innovative approach to agribusiness dev in sub saharan africa
TRANSCRIPT
Technical Paper No. 80December 1997
SD Publication SeriesOffice of Sustainable DevelopmentBureau for Africa
Jim MaxwellRichard D. AbbottAbt Associates
Innovative Approaches toAgribusiness Development inSub-Saharan Africa
Volume 3: East Africa
Final Report
Productive Sector Growth and Environment DivisionOffice of Sustainable DevelopmentBureau for AfricaU.S. Agency for International Development
Innovative Approaches to AgribusinessDevelopment in Sub-Saharan Africa
Volume 3: East Africa
Final Report
Jim MaxwellRichard D. AbbottAbt Associates
Publication services provided by AMEX International, Inc.pursuant to the following USAID contract:
Project Title: Policy, Analysis, Research, and TechnicalSupport Project
Project Number: 698-0478Contract Number: AOT-C-00-96-90066-00
Technical Paper No. 80December 1997
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Contents
Foreword viiExecutive Summary ixGlossary of Acronyms and Abbreviations xiii
1. General Introduction to the Eight Country Study 1
1.1 Background 11.2 Objective 11.3 Analytical Issues to be Addressed 11.4 The AMIS II Approach to Agribusiness Development Research 11.5 Methodology 21.6 Limitations 31.7 Organization of the Innovative Project Reports 3
2. Introduction to the East Africa Study 5
Table 2.1 Size Distribution and Focus of Firms, Associations, and Projects Evaluated 6
3. Key East Africa Findings 7
3.1 Non-Traditional Agricultural Export (NTAE) Development 73.2 Association Development 83.3 Small and Medium Enterprise (SME) Development 83.4 Financial Services 93.5 Monitoring and Evaluation (M&E) 93.6 General Recommendations 103.7 Issues Deserving Further Study 11
4. Kenya 13
4.1 Entities Selected for Study 134.2 Findings on Projects 13
4.2.1 Kenya Export Development Services (KEDS) 134.2.2 Small Enterprise Professional Service Organization (SEPSO) 154.2.3 Kenya Management Assistance Program (K-MAP) 15
4.3 Findings on Associations 164.3.1 Kenya Small Scale Farmers Association (KESSFA) 164.3.2 Agribusiness Association of Kenya (AAK) 164.3.3 Fresh Produce Exporters Association of Kenya (FPEAK) 17
4.4 Findings on Development Finance Organizations 174.4.1 Kenya Trust for Private Enterprise (KTPE) 17
4.5 Findings on Private Agribusiness Firms 184.5.1 Karzan Inc. 184.5.2 Lonrho 184.5.3 Standard Charter Estate Management (SCEM) 184.5.4 Echuka Farms 18
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4.6 Lessons Learned and Implications for USAID Planning 184.6.1 Non-Traditional Agricultural Export Development 194.6.2 Association Development 194.6.3 Small and Medium Enterprise Development 214.6.4 Financial Services 214.6.5 Monitoring and Evaluation 224.6.6 General Recommendations 224.6.7 Key Issues Deserving Further Study 23
Table 4.1 Kenya Innovative Projects and Their Areas of Focus 14
5. Uganda Overview and Analysis 25
5.1 Entities Selected for Study 255.2 Findings on Projects 25
5.2.1 Agricultural Non-Traditional Export Promotion Project (ANEPP) 255.2.2 Cooperative Agriculture and Agribusiness Support Project (CAAS) 275.2.3 Silk Sector Development Project 28
5.3 Findings on Associations 295.3.1 Uganda Oilseed Processors Association (UOSPA) 295.3.2 Uganda National Farmers Association (UNFA) 305.3.3 Uganda Vanilla Growers and Processors Association (UVGPA) 305.3.4 Uganda Manufacturers Association 305.3.5 Uganda Grain Exporters Association 315.3.6 Uganda Horticultural Association 31
5.4 Findings on Development Financing and Technical Assistance Organizations 325.4.1 Development Finance Corporation of Uganda (DFCU) 325.4.2 Africa Project Development Facility (APDF Uganda) 325.4.3 Volunteers in Overseas Cooperative Assistance (VOCA) 33
5.5 Findings on Private Agribusiness Enterprises 335.5.1 Agro Management Group Inc. 335.5.2 Ziwa Horticultural Exporters Ltd. 345.5.3 Harriet’s Flowers 35
5.6 Lessons Learned and Implications for USAID Planning 355.6.1 Non-Traditional Agricultural Export Development 355.6.2 Association Development 365.6.3 Small and Medium Enterprise Development 375.6.4 Financial Services 385.6.5 Monitoring and Evaluation 385.6.6 General Recommendations 395.6.7 Issues Deserving Further Study 40
Table 5.1 Uganda Supported Activities and Their Areas of Focus 26
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Appendixes
Appendix A Detailed Project Assessments 43Appendix B Association Profiles 63Appendix C Development Financing Organizations 73Appendix D Private Enterprise Profiles 77Appendix E Bibliography 83Appendix F List of Persons Interviewed 85
Notes 89
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Foreword
The creation of the Development Funds for Africa(DFA), and, more recently, funding contraints havechallenged the U.S. Agency for International Devel-opment (USAID) to scrutinize vigorously the effec-tiveness and impact of its development assistanceprograms in Africa and to make adjustments neededto improve on the record of the past. Structural Ad-justment programs have been adopted by many sub-Saharan African countries, albeit reluctantly, and somesignificant economic development progress has beenmade. As donor agencies face severe cutbacks andrestructuring of their own and as less assistance be-come available to developing countries, in sub-Sa-haran Africa and elsewhere, new ways must be foundto channel the declining resources to their most effec-tive and productive uses. Donor agencies like USAID,therefore, are increasingly looking at the private sec-tor for new and innovative ways of improving com-petitiveness, and often to agriculture as the potentialcatalyst for generating broad based, sustainable eco-nomic growth. In the light of the DFA and sub-Saharan African countries’ recent development expe-riences under Structural Adjustment Program, theUSAID Africa Bureau’s Office of Sustainable Devel-opment, Division of Productive Sector Growth andEnvironment (formerly ARTS/FARA), has been ex-amining the Agency’s approach to the agriculturalsector.
In January 1991, the Africa Bureau adopted “AStrategic Framework for Promoting AgriculturalMarketing and Agribusiness Development in sub-Saharan Africa” to provide analytical guidance toUSAID/W, REDSOs, and field missions. The frame-work suggested that:
(a) while technical and environmental problems mustcontinue to be addressed, a major cause of poorperformance of the agricultural sector has beenthe inefficiency of the market structures and strat-egies;
(b) improvements in marketing efficiency require agood understanding of the structural arrange-ments, organization and operating strategies avail-able to those entrepreneurs who constitute themajority of the business entities;
(c) such improvements could have a significant ben-eficial impact on incomes, foreign exchange earn-ings, domestic consumption and food security.
To enhance the analytical guidance and technicalsupport that the African Bureau provides to the field,SD/PSGE initiated a series of assessment of donoragencies’ innovative agribusiness projects in a num-ber of sub-Saharan Africa countries to develop casestudies of agribusiness firms targeted by or benefit-ting from these projects. The objective of the assess-ments was to provide the Africa Bureau and FieldMissions with an understanding of the role and sig-nificance of new, innovative agricultural marketingand agribusiness programs being implemented, andto synthesize a cogent set of lessons learned and theirimplications for USAID agribusiness project designand implementation.
This document is Volume 3 of a five-volume setpresenting the East Africa (Kenya and Uganda) re-search findings. The East Africa research addressedall of the key focus areas of Non-traditional Agricul-tural Exports Development, Association Development,Small and Medium Enterprise Development, Finan-cial Services to Agribusinesses and Monitoring andEvaluation.
Abt Associates, under the Global Bureau’s AMISII project, conducted the field research and reportpreparation. The USAID field mission in each coun-try collaborated with PSGE/PSD and Abt Associates,the contractor, and was particularly helpful in provid-ing counsel and direction of the field research andreviewing of the field draft report.
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SD/PSGE believes that the findings and recom-mendations of this report will help the Africa Bureau,field missions, host country governments, and pri-vate sector groups make more informed decisions onfuture project design, implementation, monitoring,and evaluation.
David AtwoodChief, Productive Sector Growthand Environment DivisionOffice of Sustainable DevelopmentAfrica BureauUSAID
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Executive Summary
USAID Missions, and to a lesser extent other donors,are designing and implementing agribusiness pro-grams intended to develop more efficient agriculturalproduct marketing systems. USAID does not yet haveeffective monitoring and evaluation mechanisms forthese recently established programs nor have the les-sons learned from these innovative projects been dis-seminated to Missions.
The Africa Bureau’s SD/PSGE Division there-fore requested the Agribusiness and Marketing Im-provement Strategies II (AMIS II) project to imple-ment an activity titled “Innovative Approaches toAgribusiness Development in Sub-Sahara Africa.”The purpose of this activity was to assess donoragencies’ innovative agribusiness projects in a num-ber of Sub-Saharan Africa (SSA) countries and todevelop case studies of agribusiness firms targetedby or benefiting from these projects. The objective ofthe activity is to provide the Africa Bureau and FieldMissions with an understanding of the role and sig-nificance of new, innovative agricultural marketingand agribusiness programs being implemented, andto synthesize a cogent set of lessons learned and theirimplications for USAID agribusiness project designand implementation.
The AMIS II project was established to provideUSAID with access to private sector commercial ex-pertise that would help improve agribusiness market-ing. The major focus of AMIS II is to stimulate inputsupply and postharvest-based, private sector led, eco-nomic development. The AMIS II approach is to ad-dress agribusiness marketing efficiency and effec-tiveness improvement, and agribusiness project impactmeasurement and evaluation, from a commercial per-spective. This report is therefore more prescriptiveand less descriptive than a typical USAID documentand is based on the expert judgments of analysts withextensive private sector operating experience.
The methodology utilized for this activity con-sisted of the following four basic steps: (1) identifyand select Key Focus (apparent high-opportunity)Areas for research based on current USAID interestsand the anticipated potential to positively affect agri-business development. The four Areas chosen —based on a literature review, interviews in Washing-ton, and a field survey — were non-traditional ag-ricultural exports (NTAE) development, associa-tion development, small and medium enterprise(SME) development, and financial services to agri-business; (2) select projects relevant to activity ob-jectives and the Key Focus Areas that are sufficientlydeveloped to at least start yielding lessons learnedbased on an initial field trip and discussions withMission and Bureau managers, select field researchcountries (for this report Kenya and Uganda) basedon the location of these projects; (3) complete a sec-ond field trip to collect detailed information on theselected projects and do case studies on target benefi-ciaries, primarily via in-depth interviews with projectmanagers, donor management, and beneficiaries; and(4) analyze the information collected, extract lessonslearned, and suggest the implications for enhancingthe design, implementation, and monitoring and evalu-ation of USAID agribusiness projects.
The entire Innovative Approaches project hastwo phases. Phase I, this report, covers East Africaand Phase II covers West Africa, Southern Africa,and three secondary literature studies. Innovative Ap-proaches research findings are reported in separatevolumes for East Africa (Kenya and Uganda), South-ern Africa (Zimbabwe, Mozambique, and Tanzania),and West Africa (Ghana, Mali, and Senegal). Therewill also be separate volumes reporting on the Sec-ondary Research Findings and Overall Project Sum-mary and Conclusions.
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EAST AFRICA FINDINGS SUMMARY–BY KEY FOCUS AREA
Non-Traditional Agricultural Exports (NTAE)Development
The greatest impact from scarce USAID resourceswill be achieved when NTAE projects focus supporton a few high-potential, medium-sized firms partici-pating in high-potential product lines, as determinedby subsector market opportunity assessments. An op-erating constraints analysis will help identify andprioritize NTAE development constraints for export-ing firms. Guidelines need to be developed for thesestudies.
Technical Assistance to exporters should strike abalance between high-value (e.g., pre-pack horticul-tural products) and lower-value (e.g., cleaned andgraded pulses) items in order to mitigate risk andmaximize export earnings. High-value/value addedexports are more complicated, more capital intensive,and entail significantly higher risks; exporters shouldbe encouraged and supported to optimize value added— due to the potential for higher returns — by pro-cessing and/or packaging their products. This can bea way to utilize product that does not meet freshexport standards and to employ a significant quantityof local labor. The highest grade product should beexported to developed country markets, and goodquality second-grade product to high purchasing powerregional markets and then to urban domestic markets.
Association Development
Planners of business association development projectsmust determine if the conditions exist for associationsuccess and what type of programs are needed tostimulate that success. Association success criteriaare: (1) strong leadership with a long-term commit-ment, (2) leadership that is trusted by members, do-nors, and government, (3) minimal government influ-ence, and (4) a clear and relatively narrow focus.Associations will only become self- sustaining if theyare effectively and efficiently serving their members’priority needs. A minimum score on an annual mem-bership satisfaction survey, conducted by a third party,
should be a condition for continued donor support ofan association’s. Guidelines need to be developed toassess an association’s potential for success and tomonitor how effectively an association is serving itsmember’s priority needs.
Training on how to manage associations, especiallyfinancial management and how to develop or adaptprograms that respond to members’ evolving needs, is ahigh-yield donor contribution to association develop-ment. Therefore, management training should be a com-ponent of USAID programs to assist associations.
Well-focused and well-managed associations canbridge the gap between small farmers/agribusinessfirms and the complexities of NTAE markets. Self-Help Groups (SHGs) of smaller farmers and/or entre-preneurs, who in turn belong to a donor-assisted as-sociation, are a good way to leverage scarce donorTA and financial resources.
Matching grants for association (or other institu-tional) development activities are an effective way tostimulate member involvement and commitment.
Small and Medium Enterprise (SME)Development
The two most important constraints on SME devel-opment are their (1) lack of marketing expertise and(2) minimal knowledge of sources of financial assis-tance (especially working capital) and how to applyfor them. Donor assistance should concentrate onthese two areas.
SHGs composed of SMEs can be linked to largeenterprises, which can provide the SMEs with inputs,technical assistance, and markets. To be successful,however, the development and sustenance of these link-ages requires intensive, hands-on management assis-tance by donors or donor-supported intermediaries.
The conditions for successful smallholder partici-pation in NTAE are: (a) niche markets where producershave very few alternative buyers for their output, (b) lowcapital but high labor intensity, (c) a full-service localexporter who supports the business, and (d) a well-established international market with experienced buyer/exporters. Investing project resources in niche marketstartup industries is risky and very expensive.
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Financial Services to Agribusiness
The major constraints to agribusiness lending by finan-cial institutions are the shortage of commercially viableprojects and poor loan and investment “packaging” bythe borrower, not the lack of available funds. Therefore,technical assistance should be a part of any donor-supported agribusiness finance project and should in-clude support for at least business plan development andloan or investment “packaging.”
Donors can help SMEs identify and apply for sourcesof financing, especially working capital, at a reasonablecost by providing the services of specialized local busi-ness consultants to appraise and “package” small projects.Normal collateral requirements for SME loans can berelaxed if the loan officer has a good understanding ofthe commercial requirements of the applicant’s businessversus a strict Profit & Loss/Balance Sheet orientation.Full cost recovery for SME (and certainly micro) finan-cial services is very difficult.
To achieve a high repayment ratio, a rigorous appli-cation appraisal by the lender (a feasibility study if theproject is large enough to support the cost) is necessary,and the borrower should supply a minimum of 50 per-cent of the equity in the venture. In many cases, it isadvisable for the lending institution to make direct pay-ment from loan proceeds to the major suppliers of equip-ment to avoid misuse of the borrowed money.
Monitoring and Evaluation (M&E)
USAID M&E is in an early stage of development, butis more advanced than that of most donors. Substan-tial opportunity exists for enhancing USAID M&E,especially as related to direct and indirect impact byproject component and type beneficiary, and costversus benefit analysis.
Progress toward financial self-sustainabilityshould be one of the main measures of performancefor projects providing support to associations. Be-cause the ability to manage cash flow is typicallyweak in associations, the development and monitor-ing of a Sources and Uses of Funds schedule is animportant performance evaluation tool.
How extensively agribusiness project managersuse private sector advisors and the impact of their
contribution on a project should be monitored andevaluated. Private sector line managers, both expatri-ate and local, should be used more extensively byUSAID Missions in the design and monitoring ofagribusiness development projects, because they havea much better perspective on the challenges and op-portunities private firms face than do government(direct or indirect) employees. Direct, local businessexperience is likewise important in helping to priori-tize and pursue policy reform issues related to privatesector development.
More random beneficiary sampling should beused and results presented by type beneficiary. Cur-rent beneficiary selection methodology may bias re-sults. Impact by type beneficiary will help determinecomparative yield on donor resources.
General Recommendations
Semiannual project review forums (½ day with abroad group of beneficiaries, local government offi-cials, and private sector representatives; ½ day withthe project team) should be used to coordinate projectactivities, improve their effectiveness, and enhance afeeling of local “ownership” of the project.
Many of the NTAE, SME and financial servicesdevelopment objectives and constraints identified in thisactivity can be addressed by integrating effective andfocused technical and managerial assistance with debtand equity financial services in a single entity — a Foodand Agribusiness Development Center (FADC). Ini-tially donor and/or government funded, the FADC wouldbe structured to become self-sustaining by income de-rived from services fees, a “spread” on debt, and entre-preneur or investor equity buy-backs. The FADC wouldbe focused on supporting agribusiness enterprises inidentified high opportunity subsectors and overcomingthe priority constraints they face. Identifying and devel-oping effective and efficient intermediary organizations(e.g., associations, Food and Agribusiness DevelopmentCenters, or NGOs/PVOs) is essential for leveragingscarce project resources.
Government approval and support for agribusinessprojects are essential, but implementation should beindependent of direct government involvement sincethe private sector generally prefers an “arms length”
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relationship with government, and government involve-ment in implementation will slow progress.
Key Issues
How effective is most general market information?Large firms say they don’t need or use it, and smallfirms don’t know how to use it. There is a need todevelop effective ways to measure the usage of mar-ket information versus the cost of providing it, espe-cially by type of information and type of user.
Is broad-gauged baseline monitoring data reallynecessary? Consider measuring the progress of as-sisted firms, and the associated indirect benefits, as asatisfactory way to determine the impact of a project.
How can the potential be optimized for outgrower/contract grower schemes on the model of the silk andvanilla projects in Uganda, schemes that have suc-cessfully reached out to both small farmers and
women? The specific success criteria and methodsfor developing sustainable outgrower schemes, espe-cially for specialty NTAEs, need to be determined.
What is the best and most efficient way to measurethe full social and economic impact of support to large-scale enterprises (e.g., the Ziwa Roses project inUganda)? Because USAID economic development ob-jectives include increasing broad-based income, em-ployment, and foreign exchange generation, these maybe most efficiently achieved through support to mediumand large firms. A comparative impact assessment isneeded to respond to criticisms of this type of assistance;that is supporting the “big guys” who appear to need itleast. Therefore, there is a need to determine the com-parative primary and secondary impact of support formedium and large versus micro and small enterprises,including a cost/benefit analysis.
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ADO Agricultural Development Officer
AAK Agribusiness Association of Kenya
AMIS II Agribusiness and Marketing Improvement Strategies
ANNEPP Agricultural Non-traditional Exports Promotion Program
APDF African Project Development Facility
CAAS Cooperative Agriculture and Agribusiness Support Project
CDC Common Wealth Development Corp.
DFCU Development Finance Company of Uganda
EDF Economic Development Fund
EPADU Export Policy Analysis and Development Unit
FADC Food & Agribusiness Development Center
FPEAK Fresh Produce Exporters Association of Kenya
GED German Development Corp.
HCDA Horticultural Crops Development Authority
HR Human Resources
IESC International Executive Service Corps
IFC International Finance Corporation
IPC Investment Promotion Centre
IPS Industrial Promotion Service Ltd.
IRR Internal Rate of Return
K-MAP Kenya Management Assistance Program
KARL Kenya Agricultural Research Institute
KEDS Kenya Export Development Support Project
KEM Kenya Equity Management
KESSFA Kenya Small Scale Farmers Assn.
KSPX Kenya Small Producers Exchange
KTPE Kenya Trust For Private Enterprise
M&E Monitoring and Evaluation
NGO Non-Government Organization
Glossary of Acronyms and Abbreviations
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NTAE Non-traditional Agricultural Export
OCA Operational Constraints Analysis
OCAP Operational Constraints Analysis Project
ODA Overseas Development Administration
P & L Profit & Loss Statement
PTA Preferential Trade Area
PVO Private Voluntary Organization
REDSO Regional Economic Development Support Office
SCEM Standard Chartered Estate Management
SD/PSGE Sustainable Development/Productive Sector Growth & Environment
SEPSO Small Enterprise Professional Service Organization
SHG Self-Help Group
SME Small and Medium Enterprise(s)
SSA Sub-Sahara Africa
SWOT Strengths, Weakness, Opportunities & Threats
TA Technical Assistance
TBD To Be Determined
UCA Uganda Cooperative Alliance
UDC Uganda Development Corp.
UGEA Uganda Grain Exporters Assn.
UHA Uganda Horticultural Assn.
UMA Uganda Manufacturing Association
UNFA Uganda National Farmers Assn.
UOSPA Uganda Oilseed Processors Assn.
USAID United States Agency for International Development
USPA Uganda Silk Producers Assn.
UVAN Uganda Vanilla Corp.
VOCA Volunteers in Cooperative Assistance
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1. General Introduction to theEight Country Study
1.1 BACKGROUND
USAID Missions, and to a lesser extent other donors,are designing and implementing programs with theobjective of developing more efficient agriculturalproduct marketing systems. The Africa Bureau’s Ag-ricultural Marketing and Agribusiness DevelopmentStrategic Framework calls for examining marketingconstraints and identifying ways to improve market-ing efficiency. USAID does not yet have effectivemonitoring and evaluation mechanisms for recentlyestablished agribusiness development programs norways to disseminate the lessons learned from theseinnovative projects to Missions in other countries.
USAID’s Africa Bureau therefore requested theAgribusiness and Marketing Improvement Strategies(AMIS II) project to carry out surveys of innovativeagribusiness projects in a number of Sub-SaharanAfrica (SSA) countries for the purpose of providingthe Bureau and Field Missions with: (a) a compilationof lessons learned to assist in developing future mar-keting and agribusiness development activities and(b) an effective monitoring/evaluation mechanism forits present and future activities. The complete Termsof Reference for the study are included as AppendixE to this report.
1.2 OBJECTIVE
“The objective of this research activity is to increaseunderstanding of the role and significance of new,innovative agricultural marketing and agribusinessprograms that Missions are implementing, and tosynthesize a cogent set of ‘lessons learned.’ In an eraof scarce development resources it is primordial thatdesign innovations and project successes be dissemi-nated rapidly and replicated elsewhere. As agribusi-ness development projects have grown more com-
plex, the need for monitoring and evaluation has risenaccordingly. The research activity will focus on twocategories of innovative programs to support agricul-tural marketing development: supporting services andinstitutions; and financial systems and services.”1
1.3 ANALYTICAL ISSUES TO BEADDRESSED
The research activity calls for the consultant to moni-tor in the targeted countries the impact of new andinnovative programs implemented by any donoragency and to carry out case studies of agribusinessfirms targeted by a project or benefiting from a project.
As called for in the Statement of Work refer-enced above, the major analytical issues to be ad-dressed are:
(1) What are the major constraints that the programor mechanism was designed to address?
(2) What are the performance indicators to measureimpact and how do they relate to the goal andpurpose of the mechanism/project?
(3) What has been the effect of the mechanism/projecton private sector investment levels, export pro-motion, and people-level impacts?
1.4 THE AMIS II APPROACH TOAGRIBUSINESS DEVELOPMENTRESEARCH
The AMIS II Project was designed to provide USAIDaccess to private sector commercial expertise thatwould help improve agribusiness marketing efficiency.
The major focus of the project is on stimulatingprivate sector led economic development, not onenabling environment enhancement or social develop-
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ment. Although enabling environment enhancement/social development is an important aspect of eco-nomic development, the AMIS II project addresses itonly when it acts as a constraint to commercial devel-opment. AMIS II focuses primarily on the provisionof inputs to production agriculture and all aspects ofagriculture after the farm gate. The project does notlook at production agriculture issues unless so dic-tated by market requirements. The project utilizes amarket led or demand pull approach.
The AMIS II approach is to address agribusinessmarketing efficiency improvement and agribusinessproject impact measurement and evaluation from acommercial/analytical perspective. Thus the report ismore prescriptive in nature and less descriptive thana typical USAID project report. In other words, itdeals more with the “so what?” and less with the“what’s so” of agribusiness development activities.
The principal authors of this report (Maxwell andAbbott) are first and foremost agribusiness opera-tions and consulting professionals with between themmore than 50 years of international private sectorfood and agribusiness development experience, muchof which was gained while living and working out-side the United States. Most of this experience was inmanagement positions with leading food, agribusi-ness, and agribusiness supply firms such as BeatriceFoods, ConAgra, Cargill, and FMC, and was focusedon business expansion and market entry in develop-ing countries.
Maxwell currently works for Cargill TechnicalServices, which reports to the head of Cargill Africa.Cargill’s Africa operations include 15 agribusinesseslocated in 8 different African countries.
The result of the above orientation is a presenta-tion style that is not academic (replete with numerousfootnotes or citations) but crisp, authoritative, andjudgmental. It is based on the authors’ intimate andextensive knowledge of agribusiness firm operations,investor/financier perspectives, and their significantbusiness development/market entry consulting expe-rience. Therefore, the presentation style used hereinutilizes pointed observations and represents the bestbusiness judgment of highly experienced and suc-cessful practitioners.
1.5 METHODOLOGY
The methodology adopted by the AMIS II team forthis activity consisted of the following steps:
1. Identify and select Key Focus (apparent highopportunity) Areas for research based on majorareas of current USAID interest and the antici-pated potential of a key focus area to positivelyaffect agribusiness development. The four areaschosen — based on a literature review, inter-views in Washington, and a field survey — werenon-traditional agricultural exports, associa-tion development, small and medium enter-prise (SME) development, and financial ser-vices. The first three fall into the category of“supporting services,” as mentioned in projectobjectives (see Section 1.2), while the fourth re-lates to the second category — financial systemsand services. As part of this effort, the consult-ants reviewed the procedures used by the Mis-sions and made recommendations to improve them(as called for in “Analytical Issues,” Section 1.3above).
2. Conduct a literature search on all identifiableUSAID and other donor-supported agribusinessprojects in SSA countries. (See Appendix F for alist of documents reviewed.)
3. Based on (1) and (2) above, select the SSA coun-tries that have agribusiness projects or activities,sponsored by any donor, that relate to the KeyFocus Areas. Solicit USAID Mission support towork in those countries that have both relevantprojects and activities and sizeable agribusinesssectors.
4. Arrange and complete an initial field trip to coun-tries where USAID Missions invited the consult-ants to work, and that have apparently relevantagribusiness projects and activities being imple-mented. Collect additional information on theselected projects and on any others suggested byfield personnel. Confirm mission and REDSO-level Key Focus Area interest.
5. Screen the identified projects or activities and
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select those that have aspects relevant to projectobjectives and to the Key Focus Areas and arethat sufficiently developed to start yielding les-sons learned.
6. Arrange and complete a second field trip to col-lect detailed information on the most relevantprojects and do case studies on target beneficia-ries, primarily via in-depth interviews with projectmanagers, donor management, and beneficiaries.
7. Analyze the information collected, extract les-sons learned, and suggest the implications forenhancing the design, implementation, and moni-toring and evaluation of USAID agribusinessprojects.
1.6 LIMITATIONS
Research was limited to the countries that respondedpositively to the SD/PSGE request for collaboration.The contractor invested considerable time obtainingpermission from Missions to travel to their countries.
USAID has been the only donor interested inagribusiness development and this interest is quiterecent. Therefore there are very few USAID projectswith a sufficient track record for in-depth evaluation(i.e., any results are very short term in nature). Veryrecently, the World Bank and some German donorfoundations have focused on private sector develop-ment, which often includes agribusinesses.
At the request of the Africa Bureau, a significantportion (17 percent) of the budget for this activitywas allocated to the evaluation of a credit project inMali that was not directly related to project objec-tives. This evaluation was well accepted by the MaliMission, but was not in the original budget and didtake resources away from this (Innovative ApproachesI) undertaking.
1.7 ORGANIZATION OF THEINNOVATIVE PROJECTREPORTS
The entire Innovative Approaches project has twophases. Phase I, this report, covered East Africa and
Phase II added West Africa, Southern Africa, andthree secondary literature studies.
Innovative Approaches research findings are re-ported in separate volumes for East Africa (Kenyaand Uganda), Southern Africa (Zimbabwe,Mozambique, Tanzania), and West Africa (Ghana,Mali, and Senegal). There will also be separate vol-umes reporting on the Secondary Research Findingsand Overall Project Summary and Conclusions.
Each of the regional reports are organized asfollows:
n Introduction
n Key Regional Findings (organized by the fourareas of focus plus monitoring and evaluation,general recommendations, and issues deservingfurther study)
n Country Specific Studies (separate chapters)
— Entities/Case Studies Selected
— Findings on Donor Projects
— Findings on Associations
— Findings on Development Finance Orga-nizations
— Findings on Private Agribusiness Firms
— Lessons Learned and Implications forUSAID Planning — organized by thefour areas of focus plus monitoring andevaluation, general recommendations,and issues deserving further study
Findings on the larger projects and associationswere tabulated in matrix format, responding to thespecific research questions listed in the Scope ofWork. These matrices are included in appendices tothe reports. The research questions, as interpreted bythe consultants, are as follows:
1. What project or activity objectives are relevant tothe areas of focus chosen for study?
2. How are these aspects of the activity innovative?
3. What performance indicators were or are beingused to monitor/measure impact of the activity?
4. How are external influences being managed?
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5. How successful have the relevant interventionsbeen?
6. What new agribusiness opportunities haveresulted from the activity?
7. What monitoring and evaluation mechanisms,systems, and indicators can be suggested?
8. What relevant lessons can be learned from thisactivity? What mechanisms worked and did notwork, and how could the impact be improved/enhanced?
9. What are the relevant implications for USAIDproject design and implementation?
10. What new mechanisms or interventions can besuggested to increase the effectiveness of theseprojects or activities?
11. What indicators of project success can besuggested, and what is the best way to monitorthose indicators?
12. What other useful information should bereported and what are the main unresolvedissues?
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2. Introduction to theEast Africa Study
Individuals representing entities from a broad rangeof sizes and stage of participation in the food systemwere interviewed during the fieldwork in Kenya andUganda. A list of these individuals appears in Appen-dix G; the entities they represent are categorized inTable 2.1. With respect to the table, please note that:
n The focus of this project is on quadrants V, VI,VIII, IX, XI, and XII.
n In general, the viability of commercial entitiesdeteriorates from the top right quadrant (III) tothe bottom left (X), with commercial, project,and association risks increasing (due to the va-garies of nature, lack of management capacity,and tighter margins) in a very similar manner.
n One objective of this project is to identify, basedon lessons learned, sustainable interventions thatwill make agribusiness ventures more viable andvibrant, particularly in quadrants V, VI, VIII, andIX. However, very few firms, projects, or asso-ciations were identified in quadrants VI and IX.
n All firms shown in the matrix were interviewedbut not all are profiled herein (e.g., House ofManji and Sega Farms are very large operationsnot directly relevant to this study). However,executives from these firms are board membersof the associations profiled.
6
Table 2.1 Size Distribution and Focus of Firms, Associations, and Projects Evaluated
Enterprise Size
Tier 1> 100 full-timeemployees:Established exporter
Tier 2a10 - 100full-time employees:New exporters (or notexporting at All)
Tier 2b10 - 100full-time employees:Established exporters
Tier 3 (SMEs)< 10 full-timeemployeesNew or interested inexporting
Production Agricul-ture
Quadrant IStandard CharteredEstate Mgt. (K)
Quadrant IVEchuka Farms herbs &vegetables (K)
Quadrant VII
Quadrant XKESSFA (K)CAAS (U)Natl. Farmers (U)
Agribusiness
Quadrant IILonrho (K)Sega Farms (K)House of Manji flourmilling (K)AAK (K)
Quadrant VEchuka Farms yoghurt(K),Ziwa Roses (U)ANEPP (U)Ronco (U)KTPE (K)Uganda Hort. (U)VOCA (U)
Quadrant VIIIKEDS (K)K-MAP (K)Karzan (K)Uganda Grain Export-ers (U)
Quadrant XISEPSO (K)Vanilla & Silk Projs.(U)Oilseed Processors (U)Harriet Ssali (U)
High Value-AddedProcessing
Quadrant IIIFarmers Choice (K)House of Manji bakery(K)UMA (U)DFCU (U)APDF (U&K)
Quadrant VI
Quadrant IX
Quadrant XII
(K) Kenya
(U) Uganda
Firms are boldfaced; projects are in italics; associations are underlined. Classifications are based on the majorityof the entity’s focus.
