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AREDP Afghanistan Rural EnterpriseDevelopment Program

April-June 2014QUARTERLY REPORT

MINISTRY OF RURAL REHABILITATION AND DEVELOPMENT

TOGETHER TOWARDS A COMPETATIVE AFGHANISTAN

AREDP OVERVIEW

ACRONYMS: AREDP Afghanistan Rural Enterprise Development Program BDSO Business Development Service Officers BDSP Business Development Support ProviderCDCs Community Development Councils EGs Enterprise Groups EOI Expression of Interest ESMF Environment and Social Management Framework FSG Female Saving Group IGAs Income Generating Activities M&E Monitoring and Evaluation MAIL Ministry of Agriculture, Irrigation & Livestock MFIs Microfinance Institutions MoF Ministry of Finance MOU Memorandum of Understanding MRRD Ministry of Rural Rehabilitation and Development MTs Master Trainers NGO Non-Governmental Organization NSP National Solidarity Program PEFs Provincial Enterprise Facilitators PMO Program Management Office PO Provincial Office SGs Saving Groups SME Small and Medium-Sized Enterprises ToT Training of Trainers USD United States Dollars VFs Village Facilitators VSLAs Village Saving and Loan Associations WB World Bank

Afghanistan Rural Enterprise Development Program

Afghanistan Rural Enterprise Development Programme (AREDP) is a national government-led multi-donor funded, program that jump-starts and facilitates private sector growth in rural Afghanistan. The program strengthens the private sector through integrated, value chain, top to bottom knowledge based interventions, bottom to top community enterprise development and by addressing credit and capital needs on all levels and in all locations.

The program operates under the Ministry of Rural Rehabilitation and Development through the Program Management Office (PMO) in Kabul. The key principals of the AREDP Development Objectives include supporting market orientation, sustainable businesses, improving coordination, building partnerships, facilitating client decisions, sharing best practices and vertical integration. AREDP has two Program components and one functional and support component.

The two Program components are Community-based Enterprise Development which provides knowledge-based and financial services to community-based rural enterprises, and SME Development which provides business advisory and financial services to rural SMEs.

The management component consists of Program management functions, the development of two units that handle policy issues for rural enterprises, plus research and technical support services. Monitoring and Evaluation and Gender work across all program components. AREDP is national in scope and operation and builds on other development initiatives of the GIRoA, donors, private sector MFIs, national and international stakeholders.

EXECUTIVE SUMMARY

The Afghanistan Rural Enterprise Development Program (AREDP) is a national government-led, multi-do-

nor program that is mandated to improve employment and income opportunities of rural men and women

through the facilitation of enterprise development in rural Afghanistan. Its goal is to strengthen the rural

private sector through income generation and employment creation by following an integrated approach.

Key features of this approach are to develop capacity building interventions that focus on value chain de-

velopment, integration of new knowledge and techniques and on addressing the credit and capital needs of

rural entrepreneurs.

Over the past three months, AREDP managed to make significant progress despite uncertainties due to

presidential elections, continued security concerns and the general slowdown that happens in the holy month

of Ramadan. The Community-based Enterprise Development (CED) component of AREDP made significant

progress. Follow up support was provided to existing Enterprise Groups (EGs) and Saving Groups (SGs). The

total amount of savings in the existing SGs increased to 176.2 million Afs (an increase of 19.8 million Afghanis

in this quarter). AREDP also established additional 69 SGs and 160 EGs during the reporting period. The data

from the field illustrates that the AREDP support increased employment by 18% while sales have increased

by 27% within these EGs.

Moreover, 20 people with disabilities (PwD) were selected and introduced for educational and income gen-

erating opportunities through the business incubations process. This initiative was carried out on a pilot basis

initially and after successful implementation, an additional 19 PwDs were incorporated for incubation. These

PwD will be provided with technical support and the necessary resources at a later stage. The program also

initiated a nomadic Koochies intervention and training on enterprise development for 30 koochies.

Through its Enterprise Development Unit (EDU), AREDP supported 221 SMEs. The team identified, select-

ed and prepared documents for the solar system award to 129 SMEs. In addition to this, the second and

third round of the Innovation Award grant distribution was announced and 280 applications were received.

AREDP also supported 70 SMEs to participate in exhibitions in Balkh and Kabul. The SMEs were able to mar-

ket their products and create linkages with new market players. Basic soft skills were provided for 116 SMEs,

and an exposure visit to India was arranged for owners of 17 rural enterprises.

AREDP ensured that gender is mainstreamed in all stages of its program. Out of a total of 874 SGs that were

established, 440 were by women (50%). A total of 2,392 loans were disbursed out of which 1,287 were issued

to women SGs (54%). A total of 160 EGs were established during the quarter and 151 of them were women

EGs (94%). Two major exhibitions for women entrepreneurs were organized in Kabul and Balkh, and both

contributed to enhanced sales of products and creating new market linkages.

