annual report 2014 - knowledge is key

2014

ANNUAL REPORT

MESSAGE FROM THE CEO 2Thijs van Praag: Knowledge is key

FACTS AND FIGURES 2014 6

BEST PRACTICES 8Dutch advice for a construction company in the Philippines 9Room for improvement at a printing company in Colombia 11Reducing wood consumption in Burundi, Rwanda and DR Congo 13

PARTNERSHIPS 14Argidius Foundation in Nicaragua, Honduras and Guatemala 15SNV in Kenya 17

PRIME 18Measuring the effects of our advice

SUMMARY STATEMENT OF FINANCIAL POSITION 20

SUMMARY STATEMENT OF OPERATIONS 22

Contents

Knowledge is key

A strong private sector requires the availability

of knowledge. Knowledge to overcome bottle-

necks, knowledge to innovate, knowledge to

seize business opportunities.

PUM has been active since 1978 to help to

close the ‘knowledge gap’ that still exists in

many countries around the world and that

hampers growth in the private sector. In 2014,

we guided 1,807 SMEs in 70 countries towards

knowledge-based innovation.

MESSAGE FROM THE CEO

2 PUM ANNUAL REPORT 2014

Our senior experts share knowledge in various areas. From irrigation

to crop improvement, and from energy efficiency to waste manage-

ment. They provide advice on the work floor itself, and use online

technology to stay in touch with the entrepreneurs involved, aiming

to deliver sustainable business growth over time.

We realise that it is not knowledge alone that is needed for an SME to

grow. SMEs also need finance, they need education, and they need

an enabling environment that allows them to bring out the best in

themselves. That is why we team up with partners in the entrepreneurial

ecosystem. Last year, we became a member of ANDE (Aspen Network

of Development Entrepreneurs). Through this network, we established

contacts with some new types of partners, including impact investors,

foundations and donors. These allow us to present knowledge in

tandem with access to market and access to finance opportunities

for SMEs.

One of these partners is the Argidius Foundation. With their support,

we focus on knowledge transfer to SMEs in Guatemala, Honduras and

Nicaragua. You can read more about this partnership on page 15. In

2014, we also worked closely with partners on the ground, including

business support organisations, industry associations and NGOs.

Another type of partnership that we focussed on in 2014 is the PRIME

consortium (Pioneering Real-time Impact Monitoring and Evaluation

in SMEs). Together with CBI, the Erasmus University of Rotterdam and

Wageningen University, we developed a methodology to harness the

monitoring and evaluation systems of PUM and CBI. This aims to assess

effectiveness of our support to SMEs in developing countries. These

M&E systems will be operational in 2015. Please turn to page 18 for

more information about this partnership.

Next to the Netherlands Ministry of Foreign Affairs, that remains our

largest client, we worked with a number of new clients in 2014.

This began with the Netherlands Ministry of Economic Affairs which

appointed us to provide technical assistance to farmers in India’s

‘Centres of Excellence’-programme. We also started operations in the

Caribbean Netherlands on behalf of the Netherlands Ministry of Interior

and Kingdom Relations. In Mali, we signed a contract with the Worldbank

to advise farmers on the enhancement of their bookkeeping skills.

And we were also appointed to execute a number of activities in Kenya

and Ethiopia on behalf of the Liberty Foundation.

We continue to focus on our core philosophy that SMEs are the key

to sustainable economic development. However, we recognise that

sustainable economic development can only be reached if SMEs

incorporate sustainability into their business models. In 2014, we started

to train our senior experts on how to discuss sustainability issues with

SMEs while operating in a different cultural context.

We are glad to see that more and more female entrepreneurs are applying

for our assistance. Last year, 22% of the SMEs we advised were run by

women, while 25% were run by both women and men. The percentage

of female senior experts increased slightly, from 8.7 in 2013 to 9.2% in

2014. We believe that these percentages will increase further over time,

as more and more women take on leadership roles in business.

Overall, 2014 was a tumultuous year. With considerable political

instability and the outbreak of ebola, we were forced to scale down

our operations in countries like Yemen, Mali and Sierra Leone, resulting

in less activities than anticipated. On the other hand, there were also

opportunities. We started working in Cape Verde and researched the

possibility of serving the SME sector in Zimbabwe, Somalia and Libya.