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3. Key East Africa Findings
Key findings from the Kenya and Uganda analysesand case studies are presented in this section underthe four key areas of focus, plus findings on monitor-ing and evaluation. The statements combine “lessonslearned” and “implications” from Chapters 4 and 5 ofthis report and are designed to provide guidance toUSAID planners. These statements are based on theexperience of the entities/projects studied in Kenyaand Uganda and on the analyses carried out by theconsultants. Two final sections include general rec-ommendations and issues deserving further study.
3.1 NON-TRADITIONALAGRICULTURAL EXPORT(NTAE) DEVELOPMENT
NTAE are usually defined as exports of agriculturalproducts that have historically not been producedand/or exported from the exporting country. In Kenyaand Uganda these are primarily fresh flowers andvegetables marketed to European countries.
(1) The greatest economic impact from NTAE ac-tivities, both in terms of increasing direct incomeand employment as well as indirect benefits, willcome from assistance focused on established,medium-sized firms (those with 50 to 100 em-ployees). These firms tend to be the ones with areasonable level (e.g., the 50 percent discussedelsewhere) of equity to invest, trained and expe-rienced staff, and reasonable market knowledge.
(2) Given that resources are scarce and assuming thatthe enabling environment is sufficiently supportive,USAID projects should focus support on a fewhigh-potential, medium-sized firms, as determinedby subsector market opportunity studies. Guide-lines need to be developed for these studies.
(3) Flexibility and quick response must be featuresof USAID projects assisting an embryonic NTAEsector because of the rapidly changing condi-
tions that characterize export markets.
(4) Intensive technical assistance (TA) to individualmicro (<5 employees), and to a lesser extentsmall (5–50 employees), exporting enterprises isa sub-optimal use of increasingly scarce USAIDresources. These enterprises tend to have a veryhigh drop-out rate and are unlikely to reach thepoint where they can pay for such services. Thesetypes of firms need to be grouped in some way,such as in an association. (See comments in Sec-tion 3.2 below.)
(5) TA to exporters of fresh produce should strike abalance between high-value (e.g., pre-pack hor-ticultural products), and lower-value (e.g., cleanedand graded pulses) items in order to mitigate riskand maximize export earnings. Higher value (orvalue-added) exports are more complicated, morecapital intensive, and have significantly higherrisks. However, exporters should be encouragedand supported to optimize value added — due tothe potential for higher returns — by processingand/or packaging their products. This not onlycan be a way to utilize product that does not meetfresh export standards, but also can reduce theneed for refrigerated storage and shipping (highvalue/low weight) and thereby minimize air freightcosts. Therefore, the highest grade product shouldbe exported to developed country markets, andquality second-grade product to high purchasingpower regional markets and then to urban domes-tic markets, third-grade product where appropri-ate and feasible should be processed (whereeconomy of scale opportunities exist) and fourth-grade used for animal feed.
(6) TA to producers (farmers) for non-traditionalcrops is best supplied by highly focused servicesprovided by exporting firms that market the prod-uct, or by well-designed donor-supported projects,rather than by government agencies that have amuch lesser understanding of market require-
8
ments and often outdated technology.
3.2 ASSOCIATION DEVELOPMENT
Associations may be groups of (a) processors in aparticular agribusiness subsector, (b) general or spe-cialized exporters, producers (farmers), or (c) somecombination of the two.
(1) Planners of association development projects mustdetermine at the outset if the conditions exist forassociation success and what type of programsare needed to stimulate that success. Associa-tions are not likely to develop until an industrygets beyond the embryonic stage, that is, associa-tion development tends to follow, not precede,industry development. Association success crite-ria are: (a) strong leadership with a long-termcommitment, (b) leadership that is trusted bymembers, donors, and government, (c) minimalgovernment influence, and (d) a clear and rela-tively narrow focus. Guidelines need to be devel-oped to assess association success potential. TheAMIS II project has started this process.
(2) Management training for associations, especiallyfinancial management and how to develop or adaptprograms that respond to members’ evolving needs,is a high-yield donor contribution to associationdevelopment when it is well done. Therefore, man-agement training should be a component of anyUSAID program to assist associations.
(3) Matching grants for institutional and activity de-velopment are effective because they stimulatemember involvement and commitment.
(4) Association organizers need to be aware that thereare trade-offs with regard to size and scope ofassociations. “Voice” — the impact that associationpositions can have on policy — usually requires alarge membership, but an association can moreeffectively provide services to its members when ithas a narrow focus, such as flower exporting.
(5) In industry associations that include both big andsmall members, the “big tend to pay while smalltend to use,” a problem that can weaken or
destroy the association. Therefore, a degree ofhomogeneity in size of member’s firms is desir-able.
(6) Vertically integrated producer/processor asso-ciations provide donors the opportunity to suc-cessfully support non-traditional agricultural ex-port development while reaching small-scalefarmers. This type of association is most effec-tive when the exporters are few in number andwork with relatively large-scale outgrowers, per-mitting a more cost-effective working relation-ship.
(7) Well-focused and well-managed associations canbridge the gap between small farmers and thecomplexities of NTAE markets. Working thoughSelf-Help Groups (SHGs) of smaller farmers is away to leverage scarce TA resources. For ex-ample, in Kenya, KESSFA (a small-scale farm-ers association) acts as an intermediary betweenfarmer self-help groups and selected large ex-porters.
(8) Associations will become self-sustainable only ifthey are effectively and efficiently serving mem-bers’ priority needs. A minimum score on anannual membership satisfaction survey, conductedby a third party, should be a condition for contin-ued donor support of an association.
3.3 SMALL AND MEDIUMENTERPRISE (SME)DEVELOPMENT
SMEs usually represent the largest number of agri-businesses in a developing country. Therefore theirsuccess is important to the livelihood of a large por-tion of most developing countries’ population.
(1) Small, marginal enterprises should not be sup-ported until a serious study of their economicviability is completed. Investing project resourcesin small potential (niche) market startup indus-tries is particularly risky and very expensive
(2) Conditions for successful smallholder (producer)participation in NTAE exist when they involve:
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(a) niche markets where producers have veryfew alternative buyers for their output, (b) lowcapital but high labor intensity, (c) a full-servicelocal exporter supporting the business, and (d) awell-established international market with experi-enced buyer/exporters.
(3) The two most important constraints on SMEdevelopment are their (a) lack of marketing ex-pertise and (b) minimal knowledge of and accessto sources of financial assistance (especially work-ing capital) and how to apply for them. Donorassistance should concentrate on these two ar-eas.
(4) Self-Help Groups are a useful way to leveragedevelopment resources aimed at SMEs and inmany instances may be the best way to serve theneeds of small agribusinesses. Another way tomake use of SHGs is to link them with largeenterprises which can provide inputs, technicalassistance and markets. However, this latter typeof activity requires intensive, hands-on manage-ment assistance by donors if it is to be successful.
3.4 FINANCIAL SERVICES
Without access to financing (both debt and equity) itis very difficult for agribusinesses to grow.
(1) The major constraints to agribusiness lending byfinancial institutions are the shortage of commer-cially viable projects and poor loan and invest-ment “packaging” by the borrower, not the lackof available funds. Therefore, technical assis-tance, for at least business plan development andloan or investment “packaging,” should be pro-grammed into any donor-supported financingproject.
(2) Rigorous application appraisal by the lender (a fea-sibility study if the project is large enough to sup-port the cost) is necessary, and the borrower shouldsupply a minimum of 50 percent of the equity in theventure. In many cases, it is advisable for the lend-ing institution to make direct payment from loanproceeds to the major suppliers of equipment toavoid misuse of the borrowed money.
(3) The major financial need of SMEs is workingcapital. However, a general constraint affectingSMEs is their lack of knowledge of availablefinancial resources and how to apply for them.Donors can help SMEs in this area at reasonablecost by providing the services of specialized lo-cal business consultants to appraise and packagesmall projects. However, the skills of these per-sons need to be continuously developed throughdonor-supported training programs. Full cost re-covery for services at the SME (and certainlymicro) level should not be expected.
(4) Defaults on loans to SMEs can be minimized byspecialized TA at a group level supplied throughassociations or self-help groups. One feature ofsuch training should be how to match earningsstreams from a financed activity to the fundsneeded for repayment of the loan. This will helpovercome the problem of the gradualdecapitalization of an SME in order to meet loanpayment schedules.
3.5 MONITORING AND EVALUATION(M&E)
M&E systems are designed to improve the impact ofdonor projects by understanding the progress, or lackthereof, toward objectives as the project is beingimplemented (which may lead to mid-course adjust-ments) and assessing the results versus expectationsupon project completion.
(1) USAID agribusiness project M&E is in an earlystage of development, but it is more advancedthan that for most other donors. Substantial op-portunity exists to enhance USAID project M&E,especially as related to direct and indirect impactby project component and type of beneficiary,and, cost versus benefit analysis. Current mid-term and final project assessments need to bemore rigorous on cost/benefit analysis and focusmore on beneficiary impact evaluation. A projectshould also be assessed a reasonable length oftime (e.g., 2 years) after its completion to deter-mine the sustainability of accomplishments.
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(2) A key assessment that needs to be completedbefore project initiation is the amount a subsectormust grow to achieve a reasonable payback onthe resources invested into that subsector. Forexample, how much does the $64-million Kenyahorticultural exports industry have to grow to geta satisfactory payback on the $15-million KEDSproject?
(3) Progress toward financial self-sustainabilityshould be one of the main measures of performancefor projects providing support to associations. Be-cause the ability to manage cash flow is typicallyweak in associations, the development and moni-toring of a Sources and Uses of Funds schedule isan important performance evaluation tool.
(4) Membership satisfaction is another prime indica-tor of the performance of an association. Mem-bership surveys or polls should be carried outannually, and to ensure credible results theyshould be carried out by professionals. One ele-ment of such a survey for an association thatmarkets producers’ output is a comparison of theprice received from the association versus sellingthrough buying agents — taking into account thevalue of other benefits a member may receivefrom the association. Associations should earn aminimum annual membership satisfaction scorein order to continue to receive donor support.
(5) Project evaluations should include breakouts bytype and size of beneficiary, including costs ofservices provided versus benefits; for example,increased output versus the cost of services pro-vided by size firm. Input/output (cost/benefit)analysis is a useful tool to measure direct benefitsagainst direct costs both for the overall projectand for project components. This should be doneon a quarterly basis and reviewed/managed byUSAID personnel.
(6) The frequency of use of private sector advisorsand the impact of their contribution should bemonitored to ensure that agribusiness project man-agers are utilizing private sector expertise.
(7) Information on the secondary impact of assis-tance to large firms (e.g., employee income and
how it is spent, business generated by purchasesof supplies and equipment from local suppliers,or services provided locally, such as transporta-tion, legal and accounting services, insurance,etc.) should be collected and analyzed. This willenable M&E of the full impact of support tolarger firms.
(8) More random beneficiary sampling should beused, rather than the current sampling, which isguided by project management.
3.6 GENERAL RECOMMENDATIONS
The following lessons learned and implications do notfit into the above areas of focus but they are relevantto agribusiness project design and implementation.
(1) A thorough opportunities and constraints analy-sis is needed before decisions are made aboutMission support to commercial enterprises in agiven agribusiness subsector. This is necessaryto prioritize the subsectors of primary interest.The analysis should pay particular attention tothe competitive advantage of the product in itstarget markets as well as to the availability oftrained personnel and the necessary financial re-sources. Operations Constraint Analysis is a use-ful tool in this process.
(2) Semiannual project review forums (½ day with abroad group of beneficiaries, local governmentofficials, and private sector representatives; ½day with the project team) can be used to coordi-nate project activities, improve their effective-ness, and enhance a feeling of local “ownership”of the project.
(3) Private sector advisors, both expatriate and local,should be used more extensively by USAIDMissions in the design and monitoring of agri-business development projects because they havea much better perspective on the challenges andopportunities they face than do government em-ployees. Direct, local business experience is like-wise important in helping to prioritize and pursuepolicy reform issues related to private sector de-velopment.
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(4) Identifying and developing an effective interme-diary organization (e.g., an association, a FADC,or an NGO/PVO) is important for leveragingscarce project resources in agribusiness develop-ment projects.
(5) Government approval and support for agribusi-ness projects are essential, but implementationshould be independent of direct government in-volvement because the private sector generallyprefers an “arms length” relationship with gov-ernment; government involvement in implemen-tation will slow progress.
(6) Active steering committees, with extensive pri-vate sector participation, must play a strongerrole to ensure success at all stages of projectimplementation.
3.7 ISSUES DESERVING FURTHERSTUDY
The following issues are unresolved questions forwhich there are no apparent answers. Answers tothese questions, however, would enhance agribusi-ness project design and implementation in East Af-rica. Each includes a suggestion for resolving theissue.
(1) How effective is most general market informa-tion? Large firms say they don’t need or use it,and small firms don’t know how to use it. Thereis a need to develop effective ways to measurethe usage of market information versus the costof providing it, especially by type of informationand type of user?
(2) Is broad-gauged baseline monitoring data reallynecessary? Segregating dependent and indepen-dent variables in macro impact measurement isvery difficult, and the cost of direct impact macromeasurement is usually quite high versus thebenefits realized. Consider measuring the progressof assisted firms and the associated indirect ben-efits as a satisfactory way to determine the im-pact of a project.
(3) Can commercial associations be used to improveinput supply, replacing outmoded state or coop-erative channels? Conduct an investigation ofhow commercial associations can be developedand supported to function as middle-men be-tween MSE producers and exporters, thus en-abling some economies of scale.
(4) How can the potential be optimized for outgrower/contract grower schemes on the model of the silkand vanilla projects in Uganda, schemes that havesuccessfully reached out to both small farmersand women? Assess the specific circumstancesand methods for developing sustainable outgrowerschemes, especially for specialty NTAEs.
(5) What is the best and most efficient way to mea-sure the full social and economic impact of sup-port to large-scale enterprises (e.g., Ziwa Rosesproject in Uganda)? If the development objec-tives are to increase broad-based income, em-ployment, and foreign exchange generation, itmay be most efficiently achieved through sup-port to medium and large firms. An assessment isneeded to respond to criticisms of this type ofassistance, that is, giving assistance to the “bigguys” who appear to need it least. Determine thecomparative primary and secondary impact ofsupport for medium and large versus micro andsmall enterprises, including a cost/benefit analy-sis.
(6) What is the best way to effectively communicateneeded agribusiness skills to local agricultureand business schools? Determine how the currentand anticipated skill needs of agribusiness can becommunicated to local agricultural and businessschools and how private sector leaders can playa more active role in curriculum developmentand teaching.
(7) Should or can micro and small enterprise (MSE)support institutions become self-financing? As-sess the financial payback amount and likely termon MSE projects and determine if a reasonablepayback can be achieved. If not, what other M&Eshould be developed to assess these types ofprojects.
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4. Kenya
4.1 ENTITIES SELECTED FORSTUDY
For Kenya case studies the consultants selected sixdonor-supported innovative agribusiness entities andfour private agribusinesses. These include threeprojects (two funded by USAID and one by a GermanNGO), two associations, and one development fi-nance organization. The four private agribusinessenterprises significantly enhanced our understandingof agribusiness in Kenya.
Projects: (with supporting donor in parenthesis)
KEDS — Kenya Export Development SupportProject (USAID)
SEPSO — Small Enterprise Professional ServiceOrganization (Friedrich Naumann Foundation)
K-MAP — Kenya Management Assistance Pro-gram (USAID)
Associations:
KESSFA — Kenya Small Scale Farmers Associa-tion (Hans Seidel Foundation)
AAK — Agribusiness Association of Kenya(USAID support requested)
Development Finance Organization:
KTPE — Kenya Trust for Private Enterprise(USAID)
Private Enterprises:
Karzan Inc.
Lonrho
Standard Chartered Estate Management
Echuka Farms
Most of the donor-supported entities have mul-tiple areas of focus (see Table 4.1). Therefore anassessment of each project, association, or organiza-tion was performed for each area of focus.
The assessments of the projects, associations,and other organizations that appear in the followingsections include summarized Objectives, Impact andDiscussion sections, and the Conclusions reached fromthat case study. Because the first four entities listed inTable 4.1 are large and important, detailed assess-ments, organized according to a standard set of crite-ria, were also prepared. These detailed assessmentsare included as Appendix A to this report. Detailedprofiles of the associations, development finance or-ganization, and private business firms assessed arefound in Appendices B, C, and D, respectively.
4.2 FINDINGS ON PROJECTS
Following are the main findings from each of theprojects assessed.
4.2.1 Kenya Export Development Services(KEDS)
Sponsor: USAID
Project Value: $15 million
Start Date: March 1992
Completion Date: December 1999
Principal Agribusiness-Related Objectives:
Association Development: Improve the capacityof the Horticultural Development Authority (HCDA,a parastatal) to deliver market-relevant services tomembers; strengthen the Fresh Produce ExportersAssociation of Kenya (FPEAK) as a private sectortrade association.
Non-Traditional Agricultural Export Develop-ment: Deliver TA (especially marketing) to exportingfirms; increase NTAE employment and exports; pro-mote policy reform and regulatory change to enhancethe export competitiveness of Kenyan firms; promotedialogue between government and the private sector.
14
Discussion: The KEDS project is working pri-marily with established small and medium-sized2 ex-porters rather than with new exporters. One of thereasons for the project’s success is that many impor-tant policy changes influencing exporters (e.g., liber-alization of the exchange rate) occurred at the begin-ning of the project or before the project was up andrunning. An important aspect of the KEDS project isthe active encouragement of public-private sectordialogue. Such dialogue is essential in a businessenvironment like Kenya’s because distrust and lackof communication are widespread between partici-pants in the two sectors. This improved dialogue isachieved through workshops, conferences, and aKEDS long-term technical advisor housed within theMinistry of Finance.
The most important findings from the assess-ments/case studies form the basis for the conclusionspresented in section 4.6, where Kenya cross-cuttinglessons learned and implications for USAID planningare summarized.
The KEDS firm-level assistance activity utilizesstrategic consultancy visits to companies that requestassistance. Many of these firms, although establishedexporters, generally have very poor market planningskills. The strategic consultancy allows the KEDSteam both to screen potential beneficiaries and toassist the firms in better targeting the use of theirfunds. KEDS assistance has resulted in several firmsintroducing new pre-pack horticultural products intothe EU market.
Impact: Average annual growth in NTAE hasreached 6 percent. As of November 1994, 2,814 firms(primarily medium-sized companies with some ex-port experience) had been assisted. Foreign exchangeearnings from manufacturing, horticulture, and otherNTEs increased 25 percent from 1992 to 1993. Em-ployment in NTAE firms increased 34 percent from1990 to 1993. However, the original project objec-tives — creating one million jobs and $770 million inforeign exchange revenue — are unrealistic.
It is too early to assess the effectiveness of TA toassociations (Kenya Association of Manufacturers,FPEAK, HCDA) in developing the export capabili-ties of their members, but a system for tracking ac-tivities such as trade show attendance, training, anddistribution of publications has been put in place.Trade associations receiving KEDS assistance arenow better able to coordinate their members’ partici-pation in international trade shows, resulting in anincrease in the number of participating companies.
Conclusions: When the policy environment forbusiness is right, projects like KEDS can be effective.KEDS’s hands-on involvement with associations hasbeen critical to helping them refocus their services.However, the process is often slowed by politicalfactors. In general, MSEs do not have sufficient knowl-edge of market planning and budgeting to developrequests to KEDS for assistance and need help in thisarea. TA needs are great and therefore project effortsmust be focused to achieve maximum impact. Also,
Table 4.1 Kenya Innovative Projects and Their Areas of Focus
Project/Association(Donor)
KESSFA (HSF)
KEDS (USAID)
SEPSO (FNF)
K-MAP (USAID)
AAK (Possible USAID)
KTPE (USAID)
Non-TraditionalExport Promotion
Yes
Yes
No
Some
No
Some
AssociationDevelopment
Yes
Yes
No
No
Yes
No
Small & MediumEnterprise
Development
Yes
No
Yes
Yes
Interested
Some
15
potential clients must be rigorously screened to avoidwasting scarce resources.
4.2.2 Small Enterprise Professional ServiceOrganization (SEPSO)
Sponsor: Friedrich Naumann Foundation (Germany)
Project Value: DM 300,000 per year (US$ 216,000)
Start Date:January 1993
Completion Date: 1998
Principal Objectives: Provide business serviceson a fee basis to a broad range of small enterprises;become self-supporting at the end of five years. Fo-cus on young, innovative businesses.
Discussion: SEPSO provides business servicesto micro and small-scale enterprises; the most popu-lar service is assistance with monthly accounting.SEPSO’s plan to become financially self-sustainingwithin five years has caused it to move away fromproviding services to the smallest micro enterprisesbecause they have a limited ability to pay for suchservices. A major challenge for SEPSO is developingits staff to stay ahead of client needs and retainingthat staff once developed. SEPSO staff is 100 percentKenyan.
Impact: SEPSO attempts to establish “partner-ships” with its client firms, following up with themevery month. SEPCO’s main activity is financial con-sulting (accounting), which will hopefully generatebroader-based consultancy work. SEPCO recovered20 percent of costs in the first year and worked with140 clients. Seminars and quarterly lunch meetingsare found to be very useful by clients.
Conclusions: Clients demand sophisticated ser-vices, which means SEPSO must find, train, andretain skilled personnel. Smaller, startup clients havethe greatest need for help, but they also have a limitedability to pay for services; SEPSO has had difficultycollecting from some of them. SEPSO itself, if it is tobecome self-sufficient, must be run like a business.
4.2.3 Kenya Management Assistance Program(K-MAP)
Sponsor: USAID, ODA, private sector firms
Project Value: $560,000 from USAID (1987-1992),£400,000 ($600,000) from ODA
Start Date:1986
Completion Date: Indefinite
Principal Objectives: Reduce failure rate ofKenyan SMEs by providing one-on-one assistancefrom executives of larger Kenyan companies. Work-shops and teaching materials are provided for a fee.Establish ongoing business linkages between largeand small businesses.
Discussion: The objective of the K-MAP pro-gram, in which successful large and medium-sizedKenyan firms allow their top and middle manage-ment executives to provide counsel free of charge tosmall businesses that need management assistance, isto reduce the high mortality rate of small businesses,particularly startups. To date, however, K-MAP hasbeen unable to generate more than 20 percent of itsoperating costs in revenues. Because managementexecutives donate their time to counsel small firmsthe project should be a relatively low-cost method ofassisting small businesses. According to the 1991evaluation, the cost per registered client per year wasKShs 5,068 (about US$100). K-MAP has strongmanagement and strong support from the Kenya busi-ness community — both foreign and local.
Impact: 186 medium and large companies areproviding executives for consulting with smaller com-panies. There have been no defaults on “sponsored”(reduced collateral) loans, to K-MAP clients. Unfor-tunately, a recent evaluation of the program was un-able to determine if K-MAP’s objective is being at-tained because client firms were not monitored forfailure rate, sales, net assets, profits, or any otherrelevant impact indicators. One-on-one consulting isjudged “the most valuable aspect of K-MAP assis-tance.”
Conclusions: Management and training of coun-selors by K-MAP and reporting on their activitiescould be improved. Workshops are difficult to orga-nize but are of great benefit when well done. Clientinvolvement in the preliminary assistance proposalscreening process, and in feasibility studies, is essen-
16
tial for giving the client a feeling of results “owner-ship.” K-MAP has had difficulty getting clients to paythe full cost of services. The involvement of multina-tional company consultants in developing clients ex-port marketing skills is important.
4.3 FINDINGS ON ASSOCIATIONS
Following are the main findings on each of the asso-ciations assessed.
4.3.1 Kenya Small Scale Farmers Association(KESSFA)
Sponsor: Hans Seidel Foundation (Germany)
Project Value: DM 250,000 per year (US$180,000)
Start Date: January 1993
Completion Date: January 1996
Principal Objectives: Association Development:Attract 2,000 members within 250-km radius ofNairobi; assist them to form viable self-help groups(SHGs), which in turn become members of KESSFA.
Non-Traditional Agricultural Export Develop-ment: Deliver TA to SHGs to increase productionand marketing of horticultural products. Act as aprincipal in transporting and selling members’ out-put.
Discussion: KESSFA is attempting to assist aselect group of small-scale farmers to break into theEuropean fresh vegetable export market. KESSFAoperates through small, tightly knit SHGs of farmers,with the association’s secretariat acting as intermedi-ary between the producer SHGs and a few largeexporters. KESSFA’s success depends to a great ex-tent upon the ability of the secretariat to act in amanner that guarantees the exporters receive the qual-ity and quantity of product, and timeliness of deliv-ery, that they require. This type of association offersthe leverage needed by donors to reach smallholdersand also to expand NTAEs. KESSFA’s use of pro-ducer SHGs allows them to leverage their efforts.KESSFA’s secretariat provides extensive training inNTAE production to SHG members.
Impact: As of September 1994, 104 SHGs witha total of 2,700 members had been created. Exportersadvance seed to KESSFA, which in turn advances theseed to SHGs and deducts the cost from their mar-keted produce. Members have received 25-30 percenthigher prices for green beans sold via KESSFA thanthey have received from brokers.
Conclusions: KESSFA needs to communicatebetter with potential SHG members so that they real-ize the benefits received from membership in KESSFAand are not tempted by “briefcase” exporters. Top-quality management and effective member trainingservices has enabled this association to get off to asolid start. Diversification beyond green beans isneeded.
4.3.2 Agribusiness Association of Kenya(AAK)
Sponsor: None as yet — seeking USAID assistance
Start Date: 1992
Principal Objectives: Facilitate networking be-tween Kenyan agribusinesses, strengthen linkagesbetween micro enterprises and large-scale producersand processors. The organization is not yet fully ac-tive.
Discussion: The AAK is currently composed ofthe 18 largest agribusiness firms in Kenya and isstruggling to establish itself as a viable associationthat can meet the needs of a diverse membership. Asof early 1995, they did not have a complete under-standing of members’ priority needs nor a detailedplan on how to respond to them. USAID’s role inimproving the likelihood that these capabilities willbe achieved by AAK or by similar associations shouldinclude: (a) sponsoring a member needs survey at thetime of association startup or in the early develop-ment stages, (b) helping the association develop pro-grams to address members’ priority needs, and (c)funding follow-up membership satisfaction surveysto determine how well the established priority needsare being met. Any linkage programs with agribusi-ness MSEs should wait until the AAK is fully func-tional.
Impact: Too early to evaluate
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Conclusions: AAK members will be willing topay dues and/or services fees sufficient to enable theassociation to become self-sustaining only if the as-sociation is effectively serving their priority needs.Even very large, well-financed agribusinesses havedifficulty forming effective associations.
4.3.3 Fresh Produce Exporters Association ofKenya (FPEAK)
Sponsor: 30 percent of support from donors, includ-ing the KEDS Project ($30,000)
Start Date: 1975
Objectives: The collective representation of thefresh produce and floral industry in all matters relatedto potential government legislation and intervention.Providing services to members, such as informationon new technologies.
Discussion: FPEAK was recently “re-cycled” un-der the strong tutorage of KEDS. A new, less fac-tional board was elected and a new chief executive/consultant was hired. The new board is viewed asmore representative of the whole membership; thenew chief executive/consultant is British and has longexperience in Kenya commercial horticulture. Theelection of a non-Kenyan to head FPEAK raisedsome eyebrows, but he was selected by the boardfrom an extensive list of candidates. Ongoing issueswith FPEAK are the allocation of responsibility forindustry development between FPEAK and HCDA, agovernment-sponsored horticulture promotion agency,and the related question of cess proceeds allocationbetween the two organizations. Management mustdeal with a membership not yet aware of or educatedas to the potential benefits from a trade association.
Impact: Too early to assess but there are positiveindications, especially for FPEAK taking more re-sponsibility for horticultural industry development.
Conclusions: An industry-specific associationsuch as FPEAK can focus on meeting members’general needs; subcommittees for flowers and veg-etables enable both to pursue their specialized needs.The new emphasis on market information, technicalservices, and financial information is now demand-driven. The market news service developed and fi-
nanced by KEDS is of most value to medium andsmall firms.
4.4 FINDINGS ON DEVELOPMENTFINANCE ORGANIZATIONS
Following are the main findings on the developmentfinance organizations assessed.
4.4.1 Kenya Trust for Private Enterprise(KTPE)3
Sponsor: USAID
Start Date: January 1988
Completion Date: December 1993
Objective: The objective of the KTPE projectwas to strengthen Kenyan institutional and humanresource capabilities to assist firms via equity financ-ing; 20-40 businesses were to be expanded and/orrestructured and total investment, employment, out-put, foreign exchange generation and tax revenuesincreased. Industrial Promotion Services Ltd. (IPS),an existing company, and Kenya Equity Management(KEM), a new company, were the intermediaries forequity funds disbursement.
Discussion: Basically the market was not readyfor and did not perceive the need to use venturecapital. Kenyan firms typically operate with a veryhigh debt-to-equity ratio and prefer financing viaadditional debt rather than sharing equity with others.Owners do not even want to share accurate financialinformation with potential partners. Inadequate mar-ket opportunity and venture assessment informationand limited entrepreneurial capabilities result in alimited number of viable new ventures. Third partyinvestors are rare due to the minimal “protection”available for their investment.
Impact: all but one (increased tax revenues) ofthe macro measurements for the project were met, butthere is minimal evidence this was directly influ-enced by the project (i.e., the improvements weremostly due to other influence).
Conclusions: KTPE’s overall goals were unreal-istic, even for fully developed venture capital markets
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such as those in the United States. There is consid-erable question whether the venture capital (versusmerchant banking) managerial resources at IPC orKEM were sufficient for the task at hand. Further-more, it appears that USAID program designers andimplementation managers had an insufficient under-standing of venture capital in embryonic markets.
4.5 FINDINGS ON PRIVATEAGRIBUSINESS FIRMS
Following are the main findings on the private agri-business firms assessed.
4.5.1 Karzan Inc.
Karzan Inc. is a medium-sized flower exporter witha good export market. The shift in the EC market todirect (vs. auction) sales has forced Karzan to focusheavily on meeting quality requirements. They workwith three categories of suppliers: small independentoutgrowers, commercial growers, and the company’sown production. The 110 outgrowers (0.5 to 2.5 haeach) receive fertilizer and planting materials andhave their flowers picked up at the farm. Commercialgrowers are larger and have their own cold stores andmeans of delivery. Karzan markets flowers in Europethrough a Dutch agent. Business growth will be pri-marily in joint ventures with commercial growers dueto the cost of working with many small growers.
4.5.2 Lonrho
Lonrho is a large diversified agribusiness with morethan 4,000 employees, featuring extensive verticalintegration. It is one of Kenya’s largest producers oftimber products, seed maize, waddle extract, mush-rooms, milk, cattle, pigs, poultry, as well as pork andbeef products. It obtains 50 percent of its meat fromits own farms and 50 percent from independent farm-ers. The company also has the largest refrigeratedfood distribution system in Kenya-Farmers ChoiceFoods.
4.5.3 Standard Charter Estate Management(SCEM)
SCEM, owned by Standard Charter Bank, manages
production acreage for larger owners, cooperatives,and farming companies. This includes more than277,000 acres producing coffee, tea, sisal, sugar,wheat, mixed farming, horticulture, and cattle ranch-ing.
4.5.4 Echuka Farms
Echuka Farms is a diversified farming and process-ing operation producing yogurt, jams and jellies, freshvegetables, and fresh herbs. It is owned and managedby a dynamic female entrepreneur, Mrs. Chege.Echuka Farms is a testimony to the drive and entre-preneurial capabilities of Mrs. Chege. However, itseems likely that the very wide variety of businessesshe is developing and their small scale will make itdifficult for this enterprise to expand to the next sizelevel. As in the case of most SMEs, financing is asevere limitation to the growth of the business andnew “kitchen scale” businesses have been startedwhen significant capital is required to expand anexisting business. But unlike most SMEs, Mrs.Chege’s unique personality and capabilities haveenabled her to find good local markets for nearly allher production. Lonhro (Farmers Choice) distributesEchuka’s yogurt and other refrigerated products.
