Building Businesses with Small Producers: Successful Business Development Services in Africa, Asia, and Latin America

225 Pages·2002·13.22 MB·English

by  Sunita Kapila

BUILDING BUSINESSES
WITH SMALL
PRODUCERS
SUCCESSFUL BUSINESS DEVELOPMENT
SERVICES IN AFRICA, ASIA AND
LATIN AMERICA
Edited by SUNITA KAPILA and DONALD MEAD
)fl>G
PUBLISHING
INTERNATIONAL DEVELOPMENT RESEARCH CENTRE
Ottawa • Cairo • Dakar • Montevideo • Nairobi • New Delhi • Singapore
Published by ITDG Publishing
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and the International Development Research Centre
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© International Development Research Centre 2002
First published in 2002
ISBN 1 85339 494 7
ISBN 0 88936 986 0 (North America)
All rights reserved. No part of this publication may be reprinted or reproduced or
utilized in any form or by any electronic, mechanical, or other means, now known or
hereafter invented, including photocopying and recording, or in any information
storage or retrieval system, without the written permission of the publishers.
A catalogue record for this book is available from the British Library.
National Library of Canada cataloguing in publication data
Kapila, Sunita
Building businesses with small producers: successful business development services in
Africa, Asia and Latin America
Co-published by ITDG Publishing (London, UK).
ISBN 0-88936-986-0
1. Small business - Developing countries - Case studies.
2. Small business - Developing countries - Management - Case studies.
3. Informal sector (Economics) - Developing countries.
4. Non-governmental organizations - Developing countries.
5. Economic development projects - Developing countries.
6. Technical assistance - Developing countries.
7. Developing countries - Economic conditions.
I. Mead, Donald C, 1935-
II. International Development Research Centre (Canada)
III. Title.
IV. Title: Successful business development services in Africa, Asia and Latin America.
HD2386.5K36 2002 338.6'42'091724 C2002-980021-8
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Contents
Preface v
List of contributors viii
Acronyms and abbreviations ix
1 Introduction
JONATHAN DAWSON, SUNITA KAPILA AND DONALD MEAD 1
2 Food processing to promote sustainable livelihoods in Bangladesh
SANDRA O. YU 7
3 Creating export markets for Bolivia's dry beans
HEATHER RAWLINSON AND PAMELA FEHR 36
4 Increasing the volume and value of smallholder coffee in
El Salvador
LISA STOSCH AND ERIC L. HYMAN 68
5 Empowering Ghana's cereal producers in the marketplace
JONATHAN DAWSON 94
6 Linking small ornamental fish producers in Sri Lanka to the global
market
SANDRA O. YU 121
7 Light engineering to generate employment in Zimbabwe
JONATHAN DAWSON 145
8 Building Zimbabwe's edible oil industry
JONATHAN DAWSON 170
9 Overview and conclusions
SUNITA KAPILA, DONALD MEAD, JONATHAN DAWSON 200
AND ERIC L. HYMAN
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Preface
THIS BOOK PRESENTS the findings and comparative analysis of seven case
studies that were carried out under the research project 'Methodologies for
the design and delivery of business development services for small produc-
ers'.The purpose of this project was to carry out an analysis of approaches to
the design and delivery of various business development services (BDS) in
developing countries and gain insight into how this can be done cost effec-
tively, with high impact and sustainability.
The term 'business development services' refers to a range of non-financial
services provided to micro- and small enterprises (MSEs) at various stages in
their development, including before start-up. BDS focus on reducing poverty
by raising the productivity and the incomes of small and microproducers and
entrepreneurs. Contained within the broad concept of BDS are such activities
as group training, individual counselling and advice, the development of new
commercial entities, technology development and transfer, information pro-
vision, business links and policy advocacy. BDS are aimed at assisting MSEs
to overcome internal and external constraints to their start-up, development
and performance.
The International Development Research Centre (IDRC) supported
research on seven BDS projects considered to be successful by their imple-
menting agencies, five non-governmental organizations (NGOs):
Intermediate Technology Development Group (UK), Enterprise Works
Worldwide (USA), TechnoServe Inc. (USA), Mennonite Economic
Development Associates (Canada) and Sarvodaya Sharmadana Sanamaya
(Sri Lanka). These NGOs were IDRC's partners in this project and con-
tributed significant in-kind support to the researchers. Representatives of
IDRC, the partner NGOs and a resource person formed the project steering
committee that guided the work of the researchers and engaged in the analy-
sis presented in this book.