Knowledge is the only thing that grows when you share it. I have deep

admiration for the 3,110 senior experts who dedicate their time and

energy to grow the knowledge level of SMEs. Based on their expertise

and professionalism, we are slowly getting closer to a world in which

knowledge is accessible to all, allowing SMEs to grow, create jobs,

and pass on their knowledge to future generations.

Thijs van Praag

CEO

‘PUM is helping my business make progress by improving both our skills and production methods.’Prakash Panta Flower grower in Nepal

PUM ANNUAL REPORT 2014 5

FACTS AND FIGURES 2014

Partners with whom we have MoUs and contracts

Customersserved

LEVEL OF SATISFACTION WITH PUM’S SERVICES

PEOPLE

IMPLEMENTED RECOMMENDATIONS 2014

36

96%

92%

78%

3110

259

134

52

1807

81%19%

Sta� members paid72% 28%

Sta� members volunteers11% 89%

Representatives volunteers35% 65%

Senior experts volunteers9.2% 90.8%

“How would you rate the usefulness of the recommendations of the expert?”

“How would you rate the (expected) results in relation to the costs you incurred for the expert?”

of recommen-dations have been fully or substantially implemented.

excellent/good

One or more men

53%

Agriculture & Horticulture

189

Building, Construction

& Trade

86

Business Consultancy

189

Chemical & Synthetic Materials

85

Publishing, Cross media

& Printing

41

Stockbreeding & Fisheries

228

Food & Beverages Production

211

Healthcare

63Metal

Industry

77

Transport & Logistics

24

Wood trade & Timber

processing

56

Tourism & Hotels & Catering

249

Textile & Leather

78

Trade

36

Vocational education &

Training

133

One or more women

22%

Shared by both women and men

25%

RESPONSIBLE FOR DAY-TO-DAY MANAGEMENT

ADVICE

TYPE OF MISSIONS

PROJECTS PER SECTOR

ACTIVITIES PER COUNTRY 2014

TOP 5 COUNTRIES BY NUMBERS OF PROJECTS

First time advice Follow-up advice

Number of advisory days donated by our volunteers

Value

27,199DAYS

SMEs

84%

Africa

756

Asia

523Latin America

334

Other

1%

% of SMEs served verses

‘enabling environment’-

missions

EUROS

30,114,990

€

Europe

287

TOTAL 1,900

Enabling Environment

15%

INDONESIA

117

PERU

63COLOMBIA

61SOUTH AFRICA

61

VIETNAM

75NEPAL

67

Government services &

Unions

6

Electro technical Industry &

Engineering

30

Energy, Water, Waste &

Environment/CSR

74

Banking & Insurance

31

Paper & Packaging

14


Partners with whom we have MoUs and contracts

Customersserved

LEVEL OF SATISFACTION WITH PUM’S SERVICES

PEOPLE

IMPLEMENTED RECOMMENDATIONS 2014

36

96%

92%

78%

3110

259

134

52

1807

81%19%

Sta� members paid72% 28%

Sta� members volunteers11% 89%

Representatives volunteers35% 65%

Senior experts volunteers9.2% 90.8%

“How would you rate the usefulness of the recommendations of the expert?”

“How would you rate the (expected) results in relation to the costs you incurred for the expert?”

of recommen-dations have been fully or substantially implemented.