Environmental and Social Safeguards Program (ESS) has been constantly reviewing the enterprise develop-

ment activities supported by AREDP to ensure that environment is not damaged. A total of 733 SMEs, EGs

VSLA, VF and PEF were trained on environmental issues. Several assessments were carried out with the

objective of evaluating potential hazards to environment due to sponsored activities. During the reporting

quarter, 562 environmental assessments were carried out on SMEs, EGs and VSLAs, and based on these as-

sessments recommendations were provided to the beneficiaries on ways to reduce negative impacts on the

environment. A Grievance Redressal System (GRS) tracked 33 complaints, out of which 19 were addressed

and resolved amicably.

The Training Unit conducted extensive trainings on soft skills and technical skills to SGs, VSLAs, EGs and VFs in

the target areas. In total 13, 259 people were trained out of which 7,286 were women (55%).

Table of Contents

COMPONENT A: COMMUNITY-BASED ENTERPRISE DEVELOPMENT

COMPONENT B: ENTERPRISE DEVELOPMENT

CROSS-CUTTING THEMES

COMMUNITY FACILITATION

SME FACILITATION

Community Mobilization

SME Mobilization

Gender Mainstreaming

Enterprise Groups

Providing Appropriate Technologies

Saving group formation

BUSINESS DEVELOPMENT SUPPORT FOR SMES

Training and capacity building Section

Business Incubation for PWDs

Innovation Award

Enterprise Development for Koochies

ENTERPRISE DEVELOPMENT

Capacity Building for SMEs

Environmental and Social Safeguards

Research

Business Incubation

ACCESS TO FINANCE

2223345566789

10101011121313

151516161616

Enhance micro savingImproved opportunties to access micro loan

Success Story

Success Story

Management Information SystemMonitoring and Evaluation

Success Story

QURTARLY REPORT APRIL- JUNE 2014 1

1Component A: Community-based Enterprise Development


COMPONENT A: COMMUNITY - BASED ENTERPRISE DEVELOPMENT

The Community-Based Enterprise Development Unit (CED) facilitates and supports community-led rural enterprise development through organizing rural men and women around Saving Groups (SG), Enter-prise Groups (EG) and mobilizing SGs to integrate themselves into vil-lage level organizations called Village Savings and Loans Associations (VSLA).

During the reporting quarter, AREDP continued facilitating rural enter-prise development in the villages within AREDP coverage. The commu-nity facilitation included conducting initial situational analysis, orienta-tion with community elders and awareness raising about the value of the program. Through this component, AREDP covered an additional 69 villages cumulating to 884 villages in the 27 districts of Parwan, Ba-myan, Nangarhar, Balkh, Herat, Kandahar provinces.

The community mobilization component paves the way for the critical and early stages of AREDP’s entry into villages to facilitate communities to form and nurture SGs and EGs thereby promoting micro savings at the community level.

Community awareness raising in Herat

Meeting with female community member

During community mobilisation process

COMPONENT A: COMMUNITY- BASED ENTERPRISE DEVELOPMENT

A: COMMUNITY MOBILIZATION

(a). Community Facilitation

An extensive community mobilization effort has been carried out by the AREDP team in the existing and new districts, villages and CDCs. During the reporting period the team recruited Village Facilitators (VF) to support the program at the community level. Community members were supported by the Provincial Enterprise Facilitators (PEF) and VF to form SGs after a series of introductory meetings. During the mobili-zation process, eligible and interested families were identified and after extensive awareness raising and coaching, SGs were formed. Members of SGs were encouraged to select their own leaders and develop their own SG rules and regulations. VFs played a critical role in mobilizing these communities and fostering SGs.

(b). Saving Group Formation

QURTARLY REPORT OF AREDP - JUNE 20143

Most importantly, women participation was en-couraged in these groups. 874 SGs were estab-lished out of which 440 were female SGs (50%). At the end of the second quarter, the total number of SGs reached 7,501, out of which 3,627 were female SGs (48%).

Recent assessments indicate that existing SGs have higher savings culture than newly estab-lished. The members of the older SGs realize the benefits of borrowing from savings. The data from the table below indicates that the existing SG members have increased their total savings by 19.8 million Afs during this reporting period and the total savings are at 176.2 million Afs.

(c). Enhance Micro Saving

(d). Improved opportunities to access micro loan

Saving groups across provinces has brought about access to loans within villages enabling each member borrow and improve or start small business. The data collected in the recent assessment showed that women SGs are issu-ing higher loans than male SGs. So far the SGs have cumulatively extended 2,392 loans across the program areas. The total amount of loan issued has been increased to 16.6 million Afs.


