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BIC-Impact-Monitoring-BS-12-2005.doc 1

Improving the Design and Impact Monitoring of

Business and Investment Climate (BIC) Activities in Asia

Desk Study

ON BEHALF OF THE INVESTMENT CLIMATE GROUP

OF THE PRIVATE SECTOR DEVELOPMENT NETWORK ASIA

AND OE 4120

CONDUCTED BY DR. BRIGITTE SPÄTH, GTZ,

DECEMBER, 2005


TABLE OF CONTENTS 1. The Rationale ...................................................................................................... 3

1.1 Background.................................................................................................... 3 1.2 Objective and expected results ........................................................................ 3 1.3 Participating programmes and projects ............................................................. 4

2. Analysis ............................................................................................................... 4 2.1 Commonalities and variations .......................................................................... 4 2.2 Diversity of key elements................................................................................. 5 2.3 Points of entry ................................................................................................ 6 2.4 Towards a generic impact chain and model indicators........................................ 8

(i) Increasing convergence at higher levels of impact ........................................... 8 (ii) Growing differentiation at lower levels of a chain .............................................. 9

3. Designing and implementing monitoring systems ............................................... 9 3.1 Baseline study and survey ............................................................................... 9 3.2 A Manual: The SMEDSEP monitoring system ................................................. 11 3.3 Reflecting higher development policy goals in the indicators ............................. 13

Integrated Impact Assessment Approach (IIAA) ...................................................... 14 4. Towards good practice ...................................................................................... 14 List of Literature Documents made available by the participating programmes

Annex Annex 1: BIC Impact Chain: Legal and Regulatory Framework Annex 2: BIC Impact Chain: Institutional capacity building at decentralised level Annex: 3 BIC Impact Chain: Representation, Public-Private Sector Dialogue, policy

advocacy Annex 4: Generic Impact Chain Enabling Environment, GTZ OE 4120, Oct. 2005 Annex 5: Overview PSD-Programmes in Asia and their anticpated (higher) development

policy impact Annex 6: Selected Impact Chain Systems with a view to BICPROGRESS - Bangladesh

- HRD-ME Programme Lao PDR - SMEDSEP Philippines - PSMEP Vietnam

Annex 7: Review of Programme Objectives, Components and Indicators, with a focus on improving the business and investment climate


1. THE RATIONALE Currently, there are at least nine WiRAM programmes / projects1 in Asia – Bangladesh, Cambodia, Indonesia2, Lao PDR, the Philippines, Sri Lanka and Vietnam – which include at least one component that deals more or less explicitly with the improvement of the business and investment climate (BIC) in our partner countries. These programmes face a double challenge. First, supporting the reform of the legal, political and institutional framework is a relatively new topic in private-sector development (PSD) – both for the German Technical Cooperation (GTZ) and for the whole donor community. Sec-ond, the programmes have to develop a new monitoring system or to adjust existing ones to the new requirements of GTZ’s “managing for development results”. Result or impact chains are the foundation of result-based monitoring (cf. Results-based Monitoring, 2004). Already, in the offer to the German Ministry of Economic Cooperation and Development (BMZ) a consistent impact chain - both up to and beyond the attribution gap - is required (cf. Guidelines on offers, 9/2003.) According to the new Development-policy Framework for Contracts and Cooperation (AURA) quantified and / or qualified indicators at outcome level have to be included in the offer. Exceptions are made for new programmes, for which indicators have to be specified during the first year of implementation, that is until the first progress review is submitted (Supplement to the guidelines, 10/2005). In addition, all programmes are obliged to establish a sound qualitative and quantitative monitoring system. If not done beforehand, a baseline surveys should be conducted within the first months of implementation.

1.1 Background Against this background, the issue of design and impact monitoring was an important topic discussed at the meeting of the PSD Network Asia, 29 May to 1st June 2005 in Phuket. This topic was also covered in the session of the Investment Climate Group. For this occasion the author had been asked to prepare a proposal for regional cooperation on Impact Monitoring in Asia (IMA) in Private Sector Development (PDS) programmes with a focus on interven-tions for improving the Business and Investment Climate (BIC).3 This proposal geared at monitoring of higher levels of development impact – that is mainly beyond the attribution gap. However, the representatives of the programmes in the working group felt that first the issue of improving the design of BIC components as well as the “normal” monitoring task should be addressed before venturing in areas of higher development impact monitoring.4

1.2 Objective and expected results The objective of this desk study was to identify good practices in the design and the impact monitoring of GTZ’s BIC activities in Asia.5 For this purpose the offers of GTZ’s current pro-grammes and projects in Asia, in which BIC is relevant, as well as other material provided by the PSD network was analysed, and, commonalities and differences in their design and their impact monitoring were identified.6 Based on this exercise: 1 For practical purposes the term programme(s) is used for both programme(s) and project(s). Only for specific purposes an explicit distinction is made between programmes and projects. In some cases also the term “development intervention” is used, which in a broader sense encompasses programmes, plans, and policy formation processes. 2 No information was obtained by the Indonesian Programme. 3 The preparation of this document went on account of the author’s own time budget, which is covered by OE 4000. The presentation itself was held by Ulrich Höcker, OE 4111. 4 Julius Spatz, OE 4120, was assigned to this task. 5 The first draft of this desk study was completed by end of August 2005. OE 4120 provided a feed-back at beginning of October 2005. Little attention was given to the study as such; rather the comments called for the formulation of generic impact chains including model indicators and risks (cf. Chapter 2.4, Annex 1-3). These impact chains were provided to OE 4120 by mid October 2005. 6 Due to lack of information some tasks of the original ToR could not be completed. These are:

(i) completeness and possible contradiction of current impact chains (only three elaborated impact chains plus plan of operations were obtained);


(a) generic impact chains for three typical BIC components were drafted; (b) a preliminary list of model indicators at different links of the impact chain was com-

piled, (c) common risks were identified, (d) good practices in the field of baseline studies as well as qualitative and quantitative

monitoring approaches are described, and (e) scope for regional cooperation in impact monitoring of BIC programmes is outlined.

1.3 Participating programmes and projects The following eight programmes / projects took part in this study:7 (i) Bangladesh: Promoting private small and medium-sized enterprises (SMEs) follow-

ing expiry of the Multi-Fibre Agreement - PROGRESS (ii) Cambodia: Private Sector Promotion Programme (iii) Lao PDR: Development of Human Resources for the Development of Market Econ-

omy - HRD-ME (iv) Mongolia: Export-oriented Industrial Trade Policy Project (v) Philippines (I): Private Sector Development Programme –SMEDSEP (vi) Philippines (II): Trade Liberalization in the Philippines - Opportunities for Services

and Aquaculture Products (vii) Sri Lanka: Capacity Building for Competitiveness and Qualified Employment –

CBCQE - Programme (viii) Vietnam: Promotion of Small and Medium Enterprises Programme Detailed information about the objectives, core problem, time frame, components and indi-cators of each of the programmes/projects are compiled in Annex 7. The amount of docu-mentation and information obtained and its respective quality differed widely (cf.: Annex 8 List of Documents).8

2. ANALYSIS 2.1 Commonalities and variations Within the international donor community there is an ongoing discussion on whether the is-sue of improving the business and investment climate should deal with private sector devel-opment as such or concentrate particularly on micro, small and medium enterprise develop-ment. If size matters for business environment reform is not an issue to be discussed here.9 However, out of the eight projects and programmes covered by this study at least seven explicitly deal with micro, small and/ or medium sized enterprises. Improving the business and investment climate has a different significance for each of the various development interventions. Few projects are completely dedicated to improving the economic framework. Usually programmes pursue a multi-sector approach and activities for creating a friendly business environment are undertaken side by side with other activity clus-ters. In contrast, the “Export-oriented Industrial Trade Policy Programme” in Mongolia fo-cuses almost exclusively on creating a conducive environment for exportation, and hence, improving access to external markets for Mongolian enterprises.

(ii) unintended consequences were not yet documented – and since hands on monitoring material was

not available – probably not yet noticed; (iii) good practice in baseline studies – so far only one very specific baseline study (Mongolia) and the

outline for an other one (Lao PDR) was made available; (iv) no monitoring data was made available so far.

7 No information was obtained from Indonesia. Instead the projects in Mongolia and the Philippines (II) expressed an interest to take part in this exercise. 8 This study was made possible through the shared funding of both the programmes and the GTZ Department Planning and Development (B 4), under which the author is budgeted. 9 It was, however, a topic at the Donor Committee conference on Business Enabling Environment, which con-vened in Cairo, Egypt from 29, Nov. through 1 Dec., 2005. Cf. Draft of the Cairo Communique, Dec. 2005.


Within a programme, BIC components are assigned varying priorities. For example, the Sri Lankan Capacity Building for Competitiveness and Qualified Employment – CBCQE – pro-gramme, concentrated so far almost entirely on two components: (1) ‘labour market oriented human resource development’ and (2) ‘integration of small and medium size enterprises into value chains’. Activities in the third component ‘improvement of frame conditions for SME-development and qualified employment’ were rather limited. This is partly due to the pro-gramme’s concept based on identified needs and set priorities of Sri Lankan-German devel-opment cooperation but also due to budgetary constraints of the German Government (scar-city of liquid funds). In contrast to that, BIC components are of central relevance to the pro-grammes in the Philippines and Vietnam. In some programmes the issue of improving BIC goes across most components (e.g. Lao PDR, the Philippines, Vietnam) whereas in others it is concentrated on a distinct component (e.g. Bangladesh). Moreover, it is sometimes difficult to isolate measures for improving BIC from other interven-tions. Often measures are embedded in a multi-sector programme, and are possibly inter-twined with other components. It is even more difficult to separate them when they are inte-grated in one and the same component (examples are component 3 in Laos, component 3 in Cambodia etc.) Furthermore, all these programmes and projects are at different stages of conceptualisa-tion, planning and implementation, which is also reflected by the documents obtained. This refers to planning, impact chain development as well as monitoring (system). Of all the rele-vant programmes, SMEDSEP in the Philippines is probably the most advanced. Followed by the programmes in Vietnam and Lao PDR, which used at least part of the planning and monitoring instruments developed in the Philippines. 2.2 Diversity of key elements Moreover, improving the business and investment climate is not a homogenous task. In the international donor community there is an ongoing discussion on what is to be considered as “business environment”. On the extremity, everything that is external to an enterprise and its immediate functions is considered as “environment”, whereas from an opposite point of view it is associated only with macro-economic policy or legal / regulatory issues. In an inventory for the “Working Group on Enabling Environment” of the Committee of Donor Agencies for Small Enterprise Development at least thirteen different issues or topics are distinguished. Such as governance, legal and regulatory framework, organizational frame-work, infrastructure, finance, macro economic policies, social conditions, cultural attitude, etc.10 In reviewing the above mentioned development initiatives a wide array of topics can be identified, which could be differentiated even more. However, for pragmatic purposes the fol-lowing crude distinction is made: (i) Macro-economic or (sub-)sector policy, (e.g. Export-oriented Industrial Trade Policy

Project, Mongolia) (ii) Legal and regulatory framework, (e.g. Promotion of Small and Medium Enterprises

Programme, Vietnam) (iii) Representation, public-private sector dialogue and policy advocacy, (e.g. Develop-

ment of Human Resources for the Development of Market Economy - HRD-ME, Laos and also Private Sector Promotion Programme, Cambodia)

(iv) Decentralised – regional and/or local – economic development policy, (e.g. Private Sector Development Programme –SMEDSEP, Philippines and Promotion of Small and Medium Enterprises Programme, Vietnam

10 Simon White, 2004 p.19.f. One may question the appropriate use of some of the models and the underlying framework. But this is not the place for such a debate, and it depends largely on the donors own perception and definition of a business “environment”.


(v) Integrating national business environment into global trade and investments op-portunities,11(e.g. Promoting private small and medium-sized enterprises (SMEs) following expiry of the Multi-Fibre Agreement – PROGRESS)

One can also distinguish between more general macro policy issues at the central govern-ment level, and perhaps the more immediate (policy) environment of enterprises at the level of regional or municipal governments. Particularly, local and regional economic develop-ment (LRED) programmes or components can have a focus on improving BIC. Figure 1 below gives an overview of the various development interventions and their key elements regarding BIC.

Figure 1: Key elements of interventions for improving the Business and Invest-ment Climate

Programme/ Project

Key elements12

Bangla-desh

Cam-bodia

Lao PDR Mongolia Philip-pines I

Philip-pines II

Sri Lanka

Vietnam

(i) Macro-economic or (sub-)sector policy

Focus on BDS-mar-ket dev.

Sector policy

Export-friendly sector policy

PSD-sector policy

Sub-sec-tor spe-cific trade policy for exporta-tion

SME-sector policy

(ii) Legal and regu-latory framework

Legal reforms

Stream-lining of rules and regulation

Regula-tory re-forms

(iii) Representation, public-private sector dialogue and policy advocacy

Via donor consul-tancy group

Network-ing – policy dia-logue

Policy dialogue

Competen-cies of advocacy institutions

(iv Decentralised – regional and/or local – economic devel-opment policy

LRED

LRED

LRED

(v) Integrating na-tional business envi-ronment into global trade

Compli-ance with interna-tional social and envi-ronmental standards

Standards in quality manage-ment

Sub-sec-tor spe-cific trade policy for exporta-tion

Quality man-agement system

Legend Very im-portant

relevant Also rele-vant

2.3 Points of entry Depending on the partner countries situation, the priorities of the agreed development coop-eration, the partner structure and the resources available the point of entry can be entirely different. This is illustrated by the “staircase model” of system boundaries (cf. Monitoring-Guidelines, p.15) or by the impact chain model originally used for some WiRAM products, such as BDS, LRED and microfinance (cf. chart below).

11 This is with reference to specific business environment reforms intended to achieve the MDGs -particularly goal nr. 7 and 8. It covers such issues as (a) adjusting the legal and institutional framework for implementing rules and regulations required by the WTO; (b) establishing a quality management infrastructure for complying with internationally required standards and norms (e.g. ISO 9000+, ISO 14000+) or (c) introducing systems for compliance with internationally agreed environmental and social standards in order to secure markets or gain new ones (e.g. fair trade, corporate social responsibility, sustainable environmental management). 12 Adapted from the categories described by White (2004, p. 19f.). However, not all key elements are identical with those of White.


