Hugo Sintes' update on Oxfam's Enterprise Development Programme TBN Members Day 2010 For more info. and accompanying videos see https://www.oxfam.org.uk/donate/edp/index.html

1. Oxfam’s Enterprise
Development Programme
Presentation by
Hugo Sintes
November 2010

2. Outline
• Oxfam
• Enterprise Development Programme
• Practical lessons
• Opportunities for collaboration
• Q&A

3. LAC
West
Africa
Southern Africa
HECA
East Asia
South Asia
UKPP MEEECIS
Who is Oxfam?
Oxfam GB countries
Oxfam India
14
Oxfam is a global
movement of people
working with others to
overcome poverty

4. What does Oxfam work on?
Climate change
 Understanding effects on poor people
 Help most vulnerable households adapt
 Global campaigning
Aim 1 - Right to Basic Sustainable Livelihoods
Agriculture and rural livelihoods
 Support smallholder farmers
 Engage with the private sector
 Influence local/international policies
Aim 2 - Right to Basic
Social Services
Education, Health,
HIV and AIDS
Aim 3 - Right to Life and
Security
Response to disasters
Water, sanitation and public
health
Aim 4 - Right to be Heard
Aid and Budget
Accountability
Coalitions and alliances
Aim 5 - Right to Equity -
Gender & Diversity
Violence against women
Women’s rights and
leadership

5. What does Oxfam work on? Private Sector
supporting/running companies engaging with existing companies

6. Oxfam’s Enterprise
Development Programme
Introduction

7. Why did Oxfam set up EDP?
• Oxfam set up the Enterprise Development Programme (EDP)
to identify, invest in and nurture very early-stage, rural and
agricultural SMEs in developing countries
• EDP supports SMEs as essential for
job creation and development
• Agriculture main source of livelihood
for 2 billion poor people
• SMEs are often forgotten by banks
and microcredit, and constitute
the so called ‘missing middle’
• EDP targets the ‘toughest’ SMEs
- Rural, agricultural, remote
- Limited capacity and track record
RURAL FINANCE GAP AND THE MISSING MIDDLE

8. What does EDP do?
• Since 2008, we have:
- Raised £3.1m towards our £6m target
- Reviewed 50 business plans emerging from Oxfam programmes
- Committed £2.5m to 16 enterprises
• Through EDP, Oxfam supports SMEs with :
- Loan finance (channelled through a local Financial Institution)
- Business support (mentoring, new staff, Investment Committee)
- Social grants (e.g. for women’s economic leadership)
• Enterprises are selected on the basis of following criteria:
- Business and market potential
- Opportunities created for women
- Management capacity of enterprise and partners
- Potential for reducing poverty in rural areas
Note: each enterprise is supplied/owned on average by 1,000 farmers
• EDP operates in a space where few private investor reach,
uses a business approach different from charity, and aims to
develop a model for early-stage enterprises with a mix of
public and private funds

9. Proposal
selection
Investment
Committee
Enterprise
Development
Board
Ongoing
support
and review
How are EDP investments selected?
• Proposals from
Oxfam’s
programmes
• Next Q1 2011
• Internal
Review Panel
• Internal and
external
experts
• Scrutiny,
support and
development of
each proposal
• Last Nov 2010
• Includes ‘engaged’
supporters
• Designs Strategy
• Reviews investment
decisions
• Next Dec 2010
• Business
support and
mentoring
• Monitoring,
evaluation

10. Michel Clancy
Manager, Let Agogo
Mulugeta Tefera
Manager, Assosa
Salum Shante
Director, Katani
Dawood Istanboli
Manager, NFC
AMENU Manager &
Chairman, Liberia
President & secretary of
Komatha LBCS, Sri
Lanka
Tatyana Yurina
Director, Forus
Who are the key people involved?
Tim Chambers
Latin America
Amit Vatsyayan
South Asia
Thalia Kidder
Gender Equality
Jing (A. Pura)
East Asia
Danilo Sauceda
Manager, Aproalce
Enterprise Managers
Investment Committee
David
Bright
Oxfam
David
Pitt-Watson
Hermes
Chris West
Shell
Foundation
David
Irwin
Joss
Saunders
Oxfam
Penny
Lawrence
Oxfam
EDP Board
Vincenzo
Morelli
TPG
David
Gait
Maitri
Hugo
Sintes
Manager
Nicholas
Colloff
Oxfam
Sandy
Arbuthnot
Gita
Patel
Stargate
Oxfam Advisers
Local Mentors

11. Belle Vue
St Lucia
(vegetables)
New Farm C, OPT
(processed food)
AMENU
Liberia
(rice)
FORUS, Russia
(microfinance)
Vavuniya
Sri Lanka
(dairy)
Katani, Tanzania
(sisal)
Alpina
Colombia
(dairy)
APROALCE
Honduras
(vegetables)
Let Agogo
Haiti
(dairy)
EDP Investments: 2008, 2009, 2010
LIBAS, Philippines
(moringa)
Investments 2010
Investments 2009
Investments 2008
Zembaba,
(honey)
BN, Rwanda
(mushrooms)
Pabitra, Nepal
(vegetable seeds)
Pacomen
Indonesia
(vanilla)
Assosa, Ethiopia
(sesame)
Chenab, Pakistan
(dairy)