Establishment of SGs has led to the creation of self-managed system of savings mobilization and utilization. Availability and access to micro loans within villages has enabled SG members to start-up economic activity/or improve their micro businesses. On average, newly established SGs start with a savings of 30 Afs per member, per week.

73 115

114

26 112 44

0

69 104

126

8 127 43

4

142

219

240

34 239 87

4

959

818

1711

620 12

96 2097

7501

P A R W A N B A M Y A N N A N G A R H A R B A L K H H E R A T K A N D A H A R T O T A L

N O . O F S A V I N G G R O U P S E S T A B L I S H E D

Female SGs Male SGs

Total No. of SGs for the quarter Cumulative No of SGs from the begining

1.7

1.8 2.5

2.4

1.9

10.3

2.3

1

3.4

1.1 1.7

9.5

4

2.8

5.9

3.5

3.6

19.8

P A R W A N B A M Y A N N A N G A R H A R B A L K H H E R A T T O T A L

A M O U N T O F S A V I N G S M O B I L I Z E D D U R I N G T H E Q U A R T E R ( A F S )

Female SGs Male SGs Total SGs per quarter

1.5

1.4

7.3

2.7 3.2

16.1

0.7

0.7 2.

5

1.5

1.3

6.7

0.8

0.7

4.8

1.2 1.9

9.4


A M O U N T O F L O A N I S S U E D D U R I N G T H E Q U A R T E R ( A F S )

Total amount of loan issued during the quarter

Total amount of loan issued for Female SGs

Total Amount of Loan Issued for Male SGs

201 48

9 791

521

390

2,39

2

119 27

5 394

311

188

1,28

7

82 21

4 397

210

202

1,10

5


N O . O F L O A N I S S U E D D U R I N G T H E Q U A R T E R

Total No. of loan issued for the quarter

Total No. of loan issued for Female SGs

Total No. of loan issued for Male SGs

Mohammad Ali comes from Posh Bagh village, Dahdadi district of Balkh province. He is 45 years old and owner of a bakery in Posh Bagh. He never had an opportunity to go through a for-mal education process all his life. Previously he worked as a casual construction laborer. Every morning he went to the center of the village and would wait for people to pick him up for any con-struction work. He recalls that he had to feed ten people in his family. There were times when he could not find any work and would came home without any wages. Mohammad Ali’s life was very difficult. Life began to improve for Mohammad Ali with the setting up of a SG in his village. He became a member and also elected as SG leader.

Mohammad Ali in his bakery shop

SUCCESS STORY

WITHOUT AREDP SUPPORT I WOULD STILL BE A CASUAL LABORER

As part of AREDP support to the SG, an Enterprise Development Training was conducted for the members, and Mohammad Ali was chosen to participate in the training. During the training, Mohammad Ali learned basic business development techniques and also showed enthusiasm to establish a bakery in his village. Mo-hammad Ali was the first borrower and took 19,000 Afs loan from SG and bought basic equipment along with wheat flour to start his business. Mohammad Ali’s bakery business went well and he was able to cover his basic home expenses, as well as repaying the loan amount. Later, Mohammad Ali improved his shop by getting a table and a place for bread and yeast processing.

Initially, Mohammad Ali was able to sell 100 breads per day, and now sells up to 700 per day, including taking orders from larger customers. To expand his business, Mohammad Ali acquired another shop next to his bakery and now also sells wheat flour. Mohammad Ali’s business not only provides a viable source of livelihoods for him and his family, it also is a source of livelihoods for six people that are working for him. Mo-hammadali thanks AREDP for the support and states that without AREDP I would still be a casual laborer.

Mohammad Ali is not content with the current state of his business. He is planning to expand his bakery business by obtaining modern technology for making bread. He also plans to buy a motorbike to deliver bread to his larger bulk customers. Given Mohammad Ali’s track record, he is bound to do well as his bakery business expands.


AREDP encourages rural entrepreneurs who are members of SGs and are already engaged in various rural enterprises or value chains to come together and form EGs. These enterprises are usually engaged in production, processing or marketing of dairy products, bakeries, food processing, pottery, carpentry, bee keeping, poultry, handicrafts, live-stock, gem stone processing, etc.

Recent assessments indicate that all EGs across the provinces show preference for businesses related to the maintenance of fruit orchards, tailoring, dairy product processing, handicraft production, poultry and carpet weaving. During the reporting quarter, 160 EGs (out of which 151 are women EGs – 94%) were formed bringing the total number to 1,698 EGs across the program coverage.

The enterprise development works towards maximizing the potential of increasing incomes and creating jobs in rural enterprises.

B: ENTERPRISE DEVELOPMENT

(a). Enterprise Groups

Safron processing in Herat


The overall objective of AREDP is to reduce poverty through creating employment opportunities for the targeted benefi-ciaries from rural areas. Management Information System (MIS) tracks data related to overall employment and sales in the EGs supported by the program. The data collected in the second quarter indicates that there is an increase of employ-ment by 18% in the EGs during the reporting period.