Moreover, the point of entry depends also on the envisaged duration of a programme and the respective implementation phase. It is possible that impact of a programme objective is for-mulated at the level of the target groups, whereas the phase objectives are located at the level of the intermediaries. Hence, the respective, indicators for the component or project phase always relate to the end of the phase. For example SMEDSEP of the Philippines, focuses in the first phase on BIC-activities at re-gional and local levels. However, at a later stage it is expected to make use of the obtained experience for providing advice on LRED and BIC at the national level. This is intended to be introduced in Vietnam, though it has also a component dealing more directly with policy advice at the central government or national level.

Providing advice at central government level with a view to adjust e.g. the legal framework to international standards in compliance with WTO requirements, is different from e.g. simplify-ing and smoothing registration procedures at the municipal level. And, of course it makes a difference, whether one has first to start preparing the ground, or whether one can enter al-ready at relatively advanced level of policy advice. In the case of PROGRESS in Bangladesh and its component 6 on “social and environmental standards” the potential stakeholders have first to be sensitised perhaps also to be convinced about the relevance of the issue. In con-trast to that, the Export-oriented Industrial Trade Policy Project in Mongolia can provide legal and policy advice at a relatively advanced level. Similarly, this applies also for the intervention element on representation, policy dialogue and advocacy. For example in the first phase of the Cambodia’s Private Sector Promotion Pro-gramme entrepreneurs have first to be encouraged to form networks and to take part in business associations. Whereas in the case of HRD-ME in Laos the activities can focus on the one hand on capacity building of business organisation and private sector development organisations, and on the other hand on to introducing instruments for a policy dialogue. The combination of both, key elements of intervention and the defined system boundaries influence the points of entry of a development intervention. This does also affect the impact and the related indicators. Both can only be determined, once the following questions are clarified: What is the project or programme? Who are its stakeholders? Where does its con-text or "environment" start? (cf. Monitoring guidelines, p.14).


Out of eight participating programmes only three programmes provided elaborated impact chains with more or less detailed plans of operations. Of these only one presented an analy-sis of the system boundaries. As a consequence, little can be said about the completeness or incompleteness, as well as any contradiction within the impact chains.

Good practice: The formulation of detailed impact hypotheses, the clarification of system boundaries as well as the further elaboration of an impact chain are important prerequisites for building up a result-based monitoring system. This task should therefore be one of the first (planning) exercises, and come even before elaborating a plan of operation.

2.4 Towards a generic impact chain and model indicators According to the above made analysis the main factors determining an impact chain and its points of entry are:

(i) the development situation of a partner country; (ii) the duration of a programme and its respective implementation phase, (iii) the set priorities of development cooperation – either by the partner country, the

donor, or both of them; (iv) the agreed key elements of intervention; (v) the system boundaries; (vi) the capacity of partner institutions, and (vii) the resources available.

Consequently, an impact chain can only crudely reflect a diverse and complex reality. This applies for the impact chain in any offer to BMZ. It is particularly relevant for any attempt to develop a generic impact chain. 13 For these reasons, the author refrained from developing “one generic” impact chain, sug-gesting instead to concentrate on typical examples of the main intervention areas. These topic specific frames can be instructive when designing new progammes. Actually, she was asked to concentrate on the following three topics when reviewing the material once more and to apply a “standard frame design” for result chains including typical core problems, risks, and model indicators:14

(1) Legal and Regulatory Framework (Annex 1), (2) Institutional Capacity Building at Decentralised Level (Annex 2), (3) Representation, Public-Private Sector Dialogue, Policy Advocacy (Annex 3).

The information for these standard frames are predominately gathered from the programme documents obtained. Since the programmes operate at different points of entry, it is possible that results defined as outcome / direct impact in one programme might as well be defined as output in another programme. This may also be the case with indirect impact and outcome / direct impact. This has also consequences for the indicators, which by definition reflect the results. (i) Increasing convergence at higher levels of impact By looking at all three “frames” it becomes apparent that there is increasing convergence at higher levels of impact (indirect impact, higher development policy impact). The programme objectives are set at the outcome / direct impact level; nevertheless the justification of the programme is usually based on higher development policy goals, such as poverty reduction, employment creation, competitiveness. This is also reflected in the offers according to AURA, where in the various sections refer-ence is made to a number of higher development policy objectives.15 These refer to goals 13 A generic impact chain was elaborated and revised earlier by Julius Spatz (OE 4120) (cf. Annex 4). 14 Phone conversation with Julius Spatz, OE 4120, October 4, 2005. Only at a later point the application of a “standard frame design” agreed by OE 4120 for result chains was demanded. 15 These are made under section 3.2, 3.3, 3.4 and 3.13., cf. Annex 5.


from the donor side, the partner countries and/or from international agreements (e.g. MDGs, Agenda 21, OECD-DAC). (ii) Growing differentiation at lower levels of a chain The working reality of any programme or project is even more complex. This is particularly true for the lower levels of the result chain. For this reason, the author preferred to provide some typical examples instead of drafting only one “generic impact chain” (cf. Annex 1-3). The drafting of an impact chain is an attempt to reduce complexity with a view to make it “manageable”. Hence, the challenge is to establish the right balance between this reduction of complexity on the one hand, and the requirements for significance, information content and accuracy on the other hand. Therefore, it is recommended, that the degree of differen-tiation of an impact chain should be adapted to the intended use of it.16 Some practical examples are compiled in Annex 6. In the case of PROGRESS, Bangladesh, the impact chain was developed after an assessment took place and for the purpose of drafting a revised offer to BMZ. The other three examples from Laos, the Philippines and Vietnam are the results of advanced planning. At the first place an overall impact chain is presented for the whole programme. Secondly, the various components are presented in more detail.

Good practice: An elaborated and customized impact chain together with well defined “mile-stones” and a detailed plan of operation provide a sound base for monitoring. For detailed instructions cf. SMEDSEP Monitoring Manual 2005.

3. DESIGNING AND IMPLEMENTING MONITORING SYSTEMS 3.1 Baseline study and survey Usually, reference data is required for observing changes. These can be quanitative or qualitative in nature, or even both. Ideally, a baseline study, conducted during the pro-gramme assessment or at the beginning of the first implementation phase, provides such information. This is, however, rarely the case. For this desk study only one survey from Mongolia and the outline for another survey planned in Laos were made available. The concept and method of the “Export Climate Survey Mongolia” was developed by ex-perts from the IFO Institute for Economic Research, Munich, Germany.17 It draws mainly on the IFO Institute’s own surveying activities within the German business community. The methodology and its implications is explained in the box below. A first (baseline) panel survey on “export and investment climate in Mongolia” was conducted in 2004. The questionnaire was sent out to 200 companies, of which a total of 121 compa-nies (61 %) responded to it. In addition, interviews were made with users of outputs – such as staff of relevant government organisations as well as members of Chambers and Asso-ciations. This survey is intended to be conducted every 3 months (quarterly). A differentiation is made between five sectors – (i) mining, (ii) manufacturing, (iii) tourism, (iv) trade and (v) transport.18 For each category a simple one page questionnaire is prepared. In April 2005 a second survey was conducted and covered 185 companies. In total 148 com-panies, or 80 percent of all companies covered, responded to the questionnaire. The “…report is organized as follows: Part 1 mainly concentrates on a detailed description of the

16 Cf. Arbeitshilfe für Wirkungsketten, Entwurf, August 2005. 17 Experts are S. Schönherr and J.D. Lindlbauer. The IFO Institute is especially known for its monthly “ IFO Business Climate Index” (Geschäftsklima Index ) which is recognized and presented by TV as the leading trend indicator for the German Economy. 18 At the beginning there were only four sectors. As from August 2005 onwards mining and manufacturing will be separate categories.


combined results for mining and manufacturing, transport and trade sectors. (…) This part also includes some reports on sector specific results on the questions identically asked to all four sectors regarding developments in general business condition. Some charts and tables are presented to compare attitudes of each sector to a particular issue against each other and against the general trend. Part 2 presents survey results for each of four sectors sepa-rately. Conclusions and some policy recommendations are provided in the end” (Export Climate Survey Mongolia, Quarterly Report (2) 2005, p. 1). The results of the survey are not only used for internal monitoring, but are used also by:

• The government for identifying priority fields of (policy) interventions; • Getting up-to-date information on economic development; • Assessment and validation of changes of the structural framework for exportation; • Long-term observation of changes of this framework.

The multiple use of this survey is considered to be an asset. However, one may question whether the intended conduct of such a survey every three month is appropriate in the con-text of the Mongolian economy. The HRDME programme of Laos has planned to conduct a baseline survey with a particular view to the business environment.19 The design of the survey is determined by the following purposes:

19 Concept of the HRDME Baseline Survey, 14 February 2005.

Box 1: Methodology of the Export Climate Survey Mongolia The monitoring is based on consecutive (periodical) qualitative surveys. “Qualitative” means thatthe questions are not designed to collect precise figures like those coming from the official"quantitative" statistics, but they first of all have to provide information on opinions and directionsof change. Opinions on the importance of obstacles to exporting and directions of change withregard to exports and export conditions.

As no precise figures have to be estimated afterwards the preferred statistical method is not theselection of a random sample for each survey but to build up a panel of respondents whoperiodically will be asked. This is more adequate for monitoring changes in opinions related toexport conditions. World-wide experience shows that entrepreneurs are more prepared tocorrectly answer qualitative than quantitative questions which is another advantage of thismethodology.

The fact that the data reflect opinions has to be considered when weighting the answers. Theopinion of a big company may have larger effects when it comes to quantitative consequencesbut it is not more correct compared to the answer of a small firm. Therefore the weighting factorswill not reflect the real difference in size but will be fixed in an under-proportional relation to realsize (common practice in qualitative surveys).

Another characteristic feature of the survey is a voluntary participation of the companies whatimplies that they must be motivated to answer the questionnaires. This can be made easier by ashort questionnaire concentrating upon the really important items. Also the motivation usually ishigher if the design of the questionnaire demonstrated a clear structure. A big contribution tomotivation usually comes from the importance of the project. In this case there should be clearand credible information for any exporter and for the majority of the non-exporters. Of highimportance for the answering is also who is backing the survey. The well known MongolianChamber of Commerce and Industry and the Mongolian Employers’ Federation seem to be wellrespected and therefore the right partners. Last not least, enterprises may be "hooked" forparticipation by providing quick (privileged) information about the survey results. Neverthelessquite some companies will not answer, that means the sample has to be designed with enoughvolume to tolerate the foreseeable dropouts.

Linglbauer, J.D./S. Schönherr: Mongolei Export Monitoring, Final Report, ifo-Institute, München,October 2003, p. 3 – italics by the author


1. Establishment of a baseline (or benchmarks) of the said HRDME indicators is the first purpose of the survey.

2. Provision of evidence of needed improvements in the business environment for deci-sion making on remedial policy and support action by the partner organizations of the HRDME is the second purpose.20

3. Building up of an impact monitoring system for the partner organizations and respec-tive policy making bodies. The survey and the use of its findings should be a start.

The drafted questionnaire is very detailed and elaborated and does not only refer to the business environment. This points to a threat: It is perhaps sometimes difficult to find the right balance between information absolutely needed and likely to get, and those which would be nice to have. Also other programmes intend to carry out or have already conducted baseline studies and regular surveys, using a variety of approaches and methodologies. In the following only the example of Vietnam and the Philippines are briefly mentioned. Baseline studies and monitoring surveys are an integral part in the relevant component of the Vietnamese Promotion of Small and Medium Enterprise programme. Gathered information are used for further planning and designing of interventions, for policy advice, for identifying priority areas etc. Results of the studies are usually published.21 In the current phase, the introduction of “Regulatory Impact Analysis” (RIA) will have a prominent role particularly within the component for local economic development.22 An outstanding example for the conduct and use of surveys is probably the collaboration between SMEDSEP with the Asian Institute of Management Policy Centre (AIM) policy cen-tre for monitoring and assessing impact. A major source of information are the results of the regular “City Competitiveness Surveys”. With the progress towards political decentraliza-tion and the growing significance of local entrepreneurs as prime movers in local develop-ment, the City Competitiveness Surveys look beyond national competitiveness and focus on the role of cities in furthering development. Factors are studied that influence the competitive potential of 'secondary' urban centres, such as comparative advantages, infrastructure gaps, and local government dynamism, and puts forward recommendations to enhance their competitiveness. This programme also encourages government – business collaboration for the formulation of individual cities’ strategies directions. An initial assessment of the “starting” situation and regular surveys or studies are not only of relevance for a diagnosis and the design of appropriate interventions, but serve also as a reference point for observing changes. In this respect, most of the above mentioned survey tools serve a threefold purpose: diagnosis, prescription of a cure, and monitoring how the cure works.

3.2 A Manual: The SMEDSEP monitoring system Of all the relevant programmes, SMEDSEP in the Philippines has taken up a pioneering role in developing of a monitoring system for complying with the new requirements of GTZ’s “managing for development results”. The SMEDSEP program offers 12 main service pack-ages for different clients / target groups, of which at least 5 are directly linked to creating an enabling business environment for SME development. As a consequence, BIC activities are of great relevance to monitoring. It is inbuilt into the programme.

20 The analysis of findings is supposed to guide the focus of HRDME support within the partner organizations and shape the respective Plans of Operations of HRDME components. 21 For example: Improving the quality of business law. A Quickscan of Vietnam’s Capacities & Introduction of International Best Practice, Hanoi 2005. 22 For more information about RIA cf. www.regulatoryreform.com/Publications-Reports.htm or www.competition-regulation.org.uk/publications/policy_briefs/pbdl/issue%203.pdf.


The “SMEDSEP Monitoring Manual” was developed with the expertise of COMO-Consult, Hamburg.23 It was designed to serve the information needs, the decision making and the improvement process for the service delivery of the SMEDSEP programme. The main chal-lenge was to design a comprehensive information system which:

satisfies the information needs of the internal and external users remains transparent is adapted to the resources and the capacities of the programme and its environment.