4.6 LESSONS LEARNED ANDIMPLICATIONS FOR USAIDPLANNING
In the following sections, “Lessons Learned” and“Implications for USAID Planning” derived from theanalyses in sections 4.2 to 4.5 above are presented.The order in which they are presented is roughly inorder of (1) the anticipated positive impact on USAIDobjectives and operations if they were to be success-fully adopted, and (2) the extent to which the lessonslearned or implication is broadly applicable, that is,applicable to SSA agribusiness projects in general.This ordering is subjective, but represents the studiedopinion of the research analysts and draws upon theirmany years of experience in agribusiness develop-ment in developing countries. The primary source ofthe lessons learned or implication is shown in paren-theses.
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4.6.1 Non-Traditional Agricultural ExportDevelopment
Lessons Learned
n Most NTAE research and extension input mustbe project or exporter (versus government) sup-plied. Exporters can usually only afford to supplytechnical assistance to the larger outgrowers.(KEDS)
n The higher the value added the more difficult it isfor MSE participation in NTAE, but the greaterthe market and margin opportunity. Products thatare easier to produce most often yield lowermargins, which then require larger minimum sizeoperations. Therefore, there is an inconsistencybetween direct participation by MSEs in NTAEand their financial and managerial capabilities.(AAK/KEDS)
n Much of the market information assistance andtechnical assistance must be imported becausethere is little in-country experience. (KEDS/KESSFA)
n The quality of Kenya’s product (especially withrespect to residual pesticide levels) and limitedreliability of air cargo space are the major prob-lems perceived by the EU, the market. (KEDS)
n For flowers, going direct to wholesalers avoidsthe quotas imposed by the Dutch auction, butrequires strong EU partnership(s) and quality con-trol. (KEDS)
n Exporter cooperation (e.g., in associations) mustbe carefully managed due to competitive (cartelpossibility) considerations (i.e., exporter involve-ment could lead to a monopolistic situation).(KEDS)
n The uncertainty of Kenya Air Freight Handling’sexpediting of export cargo is a substantial prob-lem, yet effective and efficient air freight han-dling is crucial to the quality and timeliness ofperishable exports. (KEDS)
n An adequate water supply is essential to fringeseason NTAE; therefore, Kenya’s water avail-ability problems may limit continued NTAE ex-pansion. (KEDS)
n Adequate physical infrastructure is essential tocost-competitive and high-quality NTAE prod-ucts, yet Kenya’s infrastructure is deteriorating,especially rail and road to Mombasa, and portmanagement and power supply consistency arepoor. (All)
Implications
n The greatest economic impact from NTAE projectassistance will be derived from activities focusedon experienced, established, medium-sized (50100 employees) firms. (KEDS)
n Project staff must have direct export commercialexperience to be of significant help to exporters.(KEDS/KESSFA)
n More private/public/donor dialogue is required,especially in the project design stage, to avoidsuboptimal designs that must be corrected whenapplied to the real world. (KEDS)
n More emphasis is needed on processed productsfor export as a way to deal with high air freightcosts and space shortage, and to utilize lessergrade product. (KEDS)
n Sectoral workshops are more expensive and moredifficult to organize than general workshops, buttheir impact can be much greater. (K-MAP)
n Recipient matching (50 percent suggested) isimportant for donor grant effectiveness. Signifi-cant marketing TA must accompany grants (es-pecially to MSEs) if they are to be effectivelyutilized. (KEDS)
n Extensive vertical integration (or at least coordi-nation) is needed for cost, timing and qualitycompetitiveness of high-value exports. (Lonrho)
4.6.2 Association Development
Lessons Learned
n Institutions or associations are only as effectiveas their management personnel. Increasing man-agement/leadership skills through training is onlyeffective to the extent that trained individualsremain with the organization. Developing andretaining key project and association personnelare challenging tasks. (All)
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n Associations can be a good, leveraged way toprovide TA for NTAE, especially to MSEs. (KEDS)
n Associations that do not respond to member needswill not be successful and will not become finan-cially self-sustaining. Therefore, membership satis-faction surveys should be conducted annually. (All)
n To enhance “voice,” more members are needed,even if this means combining subsectors such asflower, fruit, and vegetable exporters. For effec-tive TA, a relatively narrow range of subsectors,types and sizes of firms/members is needed.(KEDS/AAK/KESSFA)
n Balancing the role of a “driving force” (seniorexecutive) within an association is difficult. Astrong leader is needed, but the leaders must notmanage the association primarily for their per-sonal benefit. (AAK/KESSFA)
n The cooperative structure is much more regu-lated and influenced by the Kenyan governmentthan is that of an association. Commercial asso-ciations need to be organized as corporations, notas cooperatives, due to the “baggage” (politicalproblems) cooperatives carry in Kenya and themore pragmatic orientation of a corporate struc-ture. (KEDS/KESSFA)
n Associations must remain focused on commer-cial (vs. political) issues. (KESSFA)
n “Social” problems (e.g., ethnic tension, cliques,poor cooperation) seem more prevalent at theMSE association level. SHGs, on the other hand,are more culturally homogeneous and work to-gether more efficiently. (SCEM/KEDS/KESSFA)
n Poor “real” price information can cause prob-lems for association marketing efforts becausemembers become disenchanted with the pricethey receive from the association for their pro-duce. (KESSFA/SCEM)
n Too many micro participants in a commercialassociation can cause accounting cost problems(i.e., many small accounts with a high mainte-nance cost versus the value of the transactions).(KESSFA/SCEM/SEPSO)
n Tribal chiefs still play a significant role in gainingsupport for rural associations. (KEDS)
n Consistent collection and equitable distribution ofexporter cess payments is needed to achieve andretain credibility for cess payments as an industrydevelopment mechanism. (KEDS)
Implications
n The basis for association sustenance does notseem to be well understood by current USAIDmanagers. (AAK)
n There does not seem to be an objective mecha-nism available for assessing membership satis-faction. (AAK/KEDS)
n Mechanisms for determining the most viable andsustainable associations can and should be devel-oped. A good association “needs assessment meth-odology” is required in order to be able to ad-dress priority needs, establish model associations,devise association performance measurements,and develop sources of financial support. (All)
n A fully integrated commercial association may bethe most viable MSE producer exporter linkage.(KESSFA)
n Donors can help associations focus (or refocus)their efforts during the critical early years. (KEDS)
n SHGs as members of an association may be themost cost-effective way to serve the needs ofsmall producers and enterprises. They can pro-vide double leveraging when they are associationmembers, especially MSEs. (KEDS/KESSFA)
n Associations must have political independence,from both the government and from politicallymotivated power brokers. (KESSFA)
n Technical support from donors, and possiblyalliances with relevant associations in other coun-tries, is very useful for associations involved withexports because it is difficult for them to obtaininformation from outside the country. (KESSFA)
n Do not specify in the design the associations thata project must work with; allow flexibility tosupport those with the most potential and whoare the most cooperative. (KEDS)
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n Potential and current member education programsare important to help differentiate associationsfrom cooperatives. (KESSFA)
4.6.3 Small and Medium EnterpriseDevelopment
Lessons Learned
n SME linkages with large enterprises, and SMESHGs, can make a significant contribution to-ward SME development if these undertakings areaccompanied with close management of the pro-cess. (K-MAP/KESSFA)
n Legal constraints are being streamlined, but ille-gal constraints are still rampant, and SMEs arethe most vulnerable to the latter. (KESSFA)
n A shortage of capital and TA, especially as re-lated to marketing, are the major limitations forSME participation in NTAE. SHGs can helpovercome these limitations, especially in tandemwith well-managed associations. The largest SMEoperating constraints on SMEs are usually re-lated to marketing. (KESSFA/KEDS)
n The MSE dropout rate is very high due to lack offinancing, collateral, and management expertise.(SEPSO)
n Organizational integrity and key individuals’ in-tegrity is very important to help maintain a posi-tive attitude on the part of beneficiary SMEs.(KESSFA/K-MAP/AAK)
n Building and retaining local capacity within anSME support project ahead of clients’ needs ischallenging. (SEPSO)
n MSEs have a minimal knowledge of sources forfinancial assistance and how to apply for it. (SEPSO)
n Agribusiness SMEs’ basic development, support,and service needs are very similar to those offirms in other sectors. (SEPSO/K-MAP).
Implications for USAID Planning
n Leveraging expensive USAID and/or otherproject’s SME development resources is a majorchallenge; SHGs and associations can be veryuseful to help accomplish this. (KESSFA/KEDS)
n Ongoing and hands-on (high direct involvement)services are very important to SMEs. (KESSFA/SEPSO)
n It is difficult to maintain a very commercial ori-entation at the micro level; that is, many enter-prises that want help will never be able to pay forthe needed services. (KESSFA/SEPSO/KEDS/K-MAP)
n “Investing” in startups is very high risk due totheir high failure rate. Avoid “investing indreams.” (SEPSO)
n Direct SME assistance should be primarily fo-cused on local or regional (vs. developed coun-try) markets because their requirements are lessstrict than those of developed country marketsand they are vastly larger (up to 60 times the sizeof export markets). (KEDS)
n Successful MSE marketing services must behighly focused, probably even niche-market ori-ented. (SEPSO)
4.6.4 Financial Services
Lessons Learned
n Sources of finance and how to access them arenot well known by MSEs, a significant barrier totheir growth and development. (K-MAP/AAK/SEPSO)
n Money without TA to effectively use it is oftennot repaid. Therefore, financial services projectsneed to include or identify sources of effectiveTA for their clients. (K-MAP)
n For MSEs, the major constraint is lack of work-ing capital; therefore, MSE credit activities mustfocus on obtaining working capital. (SEPSO)
n The difference between a grant and a loan isunclear at the MSE level. Therefore, communi-cations with the borrower must be very clear onrepayment expectations. (KEDS)
n Matching an earnings stream from a financedactivity to the funds needed for loan repayment isdifficult for MSE management/owners. Loan re-payment is often achieved via de-capitalization.
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Special care must be taken to help lenders setaside funds from the earnings stream of the projectbeing financed to repay the loan. However, loanrepayment can not be the only criterion to mea-sure the success of an MSE financial servicesproject. (KEDS)
Implications
n Design and management of financial projectsmust be carried out by finance professionalsbecause the principles involved are often not wellunderstood by USAID managers. (KTPE)
n Detailed screening of financing applications bybusiness (vs. loan officer) professionals can en-able lower collateral requirements. Experiencedbusiness operations managers are needed to gobeyond profit and loss and balance sheet analy-sis. (K-MAP)
n Success of financing projects will likely requiremulti donor/agency cooperation, given the sub-stantial resources required for a minimum sizeentity. Cooperation between USAID and IFC/WB or other financially oriented agencies suchas CDC will increase the chance of project suc-cess, but will also raise project complexity.(KTPE)
4.6.5 Monitoring and Evaluation
Lessons Learned
n Progress toward financial self-sustainability andthe level of membership satisfaction should bethe primary association performance measure-ments monitored. (SEPSO/K-MAP/AAK)
n Monitoring and evaluation by donors other thanUSAID is generally quite weak, especially quan-titative measurement. (All)
n Much more direct beneficiary-level evaluationand polling is needed. (KEDS)
n The original KEDS goals seem unrealistic. (KEDS)
n One of the main commercial association perfor-mance measurements should be the net price aproducer receives when selling via the associationversus selling through buying agents. (KESSFA)
Implications
n The main focus of performance measurementshould be on the progress or success of assistedfirms, not on macroeconomic statistics, becauseit is very difficult within the comparatively shorttime-frame of a project to directly affect macromeasurements. (KEDS)
n All projects need more breakdowns by type ofbeneficiary (e.g., clients served, cost of efforts,and output increase) and by size of firm. (KEDS)
n More client (exporters, GOK, USAID manager)satisfaction assessment (qualitative) is needed asa part of project M&E. (KEDS)
n A key assessment that needs to be completed be-fore project initiation is the amount a subsectormust grow to achieve a reasonable payback on theresources invested into that subsector. For ex-ample, how much does the $64 million horticulturalexports industry have to grow to get a satisfactorypayback on the $15 million KEDS project? (KEDS)
n Quality, coverage, timeliness, and pragmatism ofquarterly project reports, including an M&Ematrix by project component, needs improve-ment. (KEDS as positive example)
n Better and more specific sources and uses offunds projections is needed for entities andprojects seeking support. (AAK)
n More focus on a project’s value (vs. tonnage)increase is needed for NTAE, especially theamount of in-country value added as the result ofa project. (KEDS)
n Review project objectives at least annually todetermine if adjustments are necessary. (KEDS)
4.6.6 General Recommendations
The following general recommendations based onKenya research do not fit under previous headings.
n Ongoing (at least annual) formal Operations Con-straint Analysis (OCA) for firms targeted forassistance will provide essential information forall commercial projects. (KEDS)
n Identifying and developing an effective interme-
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diary is important for leveraging scarce projectresources. (KESSFA/KEDS)
n Government approval and support are needed, butproject implementation must be independent. (All)
n Projects must remain limited in scope until thestaff is well trained and organized. (SEPSO)
n Local contractors and employees can be veryhelpful if they are properly selected, trained, andmanaged. (All)
n Develop local hire parallel positions for all keyproject personnel. (K-MAP/SEPSO/KESSFA/AAK)
n Cooperatively funded and managed donor projectsare difficult to coordinate, so multidonor supportis most viable for established, well-managedprojects. (K-MAP)
n There is a need for highly focused training andexperience transfer at all levels and for all projects.(KEDS/K-MAP/KESSFA)
n More USAID/embassy dialogue regarding opti-mizing project’s success is needed. (KEDS)
4.6.7 Key Issues Deserving Further Study
Following are issues that have surfaced in the courseof the research and analysis in Kenya and that de-serve further study.
n What is the best way to minimize “briefcase”exporters’ negative impact on contract growersand association members? (KEDS/KESSFA)
n Should projects have a greater focus on local andregional markets? (KEDS)
n What are the comparative results (especially whenconsidering the full multiplier effects of supportfor mega and large agribusiness firms) of projectssupporting mega, large, medium, small, and mi-cro enterprises? (KEDS)
n Are there effective ways to eliminate corruptionand inefficiency among customs officials? (All)
n How can project advisory boards be made moreactive and effective? (KEDS)
n Is the optimal association broadly based so thatit can include a large number of people andtherefore have greater “voice,” or narrowly fo-cused so that it can serve the product-specificneeds of its members? (All)
n What is the best way to identify and developproject mentors at both the USAID and localgovernment levels? (KEDS)
n When in a project’s life should the initiatingsponsor look for multidonor support? (KESSFA)
n Should/can MSE support institutions ever be-come self-financing? (SEPSO)
n For highly effective NTAE development, is sup-porting larger firms the best, or maybe only, wayto achieve quantitative results and returns on re-sources objectives? (KEDS)
n To what extent do significant NTAE participantsand their advisors understand market channel pro-portionality, trends/dynamics, and projections?(KEDS/KESSF/AAK)
n How can responsibilities be most effectively bal-anced and/or allocated between semi-governmentand private sector entities interested in agribusi-ness development; for example, HCDA andFPEAK? (KEDS)
n What is the best way to effectively communicatethe essential agribusiness skills needed by theprivate sector to agricultural and business schools?(All)
n Who should help embryonic businesses (espe-cially micros), given that they represent the high-est risk and the lowest return on resources? (All)
n Should project staff primarily manage or shouldthey provide services themselves? (K-MAP)
n Is the statement in the KEDS project documentthat 75 percent of Kenya’s export fruits, flowers,and vegetables is produced by smallholders evennear the “ball park”? (KEDS)
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5. Uganda Overview and Analysis
5.1 ENTITIES SELECTED FORSTUDY
For the Uganda portion of the study, the consultantsassessed the performance of thirteen innovative projects,associations, development finance organizations, andprivate enterprises concerned with agribusiness devel-opment. These case studies, together with the donoragencies supporting them (in parenthesis), are as fol-lows:
Projects:
ANEPP – Agricultural Non-Traditional Export Promo-tion Program (USAID)
CAAS – Cooperative Agriculture and AgribusinessSupport Project (USAID)
Silk Sector Development Project (European Union [EU])
Associations:
UOSPA – Uganda Oilseed Processors Association(USAID)
UNFA – Uganda National Farmers Association (Dan-ish International Development Agency [DANIDA])
UVGPA – Uganda Vanilla Growers and ProcessorsAssociation (USAID)
UMA – Uganda Manufacturers Association (USAID)
UGEA – Uganda Grain Exporters Association (no spon-sor)
UHA – Uganda Horticultural Association (no sponsor)
Development Finance Organizations:
DFCU – Development Finance Corporation of Uganda(International Finance Corp. [IFC], Overseas De-velopment Authority [ODA], German aid program[DEG])
APDF – Africa Project Development Facility (Interna-tional Finance Corp. [IFC])
VOCA – Volunteers in Overseas Cooperative Assistance(USAID)
Private Enterprises:
Ronco Pyrethrum Project (no donor support)
Ziwa – Ziwa Horticultural Exporters Ltd. (some USAIDsupport)
Harriet’s Flowers (some ANEPP/USAID support)
As in Kenya, many of the Ugandan projects andassociations have multiple areas of focus (see Table5.1). The consultants’ assessment of their performanceexamined these focus areas separately. Performancewith respect to provision of financial services and moni-toring and evaluation were assessed where appropriate.
Summary assessments of each of the eleven casestudies appear in the following section and form thebasis for the conclusions presented in section 5.6. Cross-cutting lessons learned from the eleven case studies, andimplications for USAID agribusiness project planningand implementation, are summarized under each of thefive areas of focus (i.e., NTAE Promotion, AssociationDevelopment, SME Development, Financial Services,and Monitoring and Evaluation).
5.2 FINDINGS ON PROJECT
Summarized findings with respect to three projects— ANEPP, CAAS, and Silk Sector DevelopmentProjects — appear in the following sections. Detailedassessments of these projects, matrixed according tothe key questions, are presented in Appendix A.
5.2.1 Agricultural Non-Traditional ExportPromotion Project (ANEPP)
Sponsor: USAID
Project Value: $13.5 million in NPA in 1992 + $10million of Title III–locally generated currency
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Start Date: 1992
Completion Date: October 1994
Principal Objectives:
Association Development: Originally, TA wasintended to identify and then work with an associa-tion, but this was modified due to the immature na-ture of existing associations. The follow-up projectinitiated in 1995 (IDEA) will further pursue associa-tion development.
NTAE Development: Increase export earnings andemployment, identify new export opportunities, pro-vide TA to exporters, and provide market informa-tion.
Discussion: ANEPP is an example of a projectaimed at expansion of NTAEs through assistance tomedium-to large-scale firms that are just starting to
export. Like KEDS in Kenya, ANEPP has not assistedsmall firms; but unlike KEDS, which is dealing withestablished exporters, ANEPP’s most recent phase4
has attempted to assist Ugandan firms in breakinginto new export markets, such as cut flowers toEurope. One of the challenges in Uganda is to estab-lish a critical mass of reputable exporters in order toovercome Uganda’s bad reputation in European hor-ticultural markets, which was established during thefirst few years of attempts by inexperienced firms toexport products that were often of substandard qual-ity and unreliable delivery. USAID/ANEPP’s Opera-tional Constraints Analysis Project (OCAP), under-taken in conjunction with the ANEPP-supportedExport Analysis and Development Unit (EPADU)and VOCA (Volunteers in Cooperative Assistance),is innovative in the sense that it not only assessesindividual firm’s operational constraints for NTAEs,
Table 5.1 Uganda Supported Activities and Their Areas of Focus
Association/Project(Donor)
ANEPP (USAID)
CAAS (USAID)
Oilseed Processors Association(USAID)
National Farmers Associaton(DANIDA)
Yanilla Growers and PocessorsAssociation (USAID)
Uganda ManufacturersAssociation USAID)
Silk Sector Development Project
DFCU (IFC/ODA/EG)
APDF Uganda (IFC/USAID)
Ziwa (some USAID)
Non-TraditionalExport Promotion
Yes
Yes
No
No
Yes
No
Yes
Yes
Yes
Yes
Yes
AssociationDevelopment
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
Small & MediumSize EnterpriseDevelopment
No
Some
Yes
No
No
Some
No
No
Some
No
Yes
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but also follows through with assistance to specificfirms to help them to overcome these constraints.OCAP was successful in helping Ugandan exportersbreak into new export markets (e.g., crocodile skinsand vanilla), increase post-harvest value-added ac-tivities (e.g., silk processing), and establish severalnew successful horticultural exporters to Europe (e.g.,cut flowers). In the process of providing direct assis-tance to exporters, EPADU project managers gainedan improved understanding of the most critical con-straints facing agribusinesses in Uganda. This en-abled a more in-depth understanding of the specificpolicy modifications needed and allows EPADU staffto be more forceful and credible advocates of policyenhancement. It also gave USAID a better focus forthe follow-up project to ANEPP: IDEA.
Impact: The value of all horticultural exportsincreased from $410,000 in 1991/92 to $3.25 millionin 1993/94, and may reach $8.4 million in 1995.Large firms are doing well. With ANEPP help, theyhave overcome many production and marketing con-straints over the past two years and have identifiednew opportunities. Import substitution of packagingmaterials and airport cold store assistance were sig-nificant project-stimulated benefits, as was assistancein crop variety adaptation work. ANEPP identifiedhigh-potential NTAE areas — flowers, spices, as-paragus, and leather leaf, plus regional markets formaize and beans — and assisted with crop trials aswell as helped overcome marketing constraints facedby exporters of these crops. As to policies, EPADUpersonnel provided valuable help in improving theenabling environment.
Conclusions: Subsector market opportunity stud-ies were important for focusing project resources onhigh-potential areas. Projects dealing with agricul-tural exports need a high degree of flexibility to beable to respond quickly to changing market condi-tions. It proved to be better to focus assistance on alimited number of the larger exporting firms. Toachieve an acceptable return on project resources,however, significant capital and management exper-tise needed to be in place in these firms. Intensivedirect TA to small and micro enterprises is not a gooduse of resources due to the inefficiency of direct
support to these enterprises. Also, their dropout rateis very high and the increase in exports that can beachieved in the short to intermediate term is less thancan be achieved for support to medium-sized experi-enced exporters. Better project reporting is needed,especially that which links specific activities to dataon increased NTAE exports. OCA activities need tobe ongoing and annually updated. NTAE technicalassistance is heavily dependent upon the skills andcapabilities of the expatriate consultant(s). Direct OCAexperience is very useful to help policy analysts un-derstand in-depth the needed policy enhancement.
Associations cannot be imposed on groups ofexporters, demand for the creation of an associationmust come from the exporters themselves. Other-wise, they will neither participate in nor support theassociation. Embryonic subsectors will not supportviable associations because there are too few poten-tial members, they do not understand their supportneeds well enough, and they are not deriving suffi-cient sales and earnings from the business to finan-cially support an association.
5.2.2 Cooperative Agriculture andAgribusiness Support Project (CAAS)
Sponsor: USAID
Project Value: $10 million
Start Date: 1991
Completion Date: October 1994
Principal Objectives:
Association Development: Provide support to theoilseed processors association (UOSPA) to increasedomestic production and reduce imports. Create adepartment within UCA (Uganda Cooperative Asso-ciation) to export coffee on behalf of coffee coopera-tives.
Non-Traditional Agriculture Export Develop-ment: Revitalize the edible oil industry, work withnewly industrialized coffee cooperatives now licensedto directly export coffee.
Discussion: The most recent phase of CAASrefocused efforts on providing direct assistance tospecific agribusinesses for the production and export
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of specific commodities. Assistance was provided toa limited number of district unions and primary soci-eties that were believed to have the potential to im-prove coffee marketing, increase the production ofedible oil for domestic consumption, and increaseNTAEs. Unfortunately, due to inherent weaknessesin most cooperatives in Uganda, CAAS has not beensuccessful in creating viable cooperative institutions,nor in establishing the appropriate role of coopera-tives as agribusinesses or as providers of services tofarmers. The original project assumption was thatlow crop production was due to low use of inputs, sothe project focused on improving input delivery tofarmers. It turned out that the problem was not inputavailability, but that returns to the farmer from theuse of inputs were too low to justify their cost. (SeeErickson and Poulin, February 1994.)
Impact: After redesign in 1991, CAAS increasedthe capacity of selected cooperatives to produce andprocess sunflowers, and helped make other coopera-tives more knowledgeable about producing and mar-keting NTAEs. However, only 5 percent of coopera-tive members were affected by the project.
Export diversification work was started success-fully with the first exports of snow peas. About 4,000tons of edible oil were produced in 1994 with the helpof matching grants given to 296 societies. The coffeemarketing board was privatized, and private sectordialogue with the government has increased. A mar-ket price information system installed by the projectseems to be well received by members.
Conclusions: Before undertaking a project toprovide support to and through an entity, assess themid-to long-term viability of that entity, in this casethe cooperatives. When members of associationsmatched donors’ grants with their own funds, thelikelihood of project success increased significantly.Good management is essential to cooperative or asso-ciation success, especially as related to its ability toadjust to changing conditions. Where cooperativesare weak, associations that group producers and pro-cessors are a viable alternative.
5.2.3 Silk Sector Development Project
Sponsor: European Union (EU)
Project Value: ECU 2.2 million (US$2.95 million)
Start Date: January 1994
Completion Date: 1996/1997
Principal Objectives: Strengthen the UgandaSilk Producers Association (USPA), an integratedproducer–processor organization. Create a project di-rectorate that the association will take over at the endof two years. Bring about a sustainable increase insilk exports and smallholder incomes through a credit/extension services package. Change USPA from anexporter-led association to a more producer-oriented,or at least balanced, organization. Make the associa-tion self-supporting in three years.
Discussion: The Silk Sector Development Projectis supported by the European Union, but the sectorhas also received assistance from USAID throughEPADU for the creation of a Silk Producers Associa-tion. This is an example of NTAE development andassistance to small farmers, because the silk is pro-duced by many small outgrowers. It is also an inter-esting example of an integrated association; that is,an association with members that include both pro-ducers and exporters. A Japanese silk company sup-plies the silk worm eggs and buys the dried silkcocoons.
There is good potential for increased value-addedat the farm level (e.g., outgrowers will be dryingcocoons themselves in the silk development centersbeing constructed) because the EU plans to workwith NGOs and women’s groups to do cocoon un-winding and silk weaving. Producers should benefitmore from the new association than they did fromoriginal exporter-led association. The USPA couldbecome the driving force in the industry, providingsignificant inputs and financing to growers, but theremay be friction between processor/exporter membersand grower members. There is no clear plan to makethe association self-financing, and the two-yearphaseover of significant services from external (EU)to association management seems overly optimistic.
Impact: Membership originally consisted of twoexporters so the project insisted on opening member-ship to producers. There are now 400 farmer mem-bers and one or two new exporter members.
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Conclusions: Association management must bestrong and must remain focused on a limited numberof objectives. There must be a clear plan on how tomake the association self-supporting. MSE participa-tion in NTAEs can be successful where the industryis highly labor intensive and not capital intensive andthere is a specialized, niche market for the product.This is true of silk production. An integrated pro-duce–exporter association may be the answer to work-ing with a product as complex as silk production andexport. The industry also lends itself well to intensivehands-on TA. Developing new export businesses ismuch easier with the significant technical and mar-keting assistance of an international firm.
5.3 FINDINGS ON ASSOCIATIONS
Following are the key findings on the associationsreviewed in Uganda.
5.3.1 Uganda Oilseed Processors Association(UOSPA)
Sponsor: USAID
Project Value: $115,000 for first two years (grantthrough CAAS project)
Start Date: Association registered April 1994
Objectives: Ensure availability of high-qualityplanting material via seed multiplication programs;secure working capital credit for members to pur-chase raw material (oil seeds); offer extension adviceto oilseed growers; provide members with oilseedmilling technical training; assist members to find spareparts; and market their output.
Discussion: The Oilseed Processors Associationis made up of SME oilseed processors. They arepredominantly marginally viable crushers who arecaught between a limited supply of raw material anda market heavily influenced by donor sales/donations,large competitor conversion of non–food grade oil tofood grade, and the major (the largest crusher pro-duces 70 percent of output) crusher. These entrepre-neurs have limited mill management experience. Theyare receiving some TA from CAAS/VOCA experts
and the association is trying to arrange for workingcapital financing for its members. Adequate rawmaterial supply and spare parts are two other majorproblems for these businesses.
Given the importance of vegetable oil importsubstitution (to offset the foreign exchange drain itcauses) and the number of farmers that would beaffected by a viable domestic oilseed production andcrushing industry, a greater focus on the industryseems called for. However, are SME crushers the best(all factors considered) leverage point? Is it likelythat domestically produced vegetable oil will everbecome competitive with world market prices usingoilseeds grown by small farmers and crushed by SMEprocessors, except in the highest transport cost loca-tions? Where will the capital come from for economyof scale crude production and refining facilities?
This new association, with members from allregions of the country, has the potential to increase itsmembers oilseed production. If the association is suc-cessful in helping members address and overcometheir operational constraints, there should be a con-siderable increase in vegetable oil production. Theassociation may be able to arrange access to workingcapital for members, but there is little funding for TAto mill operators, most of whom are small. Plans formultiplication of improved oil seeds are sketchy. Whilesupport of UOSPA may benefit a few of the moreviable medium-sized crushers, it seems unlikely thatit will have a significant impact on offsetting veg-etable oil imports and will have considerable diffi-culty becoming self-sustaining.
Impact: Too early to assess.
Conclusions: The best hope for these SMEs tosurvive is a strong association. However, very strongand effective management and years of donor supportwill likely be required for the most viable of thecrushers to become successful. Some of the crushersshould investigate and develop specialty markets toshield themselves from commodity imports. Others,with the association’s help, should consider formingconsortia and consolidate their operations into thebest facility, use others’ equipment for spare parts,and focus on sourcing raw material and marketing.
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With their consolidated volume, they could afford tohire qualified technical, financial, and managerialpersonnel.
5.3.2 Uganda National Farmers Association(UNFA)
Sponsor: DANIDA
Project Value: $4 million for first 5 years
Start Date: September 1993
Completion Date: 1998
Objectives: To raise the living standards of Ugan-dan farmers through enhanced “voice,” and the pro-vision of financial and technical assistance. To be-come the premier agricultural organization in Uganda.
Discussion: The Uganda National Farmers As-sociation is an example of an extremely broad-basedassociation with an ambitious agenda. It is attemptingto replace the government extension service with aprivate countrywide extension service, financed bydonors initially, but eventually by the members them-selves. However, there is some question as to whetherthe underlying objective of the UNFA leadership ispolitical or developmental.
UNFA is structured as a “bottom-up,” farmer-driven organization based on subassociations. It nowmanages extension services in 15 of the 39 districtsof Uganda. Each district will identify two or threehigh-value crops to focus on. Market prices from 39districts and information on recommended suppliersare two important services.
Impact: Too early to assess.
Lessons Learned: The UNFA suffers from alack of focus and overambitious objectives. It is notclear how the association will generate sufficientrevenues to become self-sustaining. The founders arevery politically motivated and in fact the regionalassociation coordinator will work under a regionalgovernment appointee. A key issue is whether thegovernment extension service will allow itself to betaken over by the UNFA.
5.3.3 Uganda Vanilla Growers and ProcessorsAssociation (UVGPA)
Sponsor: Some support from USAID and APDF
Project Value: USAID contributed $36,000 in ex-tension services over last 3 years
Start Date: Association in the process of beingformed
Principal Objectives: To increase productionand export of vanilla.
Discussion: This association is in the process ofbeing formed; until recently it existed in the form ofone vanilla producers group (around 2,000 members)and one vanilla producers cooperative (2,000 mem-bers) working with two vanilla exporters. The asso-ciation will have a strong voice on policy mattersinfluencing the vanilla industry and make it easier fordonors and government to assist the industry throughone association. However, it must become member-driven, most likely more by the exporters (who wantcontinued donor funding) than by the growers. Va-nilla production technology and marketing is providedby McCormick.
Impact: Too early to assess.
Conclusions: The strong role of exporters willmake it easier to ensure Uganda’s reputation forreliable, high-quality vanilla, and the association ismore likely to become self-sustaining (and be able topay for field technical staff). However, exporters’objectives will at times conflict with farmers’ objec-tives, and the integrated structure may weaken farm-ers’ bargaining strength vis-à-vis exporters. In fact,the percentage of export value received by the farm-ers appears low at this time. Success of the associa-tion will require hands-on support and balanced man-agement by the main entrepreneur (Mr. Sekalala ofUVAN), who has been the driving force in industryand association producer and exporter interest devel-opment. New local NTAE industries require the strongsupport of an international firm.