In order to identify effectiveness of its program, AREDP also keeps track of sale increased in each of the EGs. The MIS data suggests that there is an increase of 27% in sales within EGs during the second quarter (out of which 40% increase in male EGs and 10% in female EGs).

1,73

9

3,70

0

5,43

9

2,05

2

4,36

6

6,41

8

M A L E E M P L O Y E E S F E M A L E E M P L O Y E E S T O T A L E M P L O Y E E S

INCREASE IN NUMBER OF EMPLOYMENT IN AREDP SUPPORT ED EG S

Employment Before AREDP Support Employment After AREDP Support

12,0

82,3

80

9,66

2,52

3

21,7

44,9

03

16,9

59,6

92

10,6

46,7

97

27,6

06,4

89

M A L E E G S A L E S F E M A L E E G S A L E S T O T A L S A L E S

I N C R E A S E I N S A L E S I N A R E D P S U P P O R T E D E G S ( A F S )

Sales Before AREDP Support Sales After AREDP Support



Business incubation is a unique and highly intricate combination of business development processes, established to nurture new and small enterprises by helping them to startup and grow in the early stages of developing their businesses. In the first quarter, 13 PwDs in Parwan were included in the incubation process. After receiving technical support from AREDP, they now run their own businesses. The team has continuously visited these enterprises and provided technical support.

During the second quarter, additional 19 PwDs from Nangarhar were included in business incubation based on their busi-ness plans. The first meeting took place in which, PwDs agreed to self-finance the businesses at the initial stages to ensure a greater sense of ownership. By the end of the reporting quarter, the team worked with the procurement team to supply inputs to the PwDs.

Feedback on the pilot project from the field is positive and an additional 500 PwDs were identified to be given the enter-prise development opportunity in the near future. During the reporting period, AREDP outsourced a consulting company to support additional 130 PwDs in their business initiatives.

(c). Business Incubation

AREDP provides support to marginalized populations including people with disabilities (PwDs). PwDs are in many cases not exposed to edu-cation and income generating opportunities in Afghanistan. AREDP is providing an opportunity to educate PwDs in entrepreneurship devel-opment through linkages with other development organization in Af-ghanistan.

This is a pilot initiative and will create opportunities for PwDs to gen-erate income as well as expose them to other community members, employers, customers and give them a chance to interact with similar disabled people engaged in productive economic activity in existing and successful businesses.

Within the framework of this initiative, 20 PwDs were selected from Nangarhar province to impove the development of their enterprises and hence livelihoods through business incubation training sessions. A six-day Enterprise Development training was carried out for 20 PwDs. The training was tailored for those who previously have not had formal education or experience in business and gave an overview of business concepts.

(b). Business Incubation for PWDs

Man with disability near his newly opened shop

Initial discussion with PwDs Orientation meeting with PwDs in Nangarhar


NASIMA IS MAKING ENOUGH MONEY TO SUPPORT HER FAMILY

Naseema making clothes from home

Nasima is 24 years old from Paghmanyaar Village of Dahdadi District, Balkh province. She graduated from 12 grades, however could not continue her studies due to family economic conditions. Nasima lives with her family; her father has visual disability, her mother is old and she has two younger brothers. One of the brother makes 6,000 Afs per month and this is the only income in the family that is not sufficient to cover all expenses in the house.

Nasima started to establish home based embroidery shop. After going through exten-sive training provided by AREDP, Nasima learned how to keep a record of her business and how to make sure her product is good quality. Last year Nasima got loan from SGs and expended her business. She borrowed three times and involved her cousins in the business as well. In the beginning Nasima income was 1000 per month now it has increased to 5,000 per month.

Nasima now trains two of her cousins to work with her in the embroidery business. She recalls how hard it was to start in the beginning but gradually she became successful. She is thanking the local Provincial Enterprise Facilitators for encouragement and sup-port in the initial stages of her business.


SUCCESS STORIES

Halima is a 36 years old women from Shirabad village, Dahdadi district of Mazaar. She is a housewife who has never gone to school and only two years ago attended six months literacy classes. Halima has six children and her husband works for local government. His salary is 9,000 Afs and it is only enough to cover basic expenses in the house. Halima decided to attend a training course on Enterprise Develop-ment through the AREDP program. She took book-keeping and marketing courses and was extremely amazed by the amount of knowledge she received. During the trainings she learned how to set up a business and how to develop her own business plan.

After the training Halima was so enthusiastic and decided to start a small livestock business. Her motivation had no boundaries and with support from her family she decided to obtain loan from Shirabad Saving Group. She borrowed 20,000 Afs and with this money she got one calf, two goats and one sheep. Now, after one year she has one cow, one calf, four goat and two sheep. She is producing dairy product at home and selling it outside through her family members. Now Halima makes 2,500 Afs per month and she is able to add into her family income. She also pays her chil-dren school fee and in addtions she does not spent money to buy diary product it is now available for her family too.