Moreover, particular emphasis was given to cover the need for legitimisation and marketing function of monitoring on the one hand and the analysis, learning and improvement function on the other hand. This manual follows the various steps “Results-based Monitoring, Guidelines for Technical Cooperation Projects and Programmes”( GTZ, 2004) and illustrates how the principles can be applied to a more detailed design, planning and monitoring of a programme. It distin-guishes between controlling, operational, impact and strategic monitoring (cf. figure 2 below.

Figure 2: Overview of the Monitoring Levels According to the Impact Chain by the SMEDSEP Monitoring Manual

Monitoring Level

Planning base

Controlling - Input and cost

monitoring

• Budget assignments

Operational monitoring • Activity monitoring

• Yearly plans of operation of the program components

• Output monitoring • Milestones Impact monitoring • Use of Service

• Impact chains

• Direct Benefit • Impact chains and overall objective indicators Strategic monitoring • Indirect Impacts

• Impact chains, especially the indicators “new job creation” and “increased competitiveness of MSME”

• Cross cutting issues • Definition of indicators for transparency, participation, accountability and reliable service delivery

Source: According to the SMEDSEP Monitoring Manual, pp. 11-13.

In addition an interactive toolbox “Tools for Analysing the Political, Legal and Regulatory En-vironment for SME” was developed in order to facilitate the handling of the monitoring sys-tem.24 The respective tools and resources of the analysis stage of SMEDSEP are below. Each tool is organized by title, objective, methodology, requirements, lessons learned and resources. The requirements will give some approximation of the costs involved (interna-tional and local consultants in person days and operating costs).The resources are added to supplement the tools and encompass documents such as terms of reference (TOR), docu-mentations, visualizations, invitation letters etc.:

- Benchmarking city competitiveness in partnership with local academe, - Focus Group Discussion (FGD) on LGU governance, - Analysis of national policy framework for SMEs, - FGD on national policy framework for SMEs, - Regional SME Studies,

23 The expert is Gerd Ramm, Como Consult, Hamburg, February 2005. This manual is made available on the webpage of the Sector Network Economic Development and Employment in Asia (www2.gtz.de/assets-asia). 24 Christof Gross, Manila, Philippines, December 2004


- Survey of business registration procedures. Needless to say, these resources should serve as samples and examples and would have to be adapted (or replaced) in other contexts. This is not the place to discuss the manual or the toolbox in detail. The manual is a practical example on how the development of new thematic instruments can be combined with the challenges of impact monitoring. For any programme or project manager it is worthwhile to have a closer look at both. Much of it could, after ad-aptation, be used in the context of other programmes and projects.

3.3 Reflecting higher development policy goals in the indicators All the programmes reviewed claim in their offers to contribute to poverty reduction with reference to the BMZ Programme of Action 2015 No. 1 (economic dynamics and increasing participation of the poor), MDG 1 (poverty eradication), and the OECD-DAC classification “Comprehensive Poverty Reduction at the macro economic and sectoral level (CPR)”(cf. Annex 5). However, this result is anticipated to take place only indirectly. Since poverty impact will occur only beyond the attribution gap, no indicators are required according to AURA. Nevertheless, any programme will have to develop strategies and mechanisms to see whether the programme is on track by contributing even indirectly to poverty eradication. This would necessitate at least a plausible impact hypothesis on how a programme or development intervention is linked to observed changes by PRSP monitoring, PSIA etc. Similarly, most programmes maintain a contribution to Participatory Development / Good Governance with a OECD-DAC classification of at least PD/GG 1, which is appropriate for programmes dealing in one way or the other with the “shaping of the policy environment” (Annex 5). By doing so, this classification will have to be reflected by the indicators, either at outcome or at component level. This is, however, not always the case. With a view to socio-cultural effects the gender issue is most prominent. Other relevant socio-economic issues may be related to religion, age, social-strata etc. At the recent Conference in Cairo, the donors:“… recognise that a disproportionate amount of women-owned enterprises are small enterprises. Thus, there are gender-based barriers to small enterprise growth that need to be addressed when reforming the business environment” (Draft Cairo Com-munique, Dec. 2005, 1.4). Still, not all the reviewed programmes consider “gender equality” as an important secondary objective, classifying it as G 1 (Annex 5). Even if gender equality (classification G 1) is considered to be relevant for a programme, it is, however, not always reflected by the indicators. According to newest directives the concern about gender equality in German and International Development Cooperation will have to be considered more seriously.25 This is

25 According to the recent supplement to the „Handreichungen zur Bearbeitung von AURA-Angeboten“, Oct. 2005, p. 4, the classification of G 0 – being neutral is only possible in exceptional well justified cases.


not only relevant for the design of a programme but also for monitoring and assessing results. With the exception of the rare case of a programme which is geared exclusively to one gender, it should be evident - whenever possible - to generate gender specific informa-tion and data as well as to formulate indicators accordingly. The situation looks far more bleak with regard to the anticipated ecological results (cf. Annex 5). Most programmes do not consider a direct link between an expected “economic or industrial growth” and environmental effects. Although, some offers made an explicit refer-ence to the Agenda 21, which is ultimately linked to the concept of sustainability by reconcil-ing economic, social and environmental development. Accordingly few programmes have formulated indicators for “environmental protection, natural resource conservation and eco-logical sustainability” (Guidelines on Offers, 9/2003, p. 31).

Integrated Impact Assessment Approach (IIAA) Other donors, such as DFID, increasingly support an more integrated impact assessment approach, which resulted in formulation of the Guidelines for Assessing Impact for Enabling Environment Programmes: An Integrated Impact Assessment Approach (IIAA). 26 The approach, developed earlier for SME impact assessment, aims at giving balanced consid-eration to the multidimensional nature of sustainable development targets.27 Accordingly, sustainable development usually encompasses economic, social, environmental aspects of the development process. In programmes for creating an enabling business environment the issue of governance is considered to be of equal relevance. It was therefore added to the list of core impact indicators (cf. chart above) presented in the Guidelines. These guidelines were presented and discussed at the conference of Donor Agencies for Small Enterprise Development’s conference on “Reforming the business environment – from assessing problems to measuring results” in Cairo, Egypt from 29, November through 1 December, 2005.

4. TOWARDS GOOD PRACTICE To recall, the development programmes and projects face a double challenge. From the analysis of the available documents of the eight programmes and projects, it can be ob-served that remarkable progress was made in developing instruments and approaches for addressing the creation of an enabling business and investment climate. The same can be said in regard to develop adequate systems for impact monitoring and assessment. The pro-grammes in Philippines and Vietnam have taken up a pioneering role. Some innovative ap-proaches are also incorporated by the programme in Lao PDR and the project in Mongolia. However, much is still to be done. It is now generally accepted that impact assessment needs to move on from its earlier focus on ‘proving impact’ towards ‘improving practice’ (Hulme 2000). The objectives of impact assessment greatly influence the information needs, the approach and methodology applied. This is illustrated with a proving improving dichotomy of the primary goals of impact assessment above (cf. figure 3). The main audience of each type of assessment is listed as well as a set of factors associated with the extreme ‘pole’ positions of this continuum. This has implications not only for the types of indicators used, but also for the types of ques-tions asked, the sampling choices made and the ways the results are disseminated.28 It seems that this lesson is recognised and that increasingly attempts are made to reconcile both with one another. However, the pressure for proving impact is perhaps today stronger

26 Prepared by Caroline Pinder et al., April 2005 (www.enterprise-impact.org.uk/pdf/BEE-IAguidelines.pdg). It is accompanied by a handbook (www.enterprise-impact.org.uk/pdf/BEE-IA-Handbook.pdf) and presented at the Donor Conference in Cairo, Nov., Dec. 2005 . 27 Bond et al. 2001. 28 Mayoux, /Mosedale 2005, p. 187:


than ever. Numerical data seems to be quite suitable for such a “proving”.29 Therefore, it is sometimes quite tempting to generate some sort of “hard data”. Figure 3: Proving – Improving Opposites of Impact Assessment Proving Impacts Improving Practice Primary Goal Measuring as accurately as

possible the impact of an inter-vention

Understanding the processes of intervention and their impacts so as to improve those processes

Main Audience Academics and researchers Policymakers Evaluation departments Program Managers

Program managers Donor field staff NGO personnel Intended beneficiaries

Associated Factors

Objectivity Theory External Top down Generalisation Academic research Long timescales Degree of confidence

Subjectivity Practice Internal Bottom up Contextualisation Market research Short timescale Level of plausibility

Source: Hulme, 2000, , p. 80 From the above analysis of documents the following can be concluded:

♦ Good planning and the building up of a monitoring system are closely related. For this reason, it is worthwhile to invest time, human financial resources into conceptualisation of the planning process. It will later facilitate not only the further planning, but also the re-porting, management, and monitoring tasks.

♦ The formulation of detailed impact hypotheses, the clarification of system boundaries as well as the further elaboration of an impact chain are important prerequisites for building up a result-based monitoring system. This task should therefore be one of the first (plan-ning) exercises, and come even before elaborating a plan of operation.

♦ An elaborated and customized impact chain together with well defined “milestones” and a detailed plan of operation provide a sound base for monitoring.

♦ Monitoring can be a powerful management and also political tool. In order to secure the commitment of the partners and / or stakeholders, they should be involved in the planning and monitoring process as early as possible and on regular terms.

♦ Monitoring is an instrument building local capacity. This is of particular importance in those countries, where there is still little tradition and a lack of qualified personnel for con-ducting surveys and monitoring development interventions. An institution like AIM, Philip-pines, which conducts independent surveys is still an exception.

♦ An excellent foundation was laid for developing an adequate monitoring system and re-lated tools developed by SMEDSEP in the Philippines.30 SMEDSEP is ready to share both the manual and toolbox with other programmes and projects. Clearly some adaptation would have to be made by each programme. However, this could serve as a starting point for regional learning and perhaps one day even benchmarking.

♦ There is still the problem with the counterfactual. How can one be sure that the observed changes can be attributed to “our” development intervention? A quasi experimental ap-proach, that is using a control group, does not seem to be realistic in such type of pro-grammes. Usually the whole population of a region or country would normally be exposed to changes occurring in the business environment. A before and after comparison, with a

29 A controversial statement is made by Mayoux, /Mosedale (2005, p. 187): “Impact assessment which focuses too narrowly on easily measured economic indicators is at best only partial, and at worst positively misleading.” 30 “Tools for Analysing the Political, Legal and Regulatory Environment for SME” and the “SMEDSEP Monitoring Manual”.


baseline study / survey as reference seems to be more practical. For this reason, the con-duct of baseline studies is indispensable.

♦ Moreover, triangulation can be used in order to overcome the bias that comes from single informants, single methods, single observers or single theory studies. Such consistency checks are done by combining multiple data sources, methods, analyses etc.

♦ Experience with different types of surveys are available from the project in Mongolia on the export climate and from the Philippines on the competitiveness of cities. Together with the experience of similar surveys in other regions,31 these could serve as examples for designing adequate surveys for other programmes.

♦ Surveys are valuable instruments. However, one has to make sure, that the survey actu-ally collects the information that is required. There is the danger of overloading a survey. One may be tempted to collect to many different and perhaps sensitive information, re-sulting in a low response rate. A right balance between information absolutely needed and likely to get, and those which would be nice to have is therefore needed.

♦ Not everything has to be surveyed, proved etc. by a programme itself. Particularly in view of higher development policy objectives – including the PRSP-process, MDG monitoring, etc. - , the donor community as such as well as the partner country is challenged to pro-vide relevant information. Therefore, it is important to know, what other sources of infor-mation exist and how they could be incorporated for satisfying own information needs.

♦ Taking into consideration the multidimensional nature of sustainable development in general, and poverty reduction in particular would be a good practice. As a consequence, cross cutting issues and higher development goals would be part of a strategic monitoring (cf. example SMEDSEP Monitoring Manual 2005).

There are also a number of open issues: ♦ Besides all the numerical data that will be collected, one should not lose sight of social

processes.32 After all development is mainly a social process. What do we need to know about the effects of economic growth in terms of social stratification, changes in power structures, gender relation, effects on particular socio-economic groups, ecological ef-fects, etc.? How is this covered by the monitoring system?

♦ The same applies to risks and negative results. How will those be integrated into the monitoring? From the documentation obtained so far, little can be concluded about it.

♦ And last but not the least, how can the monitoring be monitored. Do we really get the information needed for learning and improving processes, or for proving impact?

*** BS December 2005 ***

31 In this context one could also draw lessons from the experiences of surveys conducted in Tunisia as well as in the SADAC region. Papers were presented at the recent Donor Conference in Cairo (Nov.-Dec. 2005) and are available in the respective GTZ-Conference Reader as well as on the Conference web page. 32 For a discussion of the relevance of and methodologies for assessing social processes and stratification in SED a specific issue of „The Journal of International Development“ (J. Int. Dev. 17 (2005), pp.187 -298), particularly the articles by Barrientos, Mosedale and Mayoux as well as the webpage of „Enterprise Development Impact Assessment Information Service“ (EDIAIS) www.enterprise-impact.org.uk are excellent resources.