5.3.4 Uganda Manufacturers Association
Sponsor: USAID
Project Value: $250,000 in 1995
Objectives: Build Ugandan industry. Increase hu-man resources capacity regarding business. Promote,protect, and coordinate the interests of industrialists; actas a watchdog and mouthpiece for members; initiate and
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facilitate discussions and exchange information amongmembers on issues of concern; advise government onkey policies affecting the industry.
Discussion: This 400-member organization wasformed in 1966, but did not become seriously activeuntil 1988. Agribusiness firms are an important partof its membership, though the organization repre-sents many types of industries. There are two distin-guishing characteristics of UMA: strong leadershipand a highly professional consulting unit. The mem-bership represents the “cream” of Ugandan manufac-turers, and thus it can identify, attract, and compen-sate top management/leadership and consultants.Association leadership has an interest in SMEs be-cause they believe SME success is crucial to thedevelopment of the Uganda business environment.USAID has worked with the UMA by funding theconsulting unit and its work on SME projects.
Impact: The USAID-supported consulting andSME activities are quite recent but appear to be off toa solid start.
Conclusions: UMA is likely to play a strongleadership role in developing Uganda agribusiness,but will need incentives to maintain an SME focus forpart of their efforts. It can be very effective for stimu-lating policy change and stabilizing improvementsthat have already been made, given its political ac-cess and influence. This is an important role becausesome public sector institutions remain skeptical of anemerging private sector. UMA needs funding to trainstaff and members. Its consultancy and SME devel-opment activities are still heavily financed by USAID.
5.3.5 Uganda Grain Exporters Association
Discussion: Association membership is reservedfor exporters shipping at least $500,000 of grainannually. Initially there were 24 members, but thereare fewer now due to the non-viability of the grainexport business, which was caused by fluctuatingexchange rates (especially an appreciating UgandaShilling), deteriorating seed (and therefore product)quality, and high working capital costs. It seemslikely that the UGEA will continue to flounder until thegrain export business becomes more viable, primarilyvia the use of improved seed/cultural practices and
consistent adherence to an agreement between Kenyaand Uganda regarding grain trade.
Impact: The association is currently inactive soits impact is minimal.
Conclusions: The regional grain export businessis heavily influenced by politics and government of-ficials’ personal benefit–based decisions. As a result,predictability of grain prices and access to the Kenyaexport market are very difficult. The grain exportbusiness needs more support on seed quality im-provement and extension services in order to increasethe quality and productivity of grain output. The“voice” of the UGEA would be enhanced by a broadermembership, but this should not dilute the interestand impact of the larger exporters. One way to achievethis would be to form an exporters and growerssubassociation in a geographic area that has highproduction potential. This would function as a dem-onstration/model of how producers, agricultural R&D,the extension service, and exporters could cooperateon an export market–focused project.
5.3.6 Uganda Horticultural Association
Discussion: The association, which has 80 mem-bers, of which only 20 are exporting, has undergoneseveral changes in recent years. For example, flowerexporting members left the association because theyfelt that their specialized needs were not taken intoaccount; also there was “jockeying” for power at themanagement level. Currently, the membership con-sists of fruit, vegetable, and spice exporting compa-nies. The leadership of the association is now work-ing on forming a larger association with horticultural,flower, and grain companies organized into threedivisions. Members are generally in favor of thisbecause a larger organization can financially supportan adequate secretariat. Most members’ problems arein marketing, not in production.
The concept of an NTAE association that in-cludes the horticultural, grain, and floriculture asso-ciations with divisions or subassociations focused onspecific subsectors would seem to resolve the “num-bers for voice versus focus for services” dilemma.The question of vertical integration (producers, pro-cessors, and exporters) versus horizontal member-
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ship has not been addressed. Bringing together thehorticultural and grain exporters may not be that dif-ficult because they are both struggling, but they dohave very different markets and service needs. Flori-culture is very bimodal; that is, there are 2–3 largeintegrated exporters and many very small growers.Their very different needs (often based on flowertype and target market) make it difficult for them tojoin with others.
Impact: Minimal because it is currently undergo-ing organization/reorganization
Conclusions: The leadership of the UHA believesthat an NTAE association can be successful if it focuseson common membership needs and avoids politicalconsiderations (i.e., power struggles at the managementlevel). Very strong leadership would be required forsuch an NTAE association to be successful.
5.4 FINDINGS ON DEVELOPMENTFINANCING AND TECHNICALASSISTANCE ORGANIZATIONS
The following profiles development finance and tech-nical assistance organizations in Uganda.
5.4.1 Development Finance Corporation ofUganda (DFCU)
Sponsor: Shares are held by Uganda Develop-ment Corp. (UDC), Commonwealth DevelopmentCorp. (CDC), German Development Corporation(DEG), and International Finance Corporation (IFC);each holds 25 percent.
Start Date: Established 1964, refinanced at $2.5million, and rehabilitated in 1990.
Objective: Offer both debt and equity to clientcompanies in Uganda.
Discussion: DFCU views itself as a key player inthe current development boom in Uganda’s privatesector because it combines innovative financing andefficient loan processing. It seeks serious entrepre-neurs with well-prepared business plans and can pro-vide fast service to companies with experienced man-agement and a clear focus. DFCU offers a mix of
financial and technical expertise to client companies.Its technical department has qualified and experi-enced industrial/mechanical engineers and agricul-turists who carry out in-depth technical appraisalsand offer free technical advice, primarily during theapplication for and utilization of new financing orstartup.
DFCU offers equity financing and long-term loansof between $100,000 and $1.5 million in either for-eign or local currency at competitive interest rates(cost +2 points and fee); larger projects can be co-financed by their international shareholders. DFCU’sportfolio is 50 percent agribusiness-related, but agri-business loans are difficult to make. This is becausethe potential borrowers are geographically widespread,it is difficult to set a value on rural land, and it isdifficult to use land as collateral due to land tenureconcerns.
Impact: DFCU’s 25 loans and 15 equity invest-ments include a vanilla processing plant and a horti-cultural concern that exports roses to Europe. DFCUappears to be quite successful and is providing asignificant volume of badly needed debt and equity tolarger private sector firms.
Conclusions: The shortage of viable projects tofinance and poor investment project “packaging” arethe main constraints to expanded business facingDFCU. One method used to minimize defaults is tomake direct payment from loan proceeds to majorequipment suppliers. Due to heavy up-front startupcosts — project analysis and technical assistance —DFCU can only support a reasonably large-sizedproject ($300,000+). Establishing borrower integrity(source of wealth) has proved to be a major issuebecause many potential borrowers have had closeconnections with previous governments.
5.4.2 Africa Project Development Facility(APDF Uganda)
Sponsor: APDF is supported by the InternationalFinance Corporation, but several other agencies in-cluding USAID have provided funding.
Objectives: APDF funds are often used to imple-ment feasibility studies and packages and to solicitfinancing for large ($500,000+) projects, some of
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which are in the agribusiness sector. In Uganda,USAID has encouraged and supported APDF to servesmaller projects in NTAE development.
Discussion: The Operational Constraints Analy-sis Program (OCAP) under ANEPP was financed bya USAID grant after USAID/APDF identified a needfor soft funding to cover the startup costs of snow peaand chili export businesses in Uganda. The snow peaproject does not seem to be supported by a strongcommercial entity, SME or otherwise. Success forthe Mantovu chili project has yet to be determined.
The APDF normally requires a $250,000 minimumsize project because for projects below that level assess-ment costs and the cost of arranging financing are toohigh relative to project size. However, with USAID’sencouragement and financial support in Uganda, APDFhas focused on projects needing at least $100,000 innew investment. APDF’s normal lack of interest in theSME level for NTAE is not surprising given the cost ofAPDF-type assistance for smaller projects and the seri-ous difficulties SMEs face when approaching the exportmarket by themselves.
Impact (potential): Can local consultants be de-veloped and supervised so that they can perform high-quality assessments and help arrange financing forsmaller projects. Most APDF work is currently done byexpensive expatriates. Can funds be pre-committed forprojects that meet established criteria so that work on anew project can be focused on the extent to which itmeets these criteria, thereby making the feasibility andfinancing process more efficient?
USAID support for APDF to work on smallerprojects seems to have succeeded.
Conclusions: Extensive use of expatriate profes-sionals provides a degree of comfort to investors andfinanciers, but it also makes the minimum cost ofproject assessment and financing arrangement quitehigh; therefore only large projects can afford thisexpenditure. It seems that the assessment and packag-ing of smaller projects needs to be subsidized or tohave locals developed to the point where investorsand financiers are comfortable with their work.
This positive experience suggests that a regionalpool of funds available to APDF to selectively develop
smaller projects in sectors of particular interest toUSAID would be very useful in Sub-Saharan Africa.
5.4.3 Volunteers in Overseas CooperativeAssistance (VOCA)
Sponsor: VOCA is a Washington, D.C.–basedvolunteer program.
Objectives: Provide TA to cooperatives andsmall businesses worldwide.
Discussion: Under the VOCA program inUganda, volunteers come from U.S. agribusinessesfor periods of four to six weeks. Assistance, whichmust be requested by the client firm, is coordinatedby the USAID ADO.
USAID has provided VOCA with funding forSME development, and the VOCA program in Ugandais focused on assisting NTAE. Volunteers workedwith the Mantovu chili project — a VOCA volunteerprovided assistance to the chili producers and anotherhelped with drying, grading, and packaging. VOCAalso worked with APDF on financing the chili pro-cessing enterprise.
Impact: Appears positive, but it is difficult todetermine comparative contributions because ANEPP,CAAS, and VOCA were all involved in the chiliproject, and the sustainability of the business is yet tobe determined.
Conclusions: VOCA has noted that land tenuredifficulties make “owners” hesitant to develop sig-nificant investments in property with an uncertaintitle. Post-visit reports from volunteers are a veryimportant learning tool, but are not always forthcom-ing.
5.5 FINDINGS ON PRIVATEAGRIBUSINESS ENTERPRISES
5.5.1 Agro Management Group Inc.
Description: Agro Management Group Inc.(Agro), a California corporation owned by the prin-cipals of the RONCO consulting firm, was estab-lished to invest in agribusiness in developing coun-tries. Their first investment was in the production,
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processing, and export marketing of pyrethrum inKabali, Uganda.
Discussion: Before embarking on the investment,RONCO made preliminary investigations and pro-duced a feasibility study on production, processing,and marketing of pyrethrum, built around an assuredmarket, and followed a strategy of close collaborationwith its U.S. buyer. The project is demand-driven,and although risky, appears at this time to be a soundfinancial investment.
Agro adopted a vertically integrated approach tothe project that allows it to control the critical ele-ments of the production system. Plant introduction,selection, multiplication, and distribution are financedand managed by Agro. The company created its ownextension service to help some 4,000 contract farmersobtain maximum results, and buys the flowers (fromwhich pyrethrum is extracted) from farmers throughits own purchasing department. This service is inno-vative because it is completely financed by the inves-tor and is the first all-female buying service for amajor export crop in Africa.
The 4,000 contract flower growers had 500 acres(227 hectares) producing flowers by January 1993,20 months after the first feasibility study. Plans are toexpand to 1,000 acres (400 hectares) with a target of8,000 growers as more planting material becomesavailable. The project operates on a principle of sys-tematic, fair, and on-time monthly payment for theproduce delivered. To protect the smallholder farmeragainst inflation and devaluation in Uganda’seconomy, Agro instituted a dollar-linked paymentschedule where prices are adjusted to their dollarequivalent each month.
Agro has reached this stage in the project usingits own resources and $1 million from Ronco withoutrecourse to either public funds or financial capitalmarkets. However, Agro has encountered problemsbecause processing of the raw material into the fin-ished product — pyrethrum — was to be carried outunder contract with a plant in Rwanda, which is nowclosed because of the conflicts in that country. Agrois seeking additional financing of $2.2 million to builda processing plant in Uganda. DFCU and the East
Africa Development Bank are potential sources offunds.
Impact: The project will provide a new sourceof smallholder cash income, generate substantial em-ployment, and provide foreign exchange earnings.Agro had 100 percent equity in the venture prior toseeking additional financing. It is now in its third yearof development and more than $1 million has beeninvested.
Conclusions: The speed of implementation ofthis project (prior to the problems in Rwanda) atteststo the rapid response private sector investors andfarmers can make to a business opportunity. Small-holder farmers must be convinced that an investingcompany is sincere and is dedicated to implementa-tion of its project; they want to see rapid action on asteady basis. High initial investment costs can onlybe recouped with high levels of production, obtainedas early as possible in the investment cycle. Politicaland social instability continues to plague foreign in-vestors in Africa.
5.5.2 Ziwa Horticultural Exporters Ltd.
Description: Ziwa is a privately owned com-pany that produces roses and other exports on a 1,000-hectare plot.
Discussion: Ziwa’s owner, Captain Roy, also ownsthe Dairo Air Freight Company and other farms andranches in Uganda. On its 1,000 hectares, Ziwa has 1hectare of roses grown outdoors and 2 hectares underplastic, plus some production of asparagus outdoors andleather leaf under plastic. The company employs 345people full-time, of which half are women, and another30 people part-time. The facility includes a large coldstorage building and a packing/grading shed, as well asinsulated trucks. The manager is Ugandan; a Dutchtechnical specialist is supplied by its Netherlands-basedagent. About 6 million stems were exported by air in1994, partly on Sabena and partly on Captain Roy’s aircargo service. Development costs for “indoor” flowersare about $500,000 per acre.
Ziwa received a grant from USAID/APDF for anexpert to resolve asparagus production problems, whichhave delayed startup of this operation by two years.
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Impact: While there have been no formal studiesof the impact of the enterprise on the surroundingarea, there are reports of substantial positive devel-opment “indicators,” such as new and remodeledhousing, increased use of the local private clinic,increased school attendance, and the appearance ofroadside kiosks. This project is definitely not SMEdevelopment, but the impact on employment andforeign exchange generation has been very substan-tial.
Conclusions: USAID assistance to help resolveZiwa’s asparagus problems came at a critical time inthe development of the company and played a signifi-cant role in helping it through a difficult early stageof development. Selective, high-impact assistance ofthis type seems to represent a very high return toUSAID resources.
5.5.3 Harriet’s Flowers
Description: A female entrepreneur, Harriet Ssali,owns and operates a flower producing and marketingcompany.
Discussion: Mrs. Ssali started growing flowersoutdoors in the late 1980s and sold them in her ownshop. She then imported seeds and bulbs and gavesome to other very small-scale women growers, whomshe also assisted with growing techniques. She usedher own vehicle to collect the flowers and sold themat wholesale and retail in her shop along with foodand beverages. The market for flowers has grownrapidly recently due to increasing income levels andthe developing custom of taking flowers when visit-ing or participating in a celebration. She has talkedwith an agent in Europe about purchasing her flowersbut she has insufficient supply to meet his needs. Arelated problem is that her outgrowers lack funding toexpand production. One year her seeds and bulbswere stolen and she nearly went bankrupt.
Mrs. Ssali developed a $1 million investment pro-posal for outdoor flower growing but lenders found thatshe had insufficient collateral to cover the loan. TheExport Policy Analysis and Development Unit (EPADU)of ANEPP helped develop a proposal for a $240,000financing package, with a business plan, for which Mrs.Ssali is currently trying to find support.
Impact: The benefit of EPADU/ANEPP’s in-volvement has yet to be determined because, at thetime of this study Mrs. Ssali had not been able toobtain financing for her expansion. EPADU/ANEPP’sassistance would have had a much greater impact ifthey had also been able to help her find the neededfinancing as well as help her with the business plan(i.e., function more like APDF for smaller projects).
Conclusions: Moving from micro, local scaleproduction to export quantities requires significantcapital and much supply continuity work. It is notunusual for there to be a stage where a seller has morethan the local market can absorb but too little tointerest an importer. Micros operate with a very small“cushion” and modest setbacks can jeopardize theirentire business. Micro entrepreneurs often need acash flow from other businesses/sources (e.g., from aprepared food and liquor retail outlet for Mrs. Ssali)to finance the development of their best prospects. Alocal marketg and to get a return on less than exportquality production.
5.6 LESSONS LEARNED ANDIMPLICATIONS FOR USAIDPLANNING
The following is organized by key Area of Focus.
5.6.1 Non-Traditional Agricultural ExportDevelopment
Lessons Learned
n Assistance to firms with reasonable (e.g., at least30 percent) equity to invest, export experience,and reasonable human resources will provide themost immediate and measurable yield on projectresources and the greatest impact on exports.The highest yield on project resources will comefrom focusing on a few high-potential firms.(ANEPP)
n An exporter must have a reasonably well-estab-lished market and an adequate knowledge of howto serve it in order to achieve NTAE success.(ANEPP/CAAS)
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n Conditions for successful smallholder participa-tion in an NTAE business exist when they in-volve: (a) niche markets where producers havevery few alternative buyers for their output, (b)low capital but high labor intensity, (c) a fullservice (i.e., provides research results and exten-sion) local exporter to support the business, and(d) a well-established international market withestablished buyers (e.g., McCormick and the Japa-nese silk firm). (Vanilla and Silk Associations)
n An integrated producer/processor association maybe the best approach to cooperatively develop anNTAE industry that utilizes small producers. (Va-nilla and Silk Associations)
n MSEs can rarely compete in NTAE unless they aregrouped together in an effective way. (ANEPP)
n Anecdotal evidence indicates very substantial sec-ondary benefits from support of larger projects.(Ziwa)
n The right TA well provided is greatly appreciatedby qualified entrepreneurs. There are very fewlocal technical and export marketing resourcesavailable in Uganda to potential investors.(ANEPP/APDF)
n Use the less exotic, easier to produce crops forregional sales so SMEs have an opportunity toparticipate with less risk. (ANEPP) The input/output and risk factors for greenfield (startup)development require the generation of a reason-ably quick positive cash flow. (Agro/Ronco)
n Good TA is not likely to have a positive effect onpoorly managed entities. (CAAS)
n Exports, not imports, should be the source ofexport promotion funding. A fairly administeredindustry development cess on exports is accept-able to participants. (ANEPP/Silk Association)
Implications
n A comprehensive subsector opportunity analysisis a very logical and important starting point fora new project. (ANEPP)
n A detailed OCA is needed very early in projects(in some cases in the design phase) and must beupdated annually. (CAAS/ANEPP)
n An active advisory board that includes severalprivate sector representatives is needed for allagribusiness projects. Private sector input shouldbe solicited early in the project design process.(CAAS/ANEPP)
n Project team real-world experience (as in EPADU)is very useful for prioritizing and pursuing policyreform. (EPADU)
n Assistance should be focused on commoditieswith a well-established potential market and areasonable understanding by the private sector ofhow to achieve success therein. (ANEPP/CAAS)
n Program flexibility and quick reaction time areboth essential for assistance to embryonicsubsectors. (CAAS/ANEPP)
n Projects should try to achieve a balance betweenhigh-value and low-value commodities (e.g., hor-ticulture and beans) to mitigate risk and maxi-mize export earnings impact. (CAAS/ANEPP)
5.6.2 Association Development
Lessons Learned
n Criteria for success of an association include: (a)strong leadership with a longer term commit-ment, (b) leadership that is trusted by members,donors, and government, (c) minimal govern-ment influence, and (d) a clear and relativelynarrow focus. (CAAS/ANEPP)
n Associations integrating both producers and ex-porting firms that sell to specialized non-traditionalmarkets are most effective when the exporters arefew in number. Exporters can work with a rela-tively large number of outgrowers, but the interna-tional buyer wants to deal with a very limited num-ber of exporters to enable a cost-effective workingrelationship. (Vanilla and Silk Associations)
n Integrated associations provide donors the op-portunity to successfully support non-traditionalexport development while reaching small-scalefarmers reasonably efficiently. (Vanilla and SilkAssociations)
n The vertically integrated association model is diffi-cult to extend to other capital, timing, and specifi-
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cation-intensive NTAEs such as cut flowers, wherethe trend is to move away from reliance onoutgrowers, who are difficult to manage. (ZIWA)
n All association development projects need a for-mal determination of (a) the conditions that mustexist for association success (b) what programsare needed to stimulate that success, and (c) whatit will cost to develop and implement those pro-grams. (CAAS)
n Matching grants for institutional development areeffective because they stimulate member involve-ment and commitment. (CAAS)
n Association management training, especially fi-nancial management, is a high-yield donor con-tribution. (CAAS)
n “Voice” usually requires large numbers, but ef-fective services require a relatively narrow focus.An umbrella (multi-subsector) association canacquire the numbers needed for “voice.” (ANEPP)
n In associations with both large and small mem-bers, “big tend to pay while small tend to use.”(ANEPP) Associations are not likely to developuntil an industry gets beyond the embryonic stage,that is, association development will follow, notprecede, industry development. It is difficult toimpose an association on exporters, the demandfor an association must come from them. (CAAS/ANEPP)
n Associations and cooperatives have not succeededas investors due to indecisive management.(ANEPP)
n Work with troubled institutions, such as Ugan-dan cooperatives, must be highly focused andlimited to those with potentially good managers.Improving incompetent management is very dif-ficult, if not impossible. (CAAS)
n Government involvement with cooperatives (andprobably associations) makes self-financing muchmore difficult. (UNFA)
n Social cooperation problems and conflict oftenmake association formation and success difficultand tenuous. (EPADU)
n It is preferable to establish a new associationrather than try to fix an ineffective one. (ANEPP)
n Large membership associations are often devel-oped as — or become — political pawns. (UNFA)
Implications
n A serious assessment of an association’s (new orexisting) sustainability must be made prior toproviding support; guidelines for doing this areneeded. (CAAS/ANEPP)
n Because association management development isa high-yield donor contribution when done well,it should be an important component of all USAIDassociation assistance projects. (CAAS)
n Providing matching grants to associations willhelp build membership and the credibility of theassociation in the eyes of existing members; grantsshould be for association projects, not for indi-vidual members’ projects. (CAAS)
5.6.3 Small and Medium EnterpriseDevelopment
Lessons Learned
n Lack of equity and export experience are the twomost significant constraints to SME participationin NTAEs. (ANEPP)
n Small, marginal processors should not be sup-ported until a serious study of their economicviability is completed. (UOSPA)
n Criteria for SME success in NTAEs seem to be:existence of a niche market or one with fewalternative outlets, low capital/high labor inten-sity, full service local marketer, and a well-estab-lished market. (All)
n MSE development and NTAE development projectobjectives and implementation methodology arelikely to be quite different. (ANEPP)
n SMEs have a very low tolerance for errors or badluck, given their marginal capitalization. (HarrietSsali)
n SMEs will develop very slowly if they mustdepend solely on their own resources. (HarrietSsali)
38
Implications
n Effective intermediaries such as associations,NGOs/PVOs, or an FADC are needed for effi-cient support to MSEs. (All)
n Better guidelines are needed to determine theviability/sustainability of firms being consideredfor project/activity assistance. (ANEPP)
n A reasonably detailed input/output analysis mustbe applied to MSE development activities.(CAAS)
n Consider a special/parallel program for MSEsstaffed with locals. (ANEPP)
n An “Implications for the Development of Indig-enous SMEs” should be a required part of nearlyevery USAID final report (similar to WID). (All)
5.6.4 Financial Services
Notes on Financial Services: Of the projects andassociations reviewed, DFCU and APDF are primarilyfinancial services providers. DFCU is focused on pro-viding both equity and debt to investments, some ofwhich are in agribusiness. APDF’s normal activities areto do feasibility studies and to package and solicitadditional financing for large ($500,000+) projects, someof which happen to be in agribusiness. In Uganda,USAID has supported APDF to serve projects smallerthan IFC’s norm in NTAE development.
CAAS’s matching grants to district cooperativesare not commercial finance (no payback is expected)but seem to represent one of the most effectivecomponents of the project. The fact that grants mustbe matched by local cooperative members (often in-kind) significantly affects the impact of these grants.
The associations assessed in this report all plan toarrange financing for members, but the Silk Associationis the only one with funds built into its supportingproject. The National Farmers Association and the Oil-seed Processors Association plan to arrange for financ-ing from commercial banks on preferential terms basedon borrowers’ membership in the association.
Lessons Learned
n The main challenges to successful financial ser-vices providers are the integrity of borrowers,
geographic spread of agribusiness projects (par-ticularly where roads are poor), and the difficul-ties of pledging rural land as collateral. (DFCU)
n The shortage of viable borrowers and poor invest-ment “packaging” are the main constraints, not alack of available funding. (DFCU, ANEPP, APDF)
n To minimize defaults on loans, lenders much con-duct rigorous appraisals and the borrower shouldsupply a minimum of 50 percent of the equity in theventure. The lending institution should make directpayment to suppliers for major purchases of equip-ment funded by its loan. (DFCU)
n Investments that receive donor project supportand TA have a much better chance of successthan those that do not. (EPADU)
n A reasonably large project ($300,000+) is neededto justify the cost of a detailed feasibility study.(EPADU/APDF) The lower the value of the in-vestment, the less likely that the cost of the finan-cial services will be recovered. (ANEPP, DFCU)
n Land tenure problems make it difficult to use landas collateral for loans. (VOCA)
Implications
n Given the importance of financing and of TA tolarger private investment projects, both of theseelements must be programmed into any donor-supported project of this type. (EPADU)
n Local analysts can and should be developed to doappraisals on and to prepare proposals for smallerprojects. (EPADU)
n More effective and efficient ways to providefinancing (equity and/or debt) to MSEs or throughassociations need to be developed. (All)
5.6.5 Monitoring and Evaluation
Lessons Learned
n Annual association membership satisfaction sur-veys are needed. (CAAS)
n There is a need to monitor the percentage of theexport price that producers receive from market-ing boards or associations that are assisted bydonors. (CAAS)
39
n There is a need to monitor the frequency ofassistance and the actual contribution made toprojects by private sector advisors. This is neededto ensure that project managers are utilizing pri-vate sector input efficiently as well as to measurethe impact of those inputs. (All)
n Training program results should be monitored atthe end of the program and six months afterprogram completion. (CAAS)
n The analysis of broadly based linkages betweenNTAE growth and rural income improvementsneeds considerable enhancement. (ANEPP/CAAS)
n An association must have a specific plan andtime-frame for reaching financial sustainability,especially regarding sources of funds. (ANEPP)
n Information is needed on the secondary impactof assistance to large firms to assess the fullimpact of these projects. (ANEPP/ZIWA)
n The cost of a major project should be related tothe direct value of its results. (ANEPP)
n Local universities can help establish baseline andcontrol samples that can later be used to measurethe change stimulated by a project. Controlsamples would be useful to determine what por-tion of improvements are due to changes in theenvironment and what portion can be directlyattributed to the project. (CAAS)
Implications
n Every project must produce concise, timely, andinput/output-oriented quarterly reports with a clearfocus on overall and sub-part deliverables. Theseprogress measurement reports must be reviewed/managed by USAID personnel on a timely basis.(ANEPP/CAAS)
n Impact measurements need to be broken down toshow results by the size of firm. (ANEPP)
n Much more input/output analysis is needed; thatis, an analysis of direct benefits versus directcosts. This needs to be done for project compo-nents as well as for the overall project. (CAAS/ANEPP)
n When project assistance is limited to or heavilyfocused on indigenous firms, measure the progressof indigenous firms only. (ANEPP)
n An association must have a specific plan andtime-frame for reaching financial sustainability,especially regarding sources of funds. (ANEPP)
n More random beneficiary sampling should beused rather than the current project management–guided sampling. (CAAS)
n If M&E systems rely on macro measurements(e.g., growth in total exports, sector total employ-ment), why limit assistance to indigenous firms?(ANEPP)
n Quantitative macro performance measurementsshould not be used to monitor the success ofMSE development projects. It is very difficult forthese projects to have any significant direct im-pact on macroeconomic measurements within thetime-frame of a typical USAID project. (ANEPP)Value added attributed to all USAID agribusinessprojects in Uganda must reach $25 million/yearby 2000 to achieve a 10 percent Economic Rateof Return (ERR) on expenditures through 1994,yet the maximum projected fruit and vegetableexports in the year 2000 is only $20 million.Flower and other exports attributable to USAIDprojects would have to be very large to reach thetarget growth rate. (All)
5.6.6 General Recommendations
n Private sector advisors need to be used moreextensively, especially in project design, becausethey have highly relevant experience that can beutilized to improve the efficiency and effective-ness of private sector projects. (All)
n Enterprises need reasonable equity and marketingexpertise before a return can be achieved onproject assistance. (ANEPP)
n As much emphasis should be placed on effectiveand full enforcement of existing policies and regu-lations as on the creation of new ones. (All)
n Real-world project team experience is very im-portant to help prioritize and pursue policy re-form. (EPADU)
40
n A good subsector prioritization model based onmarket potential, comparative advantage, OCA,and availability/interest of human resources isneeded very early in commercial projects. (CAAS/ANEPP)
n Detailed OCA is needed very early in a project(including design) and must be updated annu-ally. (CAAS/ANEPP)
n Because marginally viable institutions will notachieve post-assistance sustainability, project de-signers should perform a detailed assessment ofentity viability before providing support. Guide-lines are needed for making this determination.(CAAS/ANEPP)
n Delivering high-powered TA directly to smallprojects and entities is inefficient. (ANEPP)
n Smooth, logical, and timely project succession isvital to maintain local confidence in USAID ac-tivities. (ANEPP/CAAS)
n Semiannual project review forums (½ day with abroad group of beneficiaries, local governmentofficials, and private sector representatives and½ day with the project team) can be very usefulto help coordinate the project, improve its effec-tiveness, and enhance its local “ownership.” (All)
n All expatriates working on projects should havelocal hire counterparts. (ANEPP)
n There is a strong need for USAID managers towork closely with the management of supportedproject activities, especially as related todeliverables reporting and management. (DFCU)
n Keeping policy improvement “on the burner” isthe only way it will get accomplished. Therefore,all projects must contribute suggestions for high-impact policy enhancement as well as how theseimprovements can be best accomplished.(ANEPP)
n There may need to be some additional clarifica-tion and coordination between the objectives andactivities of the Mission’s agricultural develop-ment and private sector development efforts.Agribusiness is a very important sector in Uganda,
and contributes a great deal to the economy;more important, however, is its potential to leadsignificant economic development. The possibil-ity of agribusiness not getting sufficient empha-sis because it “falls in the crack” between agri-culture and private sector areas of responsibilityshould be avoided.
5.6.7 Issues Deserving Further Study
n Is broad-gauged baseline data really necessary?Isn’t measuring and monitoring progress of as-sisted firms satisfactory to determine the impactof a project or activity? (ANEPP)
n What is the best way to determine if an institution(cooperative, association, service entity) is sal-vageable or if another should be developed in itsplace? (CAAS)
n How can exporter control of integrated associa-tions be avoided? (USPA/UVEA)
n How does a project focus on NTAE but retain theflexibility to apply similar TA to the much largerdomestic and regional markets, especially forfirms that will eventually become exporters.(ANEPP)
n What is the best way to determine if existingcooperatives or new associations should be sup-ported? (CAAS) How effective is most generalmarket information? The big firms say they donot need or use it and the small firms do not knowhow to use it. Do we have effective ways tomeasure the usage of market information versusthe cost of providing it, especially by type ofinformation and type of user? (ANEPP)
n How can timing and usage control problems withPL 480 funds administered by local governmentsbe avoided? (CAAS)
n How can UMA be made financially sustainable,especially its consulting division? (CAAS/ANEPP)
n Can associations be used to improve input supplyand replace outmoded state and/or cooperativechannel(s)? (ANEPP)
41
n Why has there been no formal OCA report fromANEPP since late 1992? (ANEPP)
n The silk and vanilla examples show that NTAEdevelopment and broad-based development (i.e.,reaching out to many small farmers and women)are not mutually exclusive. What is the potentialfor outgrower/contract grower schemes involv-ing small farmers in crops other than vanilla andsilk? (Vanilla and Silk Associations)
n What is the best and most efficient way to mea-sure the full social and economic impact of sup-port to large-scale enterprises (e.g., Ziwa Rosesunder ANEPP)? This needs to be assessed inorder to address criticisms of this type of assis-
tance; that is, giving assistance to the large enti-ties who need it least. (Ziwa/ANEPP)
n Is ERR a useful measurement for projects work-ing in very embryonic environments? (All)
n How do donors best balance a policy reformproject’s need for independence from govern-ment with its need for “access”? (EPADU)
n Did CAAS use EPADU’s subsector studies as aguide for which sectors to support? (CAAS/ANEPP)
n What is the appropriate future role for coopera-tives in Uganda agribusiness or in the provisionof services to agribusinesses? (CAAS)
43
Appendix ADetailed Project Assessments*
A - 1 KEDS
A - 2 KESSFA
A - 3 SEPSO
A - 4 K-MAP
A - 5 ANEPP
A - 6 CAAS
A - 7 Silk Development Project
* Refer to the detailed questions which follow for anexplanation of the titles used under the Output column.