Halima looks back a year ago and remembers that she did not do anything at home apart from her regular house work. Now she is very busy with her busi-ness, makes money and equally contributing to the family income together with her husband. Women in the village look at Halima as role model and all of them are encouraged to have their own home-based business. Halima is very motivated about learning and urges other women to take part in the training program pro-vided by AREDP. Together with other women Halima wants to join efforts and develop livestock business. She is looking forward to getting her next loan in order to expand her business.

HALIMA: ‘AREDP SUPPORT CHANGED MY LIFE’

Halima with her cattle last year

Halima’s cattle a year after


The Koochies are one of the poorest and marginalized communities in Afghani-stan. They have been adversely affected by decades of war, insecurity, several years of draught and harsh winters. The Koochies’ main source of livelihoods is animal husbandry. Despite their long association with the livestock sector, the Koochies are still not harnessing the full potential that the sector offers. AREDP recognized that in order to harness the potential for Koochies, it is essential to support them. It was with this background that AREDP initiated an Enterprise Development project for Koochies, on a pilot basis. It is expected that the project will not only enhance Koochies’ skills to increase income derived from livestock related activities, but also support them in starting alternative micro enterpris-es, which will create new employment opportunities and increase their incomes.

An assessment that was carried out by AREDP identified a number of obstacles that hinder Koochies’ economic development. These were in particular related to lack of access to cost-effective and high quality inputs, lack of access to the market, lack of awareness on business as well as no access to modern tech-nology. In order to address these issues, AREDP is implementing a project for Koochies through consulting company that has been recruited in this quarter. The consulting company will design interventions that will increase the Koochies’ ability to produce marketable products and enhance entrepreneurial compe-tencies, develop connectivity with the market, support service providers and support institutions, develop marketing strategies to match the products and services they produce to the needs of the market and visibility of products.

While the project is at its early stages of design, AREDP has started to work with the Koochies directly. During the second quarter, Roving Facilitators (RF) have been recruited from the Koochies to facilitate the work in the ground. RFs conducted orientation meetings with the Koochies from Bagram district of Par-wan province. Sixty Koochies participated in the orientation meeting and by the end of the meeting, 30 Koochies were selected to participate in the project. Consequently, two Enterprise Development trainings were undertaken and the Koochies were assisted to develop business plans by RF. The methodology of the trainings was interactive and specifically designed for the illiterate people who have never been exposed to any conventional system of learning or formal education.

(d). Enterprise Development for Koochies

BDS training for Koochies in Parwan


Baryalay, is one of the Koochies who took part in the AREDP Enterprise Development training. He comes from Barik Aab village, Bagram district, Parwan province. He lost one of his legs in explosion while he was farming on his small land two years ago. Bary-alay was the bread winner of his family and since he could not work anymore he was very frustrated and had no hope to live.

Once the Koochies project was launched by AREDP in Parwan, Baryalay was included in the training program. This was the first time Baryalay was ever exposed to such a training and that was an eye opening experience for him. Baryalay and his cousin were very inspired by this initiative they borrowed money from a friend and started to establish vehicle spare part shop in Bagram. Now they bring spare parts from the border of Pakistan and sell in Bagram market. The training has given Baryalai so many ideas and inspiration, they want to continue with the business in the coming months and expand it.

Now Baryalay has hope for life and makes enough money to support his family. He says “I was jobless and I was not able to do anything, I felt useless in my village. I was shepherd but could not do it anymore. Now I started a shop to sell used spare parts in the market. I am very happy that I can work and support my family”. Other Koochies look at Baryalay and they are motivated by the Koochies initiative that is being implemented by AREDP. They are waiting for the project to expand in other areas of Parwan as well.

SUCCESS STORY: BARYALAY LIFE CHANGED AFTER HE ATTENDS TRAINING BY AREDP

Baryalay talking with his clients


Fatima is 38 years old from Khatem-ul-Anbiya village, Guzara district of Herat province. Like any other woman from her village, Fatima is a house wife and taking care of a family of nine people. Although she did not complete her higher education due to security issues in her village, she is very capable and realized that she can do more to support her family. Fatima’s husband is working in the market and making 300 Afs per day, but this is not sufficient for the needs of her entire family. Fatima has learned embroidery work and decided to start this business to further support her family, yet she had difficulties in the very begin-ning.

A year ago, she heard about AREDP and she became an active member of the saving group of her village established by AREDP. She received a 15,000 Afs loan from the SG for enhancing her business. She also participated in a train-ing program on marketing and enterprise development facilitated by AREDP. Through the training she has learnt how to handle her business and market her products.