List of Literature Arbeitshilfe für Wirkungsketten, (Manual for impact chains) GTZ Stabsstelle, OE 042 Gruppe Evaluierung in Zusammenarbeit mit Bereich Planung und Entwicklung, draft, August 2005. Bond, R.; J. Curran, C. Kirkpatrick, N. Lee and P. Francis: Integrated Impact Assessment for Sustainable Development: A case study approach, in: World Development, Vol. 29, 2001, No. 6, pp. 1011-1024. Committee of Donor Agencies for Small Enteprise Development. International Conference on Reforming the Business Environment, 29 November to 1 Decemer 2005, Cairo. Conference Communique, 2nd Draft. Concept of the HRDME Baseline Survey, 14 February 2005. Guidelines on Offers, Eschborn: GTZ Unit 04 Corporate Development, 9/2003 Ergänzung der Handreichung zur Bearbeitung von AURA-Angeboten, (Supplement to the guidelines on offers) Eschborn: GTZ Unit 04, 10/2005 Hulme, D.: Impact Assessment Methodologies for Micro-finance: Theory, Experience and Better Prac-tice, in: World Development Vol. 28, 2000, No. 1, p. 80 Improving the quality of business law. A Quickscan of Vietnam’s Capacities & Introduction of International Best Practice, Hanoi 2005. Jahn, Detlev: Barometer “Programme de Mise á Niveau” in Tunisia Measuring the effect of the National Economy Promotion Programme, GTZ Cairo-Conference Reader 2005

Linglbauer, J.D./S. Schönherr: Mongolei Export Monitoring, Final Report, ifo-Institute, München, October 2003. Mayoux, Linda / Mosedale Sarah 2005, p. 187: Impact assessment for pro-poor accountability: innovations and challenges, in: Journal of Development Studies No. 17, (2005) p. 187-193 Mosedale, S.: Assessing women’s empowerment: Towards a conceptual framework. in: Journal of Development Studies No. 17, (2005 Barrientos, S.: Impact assessment and labour: Developing a learning approach.in: in: Journal of Development Studies No. 17, (2005 Mayoux L./Chambers, R.: Reversing the paradigm: Quantification, participatory methods and pro-poor impact assessment, in: in: Journal of Development Studies No. 17, (2005. Michaelowa, Katharina; Borrmann, Axel: What determines Evaluation Outcome? – Evidence from Bi- and Multilateral Development Cooperation - , HWWA-Discussion Paper No. 310, 2005. Results-based Monitoring. Guidelines for Technical Cooperation Projects and Programmes, Eschborn: GTZ Unit 04 Corporate Development OU 042 Internal Evaluation, May 2004. The Regional Business Climate Survey for SADC Countries, GTZ ASPB Project Southern Africa, GTZ Cairo Conference Reader, 2005 Pinder, Caroline/ Kirkpatrick, Colin/ Mosedale, Sarah: Guidelines for Assessing the Impact of Enabling Environment Programmes: An integrated impact assessment approach (IIAA), with contributions from Pat Richardson and Simon White. Macclesfield: A study conducted for DFID by Wise Development Ltd. April 2005, SMEDSEP Monitoring Manual, by Gerd Ramm, Como Consult, Hamburg, February 2005 Tools for Analysing the Political, Legal and Regulatory Environment for SME” developed by Christof Gross, Manila, Philippines, December 2004 White, Simon: Donor Approaches to improving the business environment for small enterprises. Committee of Donor Agencies for Small Enterprise Development, Working group on Enabling Environment, July 2004. World Bank Group: Improving Investment Climates: An Evaluation of World Bank Group Assistance, Overview Report, October 18, 2005


Documents received from the participating programmes / projects Programme/Projects Documents PROGRESS SME-Promotion, Bangladesh Angebot dt./engl. AP Paul Weijers Private Sector Promotion Projekt, Cambodia Angebot dt. AP Peter Bolster Program Identification Mission - Feb/March 2004/ Summary Report HRDME, Lao PDR Angebot dt./engl. AP Manfred Matzdorf PFB dt. 06/2005 Concept for Baseline Survey PP-Presentation: Impact MonitoringSysstem PP-Presentation: HRDME PSD etc. Export-oriented Industrial Trade Policy Project, Angebot dt. Mongolia Panel Survey Guidelines (ifo 10/2003) AP Dr. Albert Gierend Export Climate Survey 04/2005 Questionaires (4 Sectors) Indikatorensystem, Wertbestueckung und Instrumente zur Messung der Indikatoren PFB 01/2004 PoO 2005 SMEDSEP, the Philippines Angebot, dt./eng. AP Martina Vahlhaus PFB dt. 06/2005 Annex: adjusted indicators 01/2004 SMEDSEP PoO 2005 SMEDSEP MILESTONES 2005: for EE /12/2004 SMEDSEP MiLESTONES 2005: 06/2005 SMEDSEP-Monitoring Mannual 02/2005; 05/2005 Trade Policy and Promotion Project, Philippines Arbeitsvorschlag dt. /engl. AP Anja Gomm Milestones 06/2005 CBCQE, Sri Lanka Angebot dt./engl, AP Uta Borges PFB dt. 02/2004., brief programm discription engl. 08/2005 Impact Chain/Interventionen (rudimentary) Vietnam-German SME Development Programme Angebot dt./engl AP Corinna Küsel PoO-2005 Impact Chain 07/2005: on the Impacts Generated in Advocating for a More Enabling Environment for BDS in Vietnam: A case study 04/20004 on the Impacts Generated in Advocating for a More Enabling Environment for BDS in Vietnam: A case study 04/20005 Improving the Quality of Business Law, Hanoi 2005 Cooperation Agreement with CIEM, 12/2004 Presentation & Abstract: RIA - to reform the regulatory framework in Vietam, 07/2005 Revised Appraisal Report for Programme Preparation, 04/2004 engl/dt. SME-Programme Document 03/2005

Annex 1: BIC Impact Chain: Legal and Regulatory Framework1


Higher Development Policy Impact ♦ Higher economic growth – pro-poor growth ♦ Increased competitiveness of SME-sector (private sector) ♦ Sustainable increase of number of enterprises, employment, income and investment in SME (pri-

vate sector) ♦ Better governance and increased participation in economic policy matters

Indirect Impact ♦ SMEs benefit from friendlier business policies and regulations ♦ Improved legal and policy framework for SME (private sector) ♦ Improved locational investment conditions ♦ Cost for doing business reduced

Direct Impact / Outcome ♦ Comprehensive market oriented regulatory framework and procedures exists ♦ Policies and programmes of various government departments are more SME friendly and coherent ♦ Enterprise Law, Investment Law and other reforms are of better quality ♦ More effective implementation of legal and regulatory policies, instruments and reforms and new

initiatives Core Problem

♦ The legal and regulatory framework is incomplete, such as lack of regulation regarding property rights, enforcing contracts, closing a business, business law, (e.g. former socialist /centrally planned economies)

♦ Regulatory policies as well as regulatory procedures (laws / decrees / by-laws, / administrative procedures etc.) are obstructive to SME development

♦ The legal framework for doing business is over-regulated, particularly for starting a business, hiring and firing workers, etc.

♦ Proceeding to register a business and to comply with business regulations are cumbersome (costs in time and money)

Indicators: ♦ Regular dialogue process with at least xy dialogue fora between the public sector and the private

business community on relevant legal projects (e.g. Enterprise and Investment Law). ♦ Higher rating in comparative business or investment climate index ♦ Number of selected bureaucratic and legal obstacles that have been removed and that are incorpo-

rated into a nationwide regulatory reform, ♦ At least xy % of proposals and advisory inputs (studies, legal comments) on the Enterprise Law

and other reforms are taken into consideration and are reflected accordingly in government docu-ments and decrees.

♦ The Regulatory Impact Assessment (RIA) method is applied in the elaboration of yz (estimated) SME relevant policy proposals.

♦ Growing number of specific reforms projects – policy, law, procedures, etc. - under implementation (base year – yz)

♦ At least yz % of the directly involved professional of the Ministries and other relevant institutions (at least x) consider the documents produced by the programme – studies, analysis, policy recom-mendation, – of good quality and relevant to their work (source: staff interviews)

♦ The percentage of small and medium entrepreneurs, confirming in a regular survey, that the legal and institutional conditions for doing business have improved, is increasing (initial bench mark and expected rate of increase are determined by the results of the first survey).

Annex 1: BIC Impact Chain: Legal and Regulatory Framework1


Risks: ♦ Precarious commitment of the government and its authorities to the reform process (e.g. market

economy, private sector development, SME-development). ♦ Lack of political will may lead to a changes in policy priorities, and hence to stagnation of reform

processes. ♦ Implementation of legal and regulatory reforms are retarded due to bureaucratic inertia or for fear

of losing privileges. ♦ There is the danger that individual authorities refuse to cooperate with other stakeholders and

therefore avert overlapping / comprehensive reforms. ♦ The designated lead agency may be newly established, but is not yet fully endowed with the neces-

sary decision making authority, therefore it might unable to fulfil its function in the reform process. Use of outputs / Services

♦ Policy makers develop a national SME action and promotional programme with a view to legal and regulatory reforms

♦ Relevant government departments and authorities develop more SME friendly and consistent poli-cies

♦ Policy makers develop feasible and SME friendly policy proposal ♦ Decision makers apply innovative law making mechanisms like RIA in the process of drafting busi-

ness laws, ♦ Entrepreneurs increasingly make use streamlined procedures and comply with business regulation ♦ Tools / manuals for innovative law making mechanisms (e.g. RIA) used for analysis and the draft-

ing other laws Outputs / Services

♦ Analysis of relevant laws (business, investment, commercial etc.), ♦ Awareness-creation among representatives of relevant government authorities and private bodies,

(business associations etc.) with emphasis on legal and regulatory matters, ♦ Introduction of innovative law making mechanism (e.g. RIA), ♦ Development of tools / manuals for innovative law making mechanisms (e.g. RIA) ♦ Dissemination of diagnostic instruments (e.g. RIA), ♦ Evaluated experience of removing selected bureaucratic and legal obstacles on a pilot scale (re-

gional / local level); ♦ Monitoring and implementation of legal reforms,

Activities advice, information, seminars, training, study tours, analysis, studies, facilitation of meetings, aware-ness creation campaigns etc. on legal and regulatory matters, law making, organisational develop-ment, information and knowledge management, etc.

Annex 2: BIC Impact Chain: Institutional capacity building at decentralised level1


Higher Development Policy impact ♦ Higher economic growth – pro-poor growth ♦ Increased competitiveness of SME-sector (private sector) ♦ Sustainable increase of number of enterprises, employment, income and investment in SME (pri-

vate sector) ♦ Better governance and increased participation in economic and social development policy

Indirect Impact ♦ Improvement of SME-framework conditions at local / regional level (measured by survey including

costs of doing business, dynamism of local / regional economy, linkages and accessibility, human resources, infrastructure, responsiveness of local / regional government, quality of life)

♦ Acceleration of employment and income generation at local / regional level ♦ Increase of SME competitiveness at local / regional level

Direct Impact / Outcome ♦ Local and regional government authorities are endowed with the necessary decision making power

and provided with adequate financial and personnel resources for supporting / promoting the re-gional and local economy,

♦ Relevant government authorities and private sector organisations are competent enough to fulfil their functions in supporting / promoting the regional and local economy

♦ LRED-approach becomes an integral part of the planning and implementation process in selected regions

♦ Regulatory and administrative framework is more conducive to economic (SME) development in selected regions

♦ Policy makers develop feasible and SME friendly policies at local / regional level ♦ Entrepreneurs take advantage of better business climate and invest

Core Problem ♦ Bureaucracy has displayed a high degree of concentration and centralization of resources and

decision making, and has shown features of paternalism and clientilism. In the course of administrative and political decentralisation there is often little experience of coordinating activities between national and decentralised levels and between the various sectoral departments.

♦ In the field of economic promotion, institutional performance is often poor and the steering capacity limited. This is particularly true at the regional and local level, since these administrative units are not usually sufficiently equipped with competent staff, resources and decision making authority. In fact, initiatives by local authorities to promote private sector development are often stifled by a centralised decision making process and a lack of financial resources.

♦ In addition, most regional and local authorities would not profit from regional and local economic growth, since taxes generated in the area are usually transferred to the central administration. Even where, officially, institutional or legal reforms have been introduced, such as decentralisation or an adaptation of the legal framework, the administriative sub-structure is too weak to implement these reforms efficiently.

♦ The immediate environment for small firms is shaped by various authorities, which play an important role on account of their regulatory function, such as enforcing municipal by-laws, health and environment regulations and their development function, such as zoning, provision of infrastructure, or educational and training facilities. Procedures to comply with regulations, such as registration and taxation, and those necessary to benefit from government incentives, to import or export, or to obtain credit often go beyond the capacity of SMEs. They are often faced with cumbersome procedures and bureaucratic arbitrariness. SMEs are subject to various forms of harassment and will have to pay off various officials in order to stay in business. In such a hostile and insecure business climate SME will not be able to prosper.

Annex 2: BIC Impact Chain: Institutional capacity building at decentralised level1


Indicators ♦ SMEs confirm that the regional and local authorities (of the region or cities covered) increasingly

fulfil their function of developing the region by acting as intermediaries and as facilitators. (source: relevant indicators in survey increase by x % from year I to year II)

♦ Regular dialogue process / at least xy dialogue fora between the public sector and the private business community on relevant legal projects (e.g. Enterprise and Investment Law).

♦ Number of simplified procedures developed and tested at regional/local level that become wide-spread at national level or in other regions,

♦ SMEs in pilot regions confirm that approval and licensing procedures have been shortened, simpli-fied and are better publicised by xy % as compared to the previous year (source: random sampling inquiry of enterprises and survey proxy-indicators)

♦ At least yz % of the entrepreneurs confirm that framework conditions for doing business have im-proved since the beginning of the phase (source: survey proxy-indicator: “in general the citiy“s regulatory environment, such as licensing procedures and fees taxes, and other regulatory re-quirements) is conducive to business”)

♦ At least yz % of the professionals that received further training / upgrading measures by the pro-gramme observe an increased application of their specialist knowledge in relevant issues (source: assessment of users – panel survey).