excellent/good

One or more men

53%

Agriculture & Horticulture

189

Building, Construction

& Trade

86

Business Consultancy

189

Chemical & Synthetic Materials

85

Publishing, Cross media

& Printing

41

Stockbreeding & Fisheries

228

Food & Beverages Production

211

Healthcare

63Metal

Industry

77

Transport & Logistics

24

Wood trade & Timber

processing

56

Tourism & Hotels & Catering

249

Textile & Leather

78

Trade

36

Vocational education &

Training

133

One or more women

22%

Shared by both women and men

25%

RESPONSIBLE FOR DAY-TO-DAY MANAGEMENT

ADVICE

TYPE OF MISSIONS

PROJECTS PER SECTOR

ACTIVITIES PER COUNTRY 2014

TOP 5 COUNTRIES BY NUMBERS OF PROJECTS

First time advice Follow-up advice

Number of advisory days donated by our volunteers

Value

27,199DAYS

SMEs

84%

Africa

756

Asia

523Latin America

334

Other

1%

% of SMEs served verses

‘enabling environment’-

missions

EUROS

30,114,990

€

Europe

287

TOTAL 1,900

Enabling Environment

15%

INDONESIA

117

PERU

63COLOMBIA

61SOUTH AFRICA

61

VIETNAM

75NEPAL

67

Government services &

Unions

6

Electro technical Industry &

Engineering

30

Energy, Water, Waste &

Environment/CSR

74

Banking & Insurance

31

Paper & Packaging

14


‘PUM sends great people that are willing to share their knowledge

and experience with us’Danilo Yee

Owner of a construction company in the Philippines

Bert’s Formula

Bert van der Plas studied at the Technical University of Delft. He spent a great deal of his career working in the Middle East and in later years was the national director in the Netherlands of a large concrete manufacturer with some thirty companies in its group.

On arrival, Bert van der Plas found a highly antiquated concrete mixer, a cement storage location in an extremely dirty area that was all handled by manual labour, and the wrong grain ratio of sand and gravel. His conclusion: Danilo could improve the quality and bring down the cost price. Van der Plas: ‘They used a standard formula with far too much cement. In the Netherlands, everything has an optimum formula and you can align the cost price to this.’ Using a better formula has enabled Danilo to improve the quality of the concrete and increase the profit margin.

Danilo Yee is a contractor, an architect and an important local supplier of ready-mixed concrete. When he heard about PUM, he asked if there was an expert who could help him improve his formula for concrete. The goal: ‘to improve the production to such extent that it would be viable and profitable and would give him a good local competitive position.’ PUM sent Bert van der Plas to help.

The Filipino businessman was not only able to make use of Bert’s technical expertise, he also used Bert’s advice as a marketing tool by calling composition of his concrete Bert’s Formula. Danilo lets everyone know that a Dutch expert is involved in the concrete production. He is using the image of the West with its more advanced technologies to increase his customers’ confidence in his products.

On Bert’s advice, Danilo started building a concrete laboratory which was set up and fitted out in the right way. According to the PUM expert, owning his own concrete laboratory will not only improve the quality of production, but will also reinforce his market image.

DUTCH ADVICE FOR A CONSTRUCTION COMPANY IN THE PHILIPPINES


‘PUM made me realise the importance of procedures!’

Carlos Ochoa Owner of a printing company in Colombia

The power of procedures

The company’s original request to PUM was to study the business and advise on how the company could generate a better quality product, how work could be carried out more efficiently, and ultimately, of course, how to improve profitability.

PUM sent expert Chris van der Klugt. Chris has broad experience in the graphics industry, in particular in the production of self-adhesive products (stickers, labels, foil). He quickly saw what was wrong, or, to put it somewhat more positively, what could be improved: ‘There were serious problems with the quality of the product. There was a lot of product waste and so profitability was also suffering. There were many incidents during the production which reduced the speed of the production process. There was defi-nitely sufficient room for improvement: stacks of paper sheets were not straight, during the production process it was not possible to stack for a next stage of the production, there were inadequate quality controls, no tools for measuring quality were available, work order forms were difficult to understand and complete, etc.

A small printing company in Medellín produces a lot of small printed items: stickers, labels, ice cream cups and lids, boxes, etc. Their products find their way to the textile, cosmetics, foodstuffs and medical industries. In general the orders, and consequently the print-runs, are fairly small.

The expert convinced the businessman that writing work procedures was a must. Together, they gathered information from interviews with employees so that work procedures could be written. An additional procedure was also introduced: a daily meeting during which all reported production process incidents were allocated to a specific employee so that he could work on a structural, preventative solution. These different measures meant a completely different way of working.

On the day of departure, all stacks of paper were neat and straight, precisely as described in the first work procedure. The businessman who had initially confessed “I have hated procedures all my life!” said proudly: “Look at the power of procedures!”