Today, Fatima is a business inspiration to her fellow villagers. Through her em-broidery work, she financially supports her family and with three female workers she is planning to expand her business throughout the district. “I am immensely thankful to AREDP for supporting my business. Now I am able to produce more goods, market my products and support my family,” said Fatima. Fatima also requested AREDP to further deliver such services so other woman could realize that they too can improve their lives and be productive members of society by using these available opportunities.

SUCCESS STORY: FATIMA, A STORY OF INSPIRATION FOR HER FELLOW VILLAGERS

Follow ups were conducted on the ongoing process of VSLA registration with MRRD/AREDP and seed capital injection grants to the matured and eligible VS-LAs and SGs. During the quarter, 132 VSLAs were registered and 82 grants were processed. Access to Finance Unit is now looking to identify MFIs and commercial banks who can potentially provide VSLAs with larger capital using Islamic mode of financing mechanisms. The pressing issue is the lack of adequate and com-prehensive Islamic financing products. Most borrowers want to engage in Islamic financing means while most lenders are wary of the system due to its interest free concept. The lenders want a return on their investment so this system is not financially attractive. During the quarter, 98 VSLAs were established in the five provinces. Out of the total established, 56 VSLAs have registered with AREDP’s monitoring Management Information System. The cumulative total number of VSLAs is 249.

Access to Finance includes identifying mature SGs and federating them in groups of eight to ten to form a Village Saving and Loan Associations (VSLA). Once SGs are formed and nurtured, the access to finance component provides opportuni-ties for affordable credit to initiate businesse. During the quarter, the Access to Finance Unit provided VSLAs with books of records, internal lending systems, portfolio management support and guidance for improved better implemen-tation of the financial management. A credit portfolio management manual was developed in this period which allows the VSLAs to find out certain critical operational ratios that indicate their financial performance and hence tendency towards sustainability.

C: ACCESS TO FINANCE

Training on credit and access to finance

Fatima is demonstrating her children collection


2Component B: Small and Medium Enterprise Development


COMPONENT B: SMALL AND MEDIUM ENTERPRISE DEVELOPMENT

Small and Medium Enterprise Development Unit (SME) addresses con-straints of the rural Micro, Small and Medium Enterprises (MSME) to-wards sustainable growth in Afghanistan. This component facilitates and supports the SME sector in the rural Afghanistan by addressing business needs and creating access to business development services and access to financial services. The SME Development covers SME facilita-tion, Business Development Support for SMEs and providing appropri-ate technology for effective enterprise development.

SME mobilization takes place in the early stages of identifying SME in the field. Once the SMEs are selected they were provided with busi-ness development service to support and nature them so that they are strengthened. During the second quarter, the team provided support to 221 existing SMEs in the six provinces of program coverage. The sup-port included providing advice on how to improve and run business effectively.

Creating linkages and market nationally and internationally for SMEs is one of the key aspect of AREDP work. During the reporting period, 70 SME owners were involved in three exhibitions in Balkh and Kabul, which were organized by ACCI and AREDP. The exhibition gave expo-sure of their product to the market in the center of Balkh and in Kabul. Ultimately the entrepreneurs were able to create linkages, meet with other entrepreneurs and this made an impact on their overall sale.

The SME section facilitates AREDP’s support to rural enterprises that are selected on the basis of their potential and ability to contribute to SME sector growth.

This section focuses on SME development through awareness raising about the availability of local and inexpensive business development services and the importance of engaging managerial and technical support. It also helps SMEs to identify appropriate business providers within their areas.


A: SME FACILITATION:

B: BUSINESS DEVELOPMENT SUPPORT FOR SMES

SME Mobilization and Creating linkages

SMEs discussing product quality during field visit

Handicraft producing business from Bamyan

Potential SMEs discussing business ideasNon-technical training for women enterprises


Demonstration on how to use appropriate technology

Female enterprise during vegetable processing


(a). Capacity Building for SMEs

Supporting SMEs through technical and non-technical training is one of the primary objectives of SME Unit. During the quarter, SME Unit facili-tated and organized a series of technical and non-technical trainings for SMEs registered with the program.

EDU also facilitated international and national exposure visits for 17 en-terprise owners. Ten SMEs in the handicraft production sector visited India and 7 SMEs visited the poultry sector in Afghanistan. The exposure visits gave entrepreneurs an opportunity to learn about similar busi-nesses in different contexts and helped how to market and expand en-terprises.

During the quarter, 116 enterprise owners were provided with soft skills trainings such as book-keeping, marketing skills, etc., which will help them to progressively improve their business performance. EDU Unit also provides technical trainings for sector specific areas and within this component seven SMEs went to India for improved seeds management training, six SMEs were sent to Bamiyan for handicraft training and five honey bee SMEs were sent for a training in Nangarhar province. The trainings were provided by sector specialists and included special inter-active training methodology.

