Technical Paper No. 80December 1997

SD Publication SeriesOffice of Sustainable DevelopmentBureau for Africa

Jim MaxwellRichard D. AbbottAbt Associates

Innovative Approaches toAgribusiness Development inSub-Saharan Africa

Volume 3: East Africa

Final Report

Productive Sector Growth and Environment DivisionOffice of Sustainable DevelopmentBureau for AfricaU.S. Agency for International Development

Innovative Approaches to AgribusinessDevelopment in Sub-Saharan Africa

Volume 3: East Africa

Final Report

Jim MaxwellRichard D. AbbottAbt Associates

Publication services provided by AMEX International, Inc.pursuant to the following USAID contract:

Project Title: Policy, Analysis, Research, and TechnicalSupport Project

Project Number: 698-0478Contract Number: AOT-C-00-96-90066-00

Technical Paper No. 80December 1997

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Contents

Foreword viiExecutive Summary ixGlossary of Acronyms and Abbreviations xiii

1. General Introduction to the Eight Country Study 1

1.1 Background 11.2 Objective 11.3 Analytical Issues to be Addressed 11.4 The AMIS II Approach to Agribusiness Development Research 11.5 Methodology 21.6 Limitations 31.7 Organization of the Innovative Project Reports 3

2. Introduction to the East Africa Study 5

Table 2.1 Size Distribution and Focus of Firms, Associations, and Projects Evaluated 6

3. Key East Africa Findings 7

3.1 Non-Traditional Agricultural Export (NTAE) Development 73.2 Association Development 83.3 Small and Medium Enterprise (SME) Development 83.4 Financial Services 93.5 Monitoring and Evaluation (M&E) 93.6 General Recommendations 103.7 Issues Deserving Further Study 11

4. Kenya 13

4.1 Entities Selected for Study 134.2 Findings on Projects 13

4.2.1 Kenya Export Development Services (KEDS) 134.2.2 Small Enterprise Professional Service Organization (SEPSO) 154.2.3 Kenya Management Assistance Program (K-MAP) 15

4.3 Findings on Associations 164.3.1 Kenya Small Scale Farmers Association (KESSFA) 164.3.2 Agribusiness Association of Kenya (AAK) 164.3.3 Fresh Produce Exporters Association of Kenya (FPEAK) 17

4.4 Findings on Development Finance Organizations 174.4.1 Kenya Trust for Private Enterprise (KTPE) 17

4.5 Findings on Private Agribusiness Firms 184.5.1 Karzan Inc. 184.5.2 Lonrho 184.5.3 Standard Charter Estate Management (SCEM) 184.5.4 Echuka Farms 18

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4.6 Lessons Learned and Implications for USAID Planning 184.6.1 Non-Traditional Agricultural Export Development 194.6.2 Association Development 194.6.3 Small and Medium Enterprise Development 214.6.4 Financial Services 214.6.5 Monitoring and Evaluation 224.6.6 General Recommendations 224.6.7 Key Issues Deserving Further Study 23

Table 4.1 Kenya Innovative Projects and Their Areas of Focus 14

5. Uganda Overview and Analysis 25

5.1 Entities Selected for Study 255.2 Findings on Projects 25

5.2.1 Agricultural Non-Traditional Export Promotion Project (ANEPP) 255.2.2 Cooperative Agriculture and Agribusiness Support Project (CAAS) 275.2.3 Silk Sector Development Project 28

5.3 Findings on Associations 295.3.1 Uganda Oilseed Processors Association (UOSPA) 295.3.2 Uganda National Farmers Association (UNFA) 305.3.3 Uganda Vanilla Growers and Processors Association (UVGPA) 305.3.4 Uganda Manufacturers Association 305.3.5 Uganda Grain Exporters Association 315.3.6 Uganda Horticultural Association 31

5.4 Findings on Development Financing and Technical Assistance Organizations 325.4.1 Development Finance Corporation of Uganda (DFCU) 325.4.2 Africa Project Development Facility (APDF Uganda) 325.4.3 Volunteers in Overseas Cooperative Assistance (VOCA) 33