1) What project or activity objectives are relevant tothe areas of focus chosen for study?
2) How are these aspects of the activity innovative?
3) What performance indicators were or are beingused to monitor/measure impact of the activity?
4) How are external influences being managed?
5) How successful have the relevant interventionsbeen?
6) What new agribusiness opportunities have re-sulted from the activity?
7) What monitoring and evaluation mechanisms, sys-tems, and indicators can be suggested?
8) What relevant lessons can be learned from thisactivity? What mechanisms worked and did notwork, and how could the impact be improved/enhanced?
9) What are the relevant implications for USAIDproject design and implementation?
10) What new mechanisms or interventions can besuggested to increase the effectiveness of theseprojects or activities?
11) What are the indicators of project success thatcan be suggested, and what is the best way tomonitor those indicators?
12) What other useful information should be reportedand what are the main unresolved issues?
44
A -
1
Inno
vativ
e P
roje
ct S
umm
ary
- K
ED
S
Out
put
Are
a of
Foc
us
Cou
ntry
:K
enya
Titl
e:K
enya
Exp
ort
Dev
elop
men
t S
ervi
ces
Spo
nsor
:U
SA
ID
Sta
rt D
ate:
Mar
198
2C
ompl
etio
n D
ate:
Dec
. 31
, 19
99P
roje
ct V
alue
:$15
mill
ion
1)
Rel
evan
t O
bjec
tives
2)
How
is
it In
nova
tive?
3)
Per
form
ance
Ind
icat
ors
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
Impr
ove
capa
city
of
HC
DA
(a
para
stat
al)
tode
liver
“m
arke
t-re
leva
nt s
ervi
ces”
to
mem
bers
(ser
vice
s th
at c
ompl
emen
t ra
ther
tha
n du
plic
ate
FP
EA
K’s
ser
vice
s).
Str
engt
hen
FP
EA
K a
s a
priv
ate
sect
or t
rade
asso
n. o
rgan
izat
iona
lly.
Iden
tify
& e
nhan
ce e
xpor
t su
b-gr
oups
; in
crea
sing
pres
ence
of
expo
rter
s w
ithin
KA
M.
Sup
port
pro
gram
s ar
e fo
cuse
d di
ffere
ntly
; ta
ilore
dto
eac
h as
sn.
Now
hav
e a
solid
M&
E f
ram
ewor
k.
Thi
s in
clud
esan
ins
titut
iona
l st
reng
then
ing
trac
king
she
et f
orac
tiviti
es s
uppo
rtin
g K
AM
, F
PE
AK
, &
HC
DA
.In
clud
es s
uch
indi
cato
rs a
s nu
mbe
rs o
f pe
rson
nel
trai
ned,
pub
licat
ions
, M
IS s
ervi
ces
offe
red
tom
embe
rs,
trad
e sh
ow a
ttend
ance
& p
artic
ipat
ion,
& o
utre
ach
activ
ities
(e.
g.,
held
tw
o po
st-h
arve
stha
ndlin
g se
min
ars
with
HC
DA
).
Del
iver
dire
ct m
arke
ting
TA
to
expo
rtin
g fir
ms.
Del
iver
ind
irect
TA
thr
ough
IE
SC
.In
crea
se e
mpl
oym
ent
in t
arge
ted
firm
s.In
crea
se e
xpor
ts b
y ta
rget
ed f
irms.
Pla
ce s
peci
al e
mph
asis
on
hort
icul
tura
l pr
oduc
ts d
ue t
o th
eir
loca
l co
nten
t (in
clud
ing
labo
r),c
apac
ity t
o ge
nera
te f
orei
gnex
chan
ge &
loc
al o
wne
rshi
p.
Pol
icy
refo
rm p
rogr
am h
as h
elpe
d ac
com
plis
h m
ajor
pol
icy
&re
gula
tory
cha
nges
tha
t ha
ve e
nhan
ced
com
petit
iven
ess
ofK
enya
’s N
TA
Es.
Als
o im
port
ant
has
been
KE
DS
’ ac
tive
prom
o-tio
n of
dia
logu
e be
twee
n th
e go
vern
men
t &
priv
ate
sect
or.
Dur
ing
first
tw
o ye
ars,
dev
elop
ed s
trat
egic
con
sulta
ncy,
an
expo
rtas
sess
men
t ca
rrie
d ou
t by
KE
DS
& a
n ex
port
er’s
man
agem
ent
team
res
ulte
d in
ide
ntifi
catio
n of
the
firm
’s n
ext
stra
tegi
c ex
port
mar
ketin
g m
ove.
Pro
vide
s a
“rea
l-wor
ld”
chec
k be
fore
fun
ding
.
6% a
vera
ge a
nnua
l gr
owth
in
NT
AE
.D
irect
firm
-leve
l as
sist
ance
to
2,81
4 fir
ms
as o
f N
ov.
1994
(to
tal
valu
e: $
240,
000)
; to
hor
t. ex
port
firm
s as
sist
ed 1
4 ou
t of
28.
Incr
ease
in
fore
ign
exch
ange
ear
ning
s fr
om m
anuf
actu
ring,
hort
icul
ture
& o
ther
NT
AE
’s o
f 25
% f
rom
199
2 to
199
3 (%
incr
ease
in
sale
s/ea
rnin
gs f
or a
ssis
ted
firm
s to
be
adde
d ne
xtye
ar).
34%
inc
reas
e in
NT
AE
’S e
mpl
oym
ent
from
199
0 to
199
3 (%
incr
ease
in
assi
sted
firm
s to
be
adde
d ne
xt y
ear)
.O
rigin
al p
roje
ct o
bjec
tives
of
crea
ting
1 m
illio
n jo
bs &
$77
0m
illio
n in
for
eign
exc
hang
e re
venu
e is
un
real
istic
.
45
Non
-Tra
ditio
nal
Agr
icul
tura
l E
xpor
t D
evel
opm
ent
(esp
ecia
lly h
ortic
ultu
re)
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
e
Priv
ate
assn
s. n
ow c
oord
inat
e th
eir
mem
bers
’pa
rtic
ipat
ion
in i
nter
natio
nal
trad
e sh
ows
(for
mer
ly d
one
poor
ly b
y go
vern
men
t).
Res
ult
isan
inc
reas
e in
the
num
ber
of c
ompa
nies
part
icip
atin
g &
the
val
ue o
f sa
les
gene
rate
ddu
ring
the
show
s.M
ore
US
AID
/Em
bass
y di
alog
ue n
eede
d.
Too
ear
ly t
o de
term
ine
how
effe
ctiv
e T
A t
oas
sns.
(K
AM
, F
PE
AK
, H
CD
A)
has
been
in
inte
rnal
izin
g ex
port
ana
lytic
al c
apab
ilitie
s;ho
wev
er;
they
app
ear
bette
r ab
le t
o de
liver
tra
dein
form
atio
n tr
aini
ng,
& e
xpor
t pr
omot
ion
serv
ices
to a
gro-
proc
esso
rs,
hort
. pr
oduc
ers
& e
xpor
ters
;an
d be
tter
able
to
addr
ess
polic
y co
nstr
aint
s to
expo
rt i
nves
tmen
t &
exp
ansi
on.
KE
DS
han
ds-o
n in
volv
emen
t w
ith a
ssns
. ha
sbe
en c
ritic
al i
n he
lpin
g re
focu
s th
eir
serv
ices
so
as t
o be
tter
mee
t m
embe
rs’
need
s &
rea
lign
thei
r re
spec
tive
role
s vi
s-à-
vis
expo
rter
s.U
nfor
tuna
tely
, po
litic
s ca
nnot
be
avoi
ded
in t
hepr
oces
s, &
the
pro
cess
tak
es t
ime.
Ass
ns.
are
only
as
effe
ctiv
e as
the
man
agem
ent
pers
onne
l (p
ublic
or
priv
ate)
. T
rain
ing
peop
le,
(e.g
., in
man
agem
ent)
is
effe
ctiv
e to
the
ext
ent
that
you
can
kee
p th
e tr
aine
d in
divi
dual
s in
the
orga
niza
tion.
Ext
ende
d “t
eam
” re
trea
ts w
ork
wel
l if
prop
erly
orga
nize
d &
man
aged
.P
ublic
/priv
ate
sect
or d
ialo
gue
oppo
rtun
ities
are
very
ben
efic
ial.
Do
not
spec
ify e
xact
ins
titut
ions
pro
ject
mus
tw
ork
with
, al
low
fle
xibi
lity
to s
uppo
rt t
hose
mos
tw
illin
g.
Sev
eral
firm
s w
ho h
ave
rece
ived
KE
DS
ass
ista
nce
have
the
new
pre-
pack
pro
duct
s in
to t
he E
urop
ean
mar
ket.
Man
ufac
turin
g fir
ms
assi
sted
are
prim
arily
tar
getin
g P
TA
mar
-ke
ts,
& h
ave
used
the
ass
ista
nce
for
prod
uct
& p
acka
ge d
evel
-op
men
t, pr
omot
ion
& a
dver
tisin
g, &
mar
ketin
g pl
ans/
surv
eys.
Nee
d m
ore
focu
s on
pro
cess
ing
busi
ness
es.
Str
ateg
ic c
onsu
ltanc
ies
have
ass
iste
d sm
all
& m
ediu
m-s
cale
expo
rter
s to
ref
ocus
the
ir re
ques
ts f
or E
DF
fun
ds t
o in
clud
eob
ject
ives
tha
t w
ill h
elp
real
ize
new
mar
ket
oppo
rtun
ities
&in
crea
se e
xpor
t sa
les.
Stil
l to
o ea
rly t
o m
easu
re i
mpa
ct o
f gr
ants
(e.
g.,
on e
xpor
t sa
les)
of a
ssis
ted
firm
s; f
irst
plan
ned
impa
ct a
sses
smen
t is
for
ear
ly19
95.
Ken
ya f
reig
ht f
orw
arde
rs y
et t
o be
priv
atiz
ed.
Whe
n po
licy
envi
ronm
ent
is r
ight
, &
the
inf
rast
ruct
ure
adeq
uate
,co
mm
erci
al v
entu
res
& a
pro
ject
suc
h as
KE
DS
sup
port
ing
them
can
succ
eed.
Sm
all
& m
ediu
m-s
ized
firm
s do
not
hav
e in
-dep
thkn
owle
dge
of m
arke
t pl
anni
ng &
bud
getin
g, t
here
fore
ED
Fap
plic
ants
nee
d as
sist
ance
dev
elop
ing
thei
r re
ques
ts t
o in
clud
eob
ject
ives
tha
t w
ill h
elp
real
ize
new
mar
ket
oppo
rtun
ities
&in
crea
se e
xpor
t sa
les.
KE
DS
TA
(i.e
., st
rate
gic
cons
ulta
ncie
s) i
nth
is a
rea
has
been
crit
ical
to
the
succ
ess
of t
he g
rant
pro
cess
.T
A n
eeds
are
diff
eren
t fo
r di
ffere
nt s
ize
expo
rter
s, e
spec
ially
mar
ket
info
rmat
ion
need
s.P
roje
ct e
ffort
s m
ust
be f
ocus
ed f
or m
axim
um i
mpa
ct.
Cha
nges
in
or a
dditi
ons
to o
bjec
tives
dilu
te t
he i
mpa
ct.
Ass
ista
nce
to “
Wan
t-to
-be”
exp
orte
rs i
s in
effic
ient
use
of
proj
ect
reso
urce
s.E
xpor
ter
coop
erat
ion
mus
t be
car
eful
ly m
anag
ed d
ue t
o co
mpe
ti-tiv
e (c
arte
l po
ssib
ility
) co
nsid
erat
ions
.
The
re m
ay b
e a
good
ret
urn
on i
nves
tmen
t to
gra
nts
to s
mal
l &
med
ium
-siz
ed f
irms
once
the
y ha
ve r
ecei
ved
the
initi
al m
anag
e-
4)
New
Opp
ortu
nitie
s
5)
Suc
cess
of
Rel
evan
tIn
terv
entio
ns
6)
Less
ons
Lea
rned
46
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
Ass
ns.
can
be a
sui
tabl
e &
cos
t-ef
fect
ive
vehi
cle
for
prov
idin
g T
A t
o no
n-tr
aditi
onal
com
mod
ity e
xpor
ters
,bu
t th
ey m
ust
be w
ell
man
aged
& s
erve
the
nee
dsof
the
ir m
embe
rs.
Don
ors
can
play
an
impo
rtan
tro
le i
n he
lpin
g as
sns.
foc
us t
heir
ener
gies
pro
perly
the
first
few
yea
rs.
It is
diff
icul
t to
ant
icip
ate
wha
tth
e ne
eds
of e
ach
assn
. w
ill b
e; a
pro
ject
with
built
-in
flexi
bilit
y to
add
ress
the
se c
hang
ing
need
sis
pre
fera
ble.
Nee
d on
goin
g, f
orm
al o
pera
ting
cons
trai
nts
anal
ysis
by
type
& s
ize
firm
.
Exp
and
cove
rage
to
incl
ude
assn
s. f
ocus
ed o
nsm
all
farm
ers
& m
icro
ent
erpr
ises
, su
ch a
s S
EP
SO
& K
ES
SF
A.
Mem
ber
satis
fact
ion
surv
eys
(sho
rt,
form
al);
mem
ber
case
stu
dies
(lo
ng,
info
rmal
); f
irm-le
vel
impa
ct o
f se
min
ars/
wor
ksho
ps.
Por
tion
of e
xpor
ts t
hat
mee
t or
exc
eed
min
imum
qual
ity s
tand
ards
.M
ore
focu
s on
the
val
ue o
f ex
port
s vs
. to
nnag
e.O
vera
ll qu
ality
, co
vera
ge &
pra
gmat
ism
of
quar
terly
repo
rts,
inc
ludi
ng a
n M
&E
mat
rix.
men
t as
sist
ance
& c
ouns
elin
g in
how
bes
t to
use
the
mon
ey(s
till
too
early
to
do a
n an
alys
is o
f th
e K
ED
S-a
ssis
ted
firm
s).
Is h
elpi
ng h
igh-
valu
e ho
rtic
ultu
re &
cut
flo
wer
firm
s pr
ovid
ing
assi
stan
ce t
o a
subs
ecto
r th
at w
ould
do
quite
wel
l an
yway
?E
stab
lishi
ng a
50%
mat
chin
g re
quire
men
ts f
or g
rant
s is
ve
ryim
port
ant
to g
et t
he m
ost
serio
us p
artic
ipan
ts.
Str
ateg
ic c
onsu
ltanc
ies
wer
e ad
ded
to i
ncre
ase
the
effe
ctiv
enes
sof
firm
-leve
l su
ppor
t. E
xpor
t m
arke
t an
alys
es u
nder
take
n by
KE
Ds’
& c
hann
eled
to
expo
rter
s vi
a as
sns.
gav
e K
ED
S &
ass
ns.
mor
e cr
edib
ility
, &
als
o im
prov
ed K
ED
S a
bilit
y to
ide
ntify
exp
ort
oppo
rtun
ities
for
mem
bers
(an
d as
sist
ed f
irms)
.D
egre
e of
val
ue a
dded
in
expo
rted
pro
duce
(as
ref
lect
ed i
n hi
gher
pric
es r
ecei
ved
by e
xpor
ters
).E
xten
t to
whi
ch p
rodu
cers
or
expo
rter
s co
ntra
ct d
irect
ly w
ith r
etai
lch
ains
or
key
dist
ribut
ors
of p
rodu
ce i
n E
U m
arke
ts (
vs.
Tho
roug
hag
ents
).S
ix-m
onth
fol
low
-up
of p
erfo
rman
ce m
easu
res
with
ass
iste
d fir
ms,
as w
ell
as h
ow w
ell
they
met
the
obj
ectiv
es a
gree
d to
in
orde
r to
rece
ive
the
gran
t.A
djus
t pr
ojec
t ob
ject
ives
as
proj
ect
mat
ures
due
to
chan
ges
inU
SA
ID e
mph
asis
& l
ocal
as
wel
l as
int
erna
tiona
l m
arke
t co
ndi-
tions
.
7)
Rel
evan
t Im
plic
atio
ns f
orU
SA
ID P
roje
ct D
esig
n &
Impl
emen
tatio
n
8)
New
Mec
hani
sms
toIn
crea
se P
roje
ct E
ffect
iven
ess
47
A -
2
Inno
vativ
e P
roje
ct S
umm
ary
- K
ES
SF
A
Out
put
Are
a of
Foc
us
Cou
ntry
:K
ES
SF
AT
itle:
Ken
ya S
mal
l S
cale
Spo
nsor
:H
ans
Sei
del
Fdt
n F
arm
ers
Ass
oc.
(Ger
man
y)
Sta
rt D
ate:
Jan.
199
3C
ompl
etio
n D
ate:
Jan.
199
6P
roje
ct V
alue
:250
,000
DM
yea
r, U
S $
370,
000
year
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
1)
Rel
evan
t O
bjec
tives
2)
How
Inn
ovat
ive
3)
Per
form
ance
Ind
icat
ors
4)
Suc
cess
of
Rel
evan
tIn
terv
entio
ns
5)
New
Opp
ortu
nitie
s6)
Les
sons
Lea
rned
Attr
act
2,00
0 m
embe
rs w
ithin
150
km
. ra
dius
of
Nai
robi
(sm
all-s
cale
, av
g. 1
ha.
, ho
rt.
farm
ers)
;as
sist
the
m t
o or
gani
ze i
nto
viab
le u
nits
(S
HG
s)-
who
the
n be
long
to
KE
SS
FA
.
Get
ting
hort
. fa
rmer
s to
geth
er i
nto
viab
le s
elf-
help
gro
ups
(S
HG
s);
also
add
ress
ing
smal
lfa
rmer
NT
AE
mar
ketin
g is
sue
(i.e.
, K
ES
SF
Aco
ntra
ctin
g di
rect
ly w
ith e
xpor
ters
).
Mem
bers
hip
in K
ES
SF
A.
Pric
e re
ceiv
ed b
y m
embe
rs (
com
pare
d to
pric
esre
ceiv
ed f
rom
bro
kers
).
Stil
l to
o ea
rly t
o ev
alua
te s
ucce
ss o
f S
HG
s &
KE
SS
FA
’s w
ork,
par
ticul
arly
tra
inin
g.
Stil
l to
o ea
rly t
o de
term
ine.
A
n in
nova
tion
KE
SS
FA
wou
ld l
ike
to
try
is t
o pa
y fa
rmer
sdi
rect
ly i
nto
thei
r ba
nk a
ccou
nts
(mai
ntai
ning
priv
acy
for
farm
ers)
; bu
t E
SS
FA
eed
sys
tem
sad
vice
.W
ould
lik
e to
pro
vide
tra
nspo
rt (
now
pro
vide
d by
agen
ts)
to t
he m
ore
diffi
cult
to r
each
far
mer
s.
SH
Gs
mus
t be
sm
all
(bet
wee
n 20
& 4
0 m
em-
bers
) &
hav
e so
met
hing
in
com
mon
(e.
g.,
wat
er
Del
iver
dire
ct T
A t
o S
HG
s.In
crea
se p
rodu
ctio
n &
am
ount
of
hort
icul
tura
l pr
oduc
ts m
arke
ted
Mar
ket
mem
bers
’ ou
tput
at
pric
es b
ette
r th
an t
hose
of
the
agen
ts.
KE
SS
FA
is
atte
mpt
ing
to g
ive
smal
l-sca
le f
arm
ers
mor
e le
vera
gein
dea
ling
with
exp
orte
rs b
y ac
ting
as p
rinci
pal
& n
egot
iatin
g fo
rth
e S
HG
s w
ith e
xpor
ters
; E
xpor
ters
adv
ance
see
ds t
o K
ES
SF
A,
who
in
turn
adv
ance
s th
em t
o fa
rmer
s (c
ost
is d
educ
ted
afte
rfa
rmer
s’ p
rodu
ce i
s so
ld).
Jan.
199
4–2,
100
mem
bers
(10
4 S
HG
s);
Sep
t. 19
94–2
,700
mem
bers
.
Mem
bers
hav
e re
ceiv
ed o
n av
erag
e 25
–30%
hig
her
pric
es f
orgr
een
bean
s th
an p
rices
fro
m K
ES
SF
A r
ecei
ved
from
bro
kers
; bu
tne
ed t
o ta
lk t
o m
embe
rs a
bout
suc
cess
of
mar
ketin
g ef
fort
s by
KE
SS
FA
.
KE
SS
FA
has
tar
gete
d se
vera
l N
TA
E’S
cro
ps,
incl
udin
g gr
een
bean
s, s
now
pea
s, a
voca
dos,
man
goes
, &
pas
sion
fru
it.C
urre
ntly
not
wor
king
on
mor
e va
lue-
adde
d ac
tiviti
es c
lose
r to
the
farm
, bu
t ar
e co
nsid
erin
g co
ld s
tore
s to
put
far
mer
s in
a p
ositi
onto
con
trac
t w
ith p
re-p
ack
expo
rter
s.
KE
SS
FA
is
face
d w
ith t
he p
robl
em o
f fa
rmer
s pr
oduc
ing
mor
eth
an t
he a
mou
nt K
ES
SF
A n
egot
iate
d fo
r w
ith e
xpor
ters
; K
ES
SF
A
48
Non
-Tra
ditio
nal
Agr
icul
tura
l E
xpor
t D
evel
opm
ent
(esp
ecia
lly h
ortic
ultu
re)
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
e
sour
ce,
trib
e,)
to g
ive
them
str
ong
ties.
The
y jo
inK
ES
SF
A a
s a
grou
p, b
ut p
ay a
s in
divi
dual
s.
Alth
ough
stil
l ea
rly,
KE
SS
FA
may
be
a go
od m
odel
of h
ow t
o br
idge
the
gap
bet
wee
n ex
port
ers
& s
mal
l-sc
ale
farm
ers.
T
he m
ost
impo
rtan
t in
terv
entio
n is
the
hand
s-on
tra
inin
g re
late
d to
for
min
g &
mai
ntai
n-in
g vi
able
SH
Gs.
M
ay n
eed
to f
orm
wom
en-o
nly
SH
Gs
so t
hey
do n
ot l
ose
out
to t
he m
en b
ecau
seof
the
exp
ort
crop
foc
us.
KE
SS
FA
wou
ld l
ike
to p
rovi
de c
redi
t &
inp
utse
rvic
es.
Mem
ber
surv
eys
(sho
rt,
form
al);
mem
ber
case
stud
ies
(long
, in
form
al);
far
m-le
vel
impa
ct o
f as
sn.
Can
KE
SS
FA
ove
rcom
e cu
rren
t pr
oble
m o
f so
me
farm
ers
selli
ng p
rom
ised
pro
duce
to
othe
r tr
ader
s.
30–3
5% o
f m
embe
rs a
re w
omen
(m
ay b
e a
dang
erof
los
ing
wom
en d
ue t
o e
xpor
t cr
op o
rient
atio
n, &
the
tend
ency
for
men
to
dom
inat
e in
the
are
a of
expo
rt c
rops
)
7)
Rel
evan
t Im
plic
atio
ns f
orU
SA
ID P
roje
ct D
esig
n &
Impl
emen
tatio
n
8)
New
Mec
hani
sms
toIn
crea
se P
roje
ct E
ffect
iven
ess
9)
Sug
gest
ed I
ndic
ator
s
10)
Oth
er I
nfor
mat
ion
then
fee
ls i
t m
ust
purc
hase
the
pro
duct
; th
e lo
cal
trad
ers
bein
gus
ed b
y K
ES
SF
A t
o co
llect
pro
duce
try
to
frus
trat
e K
ES
SF
Abu
ying
effo
rts;
sol
utio
n w
ould
be
for
KE
SS
FA
to
buy
its o
wn
truc
ks (
but
may
be
an e
xpen
sive
sol
utio
n).
Ear
ly c
ritic
al t
est
will
be
whe
ther
KE
SS
FA
will
mai
ntai
n its
com
mer
cial
orie
ntat
ion
& b
e sk
illed
eno
ugh
to n
egot
iate
suc
cess
-fu
lly o
n be
half
of t
he f
arm
ers
with
exp
orte
rs (
and
com
pete
with
othe
r ex
port
ers)
. P
robl
ems
may
aris
e if
they
los
e th
eir
com
mer
-ci
al o
rient
atio
n fo
r a
“let’s
hel
p al
l th
e sm
allh
olde
rs”
philo
soph
y.
In f
utur
e, f
orm
ano
ther
com
pany
with
sha
re c
apita
l so
ld t
om
embe
rs,
with
the
ir ow
n co
ld s
tore
& t
rans
port
atio
n, e
xpor
ting
dire
ctly
.
Incr
ease
in
mar
kete
d ou
tput
by
SH
Gs
(par
ticul
arly
of
new
cro
ps);
diffe
renc
e in
pric
es r
ecei
ved
by m
embe
rs f
rom
KE
SS
FA
and
the
pric
es b
eing
pai
d by
tra
ders
(al
read
y be
ing
mea
sure
d) o
ver
seve
ral
seas
ons.
You
ng m
en i
n pa
rtic
ular
are
attr
acte
d to
pro
duci
ng h
ort.
crop
s &
join
ing
KE
SS
FA
.
49
A -
3
Inno
vativ
e P
roje
ct S
umm
ary
- S
EP
SO
Out
put
Are
a of
Foc
us
Cou
ntry
:K
enya
Titl
e:S
EP
SO
Sta
rt D
ate:
Jan.
199
3C
ompl
etio
n D
ate:
1998
1)
Rel
evan
t O
bjec
tives
2)
How
Inn
ovat
ive
3)
Per
form
ance
Ind
icat
ors
4)
Suc
cess
of
Rel
evan
tIn
terv
entio
ns
5)
New
Opp
ortu
nitie
s
6)
Less
ons
Lear
ned
FN 1)
Sup
port
the
dev
elop
men
t of
a K
enya
n m
iddl
e cl
ass.
2)
Est
ablis
h a
succ
essf
ul m
odel
for
SM
E s
uppo
rt e
ntiti
es e
lsew
here
.S
EP
SO
1)
Pro
fitab
ly p
rovi
de b
usin
ess
serv
ices
to
smal
l en
terp
rises
; sp
ecifi
c go
als:
20%
cos
t re
cove
ry f
irst
year
; in
crea
se b
y20
% p
er
year
; fin
anci
ally
sel
f-su
stai
ning
at
the
end
of 5
yea
rs.
2)
Sus
tain
& i
mpr
ove
exis
ting
busi
ness
es (
focu
s on
you
ng,
prom
isin
g, i
nnov
ativ
e bu
sine
sses
).3)
E
stab
lish
stro
ng b
usin
ess
part
ners
hips
with
clie
nts.
SE
PS
O e
stab
lishe
s an
ong
oing
par
tner
ship
with
the
firm
s it
assi
sts;
fol
low
s up
with
clie
nts
ever
y m
onth
. T
heir
prim
ary
activ
ity,
finan
cial
con
sulti
ng,
is a
mea
ns t
o ge
nera
te b
road
er b
ased
con
sulta
ncy
wor
k (i.
e.,
is a
mar
ketin
g/cu
stom
erre
latio
ns t
ool).
Thi
s in
crea
ses
thei
r ab
ility
to
cove
r m
ore
of t
heir
activ
ities
/exp
ense
s th
roug
h ch
argi
ng f
ees.
Sha
res
in t
he c
ompa
ny a
re o
wne
d by
sen
ior
man
ager
s so
com
pany
suc
cess
is
impo
rtan
t to
the
ir pe
rson
al s
ucce
ss.
Six
cur
rent
sta
ff, t
he t
arge
t is
, N
ine:
Tw
o T
echn
ical
, tw
o ac
coun
ting,
tw
o m
arke
ting.
SE
PS
O’s
rev
enue
s vs
. co
sts
as p
er p
lan
rath
er t
han
the
num
ber
of s
emin
ars
held
. C
urre
ntly
not
mon
itorin
g cl
ient
s’pe
rfor
man
ce.
Sta
rted
lat
e 19
93;
Rec
over
ed 2
0% o
f co
sts
in f
irst
year
. C
urre
ntly
hav
e 14
0 cl
ient
s (1
5–20
% a
gric
ultu
re-b
ased
), w
hobe
com
e S
EP
SO
clie
nts
if th
ey a
re w
illin
g to
pay
reg
istr
atio
n fe
e of
100
0 S
hs (
$20)
. M
ost
popu
lar
serv
ice
is:
acco
unt-
ing;
is
espe
cial
ly a
ppre
ciat
ed b
y cl
ient
s w
ith n
o tr
aini
ng i
n ac
coun
ting.
S
emin
ars
wer
e ju
dged
ver
y us
eful
by
seve
ral
clie
nts
as a
mea
ns t
o le
arn
mor
e ab
out
appr
oach
es t
o bu
sine
ss &
mar
ketin
g, s
ourc
es o
f fin
ance
, &
for
ex
posu
re t
oot
her
entr
epre
neur
s w
ith s
imila
r pr
oble
ms .
199
4 re
venu
e K
Sh
700,
000
($35
,000
).Q
uart
erly
lun
cheo
ns f
or m
embe
rs a
re r
ated
ver
y us
eful
by
mem
bers
.
Str
engt
hs,
Wea
knes
ses,
opp
ortu
nitie
s an
d T
hrea
ts a
naly
sis
done
for
clie
nts
incl
udes
ide
ntifi
catio
n of
new
opp
ortu
ni-
ties,
suc
h as
pos
sibl
e ne
w m
arke
ts,
prod
ucts
, et
c.;
& a
lso
deve
lops
new
con
sulti
ng b
usin
ess
for
SE
PS
O.
Clie
nts
say
sem
inar
s ha
ve b
een
very
hel
pful
with
res
pect
to
lear
ning
mor
e ab
out
mar
ketin
g.
Clie
nts
are
dem
andi
ng q
uite
sop
hist
icat
ed s
ervi
ces;
req
uire
s sk
illed
SE
PS
O e
mpl
oyee
s to
pro
vide
thi
s te
chni
cal
assi
stan
ce,
ther
efor
e it
is i
mpo
rtan
t to
bui
ld i
nter
nal
capa
city
ahe
ad o
f bu
sine
ss v
olum
e.
Nee
ds o
f ag
ribus
ines
s
50
Out
put
clie
nts
are
very
sim
ilar
to o
ther
clie
nt’s
nee
ds.
Mos
t cl
ient
s do
not
kno
w a
bout
sou
rces
of
finan
ce;
for
man
y th
eir
need
for
fund
s ar
ises
fro
m c
ash
flow
pro
blem
s. S
EP
SO
nee
ds t
o be
an
ongo
ing
busi
ness
par
tner
, no
t an
out
side
sup
plie
r.C
lient
s ne
ed s
truc
ture
& s
yste
ms
for
orga
nizi
ng t
heir
busi
ness
es,
espe
cial
ly m
arke
ting
and
acco
untin
g.
Sm
alle
r &
star
tup
clie
nts,
hav
e lim
ited
abili
ty t
o pa
y fo
r se
rvic
es,
espe
cial
ly t
hose
inv
olve
d in
sea
sona
l bu
sine
sses
. T
he d
evel
op-
men
t of
sta
ff (a
nd s
tron
g ba
ck-u
p) t
o st
ay c
urre
nt &
ahe
ad o
f cl
ient
s ha
s be
en a
maj
or c
halle
nge;
bec
ause
sta
ff of
ten
leav
e af
ter
bein
g tr
aine
d. A
ccou
ntin
g is
a n
eede
d se
rvic
e, b
ut i
s hi
ghly
com
petit
ive
so i
t is
use
d as
a d
oor
open
er t
hat
will
hop
eful
ly l
ead
to a
n on
goin
g re
latio
nshi
p.