In order to remove bottlenecks for enterprise development and ensure effective business operation in rural areas, AREDP provides basic tech-nologies for eligible SMEs. ‘Lack of power’ was identified as one of the reasons hampering business expansion and development. AREDP pro-vides solar systems to grow potent businesses in rural areas. During the second quarter, the team identified, selected and completed documen-tation processes for 129 potential SMEs to acquire solar systems. The solar systems will be procured through AREDP and will be handed over to SMEs later in the next quarter.

(b). Providing Appropriate Technologies

AREDP through it SME Unit also identified 13 potential sectors for the Appropriate Technology Award. The provincial team has selected 5 types of machinery for each sector through a selection committee. The machinery was identified through an assessment process based on SMEs needs that would be best placed to further SME development. These selected sectors include poultry, handicraft, honeybee, fishing, saffron production, improved seed, dairy, carpet-wool process, nursery, carpentry, food processing and cotton-seed oil production. The Business Development Service Officers will put together the machinery specifications and process purchase through procurement unit.

SMEs learning how to produce artificial queens in honey production

SMEs supported in the second quarter


Najia Ghafarzada is a 49 years old mother of five children from Baba Yadgar village, Nahre Shah district of Balkh province. After her graduation from high school, she joined Balkh University in an administrative position. Later she worked in a local school in her area and also became the head of CDC in her village.

To supplement her limited income from government, she started food processing business in her village. She added two rooms in her house as production site and asked a few women from her village to join her in the business. Together these women she produced pickles, noodles and seasonal vegetables sauce. When the production started in the business, she registered the business with Ministry of Jus-tice.

In 2012, Najia’s business was registered with AREDP, which provided her techni-cal support such as trainings in different types of food processing. She was also trained in product marketing and branding. After receiving the training she cre-ated brand for her company.

Her marketing effort promoted the product as well as the brand, which made her and her brand famous not only in her own village but also in neighboring villages. The popularity of the brand resulted in increased business opportunity and now she is able to sell 100-300 jars per week. Currently Najia has increased her work force from 6 to 35 women to meet the demand.

Najia was nominated for second round of innovation award, an annual competi-tion for innovative business ideas. Najia together with her team are very enthusi-astic and waiting for the result of the award completions.

(c). Innovation Award

AREDP conducts an annual competition for innovative business ideas in all the covered provinces. The objective of the Innovation Award is to promote new business ideas, to encourage and strengthen existing enterprises. The pro-cess starts with awareness raising seminars at the local level where SMEs are informed about this initiative and are encouraged to apply, if eligibility criteria is meet. Once applications are receive and screened at the local level, they are forwarded to the selection committee which includes the Afghanistan Investment Support Agency, Provincial Chamber of Commerce and Provincial Industrial Unions. The committee conducts review process, selects the best eight enterprises and provides them in-kind award based on the needs that can potentially improve their business.

During the first quarter the process started with an announcement and in the second quarter 31 SMEs submitted docu-ments for the first round of the award. AREDP also announced the second and third rounds of the Award. A total of 280 applications have been received and are under review by the selection committee.

SUCCESS STORY: NAJIA LEARNED HOW TO MARKET HER PRODUCT AND TO INCREASE

Najia in the process of making noodles and sauces

The SME team together with M&E Unit started the process of Impact Assessment that is being carried out every six months to assess the impact of the overall program on the targeted beneficiaries. In particular, the assessment will identify the overall income generated, amount of sales increased within SMEs and to what extend the enterprises are sustainable. Currently the data is being collected and will be finalized and presented in the next quarter.

(d). Impact Assessment


3CROSS-CUTTING THEMES


The Environmental and Social Safeguards (ESS) has been established to oversee the environmental impact and social issues that could be potentially caused by activities of the enterprises. It works with AREDP beneficiaries to increase awareness and to build capacity on environ-ment issues and social safeguard aspects.

During the second quarter, ESS Unit carried out a number of workshops on ESS to beneficiaries from SMEs, EGs and other targeted group in the program areas. The trainings were conducted for 262 SMEs, 214 EGs, 85 VSLA, 157 VFs and 15 PEFs. The ESS team also was able to assess 245 SMEs, 279 EGs and 20 VSLAs. The objective of the assessment is to eval-uate the potential environmental and social impacts. The assessment measures the extent to which beneficiaries follow ESS guidelines, identi-fies gaps to recommend solutions to improve issues potentially having a negative impact on the environment.

AREDP established Grievance Redressal System that registers and tracks complaints of AREDP beneficiaries. This system provide a better working environment, eliminate corruption, improve service delivery and enhance project effectiveness. During the field visits, the program has tracked 33 complaints through this system and 19 of them were resolved.