5.5 Findings on Private Agribusiness Enterprises 335.5.1 Agro Management Group Inc. 335.5.2 Ziwa Horticultural Exporters Ltd. 345.5.3 Harriet’s Flowers 35

5.6 Lessons Learned and Implications for USAID Planning 355.6.1 Non-Traditional Agricultural Export Development 355.6.2 Association Development 365.6.3 Small and Medium Enterprise Development 375.6.4 Financial Services 385.6.5 Monitoring and Evaluation 385.6.6 General Recommendations 395.6.7 Issues Deserving Further Study 40

Table 5.1 Uganda Supported Activities and Their Areas of Focus 26

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Appendixes

Appendix A Detailed Project Assessments 43Appendix B Association Profiles 63Appendix C Development Financing Organizations 73Appendix D Private Enterprise Profiles 77Appendix E Bibliography 83Appendix F List of Persons Interviewed 85

Notes 89

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Foreword

The creation of the Development Funds for Africa(DFA), and, more recently, funding contraints havechallenged the U.S. Agency for International Devel-opment (USAID) to scrutinize vigorously the effec-tiveness and impact of its development assistanceprograms in Africa and to make adjustments neededto improve on the record of the past. Structural Ad-justment programs have been adopted by many sub-Saharan African countries, albeit reluctantly, and somesignificant economic development progress has beenmade. As donor agencies face severe cutbacks andrestructuring of their own and as less assistance be-come available to developing countries, in sub-Sa-haran Africa and elsewhere, new ways must be foundto channel the declining resources to their most effec-tive and productive uses. Donor agencies like USAID,therefore, are increasingly looking at the private sec-tor for new and innovative ways of improving com-petitiveness, and often to agriculture as the potentialcatalyst for generating broad based, sustainable eco-nomic growth. In the light of the DFA and sub-Saharan African countries’ recent development expe-riences under Structural Adjustment Program, theUSAID Africa Bureau’s Office of Sustainable Devel-opment, Division of Productive Sector Growth andEnvironment (formerly ARTS/FARA), has been ex-amining the Agency’s approach to the agriculturalsector.

In January 1991, the Africa Bureau adopted “AStrategic Framework for Promoting AgriculturalMarketing and Agribusiness Development in sub-Saharan Africa” to provide analytical guidance toUSAID/W, REDSOs, and field missions. The frame-work suggested that:

(a) while technical and environmental problems mustcontinue to be addressed, a major cause of poorperformance of the agricultural sector has beenthe inefficiency of the market structures and strat-egies;

(b) improvements in marketing efficiency require agood understanding of the structural arrange-ments, organization and operating strategies avail-able to those entrepreneurs who constitute themajority of the business entities;

(c) such improvements could have a significant ben-eficial impact on incomes, foreign exchange earn-ings, domestic consumption and food security.

To enhance the analytical guidance and technicalsupport that the African Bureau provides to the field,SD/PSGE initiated a series of assessment of donoragencies’ innovative agribusiness projects in a num-ber of sub-Saharan Africa countries to develop casestudies of agribusiness firms targeted by or benefit-ting from these projects. The objective of the assess-ments was to provide the Africa Bureau and FieldMissions with an understanding of the role and sig-nificance of new, innovative agricultural marketingand agribusiness programs being implemented, andto synthesize a cogent set of lessons learned and theirimplications for USAID agribusiness project designand implementation.

This document is Volume 3 of a five-volume setpresenting the East Africa (Kenya and Uganda) re-search findings. The East Africa research addressedall of the key focus areas of Non-traditional Agricul-tural Exports Development, Association Development,Small and Medium Enterprise Development, Finan-cial Services to Agribusinesses and Monitoring andEvaluation.

Abt Associates, under the Global Bureau’s AMISII project, conducted the field research and reportpreparation. The USAID field mission in each coun-try collaborated with PSGE/PSD and Abt Associates,the contractor, and was particularly helpful in provid-ing counsel and direction of the field research andreviewing of the field draft report.

