Africa Lead II Scaling up, Leveraging Momentum Market Linkages Initiative (MLI) Evaluation Results Nairobi, Kenya March 11, 2014 Presented by: Bill Wolfe
Brief Overview of the MLI Program MLI was an USD$11.5 million two year project implemented in Burundi, Democratic Republic of Congo, Kenya, Malawi, Rwanda and Uganda that begun in Sept. 2009 and ended in Sept. 2011. The project focused on increasing marketing and storage efficiencies in staple foods by stimulating investments and backward linkages in commercial grain markets. The end objective was to create a “pull-through effect”, stimulating increased commercialization of smallholder staple food production and thereby increasing regional and national food security. A key element was the use of a co-investment mechanism for the provision of grain storage and processing facilities (buildings), equipment and training. MLI Value-Chain Scheme Village Aggregation Grain Bulking Individual Wholesale Centers (VACs) Centers (GBCs) Farmers Buyers • Exporter • Miller • Brewer • Gov’t Entity • Other Processor 2
Executive Summary Evaluation Scope: – Examine the performance of the investments made, including: • Gauge the wider economic impact created by the MLI investments and their influence on professional practices • Try to compare the performance of the MLI participants with non- participants – Identify key factors/variables that determined success or failure – Make recommendations regarding any future activities involving similar investments A wide range of entities participated in the MLI program and the investment results reflect a range of outcomes from “total write-off” to “home run”. Using return on investment (ROI) metrics as part of an evaluation is a good concept as it forces you to precisely define costs and related benefits. In practice this can be challenging, especially ex-post. Using co-investments can be a powerful way to influence the development of a value chain and the resulting economic positions of its participants. However, much consideration is advised in areas such as the scale and type of investment, management capabilities, other necessary resources and the type of “end-user” buyer. Careful considerations of USAID’s (investment) objectives, risk tolerance and its wider “public policy” responsibilities is suggested as these may conflict in subtle, but important ways. 3
Evaluation Design and Methodology The evaluation was focused on examining the usage and economic returns on the assets acquired via the MLI project. Since GBCs and VACs were where the fixed asset investments occurred, these were the entities where data were collected and evaluated. An informal interview design was used since it is less intimidating than a big form to fill out, allows for explanations to ensure the right data are received, and the interviewer can better determine if the interviewee loses interest and/or when answers are being “made up”. Key elements captured were of two general types, factual and team observations. Given the investments are only two years old and the lack of record keeping by most participants, the team observations, although subjective, take on greater importance. 4
Evaluation Design and Methodology (cont’d) For several reasons the evaluation focused on the volumes versus monetary values transacted: – Since fixed (physical) assets were a focus, physical volume provides a more direct relationship. – To minimize price and currency impacts that make inter-country comparisons difficult. – Interviewees tend to remember physical quantities better than values. Answers were not forced. We took a “no data are better than bad data” approach. Warning: We quantified many aspects, although the data given were far from precise. Thus, our numerical analysis can convey a “false precision” if interpreted literally. Our goal and approach was to be “generally correct” versus “precisely wrong”. 5