AREDP recognizes the importance of gender equality and realizes that gender disparity is a significant constraint to economic growth and pov-erty reduction. Therefore, AREDP incorporates gender in all level of its operations. During the quarter, significant progress was made to pro-mote the role of women at the field level. The CED Unit conducted community mobilization and ensured women participation in the early stages of SGs and EGs formation. Out of the total 874 SG established 440 were women SGs (50%). In addition, out of 2,392 loans that were issued 1,287 were issued for women SGs (54%). As for the EGs, in total 160 were established during the quarter and 151 of them were women EGs (94%).

A number of training and exposure visits were conducted where gen-der balance was one of the selection criteria. Recent visit by M&E Unit reflected that a number of women SGs were getting stronger and the program is contributing to make significant impacts on their lives. Fur-ther, SME jointly with the Gender Unit organized an exhibition involv-ing more than 60 women from provinces. During the exhibition, these women were able to market their product at the national level, creat-ing linkages with other people in a similar business chain. At the end of the exhibition these women were able to sell their products and gener-ated a total amount of 709,325 Afs.

COMPONENT C: CROSS-CUTTING THEME

(b). Environmental and Social Safeguards

Female members of EG discussing their products

Exhibition for women in Kabul

SMEs trained to use measures of safety

(a). Gender Mainstreaming

While AREDP work is guided by two core components, there are also a number of cross-cutting issues that are equally important to its work. These include gender, training and capacity development environmental safeguards, research MIS and M&E.


CROSS-CUTTING THEME

The Training and Capacity Building is a very critical section within AREDP program and it concentrates on building capacity of SGs, VSLA, EG and VF in the targeted areas. During the reporting period, 495 trainings were carried out for 13,259 members of VF, SGs VSLAs and EGs and out of the total number 7,286 were female participants (55%). The trainings were in the areas of ori-entation and community mobilization, accounting, leadership, membership, credit investment, VSLA formation, book-keeping, marketing and product promotion, Islamic financing, etc.

After each training, assessments was carried ot by the Training Unit which indicated satisfactory feedback from participants. Generally, the participants find the training resources appropriate to their needs and context. The meth-odology used in the trainings was very well received and participants learnt basics skills for business development including book keeping, marketing and accounting.

The Research Unit provides support to AREDP in conducting and facilitating research activities through external consulting companies. During the second quarter, the Research Unit has been working with the Procurement Unit to identify consultants to conduct external research work for AREDP. The focus of this research will be on program impact assessment at the commu-nity level and providing guidance on how to craft future interventions.

During the quarter, the Research Unit has been working with consulting experts to evaluate the EGs. The evaluation expects to identify successes as well as gaps and development needs of enterprises which were established through AREDP support. The Research Unit also identifies challenges and potentials of enterprise development at the community level. These evaluations will help AREDP to improve its design for the next phase.

(d). Research

(c). Training and capacity building Section:

Soft skill training for community members

Capacity building for improving data accuracy

MIS is one of the essential components within AREDP support program. It is planned to collect, process, store, analyze information related to the core program components. It is established to keep a track of the overall program direction and helps identify immediate program impact. It also serves as deci-sion making tool for AREDP program management.

During the reporting period, the team was able to visit all the program areas in the field to collect data and compile into the system. MIS team also devel-oped help desk system that is being implemented with the purpose to report of any technical issues from the field to the national office. In order to ensure date quality, MIS team carried out a number of trainings at the provincial level so that the data transferred from the field is accurate. MIS team also developed training modules that will be handy for the team at the field level during data collection. MIS report was produced on a monthly basis that serves have been used as decision making tools for program operations.

(e). Management Information System

(f) Monitoring and Evaluation

M&E Unit within AREDP has been working very closely with core program, MIS and research units to identify the imme-diate program impact on beneficiaries. During the quarter, the team has been working to develop web-based database system. The system is very comprehensive and it will help reduce work and can track error while entering the data. The team also carried out a number of field visits in all the program areas to follow up on previous M&E finding. During the visit, the M&E team reviewed the work of SGs, EGs, VSLAs and SMEs and provided recommendations on how further strengthen them. The team also carried out a series of trainings for staff at the field level and produced monthly reports.

AFGHANISTAN RURAL ENTERPRISE DEVELOPMENT PROGRAMEMINISTRY OF RURAL REHABILIATION AND DEVELOPMENT

FOR MORE INFORMATION CONTACT:

NILABAGH STREET, DARULAMAN ROAD, WEBSITE: WWW.AREDP-MRRD.GOV.AFFACEBOOK: WWW.FACEBOOK.COM/AREDP.MRRDEMAIL: [email protected]

TOGETHER TOWARDS A COMPETATIVE AFGHANISTAN

ministry of rural rehabilitation and ... afghanistan rural enterprise development program april-june...

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