Risks: ♦ Reform processes are obstructed by bureaucratic inertia and / or by the fear of government official

of (i) becoming accountable, (ii) losing transfer payments (corruption) and (iii) other privileges; ♦ Decision making authority and mechanisms are with the central government level and avert decen-

tralised and local reforms; ♦ Lack of endowment of decision making power, financial and personnel resources for regional or

local government units, ♦ Resistance by influential groups of the population (oligarchy) against the loss of privileges;

Use of outputs / Services ♦ Staff of relevant government authorities and of other key stakeholder are aware of their roles and

function and behave accordingly, ♦ Staff of regional and local authorities apply streamlined procedures for registration and licensing, ♦ Entrepreneurs formalise their businesses by making use of improved procedures, ♦ Relevant regional and local government institutions and private sector organisations are aware of

SME’s needs in the region / municipality, ♦ Locally available LRED-facilitation is used by relevant regional and local government institutions

and private sector organisations for planning, ♦ Monitoring results on the local /regional business environment is used for planning and improving

processes Outputs / Services

♦ Division of labour between central government and regional / local authorities clarified ♦ Role (functions, procedure, etc.) of regional / local government units are clearly defined, ♦ Capacity building of staff and representatives (decision makers) of relevant stakeholders conducted ♦ Business registration and licensing process simplified and accelerated (e.g. one stop shop) ♦ Relevant business laws and its implementation on regional / local level assessed ♦ LRED-process initiated and implemented in pilot region ♦ Main stakeholders trained an coached in LRED-approach ♦ Monitoring of the business environment

Activities advice, information, seminars, training, study tours, analysis, studies, facilitation of meetings, aware-ness creation campaigns, etc. on legal and regulatory matters, local and regional economic develop-ment, diagnostic instruments, local and regional law making, organisational development, etc capacity building of private and public sector institutions at regional/local level

Annex 3: BIC Impact Chain: Representation, Public-Private Sector Dialogue, policy advocacy1


Higher Development Policy Impact Higher economic growth – pro-poor growth Increased competitiveness of SME-sector (private sector) Sustainable increase of number of enterprises, employment, income and investment in SME

(private sector) Better governance and increased participation in economic policy matters

Indirect Impact Cost of doing business reduced Business climate and conditions improved Regulatory and administrative framework is more transparent and reliable

Direct Impact / Outcome Policy dialogue is effectively applied for conducting reforms Policy dialogues is more result oriented and of better quality Decision making for improved framework conditions prepared Main stakeholders (business associations33, government authorities) committed to reform process Participation of target groups (entrepreneurs, business women, youth etc.) in policy development

and decision making is guaranteed Improved transparency of policy formulation and decision processes

Core Problems Low rate of association among entrepreneurs resulting in a lack of bargaining power and lobbying

functions Lack of organisational capacity and technical competence of entrepreneurs and their representa-

tive bodies for taking up an active role in shaping their business environment No participation of target groups (entrepreneurs, SME, disadvantaged business groups such as

women, youth, ethnic groups) in policy and decision making process regarding their business en-vironment

Absence of a public-private sector dialogue for creating an adequate / favourable legal, regulatory and institutional environment for private sector development / SME development

Indicators Absolute and relative increase in rate of association of entrepreneurs (gender-specific data, if

necessary also according to ethnicity, religion, age) (source: data from private sector associations etc, base year – yz) (socio-cultural aspect)

Number of problems and obstacles that are jointly addressed by taking advantage of the collective bargaining power of associations, (source: survey and reports of participating enterprises and associations)

Increasing share of small and medium entrepreneurs, assess the framework for their economic activities positively (source: regular surveys – first is baseline survey)

Representatives of private sector (SME) are regularly and effectively integrated into relevant decision making process by government institutions (source: interrogation of representatives of private sector, minutes of meetings) (participation)

Satisfaction with quality and results of policy dialogue (source: regular interviews with a sample of participants in policy dialogue)

Proposed and on-going reform projects are posted in the media and at bulletin boards (transpar-ency)

33 The term business association is used for all types fo membership organisations representing the interest of entrepreneurs such as Chambers, trade associations, networks , lobbying groups, etc.

Annex 3: BIC Impact Chain: Representation, Public-Private Sector Dialogue, policy advocacy1


Risks: Cooperation between private and public sector for policy development is new to a country, which

may lead to frictional losses. The government may accept only well established and pro-government / pro-party private sector

organisations as dialogue partners, to the detriment of genuine reforms Powerful interest groups (oligarchy) may resist reforms in order not to undermine their privileged

position (loss of privileges) Entrepreneurs themselves may not be interested in change, because they have arranged them-

selves with the current situation and do not know, what will come instead Particular underprivileged groups (women, youth, religious or ethnic groups) may not be repre-

sented in the dialogue, resulting in their even greater vulnerability and marginalisation Use of outputs / Services

Entrepreneurs (e.g. male, female, youth, ethnic or religious groups) establish business associations with a view to represent their interests

Business associations, government bodies and private sector development organisations are aware of their defined roles and behave accordingly

Business associations and relevant government bodies set up mechanisms for a public-private dialogue with the purpose of addressing obstacles to economic and social development

Main stakeholders of policy dialogue screen and prioritise obstacles and options, agree on strate-gies and actively take part in implementation

Results of dialogues are used by different stakeholders (business associations, government authorities, business development organisations etc.) for relevant reform process

Outputs / Services Awareness on the role and function of business associations, interest groups, lobbying and policy

dialogue is created among for representatives of the business community and relevant public bodies

Representatives of the business community and key staff of relevant public bodies are increasingly competent in all technical, legal and organisational matters regarding business associations, business and investment framework, policy dialogue

Disadvantaged entrepreneurial groups (youth, women, ethnic or religious groups, etc.) are empowered to take actively part in business associations and in public-private sector dialogue

Guidelines and best practise examples for policy dialogue and role and functions of private and government sector in economic development do exist

Capacity building for both private sector organisations and relevant government bodies in view of establishing public-private sector dialog mechanism

Core Problems Low rate of association among entrepreneurs resulting in a lack of bargaining power and lobbying

functions Lack of organisational capacity and technical competence of entrepreneurs and their representa-

tive bodies for taking up an active role in shaping their business environment No participation of target groups (entrepreneurs, SME, disadvantaged business groups such as

women, youth, ethnic groups) in policy and decision making process regarding their business en-vironment

Absence of a public-private sector dialogue for creating an adequate / favourable legal, regulatory and institutional environment for private sector development / SME development

Activities: advice, information, seminars, training, study tours, analysis, studies, facilitation of meetings, aware-ness creation campaigns, etc. on legal and regulatory matters, economic development, diagnostic instruments, law making, organisational development, etc., capacity building of private and public sector institutions

ANNEX 4: GENERIC IMPACT CHAIN ENABLING ENVIRONMENT, GTZ OE 4120, OCT. 2005


Annex 5: Overview PSD-Programmes in Asia and their anticpated (higher) development policy impact


Contribution to34: Partner Country’s development goals (3.2)

Programme of Action 201535 / International Goals (3.3)

BMZ country strategy (3.4)

Pro-poor orientation (3.13)

PD/GG Gender Ecological results

BANGLADESH

PROGRESS

Interim-Poverty Strategy Paper (I-PRSP) / post MFA-strategy

PoA No. 1 MDG 1

Drafts MSA/CPR PD / GG 1 G 1 UR /ER 1

CAMBODIA PSP National Poverty Reduction Strategy (NPRS), 2nd: Socio Economic Development Plan 2001 - 2005 (SEDP II) / Governance Action Plan (GAP).

PoA No. 1, MDG 8, Agenda 21, Chapter 14 (rural dev), 24 (eomen), 28 (particip. local population), 30 (PSD); 37 (capacity dev.)

PASP draft MSA/ CPR PD / GG 1 G 1 UR /ER O

LAOS HRD-ME Draft PRSP PoA No 1 Agenda 21 Chap. 30 / 37

PASP WirAM exists MSA / CPR PD/GG 1 G 1 UR / ER 0

Mongolia: Regional Economic Development

Government Action Plan of Mongolia, (GAPaM, 2000, Economic Growth Supporting Poverty Reduction Strategy Paper (EGSPRS, 07/2003, Concept for regional devlopment (Resolution Nr. 57, 06/2001)

PoA No. 1 Agenda 21 Chap. 11 und 12 (ecosystems) 14 (rural dev.) 28 (partizip. local population), 30 (PSD), 37 (capacitiy dev.)

PASP WiRAM exists –

MSA/CPR PD/GG 1 G 0 UR / ER 1

Mongolia: Export oriented industrial and trade policy

Government Action Plan of Mongolia (GAPaM, 2000) Interim Poverty Reduction Strategy Paper (IPRSP, 2002).

PoA No. 1 Agenda 21 Chap. 30, 37

PASP WiRAM exists – field of action no. 3

MSA/CPR PD/GG 1 G O UR / ER 0

PHILIPPINES

SMEDSEP Medium-Term Philippine Development Plan, National SME Development Plan

PoA No. 1 Agenda 21 Chap. 30, 37

PASP WiRAM exists –

MSA/CPR PD/GG 1 G 1 UR / ER 0

Sri Lanka: Promotion of Competitivess of SME etc.

The Future – Regaining Sri Lanka. PoA No. 1 ; 10 (conflict resolution) Agenda 21 Chap. 30, 37

PASP WiRAM draft MSA/CPR PD/GG 1 G 0 UR /ER 0

Sri Lanka: Regional economic devlopment

Connecting to Growth“ as Poverty Reduction Strategy and "Regaining Sri Lanka

PoA No. 1 ; 10 (conflict resolution) Agenda 21 Chap. 30, 37

PASP WiRAM draft MSA/CPR PD/GG 1 G 0 UR / ER 0

Vietnam SME Promotion

Comprehensive Poverty Reduction and Growth Strategy (CPRGS); Decree of the Government on supporting for Development of Small and Medium Enterprises

PoA No. 1 MDG 1 Agenda 21 Chap. 30

PASP WiRAM exists MSA/CPR PD/GG 1 G 1 UR /ER 1

34 According to the AURA-Offer (Chapter 3.2, 3.3, 3.4, 3.13) 35 BMZ Programme of Action 2015 (PoA) No. 1 economic dynamism , No. 3 fair trade (integration into global markets)

Annex 6: Selected Impact Chains with a view to BIC


PROGRESS – Bangladesh

HRD-ME Programme Lao PDR

SMEDSEP Philippines

PSMEP Vietnam





















SMEDSEP-Philippines









Annex 7: Impact Chains of participating Programmes


Bangladesh: Promoting private small and medium-sized enterprises (SMEs) following expiry of the Multi-Fibre Agreement - PROGRESS Core Problem / Time Core Problem: The Multi-Fibre Agreement (MFA), which has granted Bangladesh privileged access to the European and North American textile and clothing markets, is scheduled to expire at the end of 2004. The sector is thus facing an imminent drop in its share of the market. This will go hand in hand with company closures and lay-offs. The textile and clothing industry thus now faces the challenge of developing new strategies that will give it the competitive edge; this includes adhering to fundamental social and environmental standards. With a few exceptions, these companies are not in a position to design and execute new business strategies without external assistance. Not enough suitably needs-oriented and complementary services are on hand for SMEs to support them in this process. Time frame: 01/2003 – 12/2007 = 5 years Higher Development Policy impact BMZ- Programme of Action 2015: No. 1 “Increase economic dynamism and the active participation of the poor“ International Goals: MDG 1 poverty reduction Socio-economic results / Pro-poor orientation: MSA/CPR Participatory Development / Good Governance: PD / GG 1 Socio-cultural results / gender equality: G 1 Ecological results: UR /ER 1

The additional value of the programme approach with its various, jointly coordinated components essentially lies in the systematic linking and strengthening of up- and downstream stages of production and key service providers in selected sectors. This enables them to improve their value added and boost their competitiveness which, in turn, helps maintain income and employment in the sectors at risk following expiry of the MFA, and to generate new income-earning opportunities in other branches of industry, possibly also outside the main urban centres. The mechanisms outlined above are expected to promote private-sector dynamisation and thus also contribute to structural poverty reduction in Bangladesh (development-policy benefit).

Indirect Impact Contribution to country’s Interim-Poverty Strategy Paper (I-PRSP) / post MFA-strategy

In a further step, the SMEs apply the services they have obtained (knowledge, procedures, information), which in turn leads to greater productivity and economic effectiveness, enhanced quality and product diversification etc. However, these impacts are influenced by a large number of other factors, so they are no longer directly attributable to the project itself (indirect benefit).

Impact / Outcome Overall Objective: The market for business services is demand oriented.

Overall, it is expected that the activities will lead to a quantitative and qualitative increase in the offer of needs- and market-oriented services and to an increase in demand for such services (direct benefit). These services are mainly to be offered in those sectors that can help overcome the weaknesses identified and that can exploit the potential identified in the added-value chains. The providers’ demand orientation will influence positively the companies’ willingness to buy in these services, something that will ultimately give the BDS providers financial independence.

Indicators Increase in the number of offers of commercial services (Business Development Services - BDS)

in the sectors supported by the programme Reduction in the market share commanded by public service providers Increase in the number of enterprises that pay market prices for services initiated by the pro-

gramme As part of an independent representative survey, at least 50% of the companies in selected sec-

tors state that they can access sufficient numbers of BDS of adequate quality on the market (e.g. training and upgrading in business management, vocational training, information, design and product development, and social and environmental standards) – BDS that are important for busi-nesses



Bangladesh: Promoting private small and medium-sized enterprises (SMEs) following expiry of the Multi-Fibre Agreement - PROGRESS

Risks: Rampant corruption in Bangladesh generates such great costs for companies that no performance

-enhancing measure is able to offset them (1.2 pursuant to the corruption index of Transparency International, whereby on a scale of 1 – 10, one is considered to be the most corrupt).

It has not been possible to harmonise the promotion policies of all key donors. With their massive subsidies for MSME promotion, individual donors are therefore jeopardising the development of a BDS market.

Interest groups, such as the Bangladesh’s association of clothing manufacturers and exporters, are blocking the introduction of socially-acceptable and environmentally-friendly measures.

Component 1: Improving framework conditions and donor coordination

In component 1, and expressly in concerted action with other key donors, consultations will be initiated between the public and private sectors to improve the economic, institutional and political framework conditions for SME development. The main focus will be on generating framework conditions favourable to the establishment of a BDS market and on harmonising the approaches used by key donors, e.g. the issue of subsidies for SME services.

Component 6: Social and envi-ronmental standards in the clothing industry

Component 6, social and environmental standards in the clothing industry, focuses on a theme that, on the one hand, will help secure export markets for this sector and, on the other, will open up new marketing opportunities

Other components are: Component 2: Business man-agement training for small and medium-sized companies (SMEs) / Competency-based Economies through Formation of Enterprise (CEFEs) Component 3: Design and product development / Design and Technology Centre (DTC). Component 4: Enterprise In-formation Services (EIS) Component 5: Skills development

Component Objective1: The economic, political and institutional framework conditions for SME development, and for the BDS market in particular, and those for donor coordination have improved.