The Entities Evaluated: GBCs and VACs Both the GBCs and VACs varied dramatically as to their size and nature: – GBCs: from units within sophisticated, large, national or regional entities to small local enterprises – VACs: from micro and informal sites of small daily aggregation to more sophisticated operations where storage, testing, cleaning and drying occurs – Not a “bright line” distinction between larger VACs and smaller GBCs Descriptive Statistics: Who Were the MLI Participants and the Survey Population GBC Non- VAC Non- GBC Non- VAC Non- MT Handled Annually Count Country MLI GBC MLI VAC MLI MLI Totals Legal Entity Type MLI GBC MLI VAC MLI MLI Totals Burundi 3 3 unknown or not applicable 5 Unknown 2 9 11 2 2 Co/op 6 1 1 8 DRC less than 10 8 Informal/Unidentified 1 1 2 6 5 5 16 Kenya between 100 and 500 6 Limited Liability Company 13 3 16 11 2 4 17 Malawi between 501 and 1000 4 Ngo 1 1 2 5 2 7 Rwanda between 1001 and 5000 9 Self-Help Group 3 1 4 6 3 2 11 Uganda between 5001 and 10,000 4 13 Sole Proprietorship 11 1 1 Totals 33 8 11 4 56 Totals 33 8 11 4 56 between 10,001 and 20,000 3 MLI Total 41 MLI Total 41 greater than 20,000 2 Non-MLI Total 15 Non-MLI Total 15 41 Business Sophistication and Complexity Indicators Principal Commodities Handled by the Entities Surveyed Level of Business Complexity Identified by Respondents as a “Top Three” Crop in 2013: Frequency of Responses Accounting system used Count Count (1-10 scale) Country Maize Sorghum Rice Soya Gr. Nuts Beans Barley unknown n/a 1 3 Commercial Program 18 Burundi 1 1 1 2 Small/Micro Type 3 Double-entry Spreadsheet 1 Kenya 9 6 1 3 4 Spreadsheet 6 Malawi 10 2 2 2 1 4 3 Ledger/Receipt Books 7 Rwanda 6 1 5 2 None 6 SME Type Uganda 7 3 1 6 6 Unknown 3 DRC 2 7 5 41 33 9 5 2 2 1 1 2 1 8 5 9 Large & Complex 5 10 3 Unknown (DRC) 2 6 41
The Entities Evaluated: GBCs and VACs (cont’d) Our subjective definition of successful versus unsuccessful GBC and VAC businesses and investments – A successful business • provides valued service to customers • generates a positive cash flow – A successful MLI investment • generates an acceptable return on the investment • can be sustained without external support • utilizes its assets well • generates a positive economic impact (e.g. employment) • increased the focus on quality and improved handling of crops (higher value product with less losses) • creates demand (price competition) for customers • Is where the recipient needed the support in order to expand – A VAC or GBC can be successful from a business standpoint while being a failure from an investment perspective. 7
Analysis of MLI Investments The various statistics were gathered by the survey teams fell into three general categories: 1. Asset usage/utilization related 2. Return on investment related 3. Wider business/community impact and the influence of MLI The survey teams’ subjective opinion as to the return on the MLI investments was as follows: GBCs ROI Score 1 2 3 4 5 6 7 8 9 10 Frequency 1 4 2 1 1 2 7 4 4 3 "write offs" poor ok good "home runs" Rating 17% 10% 10% 38% 24% VACs ROI Score 1 2 3 4 5 6 7 8 9 10 Frequency 0 2 2 0 0 0 2 2 0 0 "write offs" poor ok good "home runs" Rating 25% 25% 0% 50% 0% 8
Descriptive Overview of the Investments Amount Invested (USD), Cost Sharing, and Funds Usage by Country and Organization Type Minimum Maximum Total Salary, MLI Cost MLI Cost Total Total Total VAC Total GBC Total Training & Share Share Org Type Invested Facilities Facilities Facilities Equipment Other %'age %'age Country Burundi GBC 471,799 232,918 32,096 200,822 233,749 5,132 51% 68% DRC GBC 290,334 0 0 0 112,696 177,638 74% 91% Kenya GBC 1,952,965 663,920 320,080 343,840 1,029,760 259,284 39% 71% VAC 52,740 47,090 47,090 0 5,650 0 50% 87% Malawi GBC 1,989,511 1,331,972 38,877 1,293,095 411,539 246,000 32% 51% Rwanda GBC 1,245,578 683,087 26,411 656,676 489,151 73,331 21% 57% Uganda GBC 3,457,338 2,884,582 179,341 2,705,241 329,783 242,974 8% 61% VAC 36,231 31,472 31,472 0 4,759 0 8% 61% Totals 9,496,495 5,875,040 675,366 5,199,674 2,617,088 1,004,359 Percent of Total VAC Facilities/Buildings 7% GBC Facilities/Buildings 55% Total Facilities/Buildings 62% Total Equipment 28% Total Salary, Training & Other 11% Grand Total 100%
Recommend
More recommend