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SD/PSGE believes that the findings and recom-mendations of this report will help the Africa Bureau,field missions, host country governments, and pri-vate sector groups make more informed decisions onfuture project design, implementation, monitoring,and evaluation.

David AtwoodChief, Productive Sector Growthand Environment DivisionOffice of Sustainable DevelopmentAfrica BureauUSAID

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Executive Summary

USAID Missions, and to a lesser extent other donors,are designing and implementing agribusiness pro-grams intended to develop more efficient agriculturalproduct marketing systems. USAID does not yet haveeffective monitoring and evaluation mechanisms forthese recently established programs nor have the les-sons learned from these innovative projects been dis-seminated to Missions.

The Africa Bureau’s SD/PSGE Division there-fore requested the Agribusiness and Marketing Im-provement Strategies II (AMIS II) project to imple-ment an activity titled “Innovative Approaches toAgribusiness Development in Sub-Sahara Africa.”The purpose of this activity was to assess donoragencies’ innovative agribusiness projects in a num-ber of Sub-Saharan Africa (SSA) countries and todevelop case studies of agribusiness firms targetedby or benefiting from these projects. The objective ofthe activity is to provide the Africa Bureau and FieldMissions with an understanding of the role and sig-nificance of new, innovative agricultural marketingand agribusiness programs being implemented, andto synthesize a cogent set of lessons learned and theirimplications for USAID agribusiness project designand implementation.

The AMIS II project was established to provideUSAID with access to private sector commercial ex-pertise that would help improve agribusiness market-ing. The major focus of AMIS II is to stimulate inputsupply and postharvest-based, private sector led, eco-nomic development. The AMIS II approach is to ad-dress agribusiness marketing efficiency and effec-tiveness improvement, and agribusiness project impactmeasurement and evaluation, from a commercial per-spective. This report is therefore more prescriptiveand less descriptive than a typical USAID documentand is based on the expert judgments of analysts withextensive private sector operating experience.

The methodology utilized for this activity con-sisted of the following four basic steps: (1) identifyand select Key Focus (apparent high-opportunity)Areas for research based on current USAID interestsand the anticipated potential to positively affect agri-business development. The four Areas chosen —based on a literature review, interviews in Washing-ton, and a field survey — were non-traditional ag-ricultural exports (NTAE) development, associa-tion development, small and medium enterprise(SME) development, and financial services to agri-business; (2) select projects relevant to activity ob-jectives and the Key Focus Areas that are sufficientlydeveloped to at least start yielding lessons learnedbased on an initial field trip and discussions withMission and Bureau managers, select field researchcountries (for this report Kenya and Uganda) basedon the location of these projects; (3) complete a sec-ond field trip to collect detailed information on theselected projects and do case studies on target benefi-ciaries, primarily via in-depth interviews with projectmanagers, donor management, and beneficiaries; and(4) analyze the information collected, extract lessonslearned, and suggest the implications for enhancingthe design, implementation, and monitoring and evalu-ation of USAID agribusiness projects.

The entire Innovative Approaches project hastwo phases. Phase I, this report, covers East Africaand Phase II covers West Africa, Southern Africa,and three secondary literature studies. Innovative Ap-proaches research findings are reported in separatevolumes for East Africa (Kenya and Uganda), South-ern Africa (Zimbabwe, Mozambique, and Tanzania),and West Africa (Ghana, Mali, and Senegal). Therewill also be separate volumes reporting on the Sec-ondary Research Findings and Overall Project Sum-mary and Conclusions.

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EAST AFRICA FINDINGS SUMMARY–BY KEY FOCUS AREA

Non-Traditional Agricultural Exports (NTAE)Development

The greatest impact from scarce USAID resourceswill be achieved when NTAE projects focus supporton a few high-potential, medium-sized firms partici-pating in high-potential product lines, as determinedby subsector market opportunity assessments. An op-erating constraints analysis will help identify andprioritize NTAE development constraints for export-ing firms. Guidelines need to be developed for thesestudies.