Component objective 6: Increasing adherence to interna-tionally recognised social and environmental standards in the clothing industry.

Indicators Component 1 All annual consultancy rec-

ommendations by the donor forum are incorporated into official government docu-ments.

In a random survey, 75% of the cooperation partners taking part in the various public and private consul-tancy inputs are able to name at least one advan-tage accruing from the de-velopment of a BDS market.

At least 10 concrete activi-ties promoting the further development of the BDS market are implemented with other donors.

Indicators Component 6: A plan of action exists for the

implementation of social and environmental standards in the clothing industry.

Experience is on hand from at least 3 pilot measures targeting socially-acceptable and environmentally-friendly work practices.

At least one of the pilot measures is taken on as a commercial business service by at least one provider.



Bangladesh: Promoting private small and medium-sized enterprises (SMEs)

following expiry of the Multi-Fibre Agreement - PROGRESS It is expected that, as a direct benefit, this will lead to an improvement in the framework conditions for MSME development, especially for the BDS market.

The direct benefit is the sensitisation of relevant actors which will culminate in initial demand for services facilitating environmentally and socially-acceptable economic practices

Use of output: These events will be used by a wide circle of public and private actors for the purpose of exchanging experience For its part, the government will adopt incentives and recommendations generated by the various committees – donor forum, public-private conferences – as reflected in pertinent policy documents.

Use of output: Together with private service providers and associations, the experience gained here will be used to introduce further BDS products and will thus be made accessible to other companies.

Output Programme inputs here revolve around methodological and specialist support, with a view to implementing conferences, discussion forums and information events together with the political executing agency (MoC) and key implementation partners (chambers and associations).

Above all, the programme is to provide methodological and specialist support, so as to initiate thematically-specific dialogue between decision-makers from politics and industry (such as international buyers, exporters, producers, representatives of trade, industry, labour and environmental bodies, chambers, associations, unions and non-governmental organisations) and to present and introduce tried-and-tested instruments for environmentally-friendly and socially-acceptable business practices which are to be tested on a model basis in individual companies with the support of international or national experts.



Cambodia: Private Sector Promotion Programme36

Core Problem: As a result of the recent past, the Cambodian private sector suffers of a low rate of association and a lack of self-confidence of the entrepreneurs. Consequently, enterprises are little prepared to face the challenges of opening markets as well as to take actively part in shaping their environment. Time frame: 1/2005 - 12/2013 = 9 years 1st Phase: 1/2005 bis 12/2007 = 3 years Higher Development Policy impact BMZ- Programme of Action 2015: No. 1 “Increase economic dynamism and the active participation of the poor“ International Goals: Agenda 21 Chap. 30 / 37 Socio-economic results / Pro-poor orientation: MSA/CPR Participatory Development / Good Governance: PD / GG 1 Socio-cultural results / gender equality: G 1 Ecological results: UR /ER 0 Indirect Impact National Poverty Reduction Strategy (NPRS), 2nd: Socio Economic Development Plan 2001 - 2005 (SEDP II) / Governance Action Plan (GAP). Impact / Outcome Overall Objective: Improved core competencies of Cambodian enterprises which are relevant to increase their competitiveness.

Indicators • Number of supported/advised entrepreneurs (SME) confirming an increase in turnover and fixed

assets (investments) (survey) • Number and share of entrepreneurs (SME) confirming sustained improved competencies in the

field of management, management, company organisation, innovation, marketing, inter-firm col-laboration, and collective bargaining (interest group) (regular gender-differentiated surveys)

• Number of organisations, trade associations, interest groups and networks of the private sector, which do exist for at least three years. (base year – start of programme)

• Share of female members in private sector organisations, trade associations, interest groups and networks,

Risks: • Necessary reforms and promotional activities for improving the economic environment are

retarded or do not have the desired effects, • The economic environment and the investment climate as well as the overall economic framework

are deteriorating • An incomplete regulatory framework and lack of legal security (including corruption) hamper the

unfolding of market forces • Partner structure is not yet consolidated. New government is not yet formed. • Effects of WTO-accession are not yet foreseeable Component 1: Promotion of the enterprise sector

Component 2: Enterprise net-works This component promotes inter-firm co-operation as well as participation in a public-private dialog.

Component 3: Support and promotion structure for enterprises

36 Some translations were made by the author, however, it was not possible to translate everything



Cambodia:37 Private Sector Promotion Programme

Component objective 1: Enterprises improve their own internal conditions for strenthening their overall competitivness

Component objective 2: Enterprises are linked in formal and non-formal networks

Component objective 3: Promotional structures are developed according to assessed demand of enterprises

Indicators

• Zahl der gemeinsam mit den Unternehmen analysierten Wertschöpfungsketten;

• Anteil der geförderten Branchen, die in hohem Maße zu erhöhter Wertschöpfung für Frauen führen;

• Steigende Zahl der Verträge und formalen Absprachen zwischen den Akteuren innerhalb der ausgewählten Wertschöpfungsketten;

• Steigende Zahl der Unternehmen, die eine Produkt-, Verfahrens- oder Betriebszertifizierung beantragen;

• Steigende Zahl neuer kambodschanischer Produkte oder Innovationen, die zur Markteinführung bereitstehen.

• Number of newly concluded inter-firm agreements and networks that exist longer than 6 months,

• Number of problems and obstacles that are jointly addressed by taking advantage of the collective bargaining power of networks , (survey and reports of participating enterprises and networks)

• Number of newly established and supported networks in which members specify a distinct added value (e.g. increase in turnover (gender-differentiated survey of participating firm);

• Number and share of entrepreneurs – gender-differentiated – that are organised in associations.

• In mindestens einer Provinz außerhalb von Phnom Penh testet ein öffentlich-privates Forum Ansätze zur lokalen Wirtschaftsförderung;

• Relevante Akteure der öffentlichen Verwaltung und der Privatwirtschaft einigen sich in mindestens einer Provinz auf Investitionsprioritäten, die zu mindestens 50% Frauen zugute kommen;

• Mindestens zwei neue Finanzinstrumente zur Unternehmensfinanzierung sind von der Finanzwirtschaft in Zusammenarbeit mit den Eigentümer/-innen von KMU marktfähig entwickelt; von denen ein Finanzinstrument auf die Bedürfnisse von Frauen zugeschnitten ist;

• Erhöhung des Umsatzes der mit dem Programm zusammenarbeitenden Anbieter von Unternehmens-dienstleistungen (in Prozent);

• Die Zahl von bisher noch nicht am Markt befindlichen unternehmensfördernden Dienstleistungen, die von privaten Anbietern entwickelt und angeboten werden.

37 Translation made by the author



Lao PDR: Development of Human Resources for the Development of Market Economy

HRD-ME38 Core Problem: Reforms so far have contributed to higher economic growth and hence poverty reduction, but since the Asian crisis reforms and economic growth are slowing down. Insufficient legal, institutional and personnel framework conditions hamper economic growth (core problem). Time frame: 03/2004 - 02/2011 = 7 years 1st Phase: 03/2004 - 02/2007 = 3 years

Higher Development Policy Goals International Goals: BMZ- Programme of Action 2015: No. 1 “Increase economic dynamism and the active participation of the poor“ International Goals: MDG 8, Agenda 21: Chapter 14 (rural dev), 24 (eomen), 28 (particip. local population), 30 (PSD); 37 (capacity dev.); Socio-economic results / Pro-poor orientation: MSA/CPR Participatory Development / Good Governance: PD / GG 1 Socio-cultural results / gender equality: G 1 Ecological results: UR /ER 0 National Goals: Draft PRSP According to projects impact chain: Poverty reduction Increased economic growth More SME and investment, more SME with higher income, more employment in SME sector improved business climate, SME are more copetitive Indirect Impact Better Regulations for Economic development introduced SME make better use of business service Market-oriented workforce for enterprises available Better support for SME-interest Regulations enforced and incentives applied Better support for SME-interests Direct Impact / Outcome Overall Objective: Government and private sector jointly create appropriate conditions for a more dynamic economic development. Direct benefits (in current phase): Decision making and specific proposals for improved framework conditions prepared Enhanced services developed with providers More graduates in vocational training and education Enhanced efficiency of partner organisation for SME promotion Indicators: • The percentage of small and medium entrepreneurs, assessing the framework for their economic

activities positively, is increasing (proven by surveys every two years, jointly launched by the National Economic Research Institute – NERI and the institutions responsible for SME promotion; results of the first survey serve as bench mark).

• The Programme Steering Committee identifies a list of problems regarding the legal framework for SME, for vocational education training and business financing. The steering committee confirms that at least three problems out of this list are solved.




Lao PDR: Development of Human Resources for the Development of Market Economy HRD-ME38

• The percentage of school leavers from the vocational education system finding employment or self-employment is increasing (proven by annual school leaver tracer studies)

Decisions of public and private sector committees, responsible for the main fields of cooperation in the three programme components (such as the National Training Council, NTC, and Small and Medium-sized Enterprise Development and Promotion Committee, SME-PDC) are implemented (evidence provided by annual internal evaluation reports).

Risks: Ein Risiko für die Zielerreichung besteht darin, dass das Tempo der Reformpolitik der laotischen Regierung weiterhin spürbar hinter dem der benachbarten Staaten zurückbleibt. Das würde sich z.B. darin äußern, dass wirtschaftspolitische Entscheidungen nicht zu Gunsten der Reformen ausfallen oder die Bereitschaft zur Zusammenarbeit mit dem und zur Förderung des Privatsektors abnimmt. Es könnte auch dazu führen, dass im Rahmen des Programms erarbeitete Rechtsakte nicht durch die zuständigen Amtsträger / Gremien bestätigt werden. Ein spezielles Risko besteht für Komponente 3, da sie den Willen der laotischen Regierung zur Implementierung einer nationalen KMU-Strategie erfordert. Dies ist momentan nicht gesichert. Component 1: Enhanced Economic Framework Conditions

Component 3: Promotion of SME development

Other component: Component 2: Integrated vocational education system

Component Objective 1: Legal and institutional framework conditions for the dynamic development of the private sector in general and for vocational education system as well as SME promotion and financing in particular are improved and innovations are disseminated to concerned persons.

Component Objective 3: Private sector and Government jointly develop an appropriate institutional environment and strategies for SME development and offer respective services.

Direct benefits in current phase: Decision making and specific proposals for improved framework conditions prepared

Direct benefits in current phase: SME-PDO able to address its legal function Services of LNCCI revised and redefined Main stakeholders for plan implementation committed Decision making for improved SME-legislation prepared

Indicators: • The state and the private sectors agreed

upon a regular and structured mechanism of dialogue and an agenda of activities.

• Responsible ministries adopted at least four reforms of organizational and institutional framework conditions for vocational education and training, SME promotion and business financing related to the programme component 1 by approving, releasing and publicising relevant decrees.

• A draft proposal for micro financing decree, that provides easier access for SMEs to credits at market conditions is developed and submitted to the Prime Minister for signature.

• Within NTC, Government and private sector have developed a proposal for reforms regarding the vocational education and training system. This proposal is submitted to the Prime Minister for signature.

• At least 150 Government officials from 5 out of 18 provinces have successfully participated

Indicators: • A legal act for SME promotion containing

detailed promotion approaches is approved and published.

• SME-PDC and private sector have jointly developed and published an implementation strategy, including detailed promotion instruments and published a respective document.

• At least 15 persons involved in SME promotion from the public sector (mainly from MIH) and the private sector (mainly from the Lao National Chamber of Commerce and Industry – LNCCI) are qualified to provide business services.

• SME Promotion Office (SMEPO) and its supported organizations offer at least 3 different types of services for SME promotion.

• The percentage of small and medium entrepreneurs, confirming in bi-annual surveys, that qualified services for their businesses are improving, is increasing (Initial



Lao PDR: Development of Human Resources for the Development of Market Economy HRD-ME38

in upgrading measures regarding market economic reforms, public-private cooperation and the Government's role in business promotion.

• The percentage of small and medium entrepreneurs, confirming in bi-annual surveys, that the legal and institutional conditions for their businesses have im-proved, is increasing (Initial bench mark and expected rate of increase are determined by the results of the first survey).

bench mark and expected rate of increase are determined by the results of the first survey).

Use of output Options for improvements in economic & SME framework conditions are screened Prioritized list of issues and alternatives for the improvements of economic framework conditions

Use of output Partners adapt their roles and functions in the process Promoting Institutions and SME are aware of the needs for BDS Role (functions, procedure, etc.) of SME-PDO clearly defined LNCCI aware of the need for SME-Promotion Strategy for SME-Promotion with main stakeholders agreed Proposals for legal improvement of SME-Promotion discussed

Output Policy Dialogue Economic Performance Monitoring and Research Training of decision makers and core staff

Output Capacity building for SME – PDO Capacity building for Business Associations (esp. LNCCI) SME-Development and Action plan Legislation for SME promotion

Activities: training and advice of decision makers and core staff, facilitation of policy dialogue Methods /Means of verification /monitoring: It is intended to conduct a baseline survey, cf. “Concept for the HRDME Baseline Survey”, February 14, 2005 Further documents about the approach as well as on a monitoring concept are elaborated.39 In addition to the impact chains, indicators and their method for data collection are listed. According to the information requried, suitable methods are selected such as quanitative and qualitative surveys, focus groups discussions, rapid assessment, internal monitoring information, national statistics etc. will be used.

39 The information compiled in this table are of various sources, such as the offer, and two presentations on “Impact Monitoring System HRD-ME Monitoring System in Laos” and “Human Resource Development for a Market Economy (HRDME) Programme in Lao PDR”. It is recommended to reconsider the impact chains, particularly at the lower level of the impact chain, and its related indicators. There seems to be confusion on what are activities, outputs, use of output.