ROOM FOR IMPROVEMENT AT A PRINTING COMPANY IN COLOMBIA


‘The training courses were perfectly timed for what we call “changing the

mindset” from poor brickyards to professional businesses.’

André de GrooteSEW Project coordinator and IFDC country representative in Burundi

Changing the mindset

It is not difficult to guess the consequences of using ‘too much wood’: deforestation and erosion, in short it’s a dead-end path. The Dutch government is therefore financing a cross-border project with Burundi, Rwanda and DR Congo. The intention is to manage and reduce wood consumption and replanting. Brickmakers should also be able to reduce their wood consumption.

Two PUM experts, both with knowledge of ceramics, were sent to provide assistance: A former TNO employee and a former lecturer at Fontys Hogeschool. They began by making an inventory during a tour through Burundi. There they saw how bricks were made: from freshly dug clay, with far too much water and in a simple metal mould, the brick-maker crouched on the ground and with a non-level ‘drying field’ next to them.

In consultation with IFDC and PUM, it was decided to design a course for brickmakers, policymakers and employees of technical institutions and people from the field of education. In the end, the

The International Fertilization Development Center (IFDC), which is active in Burundi, among other places, sent out a cry for help: “The brickmakers are using far too much wood! Could PUM send someone?” After an inventory mission, it was decided to set up an education mission whereby a selection of brickmakers and employees from the educational field and policymakers would be given additional training with the primary goal of reducing wood consumption.

course was held in three successive weeks for three groups of approximately 20 people from industry, the government and the educational field. Every group consisted of a mix of participants from Burundi, Rwanda and DR Congo. In a tight schedule from 8 to 5, the course included presentations and workshops, theory and practice.

The PUM expert: ‘It was a pleasure to note that a group of such a varying level (from brickmakers with no more than primary school education and a lot of experience to people with university training who knew virtually nothing about brick-making) could have a substantive discussion with each other.’ During a visit to the IFDC, he spoke with IFDC country representative, André de Groote. He praised the project in a subsequent email: I am very satisfied with the work provided by PUM. The two specialists have given a push at a high level. The training courses were perfectly timed for what we call “changing the mindset” from poor brickyards to professional businesses.

REDUCING WOOD CONSUMPTION IN BURUNDI, RWANDA AND DR CONGO


‘We strongly believe that SMEs have the potential to drive inclusive growth, by generating more income for people

living in poverty. We also believe that knowledge is an important driver of

SME growth. We are therefore pleased to work with PUM’s senior experts,

who share their knowledge with SMEs on a voluntary base.’

Nicholas ColloffExecutive Director, Argidius Foundation

Helping gazelles jump

Hydropower to grow coffee in HondurasA coffee processing company in Corquín, Honduras, requested advice on methods to decrease its processing costs. Since the company was located close to a river, and hydropower was an option to save energy costs, we deployed an expert who had extensive experience of the move to renewable energy in general, and hydropower in particular. This expert explored how a new energy system could be set up, and worked with the owner to adjust the process.

Increased shelf life of pastry in NicaraguaA bakery in Managua, Nicaragua, had problems with the shelf life of its products and many customers were returning the products. PUM sent an expert who had worked his entire life in a pastry produc-tion environment. He was able to, not only adjust the recipes of the products leading to a 50% increase in shelf life, but he also introduced a method to test the products’ shelf life. Moreover he gave

In 2013, PUM entered into a cooperation with the Argidius Foundation, aiming for turnover growth and the creation of full time jobs with high-potential SMEs (‘gazelles’) in Guatemala, Honduras and Nicaragua. As part of this cooperation, we undertook 45 advisory visits to SMEs in various sectors of the economy. In order to provide next-level advice, a quarter of the SMEs were visited more than once, often involving experts with adjacent areas of expertise. Some of our experiences have been described below.

advice on better packaging. The bakery is now putting aside the income for the extra turnover generated to purchase new machinery so that they can increase their production and profit levels.

More efficient operations for a restaurant in GuatemalaA restaurant in Tecpán, Guatemala, wanted to improve its operations and decrease its cost prices. The expert that was selected had worked in hospitality management his entire life. He recommended focusing on cost control for food and beverages, as well as on kitchen quality and hygiene. Furthermore, he worked on a sales and marketing plan together with the owner. The owner was very satisfied: “The transfer of knowledge by your experts is very valuable for our company, as well as for Guatemala”.