12. What do these enterprises look like?
AMENU
Liberia
(rice)
Vavuniya
Sri Lanka
(dairy)
Ascamp
Colombia
(dairy)
APROALCE
Honduras
(vegetables)
Let Agogo
Haiti
(dairy)
LIBAS,
Philippines
(moringa)
Zembaba,
Ethiopia
(honey)
BN
Rwanda
mushrooms
Pabitra,
Nepal
(seeds)
Assosa,
Ethiopia
(sesame)
Chenab,
Pakistan
(dairy)
Pacomen
Indonesia
(vanilla)
Sales GBP (000) - last year
0 0 6 7 13 17 30 35 90 99 127 137 151
Enterprise Assosa, Ethiopia. Set up in 2006. Federation
20 POs. 6,000 members (6% women).
Product /
Market
Sesame seeds, expanding into sesame oil for
local markets. Setting up edible oil plant
Investment - £70k loan (equipment, working capital)
- £20k business grant (staff, mentoring)
Staff / Skills Manager in place. Recruited finance officer &
cashier. Recruiting factory manager.
Enterprise New Farm Company, Palestine. Processor of
foods from 13 cooperatives (40%* women)
Product /
Market
Palestinian-sytle foods sold in Palestine,
Jordan, Saudi Arabia. Sales up 20% last year.
Investment - 2008: £10k loan (working capital) + £110k
- 2010: £90k loan (WC, loan) + £110 k
Staff / Skills Total 6 staff. Manager, plus Finance,
Marketing and Quality officers (2).
Enterprise Pabitra. Founded 2001.
Product Seeds sold to two major companies and local markets
Investment - 75k loan (WC) - £70k grants.
Staff / Skills President with 20 y of experience in vegetables. Received
training on various matters. Social Mobiliser, Secretary +
Recruiting Enterprise, technical & Quality Officers (3)
Ymegnushal
Chairwoman
Mergia Bekele
Mentor
Mulugeta Tefera
Manager, Assosa
Hear them on:
https://www.oxfam.org.uk/donate/edp/ethiopia.html
NFC,
Palestine
(food)

13. EDP Investments: Philippines

14. EDP Investments: Ethiopia - Sesame

15. Oxfam’s Enterprise
Development Programme
Lessons

16. Performance of the portfolio
• It’s early days – most companies in portfolio 0 – 18 months
• We measure performance on various indicators
- Business viability (profits, stable markets, and access to finance)
- Social issues:
- opportunities created for women
- resilience to climate changes
- poverty reduction (income, jobs)
• Next some of the key lessons
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Business
Performance
Social Impact
-women
-climate
-poverty
Progress on
activities
Assessment June 2010

17. 1. Need to start with good analysis of
markets, and community & gender issues
Support to women is a key focus of our investment decisions
• Run 50% of the Micro & SMEs and produce 60-80% of the food
• Despite owning 1% of the land & accessing 5-10% of the credit
• … They are often marginalised to low-return activities
• If provided the same assistance, are as or more productive
• If they control the income, more goes to health, education and
other household expenditures

18. Product/market ‘Attractiveness Matrix’
Sweetcorn
Dried mango
Cattle and sheep fattening
Henna
Kaolin (Bogonii in
local langage)
Peanuts
Sesame
Fonio (local cereal)
Dried vegetables
(Okra, pepper, onion)
Vegetable gardening
Shea butter
Nere (sumbala)
Cotton textile crafts
1. Good analysis of market and gender (b)
Traditional beer
Pepper, Cotton
Marmelade
Women’s participation
Marketdemand
HighMediumLow
HighMediumLow
Example from Mali

19. Community
FinanceExtension
Financial
Management
Business
Development
Market
Information
MARKET
SERVICES
Natural environment
& resources
Social norms &
informal networks
Infrastructure
Trade rules &
competition policy
...
(DIS)ENABLING ENVIRONMENT
MARKET CHAIN
Alternative
livelihood
strategies
Primary
Producers
Consumer:
•International
•National
•Local
Exporters /
Importers
Processors
Inputs
Channel1
Traders
Enterprise
1. Good analysis of market and gender (c)
...
Channel2

20. 1. Good analysis of market and gender (d)
Community
FinanceExtension
Financial
Management
Business
Development
Market
Information
Natural environment
& resources
Social norms &
informal networks
Infrastructure
Trade rules &
competition policy
...
Alternative
livelihood
strategies
Primary
Producers
Consumer:
•International
•National
•Local
Exporters /
Importers
Processors
Inputs
RetailersTraders
Enterprise
...
Can women access safe transport
At a good price when they need it?
Do women have property
That they can use as
Collateral for loans?
Do gender roles, attitudes
and beliefs affect women’s involvement
in different parts of the chain?
What happens in the
household economy
to make this possible?