Technical Assistance to exporters should strike abalance between high-value (e.g., pre-pack horticul-tural products) and lower-value (e.g., cleaned andgraded pulses) items in order to mitigate risk andmaximize export earnings. High-value/value addedexports are more complicated, more capital intensive,and entail significantly higher risks; exporters shouldbe encouraged and supported to optimize value added— due to the potential for higher returns — by pro-cessing and/or packaging their products. This can bea way to utilize product that does not meet freshexport standards and to employ a significant quantityof local labor. The highest grade product should beexported to developed country markets, and goodquality second-grade product to high purchasing powerregional markets and then to urban domestic markets.

Association Development

Planners of business association development projectsmust determine if the conditions exist for associationsuccess and what type of programs are needed tostimulate that success. Association success criteriaare: (1) strong leadership with a long-term commit-ment, (2) leadership that is trusted by members, do-nors, and government, (3) minimal government influ-ence, and (4) a clear and relatively narrow focus.Associations will only become self- sustaining if theyare effectively and efficiently serving their members’priority needs. A minimum score on an annual mem-bership satisfaction survey, conducted by a third party,

should be a condition for continued donor support ofan association’s. Guidelines need to be developed toassess an association’s potential for success and tomonitor how effectively an association is serving itsmember’s priority needs.

Training on how to manage associations, especiallyfinancial management and how to develop or adaptprograms that respond to members’ evolving needs, is ahigh-yield donor contribution to association develop-ment. Therefore, management training should be a com-ponent of USAID programs to assist associations.

Well-focused and well-managed associations canbridge the gap between small farmers/agribusinessfirms and the complexities of NTAE markets. Self-Help Groups (SHGs) of smaller farmers and/or entre-preneurs, who in turn belong to a donor-assisted as-sociation, are a good way to leverage scarce donorTA and financial resources.

Matching grants for association (or other institu-tional) development activities are an effective way tostimulate member involvement and commitment.

Small and Medium Enterprise (SME)Development

The two most important constraints on SME devel-opment are their (1) lack of marketing expertise and(2) minimal knowledge of sources of financial assis-tance (especially working capital) and how to applyfor them. Donor assistance should concentrate onthese two areas.

SHGs composed of SMEs can be linked to largeenterprises, which can provide the SMEs with inputs,technical assistance, and markets. To be successful,however, the development and sustenance of these link-ages requires intensive, hands-on management assis-tance by donors or donor-supported intermediaries.

The conditions for successful smallholder partici-pation in NTAE are: (a) niche markets where producershave very few alternative buyers for their output, (b) lowcapital but high labor intensity, (c) a full-service localexporter who supports the business, and (d) a well-established international market with experienced buyer/exporters. Investing project resources in niche marketstartup industries is risky and very expensive.

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Financial Services to Agribusiness

The major constraints to agribusiness lending by finan-cial institutions are the shortage of commercially viableprojects and poor loan and investment “packaging” bythe borrower, not the lack of available funds. Therefore,technical assistance should be a part of any donor-supported agribusiness finance project and should in-clude support for at least business plan development andloan or investment “packaging.”

Donors can help SMEs identify and apply for sourcesof financing, especially working capital, at a reasonablecost by providing the services of specialized local busi-ness consultants to appraise and “package” small projects.Normal collateral requirements for SME loans can berelaxed if the loan officer has a good understanding ofthe commercial requirements of the applicant’s businessversus a strict Profit & Loss/Balance Sheet orientation.Full cost recovery for SME (and certainly micro) finan-cial services is very difficult.

To achieve a high repayment ratio, a rigorous appli-cation appraisal by the lender (a feasibility study if theproject is large enough to support the cost) is necessary,and the borrower should supply a minimum of 50 per-cent of the equity in the venture. In many cases, it isadvisable for the lending institution to make direct pay-ment from loan proceeds to the major suppliers of equip-ment to avoid misuse of the borrowed money.

Monitoring and Evaluation (M&E)

USAID M&E is in an early stage of development, butis more advanced than that of most donors. Substan-tial opportunity exists for enhancing USAID M&E,especially as related to direct and indirect impact byproject component and type beneficiary, and costversus benefit analysis.