ARGIDIUS FOUNDATION IN NICARAGUA, HONDURAS AND GUATEMALA


‘Knowledge transfer from the Netherlands is crucial to fast-track

the development of the Kenyan dairy sector.’

Harm DuikerCountry Director for SNV Kenya


SNV IN KENYA

The joint collaboration addresses a number of key-systemic issues that farmer entrepreneurs in the Kenyan dairy sector encounter, including the knowledge gap in commercial fodder production, as well as in commercial dairy farming. The joint project works through so-called LCBs (local capacity builders) who are contracted by SNV and capacity-built by PUM’s senior experts to become full-fledged dairy and fodder advisors. The LCBs are Eldosirikwa Consultants and Perfometer Consultants. Through knowledge sharing and training with both farmers and LCBs, the project aims to enhance the efficiency, competitiveness and profitability of farm operations.

The cooperation between SNV and PUM ensures that a large number of farmer- entrepreneurs can be reached and that knowledge transfer is therefore efficient. SNV works with farmer study groups, associations or farmer platforms. SNV also helps these platforms to address policy issues such as access to new fodder seed varieties. Our senior experts have been instrumental in developing the

At the end of 2013, we signed a three-year Memorandum of Understanding (MoU) with SNV Kenya in the context of its Kenya Market-led Dairy programme (KMDP). 2014 marks the first year of this collaboration.

capacity and sustainability of Perfometer and Eldosirikwa as local dairy consultancy firms. Their staff received on-the-job training in Kenya and went for a one week training and exposure visit to the Netherlands. Perfometer and Eldosirikwa are now well on their way to become professional dairy consultants in their own right. Furthermore, our senior experts helped to create business links between Kenyan and Dutch dairy stakeholders, e.g. DFL, The Friesian, Uniform Agri and others.

Throughout 2014, SNV/PUM executed a total of 10 joint missions that were geared towards providing support to commercial fodder producers and medium-scale dairy farmers. Topics covered included animal husbandry, housing, feeding, land preparation and crop production, mechanisation, pasture management, and fodder preservation. The collaboration with SNV Kenya has been very successful so far. In 2015 and 2016, it will be continued and broadened so that it can mature and grow to its full capacity.

Addressing the knowledge gap in the dairy sector


PRIME

Measuring the effects of our advice

To develop an improved evaluation methodology for measuring the (socio-) economic effects of the advice offered to our customers, PUM entered into a partnership with a long-term partner in the field (CBI) and two universities (Wageningen and Rotterdam). 2014 was the second year of this partnership called PRIME. We expect real-time monitoring and evaluation systems to be operational in the course of 2015.

MethodologyIn 2014, the PRIME project team prepared a detailed document describing the methodology for the quantitative impact evaluation, using a cohort design. The methodology has been approved by the external Advisory Committee and considered a valid and appropriate approach to assess the effectiveness of private-sector support in small and medium enterprises (SMEs).

Data collectionThe questions and indicators to be collected by PUM and CBI have been harmonised with international research initiatives and defined in close coopera-tion with PUM and CBI monitoring staff. The data collection tools are in the process of being integrated in the respective M&E systems.


Data qualityData will be collected from different sources, both experts and SMEs, and checked for bias and consistency. In two countries, additional quantitative research will start with the International Trade Centre which will allow additional quality checks on the information collected in the M&E systems of CBI and PUM.

Data analysisIn 2014, the PRIME research team made a preliminary analysis of the PUM and CBI data that was available in their respective monitoring and evaluation systems. The data was collected until 2014 by the existing monitoring tools in PUM and CBI. The data has been used to compare the characteristics of SMEs supported by PUM and CBI and to identify any contex-tual conditions that influence performance. A survey will be used to complement the information on SMEs supported in 2013 and 2014 and that is needed for the impact evaluation methodology.

Case studiesDuring 2014, PRIME collected informa-tion on support interventions by PUM and CBI in Indonesia, Bolivia, Bangladesh and Peru. In each country, the focus is on one economic sector. The context, change process and enabling/disabling factors for effectiveness are assessed by interviewing SMEs and other stakeholders about their experiences.

