complimentary services to peopleries, follow-up technical backstopping ning to acquire practical and manage- who are engaged in various forms ofto assist in establishing and operating ment skills and possibly to also receive agricultural activities, e.g. welders,the businesses. support for starting up their own enter- fabricators and blacksmiths who are prises. Some District Assemblies, for producing basic farm implements andEquipment Grant Support for example the Mporhor Wassa East Dis- providing equipment repair servicesBusiness Establishment and trict Assembly, had also taken up the for farmers and agro- processors. Gra- challenge to implement this activity in duate apprentices operating as auto-Development their districts without Project support,. electricians and auto-mechanics inOver the last five years of REP imple- the rural areas are providing vital re- Business establishment: In the area ofmentation of the equipment grant sup- pair services for agricultural machinery business establishment, an effectiveport scheme substantial impact has and transport in the agricultural sector. mechanism was created for providingbeen evident on the lives of the tar- A further impact of establishment of young people with business start-upget groups. Impacts occurred in three businesses by supported graduate ap- capital.. To date, 3,182 rural youthmain areas, namely (i) access to equip- prentices is the creation of jobs and had benefited from the activity, out ofment as grant; (ii) business establish- generation of incomes for the bene- which, over 70% have already esta-ment, and (iii) business development ficiaries and their employees. So far, blished their businesses. Consequently,and promotion. 70% of the recipients have successfully the level of economic activities hadAccess to grant equipment: As a result increased significantly in the benefi- established their own businesses. Asof easy access to equipment as grants, ciary districts. Through the increased at March 201, 2,227 direct jobs werethe equipment support activity spread economic activities, the owners of the created The businesses and jobs crea-rapidly to 52 districts in the country. enterprises earn incomes to support ted enabled beneficiaries to generateThis spread of equipment grant sup- their families as well as contribute to incomes reduce rural-urban drift andport contributed to an equitable dis- the overall development of the districts contribute to the GDP at the district le-tribution of the national development through the payment of various levies vel. Besides direct or indirect employ-programme and bridging of the gap and taxes. ment, the graduate apprentices havebetween employment opportuni- also created opportunities for other The establishment of businesses by the young people in the rural areas to un-ties gap between the rural and urban graduate apprentices has also resulted dergo apprenticeshipsareas. Furthermore, access to equip- in value addition to the rural economy.16 Feed Africa • CAPITALIZATION NOTES OF THE FIDAfrique - IFADAfrica NETWORK

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