21. 1. Good analysis of market and gender (e)
• As a result of this analysis, we have
- In Rwanda, we support a mushroom enterprise because market is good,
and because barriers for women are low
- In Philippines, all tree nursering will be carried out by women
- We support another enterprise in Ethiopia, which producers lighter
Beehives and veils so that women can join production
• We also seek to establish partnerships with buyers and
financial services providers
• Oxfam interventions include policy engagement with local
authorities, and with stakeholders

22. 2. Need to understand climatic issues better
• In the last 18 months, companies we invest suffered:
- Earthquakes in Haiti and Indonesia
- Flooding in Pakistan, hurricanes in Honduras and Caribbean
- Longer summers/droughts, erratic rains
• Not all of these are climate-change related, but some are and
are getting worse
• We need to understand better where to invest &
how to adapt

23. Finance Type Example
Loans
Business related Warehousing Vanilla, Indonesia
Equipment Assosa, Ethiopia
Working capital Belle Vue, Caribbean
Grants
Business related Capacity building New Farm Company
Salaries (declining %) Honduras
Non-business related Advocacy Lèt Agogo
Project management All
Women leadership All
The size and type of investment depends on each company’s cash flow, but
in general we favour the following...
Average
investment
• £50k business loan
• £50k business grant
• £50k social/market
3. Both grants and investments are key
All our loans are channelled through local Microfinance Intermediaries or
banks, in order to:
• Build a track record for the company (and bank/MFI)
• Create a new relationship
• Manage Oxfam’s money

24. 4. Capacity building is key … but challenging
• Business skills are scarce
- Enterprises with sales £0 - £100k can’t afford experienced managers
- Skilled staff, or specialised services are often also not available in rural,
remote areas
- Financial Management is a gap we feel the most, followed by marketing
and production
• What we are doing about it...
Pre-investment
- Hire local consultants to help enterprise develop business plan
- Support from EDP Manager, Investment Committee
Post-investment
- Train in-country Oxfam staff as they provide general coordination/advice
- Recruit new enterprise staff, i.e. production experts, accounting staff
- One local mentor per company
- Link up with Business Development Services, Agricultural experts
- Deployment of UK Business Volunteers with Challenges Worldwide
- LOTS OF TOOLS ... Financial reporting, Enterprise Diagnostic...

25. 5. A number of organizations in this space
http://www.aspeninstitute.org/policy-work/aspen-
network-development-entrepreneurs

26. Summary
1a Sound market analysis
1b Sound gender analysis and explicit effort to involve women
(if seeking developmental outcome)
2 Affected by climate change?
3 Various types of money
4 Multiple approach to capacity building
5 Keep an eye on the sector

27. Oxfam’s Enterprise
Development Programme
Getting involved

28. How to get involved (1)
Financial Support
• Associate Investors £10,000pa x 3 years – with programme visit
and mentoring opportunities
• Partner Investors £50,000pa x 3 years – join as observers to
Board and Investment Committee meetings
• Board Investors £200,000pa x 3 years - join the EDP Board,
advise on strategy and decide which proposals enter the
portfolio and on what conditions
• Option to join a syndicate (group of ‘investors’)
• All of them are today philanthropic, but loan money is re-invested

29. How to get involved (2)
Other ways
• In the UK - Volunteer with SME experience to support us with
review & monitor investments. Examples :
– Rural, agricultural enterprises, for example dairy
– Knowledge of particular region
– Capacity on financial analysis
• In Country
– Particularly interested in 3-month placements
– ... but interested to discuss if specific experience in theme/country
– (costs except salary covered)

30. Oxfam’s Enterprise
Development Programme
Annex

31. How EDP is managed?
General
Assembly
Board of
Directors
Executive Manager
Finance
Officer
Marketing
Officer
Oxfam local staff
Business
Mentor
Local technical
partner
EDP Manager
Investment Committee
EDP Board
Global
Country
Local Financial
Intermediary
loan
- Partners
- Oxfam
- Enterprise
Production / Quality
Control Officer
- Supporters
‘Investors’
- Famers
Oxfam Advisers

32. 100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Agriculture and weather risks
Year 1 Y2 Y3 Y4 Y5 Y6 Y7 Y8
Market related risks
Country & currency risks
Low liquidity
Management capacity
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Technical Assistance
Crop/Weather insurance
Suitable seeds, irrigation
Fostering trading links
Formal contract farming
Currency hedging
Loans instead of equity
Training and mentoring
High-value crops only
To get higher returns
Use of guarantees
Strategies
Lower cost of capital
Portfolio diversification
Avoid SMEs & Agriculture
Technical Assistance
Crop/Weather insurance
Suitable seeds, irrigation
Fostering trading links
Formal contract farming
Currency hedging
Loans instead of equity
Training and mentoring
Mobile (only in Russia)
Farmer organisation
Use of guarantees
Lower cost of capital
Portfolio diversification
Avoid SMEs & Agriculture
The risks, costs and strategies in this space
Fig 6: Risk and costs investment in
Missing Middle - Agriculture
Costs from lower
amounts, and
remoteness are also
higher (while returns
not always highest)
To beat the costs
Source: Missing Middle Agricultural Finance