Mongolia: Export-oriented Industrial Trade Policy Project40

Core Problem: In spite of difficult adjustment processes, in recent years the Mongolian economy did stabilise and even experienced moderate growth rates. However, the internal market offers little potential for sustainable pro-poor growth as well as the for creating sufficient employment opportunities. Time frame: 01/2004 - 12/2009 = 6 years 1st Phase: 01/2004 - 12/2007 = 4 years Indicators were adjusted and substantiated with the first Progress Report for 2004 Higher Development Policy impact BMZ- Programme of Action 2015: No. 1 “Increase economic dynamism and the active participation of the poor“, No 3 Faire Trade International Goals: Agenda 21: Chapter 30 (PSD); 37 (capacity dev.) Socio-economic results / Pro-poor orientation: EPA/ GDR Participatory Development / Good Governance: PD / GG 0 Socio-cultural results / gender equality: G 0 Ecological results: UR /ER 0 Government Action Plan of Mongolia (GAPaM, 2000) / Economic Growth Supporting Poverty Reduction Strategy Paper (EGSPRS, 2003 Impact / Outcome Overall Objective: Improved structural access to external markets for Mongolian enterprises

Indicators: • Increase in the share of firms - regularly covered by a panel survey – which perceive a reduction

of obstacles to export trade by at least 23 percentage points – starting from 17 % to at least 40 % as compared with the base year 2003.

• Significant increase in the share of export-oriented firms that apply systematically standards of quality management in the total number of medium and large export-oriented firms (Registration).

• An increasing share of firms covered by a regular panel survey observe improved investment conditions - as compared to 2003 – increase by at least 19 percentage points

Risks: Beim letzten Regierungswechsel war zu beobachten, dass in den Ministerien bis auf die mittleren Ebenen Personal ausgetauscht wurde. Sollte dies bei einem erneuten Regierungswechsel nach den Wahlen im Jahr 2004 wieder eintreten, würde das einen großen Rückschlag für die geförderte Verbesserung des Wissensmanagements in Exportfragen bedeuten. Ferner gibt es innerhalb der mongolischen Regierung Diskussionen den Export von Roh-Kaschmir zu verbieten oder massiv mit einer Exportsteuer zu belegen, um der heimischen verarbeitenden Industrie genügend Rohware zur Verfügung zu stellen. Dies wäre gegen eine konsistente marktwirtschaftlich und wettbewerbsorientierte Politik gerichtet. Weiterhin ist bekannt, dass nachgeordnete Behörden, insbesondere die Steuerverwaltung, durch einen oft schikanösen Umgang mit Privatunternehmern ein unternehmerfreundliches Umfeld behindern.

Das größte, kaum zu beeinflussende Risiko, ob es durch die strukturell verbesserten Rahmenbedingungen für den Export tatsächlich zur gewünschten Stimulierung und Steigerung des

Exportes mongolischer Produkte kommt, besteht im Verhalten der größten Handelspartner der Mongolei. Die Russische Föderation belegt gegenwärtig Waren aus der Mongolei mit viel höheren Frachttarifen als sie für russische Waren gelten. Der Import von mongolischen Fleischwaren wird kurzfristig immer wieder unterbunden. Hier muss die Mongolei in den Beitrittsverhandlungen der

Russischen Föderation zur WTO ihre Position vertreten. Die VR China, als Hauptabnehmer mongolischen Kupfers und Kaschmirs, kann mit ihrer Preis- und Tarifpolitik die Exportfähigkeit dieser

Waren ebenfalls beträchtlich beeinflussen.




Mongolia: Export-oriented Industrial Trade Policy Project40 Indicators

At least 80 % of the directly involved professional of the Ministries and other relevant institutions (at least 6) consider the documents produced by the project – studies, analysis, recommendation formulating export-oriented industrial and trade policy – in form and content good and relevant (interrogation)

60 % of selected trade associations (including employers association, Chamber of Trade and Industry) consider the dialog with the government with a view to reforming framework and services relevant to exportation as increasingly more transparent and participatory (interrogation of representative of the employers association, Chamber of Trade and Industry, and at least three sectoral trade associations)

80 % of the professionals that received further training by the programme (at least 10 product manager and trainer, as well as 30 other professionals) observe an increased application of their specialist knowledge in industrial and trade relevant issues (assessment of users – panel survey).

Use of output Die Nutzung als auch der Nutzen für die Verbesserung des ordnungspolitischen Rahmens werden als Teil des Wissensmangementsystems bewertet. Daneben wird die interministerielle Koordination der mongolischen Regierung sowie der Dialog mit der Unternehmerschaft durch regelmäßige Sektorgruppentreffen und Fachveranstaltungen im Bereich der Industrie- und Handelspolitik institutionalisiert.

Output: Das so entstandene Wissen wird gegenwärtigen und potenziellen Nutzern innerhalb der mongolischen Regierung durch ein umfassendes Wissensmanagementsystem bei der Entwicklung von Exportstrategien, der Erarbeitung von Gesetzesvorlagen und Regularien zur Verfügung gestellt. Activities. Es werden von Mitarbeitern des MIT und der GTZ aufeinander abgestimmte Fach-, Organisations- und Politikberatungsleistungen erbracht sowie Fortbildungsmaßnahmen durchgeführt. Methods Means of verification /monitoring

Baseline survey in 2004: Panel survey export and investment climate Regular survey “Export Climate Survey Mongolia”, every 3 months (!) Interviews with main users of outputs – such as staff of relevant government organisations as well as members of Chambers and Associations



Philippines (I): Private Sector Development Programme –SMEDSEP Core problem: In view of these complex and interlinked problems, the productive potential of the pri-vate sector can only be tapped to a limited extent. Time Frame: 09/2003 – 08/2011 = 8 years 1st Phase: 09/2003 – 08/2006 = 3 years Indicators were adjusted and substantiated with the first Progress Report for 2004

Higher Development Policy Impact International goals: BMZ- Programme of Action 2015: No. 1 “Increase economic dynamism and the active participation of the poor“, Agenda 21: Chapter 30 (PSD); 37 (capacity dev.) Socio-economic results / Pro-poor orientation: MSA/CPR Participatory Development / Good Governance: PD/GG 1 Socio-cultural results / gender equality: G 1 Ecological results: UR /ER 0 National Goals: Medium-Term Philippine Development Plan, National SME Development Plan

- Sustainable increase in employment and income in SMEs - Employment and income generation has accerlerated - SME more competitive Indirect Impact - Better framework conditions for MSME - SME make use of better BDS / Training Services - More investment by SMEs - More employment in SME-sector Direct Impact / Outcome Overall Objective: State-run and private institutions create general business conditions in the Philip-pines, particularly in the Visayas, to harness entrepreneurial potential and encourage competition. Direct impact: SMEs benefit from the better framework conditions (SME environment improved) policy Direct impact current phase: - Better framework and SMEs friendly policy formulation - Better products and services in the market - Better access to finance for SMEs - Implementation of action plan for market development Indicators: The MSMEs confirm that the regional and local authorities in Ormoc, Cebu and Bacolod (selected

local government units - LGUs in the Visayas) increasingly fulfil their function of developing the region as a business location by acting as intermediaries and as facilitators. (relevant indicators in AIM-survey increase by 5% (2003-2005))

Appreciable increase in the quality and quantity of services provided by the supported MSME-representative bodies of the pilot regions in the field of lobbying, the provision of information and chamber/association management (annual member surveys starting in 2005).

Number of simplified procedures developed and tested in the Visayas that become widespread at national level or in other regions, and number of selected bureaucratic and legal obstacles that have been removed. (not relevant for 1st phase)

Significant increase in the proportion of MSME-credit / total credit portfolio of the promoted banks in the pilot region by at least 10 % annually as from end of 2004.

MSMEs in the regions avail themselves to a greater extent of BDSs (+ 5%) and of trained and upgraded workers in CEBU (IT-sector) and Negros Occientale (tourism sector) (as compared to the beginning of 2005)). (random sampling of enterprises as from 2005)

Risks: The general risk that the programme objectives will not be achieved is seen to be the political and economic framework conditions that prevail in the Philippines. It is assumed that the economic reforms that have been introduced will be continued and that a minimum degree of political stability is guaranteed. This particularly applies to the management level of the two government executing agencies, the DTI and TESDA.



Philippines (I): Private Sector Development Programme –SMEDSEP There are additional specific programme risks at the level of the individual components, in particular: Resistance by influential groups of the population against the loss of privileges

(component 1), Bureaucratic insistence on established centralised and administrative structures

(component 1), Maintenance of subsidies for the service level by government institutions and donors

(components 2 and 4), Displacement of private banks from MSME financing through huge subsidised government credit

programmes (component 3). Component 1: Creation of an economic, administrative and regulatory framework conducive to business activities

Component 1 + 2:

Local Regional Economic Development (LRED)

Other Components: Component 2: Market development for MSME-relevant business development services (BDSs) Component 3: Improvement of medium- and long-term financing for MSMEs Component 4: Improvement of vocational upgrading

Indirect Impact 1st phase: - Increase of SMEs competitiveness - More business setups - SMEs benefit from friendlier business policies

and regulations

Indirect Impact 1st phase: - Increase of SMEs competitiveness - Employment and income generation has

accelerated (long-term) - Environment of selected areas more

conducive to economic development Component Objective 1: The relevant government bodies (e.g. Department of Trade and Industry – DTI) and private decision-makers (e.g. Philippine Chamber of Commerce and Industry) draft proposals at national and de-centralised level on how to improve the economic climate and the general business conditions, and these proposals are implemented in pilot meas-ures in the programme region. Direct impact 1st phase: - Policy makers develop feasible and MSME

friendly policy proposal - Performance of DTI and other SME stake-

holders improved - Streamlined business regulation processes

for SMEs

Component Objective 1 + 2: The LRED-approach has become an integral part of the planning and implementation procedures of selected cities/municipalities of Leyte Province Implementation of action plan for market development (component 1 + 2) Direct impact 1st phase: - LRED approach becomes an integral part for

planning and implementation process in selected areas

- SMEs interests are increasingly incorporated in SME policies

- More SMEs use private sector org. services, their interests are better represented

Indicators: Representatives of the MSME sector are

regularly and effectively integrated into decision-making processes by relevant promotion institutions in the pilot provinces (according tho AIM-survey proxi-indicator: policies and regulations in the city are reactive of business needs, increase by 5% in 2005 compared to 2003 in Ormoc, Cebu and Bacolod).

MSMEs in Ormoc and Bacolod confirm that approval and licensing procedures have been shortened, simplified and are better publicised by 30% as compared to the previous year (random sampling inquiry of enterprises and AIM–Survey proxi-indicator

Indicators: MSMEs confirm that the regional and local

authorities in Ormoc, Cebu and Bacolod increasingly fulfil their function of developing the region as a business location bvy acting as intermediaries and as facilitators (from AIM – survey).

Local stakeholders are able to mention at least four specific areas / examples where local environment has improved as a result of applying LRED-approach (by 2nd quarter 2006), (focus group discussion)

At least 60% of the activities defined in the action plans are successfully caried out until 03/2006 (regular monitoring)

As a result of successful plan implementation



Philippines (I): Private Sector Development Programme –SMEDSEP “securing a business permit is simple and efficient” increases in Ormoc and Bacolod 2005 by 10% as compared to 2003).

Seventy per cent of the entrepreneurs say that the framework conditions have improved since the beginning of the phase (AIM Survey proxy indicator: “in general the citiy“s regula-tory environment (such as licensing proce-dures and fees taxes, and other regulatory re-quirements) is conducive to business” in-creases in Ormoc and Bacolod in 2005 by 10 % as compared to 2003).

3 out of 4 municipalities did a replanning in the 2nd quarter of 2006 (reports, new plans)

Use of output - Policy makers consider recommendations - Main SME-stakeholders are aware of their

new role in the sector

Use of output - LRED action plan jointly developed by private

and public sector - LRED facilitation capacities locally available - LGUs apply simplified business registration

processes

Output - Policy analysis (BMBE law, finance, medical

tourism) - Capacity and awareness-building for main

SME stakeholders (DTI, others)

Output: - Advise on business registration processes

(LGU-level) - Consultancy and facilitation for the LRED

process - Capacity development for the local structures

Activities: advice, information, seminars, training, study tours, analysis, studies, facilitation of meetings, awareness creation campaigns, etc. on legal and regulatory matters, local and regional economic development, diagnostic instruments, local and regional law making, organisational development, etc capacity building of private and public sector institutions at regional/local level Methods / Means of verification / monitoring: A manual “Tools for Analysing the Political, Legal and Regulatory Environment for SME” developed by Christof Gross, Manila, Philippines, December 2004 SMEDSEP Monitoring Manual, by Gerd Ramm, Como Consult, Hamburg, February 2005, Monitoring is inbuilt into programme, with a strong focus on the analysis, learning and improvement function as well as the legitimisation and marketing function. Strong collaboration with the Asian Institute of Management Policy Centre (AIM) which conducts regular surveys for “Philippine Cities Competitiveness”



Philippines (II): Trade Liberalization in the Philippines –

Opportunities for Services and Aquaculture Products41

Time frame: 1/2005 bis 06/2007 = 2,5 years Higher Development Policy impact International goals: BMZ- Programme of Action 2015: No. 3 “Fair trade”, Doha Round of WTO and Monterrey MDGs 8, Agenda 21: Chapter 2 Socio-economic results / Pro-poor orientation: MSA/CPR Participatory Development / Good Governance: PD/GG 1 Socio-cultural results / gender equality: G 0 – action to be taken Ecological results: UR /ER 0 National Goals: Export Development Plan

Wirkungen bei den Zielgruppen und damit der entwicklungspolitische Nutzen entsteht durch die bessere Nutzung der Liberalisierung im Dienstleistungshandel durch erhöhte Exporterlöse seitens philippinischer mittelständischer Dienstleister.