Progress toward financial self-sustainabilityshould be one of the main measures of performancefor projects providing support to associations. Be-cause the ability to manage cash flow is typicallyweak in associations, the development and monitor-ing of a Sources and Uses of Funds schedule is animportant performance evaluation tool.

How extensively agribusiness project managersuse private sector advisors and the impact of their

contribution on a project should be monitored andevaluated. Private sector line managers, both expatri-ate and local, should be used more extensively byUSAID Missions in the design and monitoring ofagribusiness development projects, because they havea much better perspective on the challenges and op-portunities private firms face than do government(direct or indirect) employees. Direct, local businessexperience is likewise important in helping to priori-tize and pursue policy reform issues related to privatesector development.

More random beneficiary sampling should beused and results presented by type beneficiary. Cur-rent beneficiary selection methodology may bias re-sults. Impact by type beneficiary will help determinecomparative yield on donor resources.

General Recommendations

Semiannual project review forums (½ day with abroad group of beneficiaries, local government offi-cials, and private sector representatives; ½ day withthe project team) should be used to coordinate projectactivities, improve their effectiveness, and enhance afeeling of local “ownership” of the project.

Many of the NTAE, SME and financial servicesdevelopment objectives and constraints identified in thisactivity can be addressed by integrating effective andfocused technical and managerial assistance with debtand equity financial services in a single entity — a Foodand Agribusiness Development Center (FADC). Ini-tially donor and/or government funded, the FADC wouldbe structured to become self-sustaining by income de-rived from services fees, a “spread” on debt, and entre-preneur or investor equity buy-backs. The FADC wouldbe focused on supporting agribusiness enterprises inidentified high opportunity subsectors and overcomingthe priority constraints they face. Identifying and devel-oping effective and efficient intermediary organizations(e.g., associations, Food and Agribusiness DevelopmentCenters, or NGOs/PVOs) is essential for leveragingscarce project resources.

Government approval and support for agribusinessprojects are essential, but implementation should beindependent of direct government involvement sincethe private sector generally prefers an “arms length”

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relationship with government, and government involve-ment in implementation will slow progress.

Key Issues

How effective is most general market information?Large firms say they don’t need or use it, and smallfirms don’t know how to use it. There is a need todevelop effective ways to measure the usage of mar-ket information versus the cost of providing it, espe-cially by type of information and type of user.

Is broad-gauged baseline monitoring data reallynecessary? Consider measuring the progress of as-sisted firms, and the associated indirect benefits, as asatisfactory way to determine the impact of a project.

How can the potential be optimized for outgrower/contract grower schemes on the model of the silk andvanilla projects in Uganda, schemes that have suc-cessfully reached out to both small farmers and

women? The specific success criteria and methodsfor developing sustainable outgrower schemes, espe-cially for specialty NTAEs, need to be determined.

What is the best and most efficient way to measurethe full social and economic impact of support to large-scale enterprises (e.g., the Ziwa Roses project inUganda)? Because USAID economic development ob-jectives include increasing broad-based income, em-ployment, and foreign exchange generation, these maybe most efficiently achieved through support to mediumand large firms. A comparative impact assessment isneeded to respond to criticisms of this type of assistance;that is supporting the “big guys” who appear to need itleast. Therefore, there is a need to determine the com-parative primary and secondary impact of support formedium and large versus micro and small enterprises,including a cost/benefit analysis.

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ADO Agricultural Development Officer

AAK Agribusiness Association of Kenya

AMIS II Agribusiness and Marketing Improvement Strategies

ANNEPP Agricultural Non-traditional Exports Promotion Program

APDF African Project Development Facility

CAAS Cooperative Agriculture and Agribusiness Support Project

CDC Common Wealth Development Corp.

DFCU Development Finance Company of Uganda

EDF Economic Development Fund

EPADU Export Policy Analysis and Development Unit

FADC Food & Agribusiness Development Center

FPEAK Fresh Produce Exporters Association of Kenya

GED German Development Corp.

HCDA Horticultural Crops Development Authority

HR Human Resources

IESC International Executive Service Corps

IFC International Finance Corporation

IPC Investment Promotion Centre

IPS Industrial Promotion Service Ltd.