More information about PRIME can be found at www.primepartnership.nl

WHAT IS PRIME?

PRIME is the acronym for Pioneering Real-time Impact Monitoring and Evaluation in SMEs.

PRIME is a partnership between the

Agricultural Economics Research

Institute (LEI Wageningen UR), the

Erasmus School of Economics (ESE),

the Centre for the Promotion of

Imports from Developing Countries

(CBI), and PUM. Its aim is to pioneer

impact evaluation methods of the

support provided to small and

medium enterprises in developing

countries. PRIME has been set up

to develop an approach to data

collection in order to track the

impact of PUM and CBI, while at the

same time giving both organisations

more insight into their interventions

and an opportunity to learn how

they might increase effectiveness.


SUMMARY STATEMENT OF FINANCIAL POSITION As at 31 December 2014

ASSETS in euros

FIXED ASSETS

Intangible fixed assets

Software in development 307,392

307,392

Tangible fixed assets

Hardware 71,508

Inventory 102,496

174,004

CURRENT ASSETS

Receivables

Subsidies to be received 163,756

Accounts receivables 233,216

Taxes and social security premiums 63,682

Other claims 211,225

671,879

LIQUID ASSETS 7,991,341

BALANCE SHEET TOTAL 9,144,616


LIABILITIES in euros

EQUALISATION ACCOUNTS

Equalisation funds (designated reserve) 492,848

Equalisation reserve (free reserve) 294,322

787,170

SHORT-TERM LIABILITIES

Advances received from sponsors 6,128,000

Subsidies to be repaid 731,414

Accounts payable 567,872

Taxes and social security premiums 502,692

Accrued expenses and deferred income 427,468

8,357,446

BALANCE SHEET TOTAL 9,144,616


SUMMARY STATEMENT OF OPERATIONSYear ended 31 December 2014

REVENUES in euros

Netherlands Ministry of Foreign Affairs, DGIS-DDE 9,872,145

Netherlands Ministry of Foreign Affairs, DGIS-DSO 536,193

Netherlands Ministry of Infrastructure and the Environment 12,463

Netherlands Ministry of Economic Affairs 30,733

Netherlands Ministry of the Interior and Kingdom Relations 13,675

Contribution of the Confederation of Netherlands Industry and Employers (VNO-NCW)

306,123

Contribution to volunteer services paid by applicants 265,936

Argidius Foundation 156,719

Donations to the Hans Blankert Fund 64,896

Interest 57,558

Liberty Foundation 25,000

CCHO 25,000

Corporates 18,915

FNV Mondiaal / CNV International 17,237

Other contributions 6,405

TOTAL REVENUES 11,408,997


EXPENSES in euros

Salaries of non-project staff 1,158,027

Housing costs 547,497

Office costs 90,911

ICT 257,366

General costs 153,801

TOTAL OVERHEAD 2,207,600

Salaries of project staff 1,490,834

Salaries of fundraising staff 307,713

Fundraising 30,287

Project development visits of country coordinators 547,323

Representatives acquisition costs 374,521

Communications 190,546

Regional marketing 46,049

Travel costs PUM management 41,479

Voluntary staff reimbursement 362,061

Internal training & meetings 107,305

Recruitment of experts 6,229

TOTAL INDIRECT COSTS 3,504,346 ›


EXPENSES in euros

Direct project costs 4,658,383

Representatives (expert care on site) 380,722

Business links 449,784

Hans Blankert Fund 216,857

TOTAL DIRECT COSTS 5,705,746

EQUALISATION ACCOUNT -8,695

TOTAL EXPENSES 11,408,997

› CONTINUED FROM PREVIOUS PAGE

NoteBoth summaries are translations of the audited statements that have been drawn up in Dutch, and of which original copies can be found at www.pum.nl


PUM Netherlands senior expertsBezuidenhoutseweg 12

P.O. Box 93078

2509 AB The Hague

The Netherlands

T +31 (0)70 349 05 55

F +31 (0)70 349 05 90

[email protected]

www.pum.nl

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