Indirect Impact Auf der Basis vertiefter Kenntnisse und Stakeholder-Integration die RP ihre politischen Ziele und Interessen im Dienstleistungshandel konkreter in Politiken und Verhandlungspositionen fassen die RP ihre politischen Ziele und Interessen im Dienstleistungshandel konkreter in Politiken und Verhandlungspositionen fassen (direkter Nutzen) und in Verhandlungen besser durchsetzen können (indirekter Nutzen)und in Verhandlungen besser durchsetzen können (indirekter Nutzen). Impact / Outcome Gesamtziel ist, im Dienstleistungs- und Aquakultursektor Regierungs- und Privatwirtschaftsinstitutionen und exportorientierten KKMU verbesserte und fokussierte Informationen, Analysen und Kompetenzen als Grundlage für politische und unternehmerische Entscheidungen zu vermitteln:

Risks: Risiken bei den politischen Rahmenbedingungen können den Erfolg der Komponente Dienstleistungshandel schmälern: Es besteht das Risiko, dass bei der Verhandlungsstrategie und Politikumsetzung Partikularinteressen großer Unternehmen oder politisch involvierter Oligopole die Handelsinteressen des philippinischen Mittelstands überwiegen. In der Aquakultur- Komponente besteht ein Risiko hinsichtlich der Absorption des gesteigerten Informations-, Beratungs- und Unterstützungsangebot. Die KKMU müssen das Know-How in unternehmerische Entscheidungen umsetzen und die Importregeln, Standards und Qualitätsanforderungen einhalten. Component 1: Trade in Services Component 2: Trade in Aquaculture products Component Objective: Technical experts and leading managerial staff in Ministries, Governmental and private sector institutions, who are in charge of export of services, analyze the consequences of further liberalization of the international services trade for the Philippine economy and society, they assert the interests of the (SM enterprises and employees) service suppliers in negotiations and in the policy design.

Component 2 Objective: Technical experts and leading managerial staff in Governmental and private sector institutions, who are in charge of aquaculture production, marketing and export, are making comprehensive information regarding import regulations, quality standards and product specifications of the import markets for aquaculture products available and offer improved and more focused services




Philippines (II): Trade Liberalization in the Philippines – Opportunities for Services and Aquaculture Products41

Indicators: A minimum of 5 publicly accessible analyses

of the consequences of options for further liberalization in the field of trade in services for the Philippine economy and society, for a minimum of 2 services sectors

At least 5 meetings of a (new or existing) forum for cooperation between public and private institutions regarding services exports, international negotiations and the implications for the economy and society

Joint elaboration and concrete implementation of national policies and programs on the part of the negotiating ministries and the leading private sector associations / federations, which encompass economic, social and developmental aspects

Indicators: A minimum of 5 analyses (2 of these product

specific) focusing on the competitiveness, potentials and internal export barriers of the Philippine aquaculture production were made publicly accessible and are used by the public administration and the private sector asso-ciations as a reference for decision making

A survey of a representative sample of SME indicates that 25% of the export oriented SME in the field of aquaculture make use of information systems of the partners or participate in events organized by the partners, which are related to market entry requirements, import regulations, standards and product specifications of important receiving countries

A survey of a representative sample of SME in the Visayas indicates that the sales to foreign customers (also indirectly, through middle men / exporters) has increased by x % from project start to the finishing of the component



Sri Lanka: Capacity Building for Competitiveness and Qualified Employment

CBCQE

Core Problem: The modernization of the SME sector is counteracted by the lack of qualified personnel and financial capacities as well as competencies and strategies in the public and private sector support institutions

Time frame: 07/2000 - 12/2010 = 10 years

2nd phase: 01/2004 - 12/2007 = 3 years

Higher Development Policy impact International goals: BMZ- Programme of Action 2015: Point 1 “Increase economic dynamism and the active participation of the poor“, Point 10 of the Action Programme “Peaceful settlement of conflicts” Agenda 21: Chapter 30 (PSD); 37 (capacity dev.) Socio-economic results / Pro-poor orientation: MSA/CPR Participatory Development / Good Governance: PD/GG 1 Socio-cultural results / gender equality: G 0, action to be taken Ecological results: UR /ER 0 National Goals: “The Future – Regaining Sri Lanka.” Its underlying principle is that poverty, unemployment / underemployment as well as high public debt can only be reduced through private sector led rapid growth.

It is expected that the SME demand for a well qualified workforce will increase. The income and employment situation of the poorer section of the population in the rural areas will improve (development section benefit).

Indirect Impact The Sri Lankan entrepreneurs will be able to compete in the national and international market and thereby expand their production capacities (indirect benefit). Impact / Outcome Overall Objective: Overall Objective: The competitiveness of the Small and Medium Enterprises (SMEs) is sustainably improved.

The direct benefit is the marked improvement of the international competitiveness of the SME sector.

Indicators: • Around 30 percent increase in the turnover and 20 percent increase in exports of the supported

SME sectors as compared with the 2003 figures. • At least 30 percent of SMEs advised by the economic promotion institutions have increased their

productivity through the application of modern technology and methods (survey). • The graduates of the started and replicated training programmes are employed in SMEs according

to their qualifications. • 60 percent of the surveyed entrepreneurs (representative sample survey) considers the economic

frame conditions and available business development services improved as against 2003. Risks: The main risk is connected with the peace process and the signing of a stable peace accord that

would lead to a lasting solution of the ethnic conflict. Its failure will have negative effects on the business climate, the behaviour of domestic and foreign investors as well as the involvement of donors. GOSL needs the additional inflow of funds and the social acceptance for the implementation of its economic reforms. It is assumed at present that the peace process will continue and will be successful in the medium-term.

The economic support and training institutions of the public sector need increased financial, administrative and organizational room for manoeuvre in order to fulfil their roles. The envisioned reforms (commercialization of services and privatization of state institutions) are very difficult to implement since they run counter to the interests of various stakeholders. This poses a certain risk



Sri Lanka: Capacity Building for Competitiveness and Qualified Employment CBCQE

although there is the political will for the implementation of the reforms. The magnitude of institutions and ministries with unclear mandate and contrasting policies and consequently with lesser human and financial resources for the implementation of such a comprehensive programme presents an additional risk.

The programme trusts in the reform policy of the GOSL in order to be able to contribute to a more concrete implementation in selected areas. Only when the basic pillars of this reform policy are further implemented will the expected development impacts materialize.

Component 3: Conducive framework conditions for com-petitiveness and employment Component Objective 3: The framework conditions for competitiveness and employment are improved.

Other Components: Component 1: Labour market oriented human resource devel-opment Component 2: Competitiveness of SMEs through integration into value chains

Indicators: • At least 70 percent of the surveyed SMEs confirm that they

have profited from improved promotion strategies (ie investment promotion in the SME sector, integration into the regional market, deregulatory measures) compared to 2003 (sample survey).

• Representatives of business associations and chambers confirm that compared to 2003 personnel qualification requirements of the private sector have been considerably taken into account in the design of training programmes (sur-vey).

• At least 70 percent of the surveyed SMEs confirm that compared to 2003 their access to relevant information, technology and further training has improved (qualitative survey of SMEs).



Vietnam: Promotion of Small and Medium Enterprises Programme

Core Problem: The Vietnamese private sector in general, and small and medium enterprises in par-ticular, is not yet sufficiently competitive. Time frame: 10/2004 – 09/2012 = 12 years 1st Phase: 10/2004 – 09/2008 = 4 years Higher Development Policy Impact International Goals: BMZ-Programme of Action 2015: No. 1 “Increase economic dynamism and the active participation of the poor“, MDG No 1., Agenda 21: Chapter 30 (PSD); Socio-economic results / Pro-poor orientation: MSA/CPR Participatory Development / Good Governance: PD/GG 1 Socio-cultural results / gender equality: G 1 Ecological results: UR /ER 1 National Goals: Comprehensive Poverty Reduction and Growth Strategy (CPRGS); Decree of the Government on supporting for Development of Small and Medium Enterprises • Increased income levels and reduced poverty in Vietnam • Higher economic growth and employment in private sector • Share of formal employment increased in pilot provinces • Increased investment of private SME in pilot provinces • Increase of exports in selected sectors • Increased industrial output in selected sectors • Significant improvement in competitiveness of private SME Indirect Impact: • Improved legal and policy framework for private sector • More investment and more competitive companies • Increased local value added and higher competitiveness Direct Impact / Outcome Overall Objective: The competitiveness of private small and medium enterprises (SMEs) in Vietnam has significantly improved. • Improved quality and less failure in production • Improved locational investment conditions in 4 provinces • Effective cooperation among key actors in the value chain • SME use new and improved specialized services Indicators: • Increase of the proportion of employment in the formal private sector in the programme regions (in

%) • Increase of exports in selected sub-sectors (in %) • Increase of investment of private SME in selected provinces (in %)

• Increase of the industrial output of private enterprises in selected sectors (in %) Risks: • Changes in the orientation of reforms and in the involvement of the partner organizations'

leaderships are potential risks. This can be triggered, for example, by a change in responsibilities. There is the danger that individual authorities refuse to cooperate with other stakeholders or with the programme altogether. This risk is assessed as medium.

• Cooperation between several institutions of the public and private sector in one programme is quite a new approach for Vietnam. Therefore frictional losses cannot be excluded (medium risk).

• Another risk lies in the fact that the SME department is a very young institution which is still lacking clear orientation and competence and which might not be able to fulfil its function of coordinating donor contributions to a sufficient degree. This risk is assessed as between low and medium.



Vietnam: Promotion of Small and Medium Enterprises Programme Component 1 / 1st Phase

SME Policy Component 2 1st phase:

Local Economic Development Other components: Component 3: Competitiveness of Selected Sub-sectors

Component 4: Material testing and other advanced/ specialized

technical services Indirect Impact: • Increase in # of enterprises and investment • Increase in Employment • Cost for doing business reduced • Business climate and conditions improved

Indirect Impact: • Higher rating of the 4 provinces in provincial

competitiveness index • Time and costs for registering and setting up

an enterprise reduced

Component Objective1: Policies and strategies contribute to an enabling business environment. Direct Impact: Policies and strategies contribute to an enabling business environment and investment climate. (selected policies and laws for the private sector and SME development are well prepared and implemented by relevant stakeholders. This contributes to the improvement of the legal and policy framework for SME at a provincial and national level). - Prgms. & Policies by other Ministries are

more SME friendly and consistent with the Action Plan

- Biz. Registration faster, less costly & good information on biz. are available

- Policy dialogues more result oriented and of better quality

- Enterprise Law, Investment Law and other reforms are of better quality

- More effective implementation of policies, instruments and reforms and new initiatives

Component objective 2: Public and private stakeholders in selected prov-inces implement essential promotional policies and activities. Direct Impact: Public and private stakeholders in selected provinces implement essential promotional policies and strategies (Advising local governments on how to enhance locational factors and improve investment conditions. Emphasis will be laid on provincial coordination and sharing experience with neighbouring provinces. - International best practice considered in

improving the investment climate - Commitment and involvement of all

stakeholders in strategy design and implemen-tation

- Selected factors of the investment conditions at the provincial level have improved

- Increased investment in new and existing companies (use of the promotional tools by entrepreneurs

- Planning procedures at the provincial level reformed, with regular involvement of private sector

- Planning procedures at the provincial level reformed, with regular involvement of private sector

Indicators: • A national Action Programme for SME

Promotion is established. • The number of significant activities contained

in the Action Programme for SME Promotion which are implemented (according to moni-toring reports).

• Regular dialogue process/at least 5 dialogue fora between the public sector and the private business community on relevant legal pro-jects (e.g. Enterprise and Investment Law).

• 50% of proposals and advisory inputs (stud-ies, legal comments) on the Enterprise Law and other reforms are taken into considera-tion and are reflected accordingly in Govern-ment documents and decrees.

• The Regulatory Impact Assessment method

Indicators • The consultation between provincial Govern-

ment and private sector to design and imple-ment essential promotional policies takes place in regular dialogue fora (at least twice yearly).

• 4 (anticipated) innovative instruments for the promotion of investment and business start-ups have been developed and are being used.

• A minimum of three factors relevant to busi-ness activity have improved in each selected province (factors of USAID competitiveness index).

• Results of the pilot implementation have been transferred to a minimum of five other provinces.



Vietnam: Promotion of Small and Medium Enterprises Programme is applied in the elaboration of 3 (estimated) SME relevant policy proposals.

Use of outputs: - SME Action Plan is used by Ministry (PI) and

others as a guide for implementation - DPI and other stakeholders use advice and

technical assistance from the Prgm. to set up national business information network (NBIN) in the 4 provinces

- Policy dialogues are effectively conducted on relevant reform projects

- Results of the dialogues used by different stakeholders in relevant reform projects

- Guideline & best practices on policy dialogue developed and used

- Decision makers apply innovative law making mechanisms like RIA in the process of drafting business laws (esp. UEL, CIL)

- Tools/ manuals for innovative law making mechanisms (e.g. RIA) developed and used in drafting other laws

- National Economic Reforms and Initiatives are effectively implemented

- Best practices & lessons learnt disseminated in other prov. and national level

- Economic Reforms in 4 provinces are effectively implemented

Use of outputs: - Competent staff available at provincial level,

which makes use of the tools and instruments provided

- Promotional policies developed and monitored based on a participatory process

- Economic reforms in 4 provinces are effectively Implemented

- (link Policy Component) - Innovative instruments for promotion of

investment and business start-ups are implemented

- Relevant public and private promotion agencies offer effective and market oriented services

- Selected clusters contribute to the economic development at provincial level (value chain)

Output - National SME Action and Promotional Pro-

gramme - National business information network (NBIN)

in 4 provinces - Policy dialogues on Business Environment

and Investment Climate - Introduction of innovative law making

mechanism (e.g. RIA) - Monitoring and implementation of reforms

Output - Personal + institutional capabilities

strengthened - Dialogue forums at prov. level regularly

conducted - Improvement of political/administrative

framework conditions at provincial level - Investment and business start-up promotion

strengthened - Promotion structures and strategies for priority

sectors strengthened - Development of local Business Associa-tions - PPP model formulated and applied - Dissemination to other prov.

Acticities: advice, information, seminars, training, study tours, analysis, studies, facilitation of meetings, awareness creation campaigns etc. on legal and regulatory matters, diagnostic instruments, law making, organisational development, information and knowledge management, etc. Methodology / Means of verification /monitoring: Detailed impact chains for each component and Plan of Operation (2005) elaborated, making use of the monitoring manual developed in the Philippines. Baseline studies and monitoring are an integral part of this component, gathered information are used for further planning and designing of interventions, for policy advice, for identifying priority areas etc. Results of the studies are usually published. For example: Improving the quality of business law. A Quickscan of Vietnam’s Capacities & Introduction of International Best Practice, Hanoi 2005