Pro
ject
s as
sist
ing
entr
epre
neur
s/sm
all
busi
ness
es s
houl
d th
emse
lves
be
set
up l
ike
a bu
sine
ss,
& e
valu
ated
usi
ng t
hesa
me
crite
ria a
pplie
d to
clie
nts
(i.e.
, by
loo
king
at
the
botto
m l
ine)
. T
he a
bilit
y to
gen
erat
e en
ough
rev
enue
s (b
y sa
tisfy
ing
clie
nts)
to
beco
me
finan
cial
ly s
elf-
sust
aini
ng a
fter
a pe
riod
of a
roun
d 5
year
s ru
n sh
ould
be
an i
mpo
rtan
t ob
ject
ive
and
eval
uatio
n.
In t
he f
utur
e, S
EP
SO
wou
ld l
ike
to i
nclu
de a
ven
ture
cap
ital
faci
lity
(equ
ity a
ssis
tanc
e),
whi
le m
aint
aini
ng b
usin
ess
serv
ices
to
clie
nts.
M
ore
use
of o
ther
ser
vice
pro
vide
rs a
s su
bcon
trac
tors
(e.
g.,
for
ISO
900
0).
1)
Gro
wth
rat
e in
num
ber
of c
lient
s.2)
N
ew b
usin
ess
succ
ess
rate
.3)
N
umbe
r of
em
ploy
ees
befo
re &
afte
r en
gagi
ng S
EP
SO
’s s
ervi
ces.
4)
Sal
es v
olum
e/va
lue
befo
re &
afte
r S
EP
SO
.5)
C
lient
’s r
even
ues-
cost
s pr
ofita
bilit
y.6)
C
lient
sat
isfa
ctio
n su
rvey
s.
SE
PS
O i
s ha
ving
diff
icul
ty c
olle
ctin
g pa
ymen
ts f
rom
clie
nts.
To
a ce
rtai
n ex
tent
, th
ose
firm
s m
ost
need
ing
assi
stan
ce a
reth
e on
es l
east
abl
e to
pay
for
it
(rai
sing
the
que
stio
n, s
houl
d S
EP
SO
be
expe
cted
to
be c
ompl
etel
y fin
anci
ally
sel
f-su
stai
ning
?).
Frie
dric
h N
aum
ann
Fou
ndat
ion
fee
ls t
hat
one
way
to
achi
eve
leve
rage
is
to s
et u
p a
wor
king
mod
el,
(i.e.
,an
org
aniz
atio
n lik
e S
EP
SO
), t
hat
can
be r
eplic
ated
in
othe
r se
gmen
ts o
f th
e m
arke
t (e
.g.,
outs
ide
Nai
robi
, ag
ribus
ines
s-fo
cuse
d).
Prio
r co
oper
atio
n w
ith t
he K
enya
n F
eder
atio
n of
Em
ploy
ers
was
aba
ndon
ed d
ue t
o m
inim
al f
eder
atio
n co
ntrib
u-tio
ns.
Act
iviti
es a
re 7
5% d
irect
bus
ines
s se
rvic
es (
mos
tly a
ccou
ntin
g/fin
anci
al)
& 2
5% t
rain
ing.
Sta
ff is
100
% K
enya
n, a
lso
all
Kik
oyu.
Are
a of
Foc
us
Sm
all
and
Med
ium
Ent
erpr
ise
Dev
elop
men
t
7)
Rel
evan
t Im
plic
atio
ns f
orU
SA
ID P
roje
ct D
esig
n &
Impl
emen
tatio
n
8)
New
Mec
hani
sms
toIn
crea
se P
roje
ct E
ffect
iven
ess
9)
Sug
gest
ed I
ndic
ator
s
10)
Oth
er I
nfor
mat
ion
51
A -
4
Inno
vativ
e P
roje
ct S
umm
ary
- K
-MA
P
Out
put
Are
a of
Foc
us
Cou
ntry
:K
enya
Titl
e:K
enya
Man
agem
ent
Spo
nsor
:S
ome
US
AID
+ O
DA
+ P
r. S
ecto
r A
ssis
tanc
e
Sta
rt D
ate:
1986
Com
plet
ion
Dat
e:O
ngoi
ngP
roje
ct V
alue
:‘87
- ‘
92 -
$56
0,00
0 fr
om A
ID
1)
Rel
evan
t O
bjec
tives
2)
How
is
it In
nova
tive
3)
Per
form
ance
Ind
icat
ors
4)
Ext
erna
l In
fluen
ces
5)
Rel
evan
t S
ucce
ss
6)
Mea
sure
men
t Im
prov
emen
ts
Incr
ease
priv
ate,
for
mal
sec
tor
grow
th b
y pr
ovid
ing
one-
on-o
ne a
ssis
tanc
e to
SM
Es
by e
xecu
tives
of
the
larg
er K
enya
nco
mpa
nies
.P
rovi
de w
orks
hops
& t
rain
ing
to S
ME
s to
enh
ance
the
ir ra
te o
f de
velo
pmen
t.P
rovi
de m
ater
ials
(bo
okle
ts,
mag
azin
es,
tape
s, e
tc.)
to
help
dev
elop
SM
E m
anag
ers.
Red
uce
the
smal
l bu
sine
ss m
orta
lity
rate
thr
ough
the
pro
visi
on o
f m
anag
emen
t &
tec
hnic
al a
ssis
tanc
e; e
stab
lish
linka
ges
betw
een
smal
l &
lar
ge b
usin
esse
s
Fun
ded
by p
rivat
e en
terp
rises
(m
ostly
maj
ors)
& d
onor
s.S
ubco
ntra
ctin
g ex
chan
ge b
etw
een
big
& s
mal
l bu
sine
sses
.P
rogr
am f
or r
educ
ed (
150%
to
50%
) lo
an c
olla
tera
l re
quire
men
t by
1+
yea
r cl
ient
s; p
roje
ct g
ets
smal
l co
mm
issi
on.
Wor
ksho
ps o
n “B
uild
ing
Con
stitu
ency
for
Eco
nom
ic C
hang
e”
- fo
rum
s w
ith g
over
nmen
t, la
rge
com
pani
es,
& S
ME
sre
gard
ing
polic
y &
ena
blin
g en
viro
nmen
t is
sues
.
Sur
viva
l &
gro
wth
rat
es o
f re
gist
ered
clie
nts.
Def
aults
on
“spo
nsor
ed”
loan
s.P
rogr
ess
tow
ards
sel
f-su
ffici
ency
. 1
993
= 4
0%,
1994
= 2
0% (
expa
nded
sta
ff),
1999
tar
get
=10
0%.
Atti
tude
of
clie
nts,
spo
nsor
s, c
ouns
elor
s, &
gov
ernm
ent
tow
ard
K-M
AP
.
Suc
cess
of
larg
e co
mpa
nies
& t
ime
avai
labi
lity
of c
ouns
elor
exe
cutiv
es.
Sup
port
fro
m d
onor
s &
sou
rces
of
TA
, in
clud
ing
univ
ersi
ties
& r
etire
d in
tern
atio
nal
exec
utiv
es.
186
med
ium
& l
arge
“pr
ovid
er”
com
pani
es (
70%
ind
igen
ous)
, 78
act
ive
supp
orte
rs,
& 8
00 c
umul
ativ
e cl
ient
com
pani
es(3
50 a
ctiv
e).
Less
tha
n 10
% f
ailu
re r
ate
for
(scr
eene
d) c
lient
s.N
o de
faul
ts o
n “s
pons
ored
” lo
ans
(new
pro
gram
).T
here
are
add
ition
al d
onor
s su
ppor
ting
the
prog
ram
(e.
g.,
OD
A).
Has
bee
n op
erat
ing
for
8 ye
ars.
Fin
anci
al p
rogr
ess
of a
ssis
ted
clie
nts,
bot
h du
ring
& a
fter
activ
e as
sist
ance
.U
pdat
e cl
ient
sat
isfa
ctio
n su
rvey
(no
t do
ne s
ince
199
2).
Link
con
tinue
d do
nor
supp
ort
to p
rogr
ess
tow
ard
finan
cial
sus
tain
abili
ty (
or a
mou
nt o
f cl
ient
fee
s) &
ave
rage
clie
ntra
ting.
52
Pla
ce m
ore
emph
asis
on
tech
nica
l co
nsul
ting.
Enh
ance
int
erna
l re
sear
ch &
inf
orm
atio
n pr
ovis
ion
capa
bilit
y.C
hair
nonf
inan
cial
sub
com
mitt
ee o
n po
licy
refo
rm o
f K
enya
n go
vern
men
t.E
stab
lish
a se
para
te u
nit
focu
sed
on a
grib
usin
ess
(usi
ng T
A f
rom
the
Dut
ch).
Ong
oing
for
ums
with
ind
ustr
y or
fun
ctio
nal
focu
s.
One
-on
one
coun
selin
g &
wor
ksho
ps j
udge
d m
ost
valu
able
by
clie
nts.
Sec
tora
l w
orks
hops
are
diff
icul
t to
org
aniz
e &
sta
ff bu
t ar
e of
gre
at b
enef
it w
hen
wel
l do
ne.
Bet
ter
coun
selo
r m
anag
emen
t &
tra
inin
g w
ould
yie
ld s
igni
fican
t re
turn
s.K
eep
K-M
AP
sta
ff in
coo
rdin
atio
n &
out
of
dire
ct c
onsu
lting
; us
e pr
actit
ione
rs.
Clie
nt i
nvol
vem
ent
in p
re-s
cree
ning
act
ivity
& a
ny f
easi
bilit
y st
udie
s is
ess
entia
l fo
r cl
ient
“ow
ners
hip.
”T
here
is
som
e di
fficu
lty g
ettin
g cl
ient
s to
pay
the
ful
l co
st o
f se
rvic
es.
Em
ploy
men
t se
rvic
e di
d no
t w
ork
beca
use
clie
nts
wer
e no
t w
illin
g to
pay
.
Com
mer
cial
com
pani
es d
o no
t w
ant
gove
rnm
ent
invo
lved
in
proj
ect
impl
emen
tatio
n.K
enya
n (A
fric
an)
“ow
ners
hip”
is
impo
rtan
t to
pro
gram
suc
cess
/pro
gres
s.B
ig
mul
tinat
iona
ls’
inte
rnat
iona
l m
arke
ting
capa
bilit
ies
is v
ery
impo
rtan
t fo
r m
arke
ting
skill
s de
velo
pmen
t.
Bus
ines
s G
row
th P
rogr
am—
inte
nsiv
e (1
2 w
orks
hops
& 6
con
sulti
ng s
essi
ons
over
6 m
onth
s) f
or y
oung
ent
repr
eneu
rd
eve
lop
me
nt.
Inte
rnal
res
earc
h ca
pabi
lity
for
answ
erin
g m
embe
rs’
ques
tions
& d
oing
res
earc
h on
top
ics
of c
omm
on i
nter
est,
(e.g
.,po
licy
chan
ge i
mpa
ct).
Look
ing
at a
ven
ture
cap
ital
com
pone
nt f
or m
ediu
m-s
ized
com
pani
es.
Sal
es,
earn
ings
, &
em
ploy
men
t gr
owth
of
assi
sted
clie
nts.
Tim
e in
vest
men
t of
cou
nsel
ors
& t
imel
y fil
ing
of r
epor
ts.
Ave
rage
lev
el o
f ex
ecut
ive
part
icip
atin
g as
cou
nsel
ors.
Rat
ings
on
annu
al c
lient
sur
vey.
40%
of
clie
nts
are
wom
en.
Wor
ksho
p pa
rtic
ipan
ts p
ay 5
0% o
f co
sts.
Man
y (2
0%)
agrib
usin
ess
clie
nts;
mat
ch t
hem
with
agr
ibus
ines
s co
unse
lors
; bu
t th
eir
need
s ar
e si
mila
r to
oth
ers.
Ave
rage
clie
nt h
as 1
0 em
ploy
ees.
12 f
ull-t
ime
staf
f.
7)
New
Opp
ortu
nitie
s
8)
Less
ons
Lear
ned
9)
Rel
evan
t Im
plic
atio
ns
10)
New
Mec
hani
sms
11)
Sug
gest
ed I
ndic
ator
s
12)
Oth
er I
nfor
mat
ion
Out
put
Are
a of
Foc
us
SM
E D
evel
opm
ent
& S
uste
nanc
e
53
A -
5
Inno
vativ
e P
roje
ct S
umm
ary
- A
NE
PP
Out
put
Are
a of
Foc
us
Cou
ntry
:U
gand
aT
itle:
AN
EP
P/P
h3 (
3rd
Pha
se A
NE
PP
) A
gric
ulut
ural
Non
-Tra
ditio
nal
Exp
ort
Pro
mot
ion
Pro
ject
Sta
rt D
ate:
1992
Com
plet
ion
Dat
e:19
94P
roje
ct V
alue
:$13
.5 m
illio
n N
PA
in 1
992
+ $
10 m
illio
n
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
1)
Rel
evan
t O
bjec
tives
2)
How
is
it In
nova
tive?
3)
Per
form
ance
Ind
icat
ors
4)
Man
agem
ent
of E
xter
nal
Fa
cto
rs
Orig
inal
ly,
TA
was
int
ende
d to
ide
ntify
& w
ork
with
an
asso
ciat
ion;
thi
s w
as m
odifi
ed d
ue t
oth
e im
mat
ure
natu
re o
f ex
istin
g as
sns.
F
ollo
w-
up p
roje
ct (
IDE
A)
will
fur
ther
pur
sue
asso
cia-
tion
deve
lopm
ent.
How
will
the
Van
illa
Ass
ocia
tion
coa
lesc
e &
stay
tog
ethe
r w
ithou
t U
VA
N d
oing
mos
t of
the
wo
rk?
Dev
elop
men
t of
the
NT
AE
sub
sect
or w
illst
imul
ate
inte
rest
in
the
rele
vant
ass
ns.
Incr
ease
exp
ort
earn
ings
.In
crea
se e
mpl
oym
ent
in N
TA
E s
ecto
r.Id
entif
y ex
port
opp
ortu
nitie
s &
pro
mot
e ex
port
s.P
rovi
de T
A t
o ex
port
ers.
Div
ersi
fy e
xpor
t ba
se.
Obj
ectiv
es c
an b
e gr
oupe
d in
to f
our
area
s: -
R
emov
al o
f pr
actic
al d
iffic
ultie
s -
P
rovi
sion
of
mar
ket
info
-
Dev
elop
key
tec
hnic
al s
kills
in
R&
D s
uppo
rt s
ervi
ces
-
Dev
elop
men
t of
, &
sup
port
to,
sec
tor
assn
s.
EP
AD
U (
supp
orte
d by
AN
EP
P)
is a
goo
d m
odel
of
an a
uton
o-m
ous
polic
y an
alys
is u
nit
with
a v
ery
posi
tive
impa
ct o
n po
licie
saf
fect
ing
NT
AE
exp
orte
rs &
gro
wer
s. O
CA
P (
Ope
ratio
nal
Con
-st
rain
ts A
naly
sis
Pro
ject
), u
nder
take
n by
EP
AD
U/A
NE
PP
, w
ithfu
nds
& T
A a
ssis
tanc
e fr
om A
PD
F,
iden
tifie
d, o
n bo
th a
for
mal
&in
form
al b
asis
, sp
ecifi
c op
erat
iona
l co
nstr
aint
s to
NT
AE
s,pr
ovid
ed T
A t
o hi
gh p
oten
tial
firm
s to
ove
rcom
e th
em,
& u
sed
the
OC
A r
esul
ts t
o he
lp b
ring
abou
t po
licy
chan
ge.
Onl
y ex
-am
ple
foun
d of
pos
t-fin
ance
ass
ista
nce
by A
PD
F.
Han
ds-o
nw
ork
of E
PA
DU
, pr
imar
ily b
y lo
cals
, to
stim
ulat
e 2n
d tie
r fir
ms
topu
rsue
opp
ortu
nitie
s.
Prim
arily
pro
cess
ind
icat
ors,
suc
h as
num
ber
of p
eopl
e ta
ken
over
seas
, sp
ecifi
c se
rvic
es p
rovi
ded
by t
he p
roje
ct,
phys
ical
esta
blis
hmen
t of
cro
ps i
n th
e tr
ials
pro
gram
. A
lso
chan
ges
(dou
blin
g) o
f ex
port
val
ues
of a
ll co
mm
odity
gro
ups
with
inho
rtic
ultu
ral
sect
or &
inc
reas
e in
ave
rage
uni
t va
lue
(i.e.
, am
ount
of v
alue
add
ed).
54
5)
Suc
cess
of
Rel
evan
tIn
terv
entio
ns
6)
New
Opp
ortu
nitie
s fr
omth
e P
roje
ct
7)
Sug
gest
ed M
easu
rem
ent
& E
valu
atio
n Im
prov
emen
ts
Ver
y m
inim
al p
rogr
ess
mad
e du
e to
the
ver
yem
bryo
nic
natu
re o
f th
e su
bsec
tor.
A b
road
-bas
ed e
xpor
ters
ass
ocia
tion
coul
d be
deve
lope
d fa
irly
soon
.
Est
ablis
h fo
rmal
crit
eria
for
don
or a
ssoc
iatio
nsu
ppor
t &
com
mun
icat
e to
ass
n.
Con
side
ratio
n gi
ven
to e
xcha
nge
rate
im
pact
in
1994
. H
igh
tran
spor
tatio
n co
sts
to E
urop
ean
mar
kets
rel
ativ
e to
tho
se o
fW
est
Afr
ican
com
petit
ors
mak
e so
me
othe
rwis
e hi
gh-p
oten
tial
crop
s no
ncom
petit
ive
from
a p
rodu
ctio
n st
andp
oint
. E
PA
DU
polic
y m
odifi
catio
n su
cces
ses
big
help
re:
ena
blin
g en
viro
n-m
ent.
Val
ue o
f al
l ho
rt.
expo
rts
has
incr
ease
d fr
om $
410,
000
in 1
991/
92 t
o $3
.25
mill
ion
in 1
993/
94 (
expe
cted
to
be $
8.4
mill
ion
in19
95).
OC
AP
onl
y m
argi
nally
suc
cess
ful;
min
imum
siz
e pr
ojec
tfo
r A
PD
F a
ssis
tanc
e to
o la
rge
vers
us l
ocal
nee
ds.
Pac
kagi
ngim
port
sub
stitu
tion
& a
irpor
t co
ld s
tore
ass
ista
nce
very
hel
pful
.G
ood
loca
l ca
paci
ty-b
uild
ing
for
NT
AE
, O
CA
,& p
olic
y m
odifi
ca-
tion.
Pro
ject
man
agem
ent
& f
inan
cial
ass
ista
nce
to v
arie
tyad
apta
tion
wor
k w
as a
sig
nific
ant
bene
fit.
1st-
tie
r fir
ms
doin
gw
ell,
have
ove
rcom
e m
any
prod
uctio
n &
mar
ketin
g co
nstr
aint
sov
er t
he p
ast
two
year
s &
ide
ntifi
ed n
ew o
ppor
tuni
ties
via
AN
EP
P t
echn
ical
ass
ista
nce.
AN
EP
P i
dent
ified
(th
roug
h ba
selin
e st
udie
s) t
hree
hig
h-po
tent
ial
NT
AE
are
as o
n w
hich
to
focu
s re
sour
ces:
fre
sh h
igh-
valu
e(f
low
ers)
, st
rong
reg
iona
l m
arke
t po
ssib
ilitie
s (m
aize
& b
eans
),&
non
peris
habl
e hi
gh-v
alue
(sp
ices
); a
lso
iden
tifie
d ne
w c
rops
(e.g
., as
para
gus
& l
eath
er l
eaf)
pre
viou
sly
not
grow
n in
Uga
nda;
purs
ued
crop
tria
ls &
hel
ped
over
com
e m
arke
ting
cons
trai
nts
face
d by
ass
iste
d fir
ms.
Str
atify
firm
s in
to t
he t
hree
siz
e gr
oupi
ngs
& f
ollo
w p
erfo
rman
ce(e
.g.,
sale
s, r
etur
ns,
empl
oym
ent
of a
ssis
ted
firm
s) b
y si
ze.
Mea
sure
sec
onda
ry i
mpa
ct o
f la
rge
firm
ass
ista
nce
(e.g
., Z
iwa)
.N
eed
bette
r pr
ojec
t pr
ogre
ss r
epor
ting.
Bas
elin
e m
acro
dat
a is
poor
, bu
t is
it
real
ly n
eces
sary
? If
M&
E f
ocus
es o
n m
acro
mea
sure
men
t, w
hy l
imit
assi
stan
ce t
o in
dige
nous
firm
s? C
anpr
ogra
m s
ucce
ss b
e m
easu
red
by t
he p
rogr
ess
of j
ust
thos
efir
ms
assi
sted
? Li
nk s
peci
fic a
ctiv
ities
to
the
mea
sure
men
tses
tabl
ishe
d fo
r th
e pr
ojec
t (e
.g.,
wha
t sp
ecifi
c ac
tiviti
es c
ontr
ib-
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
55
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
8)
Less
ons
Lear
ned
9)
Rel
evan
t Im
plic
atio
ns f
orU
SA
ID P
roje
ct D
esig
n &
Im
ple-
men
tatio
n
Can
not
impo
se o
rgan
izat
ion
on g
roup
s of
expo
rter
s; d
eman
d m
ust
com
e fr
om t
hem
.G
ood
man
ager
s &
str
ong
lead
ers
as w
ell
as a
tight
foc
us l
ead
to s
tron
g as
sns.
E
mbr
yoni
csu
bsec
tors
will
not
sup
port
via
ble
assn
s.“V
oice
” re
quire
s nu
mbe
rs,
but
serv
ices
mus
t be
high
ly f
ocus
ed.
In
assn
s. w
ith b
oth
larg
e &
smal
l m
embe
rs,
the
larg
e te
nd t
o pa
y &
the
smal
l to
use
.
Wel
l-foc
used
& m
anag
ed a
ssns
. m
ay b
e ab
leto
brid
ge t
he g
ap b
etw
een
smal
l fa
rmer
s &
the
com
plex
req
uire
men
ts o
f in
tern
atio
nal
mar
kets
(e.g
., si
lk &
van
illa
assn
s.)
uted
how
muc
h to
the
dou
blin
g of
NT
AE
exp
orts
).
Sub
sect
or o
ppor
tuni
ty s
tudi
es w
ere
impo
rtan
t fo
r id
entif
ying
hig
h-po
tent
ial
area
s fo
r pr
ojec
t fo
cus.
Pro
ject
s de
alin
g w
ith a
grib
usi-
ness
es &
exp
orte
rs n
eed
a hi
gh d
egre
e of
fle
xibi
lity
to b
e ab
le t
oqu
ickl
y re
spon
d to
rap
idly
cha
ngin
g ne
eds
of t
he m
arke
t. B
ette
rto
foc
us o
n a
limite
d nu
mbe
r of
exp
orte
rs t
han
to t
ry t
o he
lpev
eryo
ne.
Mic
ro &
sm
all
ente
rpris
es c
an r
arel
y co
mpe
te i
nN
TA
Es
unle
ss g
roup
ed t
hey
are
toge
ther
in
an e
ffect
ive
way
. T
herig
ht T
A w
ell
prov
ided
(e.
g.,
with
goo
d in
tern
atio
nal
cont
acts
&te
chni
cal
supp
ort)
is
muc
h ap
prec
iate
d by
the
ent
repr
eneu
rsw
ho N
TA
E p
roje
cts
wan
t to
enc
oura
ge.
Poo
rly “
pack
aged
”in
vest
men
t pr
ojec
t pl
ans
are
a m
ore
impo
rtan
t co
nstr
aint
tha
nla
ck o
f fin
anci
ng.
Get
exp
ort
supp
ort
fund
ing
from
exp
orts
not
impo
rts,
thu
s an
inc
reas
e in
exp
orts
= a
n in
crea
se i
n av
aila
ble
fund
ing.
Del
iver
ing
high
-pow
ered
TA
to
smal
ler
proj
ects
is
inef
ficie
nt (
e.g.
, A
PD
F).
Ent
erpr
ises
nee
d si
gnifi
cant
cap
ital
&m
anag
emen
t ex
pert
ise
befo
re a
ret
urn
can
be a
chie
ved
onpr
ojec
t as
sist
ance
. R
apid
res
pons
e to
clie
nt n
eeds
is
very
impo
rtan
t in
NT
AE
dev
elop
men
t.
Obj
ectiv
es o
f N
TA
E p
roje
cts
(e.g
., fo
reig
n ex
chan
ge g
ener
atio
n)sh
ould
not
be
conf
used
with
obj
ectiv
es o
f pr
ojec
ts a
imed
at
deve
lopi
ng m
icro
ent
erpr
ises
/sm
all
farm
ers.
Inc
lude
dom
estic
mar
ket
deve
lopm
ent
for
SM
Es
who
may
eve
ntua
lly b
ecom
eex
port
ers.
Lac
k of
equ
ity &
exp
ort
expe
rienc
e ar
e th
e tw
o gr
eate
stS
ME
con
stra
ints
. M
ost
shor
t- t
o in
term
edia
te-t
erm
NT
AE
gro
wth
will
com
e fr
om e
xist
ing
expo
rter
s.
56
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
Ste
erin
g co
mm
ittee
s ne
ed t
o pl
ay a
str
onge
r ro
le a
t al
l pr
ojec
tst
ages
. W
ork
with
sm
all-s
cale
firm
s/fa
rmer
s ne
eds
to f
ocus
on
over
com
ing
cons
trai
nts
to i
ncre
ased
pro
duct
ion,
mar
ketin
g of
low
-val
ue c
rops
,& r
each
ing
pote
ntia
l re
gion
al m
arke
ts (
e.g.
, us
eas
sns.
for
inp
ut d
istr
ibut
ion,
con
tinue
d su
ppor
t to
R&
D,
&di
ssem
inat
ion
of n
ew t
echn
olog
ies)
. E
stab
lish
a ne
w o
rgan
iza-
tion
for
NT
AE
dev
elop
men
t (E
PA
DU
) if
the
exis
ting
one
(UP
EC
)is
not
fun
ctio
ning
; av
oid
“bea
ting
on a
dea
d ho
rse.
” F
ocus
on
less
exo
tic b
ut h
igh-
volu
me
pote
ntia
l cr
ops
(e.g
., m
aize
&be
ans)
for
a g
reat
er &
qui
cker
eco
nom
ic i
mpa
ct.
Upd
ate
OC
Aan
nual
ly.
Est
ablis
h a
loca
lly s
taffe
d sm
all
proj
ects
dev
elop
men
tun
it fo
r pr
ojec
ts s
mal
ler
than
AP
DF
can
han
dle
& f
or “
ongo
ing”
supp
ort
(i.e.
, us
e du
al p
rogr
ams)
. A
ll se
nior
pro
ject
op
erat
ing
pers
onne
l sh
ould
hav
e lo
cal
coun
terp
arts
.
How
hav
e as
sist
ed f
irms
by s
ize
cate
gory
inc
reas
ed t
heir
sale
s&
pro
fitab
ility
& e
xpan
ded
thei
r em
ploy
men
t? N
umbe
r of
firm
sm
akin
g ju
mp
from
2nd
to
1st
tier
& t
heir
expo
rt/e
mpl
oym
ent
leve
ls.
Soc
ioec
onom
ic i
mpa
ct s
tudy
foc
usin
g on
rur
al a
rea
surr
ound
ing
assi
sted
firm
s. M
easu
re i
ncre
ase
in e
xpor
ts f
rom
indi
geno
us f
irms
only
bec
ause
the
se a
re t
he m
ajor
foc
us o
fa
ssis
tan
ce.
Effi
cien
cy o
f sm
all-s
cale
mai
ze &
bea
n pr
oduc
tion
need
s to
incr
ease
in
orde
r to
tak
e ad
vant
age
of s
igni
fican
t re
gion
al e
xpor
top
port
uniti
es.
Mar
ket
info
rmat
ion—
is
it w
orth
the
exp
ense
(i.e
.,th
ose
regu
larly
exp
ortin
g do
not
nee
d it)
or
shou
ld i
t be
vie
wed
as a
n ed
ucat
iona
l to
ol f
or t
he 2
nd &
3rd
tie
rs?
Big
gest
im
pact
of
AN
EP
P m
ay b
e in
crea
sed
awar
enes
s of
the
com
plex
ities
of
inte
rnat
iona
l m
arke
ting
(how
to
mea
sure
?).
The
dis
cont
inui
ty o
fID
EA
not
ach
ievi
ng a
sm
ooth
tak
eove
r fr
om A
NE
PP
has
res
ulte
din
the
with
draw
al o
f su
ppor
t fr
om s
ome
mid
-str
eam
pro
ject
s &
alo
ss o
f U
SA
ID c
redi
bilit
y by
loc
als.
Thi
s se
ems
to r
epre
sent
poor
ly m
anag
ed p
roje
ct “
cont
inui
ty.”
Max
imum
fru
it &
veg
etab
leex
port
s (n
ot i
nclu
ding
flo
wer
s) b
y th
e ye
ar 2
000
are
estim
ated
to
be o
nly
abou
t U
S$2
0 m
illio
n v
ersu
s A
NE
PP
’s c
ost
of $
23.5
mill
ion
.
Tec
hnic
al a
ssis
tanc
e in
the
are
a of
str
engt
heni
ngas
sns.
(e.g
., m
anag
emen
t &
gro
up d
ynam
ics)
.S
tren
gthe
n ex
istin
g as
sns.
, &
per
haps
cre
ate
anum
brel
la a
grib
usin
ess
assn
. th
at w
ould
giv
em
embe
rs a
str
onge
r co
llect
ive
voic
e in
pol
icy
deci
sion
s th
at a
ffect
the
m.
Ide
ntify
, un
ders
tand
, &
mea
sure
the
crit
eria
for
ass
n. s
ucce
ss,
espe
cial
lyfo
r S
ME
ass
ns.
Doe
s an
ass
ocia
tion
have
a s
peci
fic p
lan
&tim
efra
me
for
reac
hing
fin
anci
al s
elf-
sust
aina
bilit
y,in
clud
ing
sour
ces
of f
unds
?
Can
ass
ns.
be u
sed
to i
mpr
ove
inpu
t di
strib
utio
n(&
rep
lace
old
gov
ernm
ent
chan
nels
)?
10)
Sug
gest
ed N
ew M
echa
-ni
sms
to I
ncre
ase
Pro
ject
Effe
ctiv
enes
s/N
ew P
roje
ctO
ppor
tuni
ties
or A
ppro
ache
s
11)
Sug
gest
ed N
ewIn
dic
ato
rs
12)
Oth
er I
nfor
mat
ion/
Key
Issu
es
57
A -
6
Inno
vativ
e P
roje
ct S
umm
ary
- C
AA
S
Out
put
Are
a of
Foc
us
Cou
ntry
:U
gand
aT
itle:
CA
SS
(A
fter
1991
re-
orie
ntat
ion)
Coo
pera
tive
Spo
nsor
:U
SA
ID
Sta
rt D
ate:
1991
Com
plet
ion
Dat
e:O
ct.
1994
(ex
cept
PL4
80 &
Co-
op B
ank
Fin
anci
ng)
Pro
ject
Val
ue:$
10 m
illio
n
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
1)
Rel
evan
t O
bjec
tives
2)
How
is
it In
nova
tive
3)
Per
form
ance
Ind
icat
ors
4)
Ext
erna
l In
fluen
ces
5)
Suc
cess
of
Rel
evan
tIn
terv
entio
ns
Pro
vide
sup
port
to
oils
eed
proc
esso
rs a
ssoc
iatio
n(U
OS
PA
) to
inc
reas
e do
mes
tic e
dibl
e oi
l pr
oduc
-tio
n &
red
uce
impo
rts.
Cre
ate
depa
rtm
ent
unde
rU
NE
X (
subs
idia
ry c
ompa
ny o
f U
CA
) to
exp
ort
for
coffe
e co
oper
ativ
es.
Fac
ilita
ting
linka
ges
betw
een
prod
ucer
coo
pera
-tiv
es &
priv
ate
expo
rter
s of
cof
fee.
An
asso
ciat
ion
of p
roce
ssor
s as
a m
echa
nism
for
stim
ulat
ing
dom
estic
pro
duct
ion
& r
educ
ing
impo
rts.
Diff
icul
t to
det
erm
ine
appa
rent
ly m
inim
al q
uant
ita-
tive
mea
sure
men
ts w
ere
esta
blis
hed.