Three services were given particular attention in the case studies:
marketing, access to technology, and acquisition of business and manage-
ment skills. The researchers conducted the seven case studies guided by
detailed terms of reference. The cases looked at the strategies and principal
practices employed by the five NGOs in providing the BDS through a set
of indicators to assess 'good practice' in terms of impact, cost effectiveness
and sustainability. Some of the projects reviewed included private sector
collaboration, or they began as NGO projects and evolved into private
companies.
This IDRC research project addressed BDS delivery questions within a
comparative framework. The comparative analysis of research findings
focuses on eight key variables:
1. Specialization or diversification of services offered: do the projects exam-
ined in the case studies offer a range of services, or only one? If a project
focuses on only particular services, are the others that are needed provided
by the private sector or through other assistance programmes?
2. Specialization or diversification in sector(s) of activity: do the projects
work with a particular product (for example, beans, or furniture), or with
enterprises engaged in a diverse set of activities (for example, all MSEs in
a particular locality)?
3. The roles that development NGOs and private providers play in service
delivery: do these case studies show them to be changing over time? What
are the reasons?
4. Nature of the BDS client - groups or individuals? How does client type
affect service design and performance?
5. Poverty alleviation versus growth orientation: to what extent do the serv-
ices address the challenge of poverty alleviation and to what extent does
the intervention focus on the potential for growth? How are enterprises
with growth potential identified?
6. Issues of scaling up: how did the seven projects studied in this project seek
to optimize and broaden their impact?
7. Approaches to needs assessment: how were client needs factored into
NGO programme design and service selection?
8. Flexibility of service response: how did the project change over its life-
time? In what ways did the project managers find it necessary to change
their approach in response to evolving circumstances or to improved
understanding of the needs of their clients?
The research findings that are presented in this book are intended to con-
tribute to the ongoing BDS debate. It is a debate that has been prompted by
the success to date in standardizing and commercializing microcredit pro-
grammes and by donors' interest in focusing their assistance on priority
sectors not readily 'privatized'. Donor agencies have been considering the
possibility of standardizing and commercializing the provision of non-finan-
cial BDS to existing and potential micro- and small entrepreneurs and
businesses.
We hope the case studies that follow and the discourse on each will throw
light on issues such as the development and implementation of BDS per-
formance assessment; alternatives in BDS design and delivery; BDS and
credit relationships; and subsidized and commercial provision of BDS.
This research project, the analysis of its findings and their presentation in
this book would not have been possible without the unstinting work and sup-
port over four years of the project steering committee. Members of this
committee were Anura Atapattu, Brent Herbert-Copley, Eric Hyman, Steve
Londner, Donald Mead, Julie Redfern and Andrew Scott. Special thanks go
vi
to Mike Albu, Jonathan Dawson, Pam Fehr, Eric Hyman, Steve Londner,
Donald Mead and Sandra Yu, all of whom stuck it out through the various
case study redrafts, providing fresh, valuable insights every time. I am also
extremely grateful to the field staff of the five partner NGOs who made their
offices, projects and data so readily available to the researchers. The first two
years (1998 and 1999) of this study were coordinated by Kenneth Loucks of
Dev-21 Consulting Ltd and the last two (2000 and 2001) by myself. Thanks to
Bill Carman of IDRC and Helen Marsden and Ginny Gilmore of ITDG
Publishing for actually bringing this book to print. Helen van Houten did the
technical editing of this work with great patience and good humour. To each
and every one of you, sincere thanks.
Sunita Kapila
Nairobi, Kenya
October 2001
vn
Contributors
Sunita Kapila has worked in international development for over two decades, especially in
small enterprise development in South Asia and Africa. She has worked in the areas of
women's informal income generation, the acquisition of employable and entrepreneurial
skills, strengthening of micro- and small entrepreneurs' associations, and urban gover-
nance. She has worked both as a staff member and as a consultant with non-governmental
organizations and donor agencies.
Donald Mead has over 40 years of experience as a development economist, including sev-
eral long-term assignments in eastern and southern Africa. For the past 22 years, as
professor of agricultural economics at Michigan State University, he has concentrated on
prospects and problems of small enterprises and the design of effective interventions for
the support of such enterprises.
Jonathan Dawson has been a consultant for 15 years, specializing in the design and deliv-
ery of business development services for small-scale producers in Africa and Asia. He is
also involved as a teacher and consultant in the promotion of sustainable community
development in the industrialized world and is an adviser to the Global Ecovillage
Network (GEN) - Europe.