IRR Internal Rate of Return

K-MAP Kenya Management Assistance Program

KARL Kenya Agricultural Research Institute

KEDS Kenya Export Development Support Project

KEM Kenya Equity Management

KESSFA Kenya Small Scale Farmers Assn.

KSPX Kenya Small Producers Exchange

KTPE Kenya Trust For Private Enterprise

M&E Monitoring and Evaluation

NGO Non-Government Organization

Glossary of Acronyms and Abbreviations

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NTAE Non-traditional Agricultural Export

OCA Operational Constraints Analysis

OCAP Operational Constraints Analysis Project

ODA Overseas Development Administration

P & L Profit & Loss Statement

PTA Preferential Trade Area

PVO Private Voluntary Organization

REDSO Regional Economic Development Support Office

SCEM Standard Chartered Estate Management

SD/PSGE Sustainable Development/Productive Sector Growth & Environment

SEPSO Small Enterprise Professional Service Organization

SHG Self-Help Group

SME Small and Medium Enterprise(s)

SSA Sub-Sahara Africa

SWOT Strengths, Weakness, Opportunities & Threats

TA Technical Assistance

TBD To Be Determined

UCA Uganda Cooperative Alliance

UDC Uganda Development Corp.

UGEA Uganda Grain Exporters Assn.

UHA Uganda Horticultural Assn.

UMA Uganda Manufacturing Association

UNFA Uganda National Farmers Assn.

UOSPA Uganda Oilseed Processors Assn.

USAID United States Agency for International Development

USPA Uganda Silk Producers Assn.

UVAN Uganda Vanilla Corp.

VOCA Volunteers in Cooperative Assistance

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1. General Introduction to theEight Country Study

1.1 BACKGROUND

USAID Missions, and to a lesser extent other donors,are designing and implementing programs with theobjective of developing more efficient agriculturalproduct marketing systems. The Africa Bureau’s Ag-ricultural Marketing and Agribusiness DevelopmentStrategic Framework calls for examining marketingconstraints and identifying ways to improve market-ing efficiency. USAID does not yet have effectivemonitoring and evaluation mechanisms for recentlyestablished agribusiness development programs norways to disseminate the lessons learned from theseinnovative projects to Missions in other countries.

USAID’s Africa Bureau therefore requested theAgribusiness and Marketing Improvement Strategies(AMIS II) project to carry out surveys of innovativeagribusiness projects in a number of Sub-SaharanAfrica (SSA) countries for the purpose of providingthe Bureau and Field Missions with: (a) a compilationof lessons learned to assist in developing future mar-keting and agribusiness development activities and(b) an effective monitoring/evaluation mechanism forits present and future activities. The complete Termsof Reference for the study are included as AppendixE to this report.

1.2 OBJECTIVE

“The objective of this research activity is to increaseunderstanding of the role and significance of new,innovative agricultural marketing and agribusinessprograms that Missions are implementing, and tosynthesize a cogent set of ‘lessons learned.’ In an eraof scarce development resources it is primordial thatdesign innovations and project successes be dissemi-nated rapidly and replicated elsewhere. As agribusi-ness development projects have grown more com-

plex, the need for monitoring and evaluation has risenaccordingly. The research activity will focus on twocategories of innovative programs to support agricul-tural marketing development: supporting services andinstitutions; and financial systems and services.”1

1.3 ANALYTICAL ISSUES TO BEADDRESSED

The research activity calls for the consultant to moni-tor in the targeted countries the impact of new andinnovative programs implemented by any donoragency and to carry out case studies of agribusinessfirms targeted by a project or benefiting from a project.

As called for in the Statement of Work refer-enced above, the major analytical issues to be ad-dressed are:

(1) What are the major constraints that the programor mechanism was designed to address?

(2) What are the performance indicators to measureimpact and how do they relate to the goal andpurpose of the mechanism/project?

(3) What has been the effect of the mechanism/projecton private sector investment levels, export pro-motion, and people-level impacts?