Wid
espr
ead
by i
nept
itude
& t
heft
coop
erat
ive
man
agem
ent.
Gov
ernm
ent
will
not
app
rove
de-
regi
ster
ing
defu
nct
coop
erat
ives
, ev
en t
houg
h th
ela
w a
llow
ing
it pa
ssed
. N
ewly
lib
eral
ized
env
iron-
men
t, bu
t th
ere
is s
till
grea
t di
stru
st o
f fo
rmer
top
-do
wn,
gov
ernm
ent-
influ
ence
d co
oper
ativ
es.
Afte
r its
red
esig
n in
199
1, C
AA
S s
ucce
eded
in
incr
easi
ng t
he c
apac
ity o
f se
lect
ed c
oope
rativ
es t
opr
oduc
e &
pro
cess
sun
flow
ers
& h
elpe
d m
ake
sele
cted
coo
pera
tives
mor
e kn
owle
dgea
ble
abou
tpr
oduc
ing
& m
arke
ting
NT
AE
s. O
nly
5% o
f co
op-
erat
ive
mem
bers
wer
e af
fect
ed b
y th
e pr
ojec
t.M
atch
ing
gran
ts h
elpe
d pa
y fo
r co
oper
ativ
efa
cilit
ies
& b
uild
per
ceiv
ed v
alue
of
coop
erat
ives
to
me
mb
ers
.
Afte
r re
desi
gn,
deve
lop
NT
AE
agr
ibus
ines
ses:
Rev
italiz
atio
n of
edi
ble
oil
indu
stry
.W
ork
with
new
ly l
iber
aliz
ed c
offe
eC
oope
rativ
es n
ow l
icen
sed
to d
irect
ly e
xpor
t th
eir
coffe
e.
Min
imal
: so
me
wor
k on
NT
AE
(e.
g.,
snow
pea
s) i
nnov
ativ
e in
the
cont
ext
of a
ssis
tanc
e to
coo
pera
tives
. S
hifte
d fr
om a
ssis
-ta
nce
to c
oope
rativ
es t
o su
bsec
tor
high
-val
ue N
TA
E a
ssis
tanc
em
id-p
roje
ct.
Exp
ende
d so
me
effo
rt o
n th
e ne
w b
road
ly b
ased
silk
& v
anill
ap
roje
cts.
Hav
e no
t at
tem
pted
to
serio
usly
mea
sure
im
pact
, in
clud
ing
onco
oper
ativ
e pe
ople
tra
ined
.
Impr
ovem
ent
in e
nabl
ing
envi
ronm
ent
& e
cono
my
elim
inat
edne
ed f
or s
ome
of t
he e
arly
pro
ject
com
pone
nts.
Ove
rall
resu
lts s
eem
mar
gina
l ve
rsus
the
fin
anci
al i
nves
tmen
t.E
xpor
t di
vers
ifica
tion
wor
k su
cces
sful
ly
star
ted.
Exp
orte
d 2
tons
of s
now
pea
s; e
xpec
t to
pro
duce
4,0
00 t
ons
of e
dibl
e oi
l in
1994
as
a re
sult
of o
ilsee
d re
habi
litat
ion
proj
ect;
gave
gra
nts
to29
6 so
ciet
ies
thro
ugh
mat
chin
g gr
ant
prog
ram
. C
offe
e m
arke
t-in
g bo
ard
priv
atiz
ed.
Priv
ate
sect
or d
ialo
gue
has
incr
ease
d.M
arke
t pr
ice
info
rmat
ion
seem
s w
ell
rece
ived
.
58
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
6)
Sug
gest
ed M
easu
rem
ent
Imp
rove
me
nts
7)
New
Opp
ortu
nitie
s fr
omth
e P
roje
ct
8)
Less
ons
Lear
ned
9)
Rel
evan
t Im
plic
atio
ns f
orU
SA
ID P
roje
ct D
esig
n &
Imp
lem
en
tatio
n
Mon
itor
new
ass
ns.
rega
rdin
g m
embe
r pr
iorit
yne
eds
& o
ngoi
ng s
atis
fact
ion
(e.g
., in
terv
iew
mem
bers
on
how
the
y ra
te t
he a
ssns
. pe
rfor
-m
ance
rel
ativ
e to
est
ablis
hed
obje
ctiv
es);
for
UO
SP
A i
mpa
ct o
n m
embe
rs’
viab
ility
& p
rofit
abili
ty.
Por
tion
of m
arke
ting
entit
ies’
sal
e pr
ice
rem
itted
to
prod
ucer
s. S
elf-
sust
aina
bilit
y pr
ogre
ss o
f U
CA
.M
onito
r tr
aini
ng e
ffect
iven
ess
with
6-m
onth
fol
low
-u
p.
Hel
ped
esta
blis
h oi
l S
eed
Pro
duce
rs A
ssoc
iatio
n&
Sno
w P
ea G
row
ers
Ass
ocia
tion
Whe
re &
whe
n m
embe
rs a
re c
ontr
ibut
ing
(e.g
.,m
atch
ing
dono
r’s c
ontr
ibut
ion
som
ehow
), t
helik
elih
ood
of p
roje
ct s
ucce
ss i
s dr
amat
ical
ly b
ette
r.G
over
nmen
t m
ust
stay
out
of
com
mer
cial
ly r
elat
edac
tiviti
es.
Bas
ic t
rain
ing
help
s st
rugg
ling
inst
itu-
tions
. M
anag
emen
t m
akes
the
diff
eren
ce i
n th
epe
rfor
man
ce o
f co
oper
ativ
es,
espe
cial
ly t
heir
abili
tyto
adj
ust
to c
hang
ing
cond
ition
s. W
here
coo
pera
-tiv
es a
re w
eak
& n
ot p
rovi
ding
ser
vice
s to
mem
-be
rs,
assn
s. a
re a
via
ble
alte
rnat
ive,
sin
ce m
any
prod
ucer
s st
ill h
ave
a st
rong
nee
d to
get
tog
ethe
r.
Coo
pera
tive
deve
lopm
ent
has
prov
ed l
arge
lyun
succ
essf
ul;
how
will
ass
ocia
tion
deve
lopm
ent
prov
e to
be
mor
e su
cces
sful
? D
espi
te a
lot
of
effo
rt &
mon
ey,
CA
AS
has
bee
n un
able
to
crea
tem
any
viab
le c
oope
rativ
e in
stitu
tions
, or
to
esta
blis
hth
e ap
prop
riate
rol
e of
coo
pera
tives
in
agrib
usi-
ness
or
as p
rovi
ders
of
serv
ices
to
farm
ers.
Dra
mat
ic n
eed
for
bette
r da
ta o
n di
rect
im
pact
& b
road
er b
ased
bene
ficia
ry s
atis
fact
ion
surv
eys.
Mor
e w
ork
need
ed o
n m
arke
tpo
tent
ial
for
prod
ucts
pro
mot
ed &
wha
t it
will
tak
e to
rea
lize
that
po
ten
tial.
CA
AS
ide
ntifi
ed m
arke
t fo
r sn
owpe
as (
alon
g w
ith A
NE
PP
) &
help
ed o
verc
ome
prod
uctio
n co
nstr
aint
s; m
arke
t si
ze &
sus
tain
-ab
ility
to
be d
eter
min
ed.
TA
& a
dvis
ors
are
not
likel
y to
affe
ct p
oorly
man
aged
coo
pera
-tiv
es.
Mus
t ha
ve s
erio
us s
usta
inab
ility
pla
ns &
mon
itor
sam
e(n
one
evid
ent)
. N
eed
in-d
epth
und
erst
andi
ng o
f co
mm
erci
alop
port
uniti
es &
ope
ratin
g co
nstr
aint
s to
dev
elop
effi
cien
t &
viab
le p
rogr
ams/
proj
ects
.
Foc
us,
focu
s, f
ocus
. D
etai
led
OC
A n
eede
d in
pro
ject
des
ign
phas
e. A
void
ins
titut
iona
l re
scue
, es
peci
ally
whe
n po
litic
ally
influ
ence
d. O
rigin
al d
esig
n as
sum
ed l
ow p
rodu
ctio
n w
as d
ue t
olo
w u
se o
f in
puts
& t
here
fore
foc
used
on
inpu
t de
liver
y vi
aco
oper
ativ
es;
this
tur
ned
out
to b
e a
poor
ass
umpt
ion
(far
mer
sw
ere
not
usin
g in
puts
bec
ause
it
didn
’t pa
y of
f!)
59
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
10)
New
Mec
hani
sms
toIn
crea
se P
roje
ct E
ffect
ive-
ness
/ N
ew P
roje
ct O
ppor
tuni
-tie
s or
App
roac
hes
11)
Sug
gest
ed I
ndic
ator
s
12)
Oth
er I
nfor
mat
ion/
Key
Issu
es
Sin
ce a
ssn.
sus
tain
abili
ty i
s a
func
tion
ofm
anag
emen
t, sh
ould
not
a m
ajor
don
or f
ocus
be i
nstit
utio
nal
man
agem
ent
deve
lopm
ent?
Res
truc
ture
UC
A t
o a
sust
aina
ble
size
with
high
-dem
and
serv
ices
. D
o a
form
al a
naly
sis
ofth
e co
nditi
ons
for
inst
itutio
nal
succ
ess
&pr
ogra
ms
need
ed f
or s
timul
atin
g sa
me.
Fin
anci
al v
iabi
lity
of a
ssis
ted
coop
erat
ives
.P
ortio
n &
num
ber
of c
oope
rativ
e m
embe
rshi
pth
at b
enef
ited
from
the
pro
gram
/ pr
ojec
t.M
embe
rshi
p sa
tisfa
ctio
n sc
ore
from
an
annu
alsu
rvey
.
Sho
uld
the
coop
erat
ive
mov
emen
t lo
ok a
tbr
oad
issu
es s
uch
as l
and
tenu
re?
Und
erw
hat
circ
umst
ance
s is
ins
titut
iona
l re
scue
bette
r th
an e
stab
lishi
ng a
n al
tern
ativ
e or
gani
za-
tion?
Sho
uld
rura
l co
oper
ativ
es g
et i
nvol
ved
with
NT
AE
(es
peci
ally
hig
h-va
lue)
giv
en i
tsco
mpl
exiti
es?
Can
bro
adly
foc
used
ins
titut
ions
(e.g
., co
oper
ativ
es)
be e
ffect
ive
& s
usta
inab
lein
dev
elop
ing
econ
omie
s? H
ow d
o th
eyco
mpa
re i
n ef
fect
iven
ess
to m
ore
focu
sed
&le
ss g
over
nmen
t-in
fluen
ced
assn
s.?
Whe
n &
how
sho
uld
defu
nct
coop
erat
ives
be
diss
olve
d?
Sem
i-ann
ual
proj
ect
revi
ew f
orum
(½
day
with
all
part
icip
ants
&re
pres
enta
tive
bene
ficia
ries
& ½
day
int
erna
l). “
Dev
il’s
Adv
ocat
e”as
sign
ed a
t in
tern
al s
essi
on.
Mor
e fo
rmal
& o
ngoi
ng a
naly
sis
of c
onst
rain
ts &
mea
ns f
or o
verc
omin
g sa
me.
Use
AN
EP
Psu
bsec
tor
anal
ysis
stu
dies
for
opp
ortu
nity
ide
ntifi
catio
n. M
ake
serio
us d
eter
min
atio
n of
ins
titut
iona
l vi
abili
ty
befo
re a
ttem
ptin
gto
res
cue
it.
Con
trac
tor
repo
rtin
g &
per
form
ance
ver
sus
obje
ctiv
es n
eed
tobe
muc
h be
tter
man
aged
. A
ctua
l ex
port
s or
sal
es o
f as
sist
edpr
ojec
ts v
ersu
s co
st t
o ge
nera
te.
Por
tion
of v
eget
able
oil
supp
lied
from
dom
estic
sou
rces
or
decr
ease
in
fore
ign
ex-
chan
ge u
sed
for
impo
rts.
Inc
reas
e in
out
put
of U
OS
PA
mem
-b
ers
.
Why
no
mai
ze &
bea
ns e
xpor
t pr
ogra
m?
Whi
ch s
ubse
ctor
s ha
veth
e po
tent
ial
to s
how
a r
easo
nabl
e re
turn
on
US
AID
’s i
nves
t-m
ent—
base
d on
mar
ket
pote
ntia
l, co
mpa
rativ
e ad
vant
age,
OC
A&
int
eres
ted/
capa
ble
hum
an r
esou
rces
?
60
A -
7
Inno
vativ
e P
roje
ct S
umm
ary
- S
ilk D
evel
opm
ent
Pro
ject
Out
put
Are
a of
Foc
us
Cou
ntry
:U
gand
aT
itle:
Silk
Sec
tor
Dev
elop
men
t P
roje
ctS
tart
Dat
e:Ja
n. 1
994
Com
plet
ion
Dat
e:19
96/1
997
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
1)
Rel
evan
t O
bjec
tives
2)
How
is
it In
nova
tive?
3)
Per
form
ance
Ind
icat
ors
4)
Suc
cess
of
Rel
evan
tIn
terv
entio
ns
5)
Mea
sure
men
t of
Im
prov
e-m
en
ts
6)
New
Opp
ortu
nitie
s
Tw
o-ye
ar p
ilot
proj
ect
will
be
impl
emen
ted
thro
ugh
a pr
ivat
e se
ctor
ass
n.,
the
Uga
nda
Silk
Pro
duce
rsA
ssoc
. (U
SP
A),
with
in w
hich
a P
roje
ct D
irect
orat
e(P
D)
will
be
esta
blis
hed.
The
goa
l is
to
stre
ngth
enth
e U
SP
A s
o th
at i
t w
ill b
e ab
le t
o ta
ke o
ver
all
ofth
e ac
tiviti
es o
f th
e P
D b
y th
e en
d of
the
2nd
yea
r.
Cha
ngin
g U
SP
A f
rom
an
expo
rter
-led
asso
ciat
ion
to a
mor
e pr
oduc
er-o
rient
ed a
ssoc
iatio
n; i
t is
too
early
to
dete
rmin
e ho
w s
ucce
ssfu
l th
is t
rans
ition
will
be.
A c
ompl
ete
inte
rnal
mon
itorin
g sy
stem
to
bees
tabl
ishe
d, i
nclu
ding
ful
l de
tails
of
tech
nica
l,so
cioe
cono
mic
, &
fin
anci
al d
ata
to b
e co
llect
ed b
yU
SP
A.
Too
ear
ly t
o de
term
ine.
Will
nee
d to
mon
itor
US
PA
reg
ardi
ng m
embe
rsa
tisfa
ctio
n (e
.g.,
inte
rvie
w m
embe
rs o
n ho
w t
hey
rate
the
ass
ns.
perf
orm
ance
rel
ativ
e to
est
ablis
hed
obje
ctiv
es)
have
an
impa
ct o
n m
embe
rs’
prof
itabi
l-ity
. A
noth
er m
easu
re w
ill b
e w
heth
er U
SP
A c
ange
nera
te e
noug
h re
venu
es (
e.g.
, fr
om f
ees
for
serv
ice,
exp
ort
cess
, m
embe
rshi
p fe
es)
afte
r 2
year
s to
be
self-
sust
aini
ng.
Brin
g ab
out
a su
stai
nabl
e in
crea
se i
n na
tiona
l ex
port
rev
enue
s&
sm
allh
olde
r in
com
es t
hrou
gh t
he d
evel
opm
ent
& s
tren
gthe
n-in
g of
the
com
mer
cial
ser
icul
ture
(si
lk)
sect
or.
Tot
ally
new
sm
allh
olde
r-ba
sed
NT
AE
. P
lans
to
deve
lop
& a
pply
a re
plic
able
cro
p-cr
edit
pack
age
& e
xten
sion
thr
ough
the
esta
blis
hmen
t of
24
Silk
Dev
elop
men
t C
ente
rs (
SD
Cs)
ser
ving
240
farm
ers.
Ass
n. p
rovi
ded
exte
nsio
n. I
nteg
rate
d pr
oduc
er &
proc
esso
r as
sn.
SD
Cs
to b
e tu
rned
ove
r to
the
ass
n. a
t en
d of
pro
ject
.
Will
hav
e so
me
com
paris
ons
of p
artic
ipat
ing
vers
us n
onpa
rtic
i-pa
ting
farm
ers.
Bas
elin
e su
rvey
of
farm
ers
will
be
follo
wed
up
afte
r 18
mon
ths.
Goo
d st
artin
g lo
g fr
ame.
Too
ear
ly t
o de
term
ine.
Par
ticip
ator
y fa
rmer
ver
sus
non-
part
icip
ator
y fa
rmer
inc
ome
surv
eys
will
be
a go
od m
echa
nism
for
mon
itorin
g im
pact
(i.e
.,ba
selin
e ve
rsus
afte
r se
vera
l ye
ars)
. F
arm
er s
atis
fact
ion
with
cost
ver
sus
valu
e of
ext
ensi
on &
mar
ketin
g se
rvic
es.
61
Out
put
Are
a of
Foc
us
Ass
ocia
tion
Dev
elop
men
t,S
tren
gthe
ning
, S
uste
nanc
eN
on-T
radi
tiona
l A
gric
ultu
ral
Exp
ort
Dev
elop
men
t(e
spec
ially
hor
ticul
ture
)
Goo
d po
tent
ial
for
valu
e-ad
ded
activ
ities
aim
ed a
t w
omen
’sgr
oups
/NG
Os
(e.g
., si
lk w
eavi
ng,
easy
to
star
t w
ith e
xpor
t-re
ject
ma
teri
als
).
If th
ere
is a
nic
he m
arke
t or
one
with
min
imal
alte
rnat
ive
outle
tsfo
r pr
oduc
ers,
low
cap
ital
inte
nsity
, &
hig
h la
bor
inte
nsity
, fu
ll-se
rvic
e lo
cal
expo
rter
(s),
and
an
esta
blis
hed
inte
rnat
iona
lm
arke
t, th
en S
ME
par
ticip
atio
n in
NT
AE
s ca
n w
ork.
Ces
s(t
owar
d se
lf-fu
ndin
g) o
n ex
port
s is
acc
epta
ble
to p
artic
ipan
ts.
Som
ethi
ng a
s co
mpl
ex a
s si
lk r
equi
res
hand
s-on
TA
& s
tron
gex
port
er-p
rodu
cer
ties;
an
inte
grat
ed p
rodu
cer-
expo
rter
ass
ocia
-tio
n m
ay b
e th
e an
swer
for
suc
h N
TA
Es.
Pro
ject
was
pre
cede
dw
ith d
etai
led
subs
ecto
r fe
asib
ility
stu
dy.
Ver
y si
mila
r to
asp
ecia
lized
AD
C.
Ass
n. m
ust
be p
erce
ived
as
bein
g of
ben
efit
toa
ll m
em
be
rs.
7)
Less
ons
Lear
ned
8)
Rel
evan
t Im
plic
atio
ns f
orU
SA
ID P
roje
ct D
esig
n &
Imp
lem
en
tatio
n
Key
cha
ract
eris
tic o
f a
stro
ng a
ssn.
is
good
man
agem
ent
staf
f (m
embe
rs m
ust
belie
ve i
t is
man
aged
wel
l). A
n as
sn.
shou
ld n
ot g
etin
volv
ed i
n to
o m
any
activ
ities
; it
shou
ld s
tay
focu
sed
assn
. m
ust
be s
een
as r
epre
sent
ing
ever
yone
& e
nfor
cing
the
rul
es f
or e
very
one.
Wor
king
with
an
assn
. cl
osel
y fo
r th
e fir
st f
ewye
ars
to g
et t
hem
cle
arly
foc
used
on
prov
idin
gm
embe
rshi
p w
ith n
eede
d se
rvic
es m
ay h
elp
ensu
re v
iabi
lity
over
the
lon
g-te
rm,
ther
e m
ust
be a
cle
ar p
lan
on h
ow t
he a
ssn.
will
bec
ome
finan
cial
ly s
elf-
sust
aini
ng.
63
Appendix BAssociation Profiles
B-1 KESSFA
B-2 AAK
B-3 FPEAK
B-4 UVEA
B-5 USPA
B-6 UOSPA
B-7 UNFA
B-8 UMA
B-9 UGEA
B-10 VHA
64
B-1 Association Profile - KESSFA
Kenya Small Scale Farmers Association (KESSFA)
Basic Objective
Number of Clients
Years in Existence(offering services toclients)
Operating Budget
Percent Self-Financing(or goal toward becom-ing self-financing)
Annual Donor Support
% Post-HarvestAgriculture Business
Number of staff
Major Strengths*
Major Weaknesses*
Assist small-scale horticultural farmers in organizing into self-help groups; act asa broker between these groups & exporters.
2,817 farmers (Nov. 1994), organized into 107 (SHGs)
1 year; formed in 1993Key personnel are from Kenya National Farmers Union, also supported by HSF.
$226,000 Annual revenues: KShs 791,479 (US$16,000)
< 10%; no specific plan to become more financially self-sustaining, but goals are15–20% for year 2, 20–30% for year 3, & 40% by year 4.
KShs 10.5 million (US$210,000)
100% fresh horticultural products; in future would like to work on increasing value-added activities by members.
4 secretariat staff
Allows small farmers access to competitive export markets that they would nothave as individuals.Training programs very well received.Seed supply & what to plant suggestions both important.Very well focused/limited in scope (geographic & number of members).
Limited ability of members to pay membership dues & think about the longerterm.No credit available for members.May be some tribal favoritism.Lack of transport availability from areas without good roads.Highly seasonal business, thus excess capacity off season.Bulk versus value-added ratio is too high.
* Primarily member/client defined
65
B-2 Association Profile - AAK
Agribusiness Association of Kenya (AAK)
Basic Objective
Number of Clients
Years in Existence(offering services toclients)
Operating Budget
Percent Self-Financing(or goal toward becom-ing self-financing)
Annual Donor Support
% Post-HarvestAgriculture
Number of Staff
Major Strengths*
Major Weaknesses*
Facilitate networking between agribusinesses & strengthen linkages betweenmicro enterprises & large-scale producers & processors; promotion of agribusi-ness dialogue especially with financial institutions; & lobbying.
21 firms
Formed in 1992
Not fully active
Plans for study to examine the range of services to be offered to members by theassn. & possibilities for income-generating activities with the goal of attainingfinancial self-sufficiency within a 3-year period.
Seeking USAID funding of Secretariat: $450,000 for 3 years
> 80%
Proposed secretariat staff: 4 full-time, 1 part-time
Members include the most successful agribusinesses in Kenya; potential lobbyingpower is high.
Lack of a thorough understanding of specific information & service needs ofmembers & their willingness to pay for these services. Small-scale & large-scalemembers likely to have very different needs; not clear how linkages between thetwo are to be fostered.
* Primarily member/client defined
66
B-3 Association Profile - Uganda Oilseed Processors Association (UOSPA)
Fresh Produce Exporters Association of Kenya (FPEAK)
Basic Objectives
Number of Members
Years in Existence(offering services toclients)
Operating Budget
Percent Self-Financing
Annual Donor Support
% Post-Harvest Agricul-ture BusinessNumber of Staff
Major Strengths*
Major Weaknesses*
1) The collective representation of the fresh produce & floral industry in allmatters related to potential government legislation & intervention (original objec-tive).2) Providing services; bringing new technologies & information to members (newadditional objective).
> 200; around 50 active members
Established originally in 1975; formal secretariat established for first time in 1992;new & more active board of directors elected in 1994.
$65,000 (1994)
70%
$30,000 (1994)
100%
2 part-time; 6 board members, 1 part-time.
Industry-specific association allows good focus on meeting members’needs. Newemphasis on provision of marketing, technical services (e.g., new varieties);funding/financial information to members is more demand-driven than previously.Market News Service—eveloped & financed by KEDS. Most value is to medium &small firms.
Dealing with a membership not yet aware & educated on benefits of a tradeassociation (e.g., relatively unsophisticated managers, many of whom are farmerswho recently started exporting).Insufficient emphasis on sea freight rate reduction.
* Primarily member/client defined
67
* Primarily member/client defined
B-4 Association Profile - UVGEA
Uganda Vanilla Growers and Exporters Association (UVGEA)
Basic Objective
Number of Members/Clients
Years in Existence(offering services)
Operating Budget
% Self-Financing
Annual Donor Support
Costs versus Returns ofSupport
Number of Staff
Major Strengths*
Major Weaknesses*
Increase production & exports of vanilla
Around 5,000 producers & 2 exporting firms
This assn. is in the process of being formed; until now it has existed in the formof one vanilla producers group (around 2,000 members) & one vanilla producerscooperative (2,000 members), working with 2 vanilla exporters.
Not clearly established; assn. charges 2,000 Shs to join; 1,000 Shs/year fee.Plan is for salary of 27 technical field staff (now being paid by USAID/EPADU tobe paid for by assn. (timeframe not clear).
Searching for donor support; have received assistance from USAID for the last 3years. APDF feasibility study assistance.
USAID spent around $36,000 on extension services to farmers over the 3 years;$25,000 on experts; results: an increase in vanilla exports from $40,000 to$900,000 from 1990 to1994.
27 technical field staff; cost to USAID: $1,000/mo. for 3 years
Have a strong voice on policy matters influencing the vanilla industry; will make iteasier for donors & government to assist industry through one association; mustbecome member-driven, perhaps more by the exporters (who want continueddonor financial assistance) than by the farmers themselves; will make it easier toensure Uganda’s reputation for reliable, high-quality vanilla; will be easier tobecome self-sustaining (& pay for field technical staff) if exporters are alsomembers.
Exporter objectives will at times conflict with farmers’ objectives; may weakenfarmers’bargaining strength vis-à-vis exporters. Success will require ongoinghands-on support and management by the main entrepreneur. Producers percent-age of export value appears low at this time. UVAN dominates exports but theowner has been the driving force in industry & association development.
68
B-5 Association Profile - USPA
Uganda Silk Producers Association (USPA)
Basic Objective
Number of Members/Clients
Years in Existence(offering services)
Operating Budget
% Self-Financing
Annual Donor Support
% Post-Harvest Agri-business1) Revenues2) Clients
Number of staff
Major Strengths*
Major Weaknesses*
Bring about a sustainable increase in national export revenues & smallholderincomes through the development & strengthening of the commercial sericulturesector.
At first, USPA consisted of 2 exporters; when the EU agreed to support them,they insisted on USPA being open to farmers; now have 400 members, & areseeing 1 or 2 new exporters entering the business.
4 years; new integrated assn. started in Jan. 1994
1.3 million Ush average over first 3 years. Ush 60,000/member (US$50) neededfor sustainability
Goal to be self-financing in 3 years; however, EU does not appear to have a clearplan on how this will be accomplished.
ECU 2.2 million over 3 years; includes silk development facilities & farmer loanfacilities.
100%; Good potential for increased value-added at the farm-level (e.g., farmerswill be drying cocoons themselves in the silk development centers being con-structed); EU plans to work with NGOs & women’s groups doing silk weaving.
To be determined. However, by the end of the second year it is supposed to bemanaging most project activities, which are projected to require 4–5 full-timeprofessionals.
Producers should benefit more from the new assn. than from the original ex-porter-led assn. current chairman (also exporter) is seen as fair & impartial & hasbeen a positive driving force behind assn. & industry development. Conceptually,the USPA will become the driving force in the industry providing significant inputs& financing to growers.
May be friction between processor/exporter & grower members; no clear plan tomake assn. self-financing. Two-year phaseover from external (EU) to assn.management of significant services seems overly optimistic.
* Primarily member/client defined
69
B-6 Association Profile - UOSPA
Uganda Oilseed Processors Association (UOSPA)
Basic Objective
Number of Members/Clients
Years in Existence(offering services)
Operating Budget
% Self-Financing
Annual Donor Support
% Post-Harvest Agri-business
Number of staff
Strengths*
Major Weaknesses*
Ensure availability of high-quality planting material via seed multiplication pro-grams; secure working capital credit for members to purchase raw material; offerextension advice to oilseed growers; provide members with oilseed millingtechnical training; assist them to find spare parts; market their output.
40–0; 20 paid members
Registered April 7, 1994; just starting up. Need help in drafting associationstructure, by-laws, organization, etc.
107,135,000 UShs for 2 years (from USAID/CAAS project)
Only 0.6% for 1994 from 20 members, who each paid 15,000 UShs membershipfee
$115,000 USAID/CAAS grant for first 2 years
100%
1 Administrative Secretary; hiring a Project Manager
Potential to increase oilseeds production. Members come from all regions of thecountry. If assn. is successful in helping members address & overcome theiroperational constraints, there should be a considerable increase in vegetable oilproduction. The association may be able to arrange member access to workingcapital.
Lack of member business & oil processing technical skills. Many members notfinancially viable. Some believe UOSPA’s role is to channel donor funds tomembers. Members as of yet not using the assn. to lobby. Under the wings ofUCA. No overall plan for developing the oilseed sector. Largest number ofmembers account for a very small % of production (70% is by 1 firm). Very littlefunding for TA to mill operators. Plans for quality oil seed multiplication aresketchy.
* Primarily member/client defined
70
B-7 Association Profile - UNFA
Uganda National Farmers Association (UNFA)
Basic Objective
Number of Members
Years in Existence(offering services)
Operating Budget
% Self-Financing
Annual DonorSupport
% Agribusiness
Number of Staff
Strengths*
Major Weaknesses*
To raise the living standards of Ugandan farmers through enhanced “voice” & theprovision of financial & technical assistance. To be the premier agriculturalorganization in Uganda.
40,000 in 15 districts; Ush 1,500 to join; 1,000/year.
Approximately 3 years. Formally established Sept. 1993. Major member needsperceived to be credit facilities & marketing services/information.
Around $4 million for first 5 years
Plan: 10% in first year; 20% in 2nd; up to 100% by 10th. Membership proceedsgo 60% to district & 40% to headquarters.
DANIDA has provided $4 million for the first 5 years. Chief Technical, Extension& Marketing Advisors from DANIDA. Early funding from USAID, World FoodProgram, & FAO.
100%; heavy focus on inputs—credit & extension—but some on market informa-tion (domestic S/D balancing).
30 full-time; 15 of which are located in the 15 districts where UNFA is currentlyfully operational
UNFA is structured as a “bottom-up” farmer driven organization based on sub-assns. If successful will eventually replace an ineffective government extensionservice; now manage extension in 15 of 39 districts. Each district will identify 2–3high-value crops to focus on. Market prices from 39 districts & recommendedsuppliers are two important services. Sponsors national agricultural exposition.If 70% of farmers join, will represent 63% of the population.
Lack of focus; objectives very ambitious. Not clear how association will generatesufficient revenues to become self-sustaining. Founders are very politicallymotivated. Regional association coordinator will work under regional governmentappointee. Will current government extension service allow themselves to betaken over? Will assn. workers, especially for supplier recommendations be,“influenced” by less scrupulous vendors?
* Primarily member/client defined
71
B-8 Association Profile - UMA
Uganda Manufacturers Association (UMA)
Basic Objective
Number of Members/Clients
Years in Existence(offering services toclients)
Operating Budget
% Self-Financing
Annual Donor Support
% Post-Harvest Agri-business
Number of staff
Strengths*
Major Weaknesses*
Build Ugandan industry. Increase human resources capacity regarding business.Promote, protect, & coordinate the interests of industrialists; act as a watchdogand mouthpiece for members; initiate & facilitate discussions & exchange informa-tion among members on issues of concern; advise government on key policiesaffecting industry.
410 ordinary plus some associated members; related associations & affiliatedmembers; suppliers to industry
Formed in 1966; serious activation in 1988
$654,000 for UMA secretariat; membership fees range from $55 to $380 depend-ing on company size; consultancy financed by USAID. Income includes gate feesto UMA-owned trade fair grounds.
Secretariat - 98%, 2% from British Council; consultancy financed by USAID.
$255,000. Substantial USAID grants to the Consulting unit for policy & feasibilitystudies, joint government/private sector forums & 2 young MBAs on UMA staff.USAID also supports its consultancy work with SMEs. Total 1995 USAID support$250,000.
Major area of emphasis; both NTAE & import substitution (e.g., vegetable oils).
24-member board; UMA secretariat (chm., v. chm., sec. & treas.) has 16 staff (7graduates); the consulting and Information services group has 8 full time, gradu-ate consultants.
Strong, competent leadership. Focus on informing members of business potential(e.g., market–where & what) policy modifications needed, and availability ofinputs. Interested in establishing export quality standards. Has a consultancy unitto help both SMEs & large companies. No financial accountability problems. Veryconducive relationship with government & the president. Young, highly qualifiedprofessional staff.