Pamela Fehr is technical adviser and consultant in microenterprise development at
Mennonite Economic Development Associates (MEDA). She has worked in design and
delivery of BDS marketing programmes in Bolivia, Haiti, Nicaragua and Peru. She is cur-
rently based in Port-au-Prince, Haiti, where she is focusing on institutional strengthening
for MEDA's rural credit programme, which targets small producers.
Eric L. Hyman, currently with the African Development Foundation, was previously chief
of program evaluation at Enterprise Works Worldwide. Dr Hyman has 22 years of experi-
ence in microenterprise development, economic appraisal, monitoring and evaluation,
appropriate technologies and environmental impact assessment. He has worked in 23
developing countries and published two books and 73 journal articles.
Heather Rawlinson worked as an intern with the Mennonite Economic Development
Associates (MEDA) in Bolivia in 1998 and 1999, and later worked in the Canadian Red
Cross as the International Program Associate on the Americas Program (2000 to 2001).
She recently returned to Bolivia to work with a local organization on projects for home-
less children.
Lisa Stosch is the senior adviser for the Evaluation Unit at Enterprise Works Worldwide
in Washington, D.C. Ms Stosch has worked with microenterprise development for over 14
years, specializing in monitoring and evaluation, and financial and programme manage-
ment. She currently manages the Impact Tracking System, which gauges the effects of 28
projects in 17 countries. She has co-written and published several annual reports and pro-
gram brochures for Enterprise Works.
Sandra O. Yu specializes in small enterprise and informal sector support, with focus on
business and institutional development. She has been involved in research, community
development and training and has worked in Asia, Africa and the Caribbean. Her work
has been published by the ILO, in the Labour Education Journal, UN Economic and
Social Affairs, International Institute of Rural Reconstruction, and as editorial columns in
Philippine newspapers.
Acronyms and abbreviations
ADB Agricultural Development Bank of Ghana
ADRA Adventist Development and Relief Agency
AFC Agricultural Finance Corporation (Zimbabwe)
AgENT USAID-funded agency in Sri Lanka
AGRITEX Agricultural Technical and Extension Services (Zimbabwe)
ANACAFE Asociacion Nacional del Cafe (National Coffee Association of
Guatemala)
ASOFAM Asociacion Nacional de Fabricantes Artesanos de Muebles
(National Association of Artisan Furniture Makers) (Bolivia)
ASOHABA Asociacion de Productores de Haba (Association of Broad
Bean Producers) (Bolivia)
ASOMEX ASOPROF/MEDA Export Company (Bolivia)
ASOPROF Asociacion Nacional de Productores de Frijol (National
Association of Bean Producers) (Bolivia)
ASPECAGUA Asociacion de Pequenos Caficultures de Guatemala
(Association of Small-Scale Coffee Producers of Guatemala)
ATDP Agro-based Industries and Technology Development Project
(Bangladesh)
ATI Appropriate Technology International (former name of
Enterprise Works Worldwide)
ATZ Appropriate Technology Zimbabwe
BA business adviser
BDS business development services
BDT Bangladesh taka
BODC Bangladesh Organization for Development Cooperation
BRDB Bangladesh Rural Development Board
CCCH Central de Cooperativas Cafetaleras de Honduras (Coffee
Cooperative Center of Honduras)
CEFE Competency-based Economies through Formation of
Entrepreneurs (GTZ programme)
CENCAFES Central de Cooperativas de Caficultores de El Salvador (Coffee
Cooperative Center of El Salvador)
CIDA Canadian International Development Agency
COMERCAFE Comercializadora Regional de Cafe (Regional Coffee
Marketing Company) (El Salvador)
CSC Consejo Salvadoreno de Cafe (Salvadorean Coffee Council)
DFID Department for International Development (UK)
DTC Development Technology Centre of the University of
Zimbabwe
FACN Federation des Associations des Cafeieres Natives (Federation
of Native Coffee Farmer Associations in Haiti)
FAO Food and Agriculture Organization of the United Nations
FASCOM Farmers' Service Company (Ghana)
FASCU Farmers' Service Multipurpose Co-operative Union (Ghana)
FEDEAGRO Federation de Asociaciones Agropecuarias (Federation of
Associations of Agricultural Producers) (Bolivia)
FFPED Forum for Food Processing Enterprise Development
GECLOF Ghana Ecumenical Church Loan Fund
GHC Ghanaian cedi