Large firms in Uganda are relatively small in global terms. Some public sectorinstitutions very skeptical of an emerging private sector & try to inhibit itsprogress. Some policy (e.g., selective tax exemption) and enforcement (smug-gling) issues make it difficult for the private sector. Need more funding for trainingof staff and members. Consultancy still heavily financed by USAID.
* Primarily member/client defined
72
B-9 Uganda Grain Exporters Association
n Need to export $500,000 to join (serious export-ers only).
n Initially there were 24 members there are fewernow because the grain export business becamenonviable due to fluctuating exchange rates, de-teriorating seed (and therefore product) quality,working capital costs; and few pay but manywant benefits.
n The regional grain export business is heavilyinfluenced by political and government officials’personal benefit decisions. Therefore, it is verydifficult to predict price and access.
n The grain export business needs more support onseed quality improvement and extension servicesin order to increase the quality and productivityof grain output.
n The problems and likely solutions to the grainexport trade are known; the challenge is gettingit done.
B-10 Uganda Horticultural Association
n 80 members; only 20 are exporting.
n It has undergone several evolutions and is stillevolving.
n The flower exporters broke from the associationdue to their perceived specialized needs and lead-ership “jockeying”; now the membership con-sists of fruit, vegetable, and spice companies.
n Association leadership (from Fruitpack) is nowtrying to develop an NTAE association with hor-ticultural, flower, and grain companies organizedinto three divisions.
n A larger association is wanted because the largerthe membership the greater the voice and thegreater the amount of funding available for asecretariat.
n USAID/VOCA did a Horticulture Assn. feasibilitystudy, but their proposal for its structure wasexcessively farmer based.
n Most members’ problems/needs are in market-ing, not production.
n Horticultural association leadership believes thatan NTAE association can be successful if it fo-cuses on common membership needs and avoidspolitical considerations (i.e., power management).
73
Appendix CDevelopment Financing Organizations
C-1 Development Finance Company of Uganda(DFCU)
C-2 Africa Project Development Facility (APDF)
C-3 Kenya Trust for Private Enterprise (KTPE)
C-1 Development Finance Company of Uganda(DFCU)
n Established in 1964 during the beginning ofUganda’s development, refinanced at $2.5 mil-lion and fully rehabilitated in 1990.
n Ugandan company, with most of its shares heldby foreign entities. Shareholders, at 25 percenteach are the Uganda Development Corporation(UDC), Commonwealth Development Corpora-tion (GDC), German Development Corporation(DEG), and the International Finance Corpora-tion (IFC).
n View themselves as key players in the currentdevelopment boom within Uganda’s private sec-tor because they combine innovative financingand efficient loan processing; looking for seriousentrepreneurs with well thought through busi-ness plans; gives fast service to companies withexperienced management and a clear focus.
n Offers long-term loans of between $100,000 and$1.5 million in either foreign or local currency atcompetitive interest rates (cost +2 points andfee); larger projects can be shared with their in-ternational shareholders.
n Will invest equity of between $50,000 and$800,000 for up to 50 percent (like redeemablepreferred shares).
n Staff: 3 expatriates, 12 Ugandan professionals,12 administrative.
n Portfolio 50 percent agribusiness related; agri-business loans are difficult due to the geographicspread of the businesses and the difficulty of
valuing and using land as collateral.
n Has seen a rapid growth in its long and medium-term shilling and foreign currency finance portfolioin the last five years; this growth is attributed to thecompany’s ability to identify profitable projects, getthe finance on line in the shortest time possible, andoffer its services at a reasonable cost.
n Examples of the 25 loans and 15 equity invest-ments include: UVAN, the first vanilla process-ing plant set up in 15 years and enjoying a highdemand on the export market; Nile Roses, a hor-ticultural concern that exports roses to Europe;and Capital Radio, one of the first FM stereoradio stations to go on the air in Uganda,
n Offers a mix of financial and technical expertiseto client companies; technical department hasqualified and experienced industrial/mechanicalengineers and agriculturists who carry out in-depth technical appraisals and offer free techni-cal advice.
n Do rigorous potential project appraisals usingown staff, establish extensive conditions prece-dent with clients, and pay their suppliers directlyafter verification of specifications and appropri-ateness of purchases.
n Provide some advice on inputs but minimal post-loan supervision.
n Biggest challenge is finding borrowers with in-tegrity; viable borrowers/projects are the limita-tion, not the availability of funds; professionalproject management is in short supply and isexpensive.
n Escape (how they get their money and returnsback) is sale of shares to entrepreneur or similarcompany, no stock market.
n In the near future will form a leasing companythat will lease out assets with no collateral secu-rity. Such assets may include production tools
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and equipment, automobiles, office equipmentand furniture, computers, and the like.
C-2 Africa Project Development Facility(APDF), Uganda activities
n OCA program in Uganda was financed by aUSAID grant after USAID/APDF identified aneed for soft funding to cover startup costs ofexport businesses in Uganda (e.g., bringing inoutside experts to manage projects such as roseexports, since no such Ugandan expertise exists).
n Need is not unique to Uganda, although in moredeveloped countries (e.g., Kenya) there is moretechnical expertise available locally.
n Suggests that a regional OCA-type pool of fundsavailable to APDF would be very helpful sincethe are a number of USAID projects in SSA, andAPDF management would like to be able to tapinto a regional fund in order to contribute theirexpertise to these projects where and when ap-propriate.
n Main reason APDF requires a $250,000 mini-mum size project is that below this the costs aretoo high relative to project size; that is, the sameamount of time and other resources tends to beinvested for a $250,000 project as for a $5 mil-lion project,
n Two Uganda examples where APDF has benttheir minimum size rules for USAID (with as-yetuncertain results) include:
Snowpea production —group of smallholders in south-west Uganda: interesting example of USAID assist-ing at the production end with no clear marketingchannel in sight. No exporter in the area was willingto take on the risk of exporting snowpeas for thefarmers group. Without this vital link (ideally estab-lished before production), it is not likely that theundertaking will succeed (i.e., it may turn out thatthese producers would be better off growing maize).
Matovu chilies —total project value of $180,000;entrepreneur puts up roughly $50,000 (i.e., less thanAPDF’s normal 40 percent of total project cost mini-mum). APDF has invested a tremendous amount oftime trying to get this (apparently) entrepreneur to
focus his energies on the project, and brought in achili expert to look at production and marketing is-sues. As is often the case, the entrepreneur is notwilling to risk committing himself totally to the project(i.e., he is still involved with various other things anddoes not focus his energies on this project). It isunclear whether this endeavor will be successful.
n Is proposing to use one or two local consultingfirms, with APDF’s oversight and training; willthen go down to projects of $100,000, but notlower; however, the lower the dollar value, theless able APDF is to recover costs,
n Is no doubt that APDF’s services are needed atthe lower level; issue is the cost-effectiveness ofproviding these services; since smaller firms donot need the same intensity of services, it shouldbe possible to provide them at a lower cost.
C-3 Kenya Trust for Private Enterprise (KTPE)
n Purpose was to strengthen Kenyan institutionaland human resource’s capabilities to assist firmsvia equity financing; 20–40 businesses were tobe expanded and/or restructured and total newinvestment, employment, output, foreign ex-change generation, and tax revenues increased.
n Industrial Promotion Services Ltd. (IPS), an ex-isting company, and Kenya Equity Management(KEM), a new company, were the intermediariesfor equity funds dispersement.
n All but one of the macro measurements (in-creased tax revenues) were met, but there isminimal evidence this was directly influenced bythe project.
n Basically the market was not ready for and didnot perceive the need to use venture capital.
n Kenyan firms typically operate with a very highdebt; toequity ratio and prefer financing via addi-tional debt versus sharing equity with others;owners do not even want to share accurate finan-cial information with potential partners; inad-equate market opportunity information and lim-ited entrepreneurial capabilities means good newventures are not very numerous; third party in-vestors are rare due to the minimal “protection”
75
available for their investment.
n Overall project goals were unrealistic, and wouldbe unrealistic even for fully developed venturecapital markets such as those in the US.
n IPS operates as a holding company, directly man-ages its investments, and “rolls” very few (25percent in 30 years) of its investments.
n KEM operates more as a merchant banking com-pany than as a provider of venture capital,
n There is considerable uncertainly about whetherthe venture capital managerial resources at IPCor KEM were sufficient for the task at hand.
n USAID resources allocated to the project wereinsufficient to support one, much less two, ven-
ture capital firms; there was also insufficientmonitoring, guidance and interaction betweenKEM and USAID and IPS and USAID.
n Due to the devaluation of the KSh in 1993, the US$value of the trust was decreasing since there werefew foreign exchange–based investments and thereturns were insufficient to offset devaluation.
n If the project objectives were to experiment onand learn about the applicability of venture capi-tal in Kenya, this was realized.
n USAID program designers and implementationmanagers had an insufficient understanding ofventure capital in embryonic markets.
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77
Appendix DPrivate Enterprise Profiles
D-1 Karzan
D-2 Standard Chartered Estate Management (SCEM)
D-3 Lonrho
D-4 Echuka Farms
D-5 Ronco Pyrethrum Project
D-6 Ziwa Horticultural Exporters
D-1 Karzan
Karzan is a medium-size of flower exporter with agood export market that can not grow using small-holder sourcing. With the shift in the EC market todirect (versus auction) sales, Karzan is using con-trolled Joint Venture (JV) production arrangementsto meet the quality requirements of this market.
In business 3+ years; mostly non-roses.
n Works with three categories of suppliers; smallindependent outgrowers (6 -7 million stems/year),commercial clients (35 million stems), and JV orowned production (currently 4 million stems).
n Has about 110 small outgrowers, whose plots arebetween 0.5 and 2.5 acres.
n Collects from outgrowers by truck and landcruiser; very few deliver to Karzan’s (K) coldstore.
n Provides fertilizer and some planting materials,but only to outgrowers they know will sell themflowers.
n Grades flowers at the cold store and pays 2times/month on a graded basis.
n Outgrowers ability to expand is minimal due tocapital requirements (cold store) and a limitedmarket size for the easier to grow outdoor variet-ies.
n Clients are larger growers who have from 10–20acres each; they grade their own flowers (some
roses under plastic), have their own cold stores,and deliver to Karzan they range from a bottler toexperienced horticulturists.
n Karzan helped clients establish their operationsand provides ongoing TA (by the 2 Karzan own-ers) and marketing; clients pay Karzan a com-mission for this service.
n Karzan consolidates clients’ shipments, marketsvia their Dutch agent, receives payment from theEC customer, subtracts their commission, andpays the client.
n Capital availability is also a constraint for thesmaller clients since cold stores and transporta-tion equipment is expensive.
n Have recently developed 20 acres of “controlled”production under lights as JVs with a few of theirbest growers,
n JVs will accept Karzan’s advise and know howto manage or hire professional farm/operationsmanagers; smaller firms do not have the scale todo this.
n Use one agent in Holland and sell 70 percent toauctions (under quotas) and 30 percent direct towholesalers.
n Dutch growers started the two auctions andtherefore foreign quotas are being reduced.
n Agent provides daily prices via fax.
n Agent can market more flowers, especially viadirect sales, than Karzan can ship.
n Expect nearly all business expansion to be fromown/JV production due to ability to control out-put type, quality, and timing; the direct market(highest growth channel) will reject off specproduct, not just pay a lower price as at theauction.
n Their JV based expansion will be in specialized,
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high-technology varieties to minimize competi-tion, maximize price, and thus reduce the relativeimportance ( percent) of freight cost.
n Freight was $1.75/kg in late 1994 and $1.86 in1993; the flower shippers together negotiated alower rate (Ethiopia is $0.95/kg.).
n Excess of $0.12/kg. goes to HCDA.
n FPEAK’s impact not impressive, but they didhelp resolve the Kenya Air Freight handling prob-lem.
n Kenya’s advantage is year-round production (i.e.,off-season supply to Europe.
D-2 Standard Chartered Estate Management(SCEM)
SCEM manages vast production acreage for largeowners, cooperatives and multi-shareholder farmingcompanies. Their full service approach has resultedin almost no defaults in a very large (KSh 70 billion)agricultural portfolio. Their efforts at consolidatingsmallholders into larger more efficient units have notbeen very successful, usually due to “social” prob-lems.
n 17 years of experience in estate management;acquired by Standard Chartered in 1984.
n Has 217 employees and manages 277,100 acresproducing coffee (30 percent of Kenya’s acre-age), tea, sisal, sugar, wheat, mixed farming, hor-ticulture, and ranching; largest estate manage-ment company in Sub-Saharan Africa.
n Standard Chartered resources (mostly loans) toenterprises SCEM manages are KSh 70 billion(US$1.4 billion).
n Objectives are to expand and protect StandardCharter’s commitment to Kenyan agriculture (cur-rently 23 percent of its loan portfolio) and effec-tively manage owners’ operations.
n Package includes finance, management, input sup-ply, accounting, and sales agency.
n Agree on business plan and budget with owner(s)at beginning of the year and take full responsibil-ity for implementing agreed plan.
n Draws down pre-established credit lines (securedby property and the crop) for inputs, sells output,and pays off loans, then pays owners from saleproceeds.
n Input supplies are directly imported in bulk withextensive back-up inventory.
n Some estates are jointly owned by cooperative orshareholder groups therefore second party pro-fessional management minimizes internal dissent.
n Have an in-house training facility for farm andestate managers; each managed estate has anSCEM-hired manager,
n Also does feasibility studies, turn-key projects,and provides TA to financial institutions (e.g.,IFC and APDF).
n Agency business most straight forward when amarketing board is involved, thus price informa-tion is well known.
n Has had poor experience managing consolidatedacreage of small horticultural growers; politicalconsiderations, differences of opinion amongmembers, and their accounting system prefer-ences cause problems.
n Developed a plan for a large project for consoli-dating many smallholder dilapidated coffee plan-tations, rehabilitating them, and providingSCEM’s full services; the rehabilitation wouldneed donor financing and this is still being con-sidered by the EU; could not include smallhold-ers of less than 5 acres due to the administration/reporting costs versus potential revenue.
n Have similar estate management activities inGhana, Zambia, Malawi, and Zimbabwe.
n Provided initial assistance to Ziwa’s (Uganda)asparagus and leatherleaf startup, but this wasnot very successful and an ANEPP-provided con-sultant from California had to take over.
D-3 Lonrho
Lonrho is a diversified mega agribusiness in the Kenyacontext and is extensively backward and forwardintegrated. It makes extensive use of contract grow-
79
ers but provides model farms, high-technology in-puts, and its own extension service. It also does mostof its own applied research.
n Agribusiness division has 4,000 employees.
n Highly integrated, high-technology production,processing (much high value added), and market-ing— both export (18 percent, mostly regional)and domestic (82 percent) — organization.
n Originally in forestry, cereal production, and cattlefarming; now one of Kenya’s largest producersof timber products, seed maize, waddle extract,mushrooms, milk, cattle, pigs, poultry, pork, andbeef products (also ostrich farming).
n Important consumer brands include Farmer’sChoice (85 percent processed meats market share),Eldore, Flamingo, and Kenmosa.
n 50 percent of meat raw materials from ownfarms, 50 percent from “small” farmers.
n Supply semen, breeding guilts, and feed to con-tract producers.
n Have the largest refrigerated food distributionsystem in Kenya; also distribute other’s products,including Echuka Farm’s yogurt.
n The efficiency of full integration, professionalmanagement, and scale economies results inhighly competitive processed meat exports.
n Lonrho provides the technology, capital, and in-ternational marketing expertise and the Kenyasmall farmer his labor and the raw material.
n Breed Boran cattle and are exporting both semenand embryos.
n Have game reserves attached to their cattle ranchesas a means to help preserve game in a self-financ-ing manner (i.e., via tourism ([Lonrho Hotels]).
n Wattle operations use 85 percent outside sourc-ing.
n Mushroom operations use wheat straw and spentwattle bark.
n Use outgrowers for seed potato multiplication.
n Provide own extension service for all higher tech-nology contract production and most extensionservices for other contract production.
n Have an agricultural research budget similar toKenya Agricultural Research Institute’s and workon similar projects since KARI’s results are notalways applicable/suitable to Lonrho.
n Use nucleus or model farms to develop and dem-onstrate the best agricultural practices.
D-4 Ronco Pyrethrum Project
n Agro Management Group Inc. (Agro), a Califor-nia corporation owned by Ronco principals, es-tablished to invest in agribusiness in developingcountries; first investment was the production,marketing, and processing of pyrethrum in Kabali,Uganda for export; project provides a new sourceof smallholder cash income, generates substan-tial employment, and provides foreign exchangeearnings; Agro had 100 percent equity prior toseeking additional financing; project now in itsthird year of development and more than $1 mil-lion has been invested.
n Ronco undertook preliminary investigations andproduced a feasibility study on production, mar-keting, and processing of pyrethrum; built aroundan assured market, and following a strategy ofclose collaboration with the U.S. buyer of theproduct, project is demand-driven, and althoughrisky, is a sound financial investment.
n Undertaking all phases of the production, mar-keting, and processing of flowers in Uganda; thisvertically integrated approach allows control ofthe critical elements of the production system;plant introduction, selection, multiplication, anddistribution are financed and managed by Agro;company created its own extension service tohelp some 4,000 contract farmers obtain maxi-mum results; farmer gets high returns to land andlabor inputs while Agro gets greater productionand reduces marketing costs by obtaining greaterquantities of flowers in a more concentrated area.
n Created own marketing service to buy the flow-ers from farmers; this service is innovative be-
80
cause it is completely financed by the investorand is the first all-female buying service for amajor export crop in Africa; hired the agents andtrained them in how to operate a buying center(currently nine); believes in the principle thatservice to client farmers based on honesty andintegrity is essential to the company’s welfareand profits.
n Second principle is systematic, fair, and on-timepayment for the produce delivered; pays all farm-ers monthly, clearing the books on all purchasesmade up to the 20th of the month by the 1st of thefollowing month; to protect the smallholder farmeragainst inflation and devaluation in Uganda’seconomy, instituted a dollar-linked paymentschedule where prices are adjusted to their dollarequivalent each month.
n Have 35 of own extension agents and 2 employ-ees working at a 15-acre closed government re-search station doing varietal and cultural appliedresearch.
n Contract growers had 500 acres (200 hectares)producing flowers by January 1993, 20 monthsafter first feasibility study; will expand to 1,000acres (400 hectares) with a target of 8,000 grow-ers, as more planting material becomes available;speed of implementation attests to the rapid re-sponse private sector investors and farmers canmake to a business opportunity; smallholder farm-ers must be convinced that an investing companyis sincere in its promises and dedicated to itsexecution and want to see action take place rap-idly and on a steady basis; high initial investmentcosts can only be recouped with high levels ofproduction, obtained as early as possible in theinvestment cycle.
n In areas that have the correct elevation and cli-mate, farmers can earn up to $750 per hectarewith little input besides land and labor; this ex-ceeds almost all other possible crops; expect48,000 rural people to benefit from the project;farm income will increase $1.5 million/year inthe growing area.
n Is committed to leaving up to 10 percent of
project profits with associations or groups oflocal pyrethrum growers to empower them to bean economic force in the Ugandan economy.
n Has reached this stage in the project using itsown resources and $1 million from Ronco with-out recourse to either public funds or financialcapital markets.
n Had contract with a plant in Rwanda to processthe product; political conflict resulted in the plantbeing closed; now must build own processingplant.
n Next phase is seeking financing for a $2.2 millioninvestment in a processing plant that will create125–150 additional jobs.
n Expect to get financing from IFC, East AfricaDevelopment Bank and DFCU (and possiblyOPIC) in April 1995 and to export the first prod-uct in early 1996.
D-5 Ziwa Horticultural Exporters Ltd.
n Located in the Mukono District; 50 km. fromKampala on 1,000 acres,
n Owned by Captain Roy, who also owns Dairo AirFreight and many farms/ranches in Uganda.
n Has a Ugandan manager; their full-time Dutchtechnical specialist supplied by their Holland-based agent.
n 345 full-time employees (half women); require20 people/ha. for growing and picking and 10people/ha. for grading and packing.
n Have 1 ha. roses outdoors and 2 ha. roses underplastic (yield around 7.5 tons/acre/year); also growasparagus outdoors and leatherleaf under plastic.
n Large cold storage and grading building plus owninsulated trucks.
n Start-up costs for roses under plastic are in thearea of $500,000/acre.
n Use drip irrigation with fertilizer supplied viairrigation, use 600 cubic meters water/day fromown sources; spray pesticides 3 times/week.
n Have problems with consistency of power sup-
81
ply so own generator required, which runs fre-quently, public power is comparatively (to otherexporting countries) expensive.
n Air freight costs $1.60/kg on Sabina and $1.85on Dairo ($0.05/stem); this compares to $2.10 inKenya; air freight runs about 25 percent of salesprice.
n Costs other than air freight run another $1.00;average sales price is around $6.00/kg.
n Will export around 6 million stems in 1994.
n Received a technical grant from the OCA USAID/APDF project for $96,000 to help resolve aspara-gus problems; California asparagus grower didthe job but they have been delayed 2 years withthe initial problems.
n No formal impact studies, but on-site manage-ment reports major positive development “indi-cators” in the surrounding area, (e.g., housingconstruction/remodeling, private clinic volume,school attendance, road side kiosks).
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Appendix EProject Scope of Work
83
Appendix EBibliography
AFRICA
Holtzman, John S., Richard D. Abbott; Carol Adoum;and collaborators. Agribusiness Develop-ment in Sub-Saharan Africa: Suggested Ap-proaches, Information Needs and an Ana-lytical Agenda, vol. 2: Country Annexes.September 1992.
Swanberg, Kenneth G. A Background Paper: AfricaPrivate Enterprise Fund. August 1993.
Holtzman, John S., Charles J. D. Stathacos, ThomasWittenberg, and collaborators. HorticulturalMarketing in Export in Senegal: Constraints,Opportunities and Policy Issues. December1989. PB-ABF-141.
UGANDA
Eriksson, John, John Balis; and Roger Poulin. Assess-ment of USAID Support for Agribusiness:Uganda Case Study. June 1994
International Science and Technology Institute, Inc.Final Report and Review: Uganda ANEPP-PHH Project. September 1994.
U.S. Agency for International Development. Uganda:Agricultural Non-Traditional Export Promo-tion Program (ANEPP) (617-0133). PD-AAZ-547
Enger, Warren J., Derrick R. Burgess, and J. K.Ahimbisibwe. Oilseed Production and Pro-cessing Sector Analysis. Cooperative Agri-culture and Agribusiness Support Project -Uganda. PN-ABC-992 July 1989.
U.S. Agency for International Development. Uganda:Cooperative Agriculture and Agribusiness
Support Project (617-0111). PD-BBP-984.September 1994.
Kabuga, C. Response to the CAAS Evaluation DraftReport. Uganda Cooperative Alliance. 30August 1990.
Carr, Thomas. CAAS Project Quarterly Report. June1991.
Carr, Thomas. CAAS Project Quarterly Report. Sep-tember 1991.
KENYA
U.S. Agency for International Development. CountryProgram Strategic Plan FY 1990–1995. PN-ABE-620; ISN65206. March 1990.
U.S. Agency for International Development. Kenya:Agricultural Management Project (615-0221). PD-ABD-227. ISN73653. June 1991.
U.S. Agency for International Development. KenyaNational Agricultural Research Project (615-0229) PD-BBD-467. June 1993.
Abt Associates Inc., Postharvest Institute for Perish-ables, and Agribusiness Association of Kenya.Constraints in the Kenyan Fruit Juice Pro-cessing Industry. Final Report. September1993.
U.S. Agency for Internatonal Development. AppraisalReport Horticulture and Traditional FoodCrops Development Project; Republic ofKenya. 1993.
Watkins, Chandra D., and S. Embassy in Nairobi,Kenya. Kenya—verseas Business Report -OBR9301. 1993.
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Appendix FList of Persons Interviewed
KAMPALA, UGANDA
Victor AmannAgricultural Cooperative Development International256-041-258898
James CartwrightISTI
James DunnUSAID256-041-257285
Duane EriksmoenUSAID256-041-235879
Ddingiro-Lwanga GeoffreyZIWA Horticultural Exporters Ltd.256-041-244241
David HeemsbergenVolunteers in Overseas Cooperative Assistance202-383-4961
William KalemaUMA Consultancy and Information Services256-041-236182
Sam Kibalama-KatumbaHorticulture Exporter Assn.
Matthias KibukaUSAID256-041-244087
Rita Laker-OjokATI
Philip MikosEuropean Union256-041-233303
Sami MoussaAfrican Development Bank225-204636
J.S. MugerwaMakerere University256-041-542277
James MulwanaUganda Manufacturers Association256-41-236148
Edison MwangeMakerere University256-041-542277
Prof. Erisa OchiengExport Policy Analysis and Development Unit256-041-231363
Rick PhillipsDevelopment Finance Company of Uganda Ltd.256-041-256125
A. SekalalaUVAN Limited256-041-243490
Karim SomaniCEI256-041-250212
Sam Tulya-MuhikaInternational Development Consultants Ltd.256-041-244725
86
Holly WiseUSAID254-2-331160
Fred ZakeUMA Consultancy and Information Services256-41-236182
NAIROBI, KENYA
Dean AlterUSAID254-2-331160 x500
Joe CarvalhoUSAID
John FlynnUSAID/REDSO/E
Herbert G. MuhiaKenya Small Scale Farmers Association254-2-724904
Christian HegemerHanns Seidel Foundation254-2-742054
John JamesAPDF
Mr. KiplagatAAK
Michael KleshUSAID/REDSO254-2-331160 x2358
Zaine ManjiCarzan Flowers
Ian MorrellFPEAK
Henry OgolaKenya Fertilizer Assn.
Jane UlmanAPDF
Amin GwaderiHouse of Manji Ltd.254-2-555944
Victor PrattKenya Management Assistance Programme254-2-220853
Bernhard LöhrIPM Horticulture254-2-569071
Joseph GichukiSEPSO Ltd.254-2-448576
Peeush MahajanEast African Growers Ltd.254-2-221145
John NgatiaMeridien Securities Kenya Ltd.254-2-339068
Russell ClarkLONRHO Agribusiness (K)254-2-214752
P.F. JennerStandard Chartered Estate Management Ltd.254-2-216378
Dennis WellerUSAID254-2-331160 x2239
Peter HerrmanFriedrich-Naumann-Stiftung254-2-442321
87
John KashangakiAgriconsult Ltd.254-2-227834
Matesh GohilKenya Management Assistance Programme254-2-220853
Thomas HobgoodUSAID254-2-331160 x70
Migwe KimemiaUSAID254-2-331160
Paul GuenetteKenya Export Development Support254-2-221106
Ngure MwanikiAgriconsult Ltd.254-2-227834 x5
Dennis McCarthyUSAID254-2-331160
Jairosi OchinoCargill East Africa Ltd.254-2-22929
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Notes
1 Statement of Work: Monitoring and Impact Assessmentof Innovative Approaches to Agricultural Marketing Sys-tems Development, See Appendix E.
2 USAID Kenya defines micro enterprises as those withfewer than 10 employees, small enterprises from 10 to 50employees, medium enterprises from 50 to 100, andlarge enterprises more than 100.
3 The information for this discussion was obtained entirelyfrom secondary sources.
4 USAID support to agribusinesses began in 1984 and firstfocused on the rehabilitation of agro-enterprises. ANEPPwas initiated in 1988 and its first focus was on policyreform. Phase II (1990–1992) replaced the use of CIPSwith NPA and PL 480 and along with policy reformbegan to emphasize direct assistance to agribusinessesand a focus on a limited number of specific NTAEcommodities. The most recent phase (1992–1994) andthe focus of this study, has continued NPA in support ofpolicy reforms and an increased emphasis on direct assis-tance to agribusinesses.
90
SD Technical Papers
Office of Sustainable DevelopmentBureau for Africa
U.S. Agency for International Development
The series includes the following publications:1 / Framework for Selection of Priority Research and Analysis Topics in Private Health Sector Development in Africa*2 / Proceedings of the USAID Natural Resources Management and Environmental Policy Conference: Banjul, The Gambia /
January 18-22, 1994*3 / Agricultural Research in Africa: A Review of USAID Strategies and Experience*4 / Regionalization of Research in West and Central Africa: A Synthesis of Workshop Findings and Recommendations (Banjul,
The Gambia. March 14-16, 1994)*5 / Developments in Potato Research in Central Africa*6 / Maize Research Impact in Africa: The Obscured Revolution / Summary Report*7 / Maize Research Impact in Africa: The Obscured Revolution / Complete Report*8 / Urban Maize Meal Consumption Patterns: Strategies for Improving Food Access for Vulnerable Households in Kenya*9 / Targeting Assistance to the Poor and Food Insecure: A Literature Review10 / An Analysis of USAID Programs to Improve Equity in Malawi and Ghana's Education Systems*11 / Understanding Linkages among Food Availability, Access, Consumption, and Nutrition in Africa: Empirical Findings and
Issues from the Literature*12 / Market-Oriented Strategies Improve Household Access to Food: Experiences from Sub-Saharan Africa13 / Overview of USAID Basic Education Programs in Sub-Saharan Africa II14 / Basic Education in Africa: USAID'sApproach to Sustainable Reform in the 1990s15 / Community-Based Primary Education: Lessons Learned from the Basic Education Expansion Project (BEEP) in Mali16 / Budgetary Impact of Non-Project Assistance in the Education Sector: A Review of Benin, Ghana, Guinea, and Malawi*17 / GIS Technology Transfer: An Ecological Approach—Final Report*18 / Environmental Guidelines for Small-Scale Activities in Africa: Environmentally Sound Design for Planning and
Implementing Humanitarian and Development Activities*19 / Comparative Analysis of Economic Reform and Structural Adjustment Programs in Eastern Africa*20 / Comparative Analysis of Economic Reform and Structural Adjustment Programs in Eastern Africa / Annex*21 / Comparative Transportation Cost in East Africa: Executive Summary*22 / Comparative Transportation Cost in East Africa: Final Report*23 / Comparative Analysis of Structural Adjustment Programs in Southern Africa: With Emphasis on Agriculture and Trade*24 / Endowments in Africa: A Discussion of Issues for Using Alternative Funding Mechanisms to Support Agricultural and
Natural Resources Management Programs*25 / Effects of Market Reform on Access to Food by Low-Income Households: Evidence from Four Countries in Eastern and
Southern Africa*26 / Promoting Farm Investment for Sustainable Intensification of African Agriculture*27 / Improving the Measurement and Analysis of African Agricultural Productivity: Promoting Complementarities Between Micro
and Macro Data*28 / Promoting Food Security in Rwanda Through Sustainable Agricultural Productivity*29 / Methodologies for Estimating Informal Crossborder Trade in Eastern and Southern Africa*30 / A Guide to the Gender Dimension of Environment and Natural Resources Management: Based on Sample
Review of USAID NRM Projects in Africa*31 / A Selected Bibliography on Gender in Environment and Natural Resources: With Emphasis on Africa*32 / Comparative Cost of Production Analysis in East Africa: Implications for Competitiveness and Comparative Advantage*33 / Analysis of Policy Reform and Structural Adjustment Programs in Malawi: With Emphasis on Agriculture and Trade*34 / Structural Adjustment and Agricultural Reform in South Africa*35 / Policy Reforms and Structural Adjustment in Zambia: The Case of Agriculture and Trade*36 / Analysis of Policy Reform and Structural Adjustment Programs in Zimbabwe: With Emphasis on Agriculture and Trade37 / The Control of Dysentery in Africa: Overview, Recommendations, and Checklists38 / Collaborative Programs in Primary Education, Health, and Nutrition: Report on the Proceedings of a Collaborative Meeting,
Washington, D.C., May 7-8, 1996*39 / Trends in Real Food Prices in Six Sub-Saharan African Countries*40 / Cash Crop and Foodgrain Productivity in Senegal: Historical View, New Survey Evidence, and Policy Implications
* Produced and dissemination under contract to USAID/AFR/SD by AMEX International, Inc. For copies or information, contact:Outreach Systems Assistant / AMEX International, Inc. / 1111 19th Street North / Arlington, VA 22209. Phone: 703-235-5276. Fax: 703-235-5064.
U.S. Agency for International DevelopmentBureau for AfricaOffice of Sustainable DevelopmentProductive Sector Growth and Environment DivisionWashington, D.C. 20523-0046