1.4 THE AMIS II APPROACH TOAGRIBUSINESS DEVELOPMENTRESEARCH

The AMIS II Project was designed to provide USAIDaccess to private sector commercial expertise thatwould help improve agribusiness marketing efficiency.

The major focus of the project is on stimulatingprivate sector led economic development, not onenabling environment enhancement or social develop-

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ment. Although enabling environment enhancement/social development is an important aspect of eco-nomic development, the AMIS II project addresses itonly when it acts as a constraint to commercial devel-opment. AMIS II focuses primarily on the provisionof inputs to production agriculture and all aspects ofagriculture after the farm gate. The project does notlook at production agriculture issues unless so dic-tated by market requirements. The project utilizes amarket led or demand pull approach.

The AMIS II approach is to address agribusinessmarketing efficiency improvement and agribusinessproject impact measurement and evaluation from acommercial/analytical perspective. Thus the report ismore prescriptive in nature and less descriptive thana typical USAID project report. In other words, itdeals more with the “so what?” and less with the“what’s so” of agribusiness development activities.

The principal authors of this report (Maxwell andAbbott) are first and foremost agribusiness opera-tions and consulting professionals with between themmore than 50 years of international private sectorfood and agribusiness development experience, muchof which was gained while living and working out-side the United States. Most of this experience was inmanagement positions with leading food, agribusi-ness, and agribusiness supply firms such as BeatriceFoods, ConAgra, Cargill, and FMC, and was focusedon business expansion and market entry in develop-ing countries.

Maxwell currently works for Cargill TechnicalServices, which reports to the head of Cargill Africa.Cargill’s Africa operations include 15 agribusinesseslocated in 8 different African countries.

The result of the above orientation is a presenta-tion style that is not academic (replete with numerousfootnotes or citations) but crisp, authoritative, andjudgmental. It is based on the authors’ intimate andextensive knowledge of agribusiness firm operations,investor/financier perspectives, and their significantbusiness development/market entry consulting expe-rience. Therefore, the presentation style used hereinutilizes pointed observations and represents the bestbusiness judgment of highly experienced and suc-cessful practitioners.

1.5 METHODOLOGY

The methodology adopted by the AMIS II team forthis activity consisted of the following steps:

1. Identify and select Key Focus (apparent highopportunity) Areas for research based on majorareas of current USAID interest and the antici-pated potential of a key focus area to positivelyaffect agribusiness development. The four areaschosen — based on a literature review, inter-views in Washington, and a field survey — werenon-traditional agricultural exports, associa-tion development, small and medium enter-prise (SME) development, and financial ser-vices. The first three fall into the category of“supporting services,” as mentioned in projectobjectives (see Section 1.2), while the fourth re-lates to the second category — financial systemsand services. As part of this effort, the consult-ants reviewed the procedures used by the Mis-sions and made recommendations to improve them(as called for in “Analytical Issues,” Section 1.3above).

2. Conduct a literature search on all identifiableUSAID and other donor-supported agribusinessprojects in SSA countries. (See Appendix F for alist of documents reviewed.)

3. Based on (1) and (2) above, select the SSA coun-tries that have agribusiness projects or activities,sponsored by any donor, that relate to the KeyFocus Areas. Solicit USAID Mission support towork in those countries that have both relevantprojects and activities and sizeable agribusinesssectors.

4. Arrange and complete an initial field trip to coun-tries where USAID Missions invited the consult-ants to work, and that have apparently relevantagribusiness projects and activities being imple-mented. Collect additional information on theselected projects and on any others suggested byfield personnel. Confirm mission and REDSO-level Key Focus Area interest.

5. Screen the identified projects or activities and

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select those that have aspects relevant to projectobjectives and to the Key Focus Areas and arethat sufficiently developed to start yielding les-sons learned.

6. Arrange and complete a second field trip to col-lect detailed information on the most relevantprojects and do case studies on target beneficia-ries, primarily via in-depth interviews with projectmanagers, donor management, and beneficiaries.

7. Analyze the information collected, extract les-sons learned, and suggest the implications forenhancing the design, implementation, and moni-toring and evaluation of USAID agribusinessprojects.

1.6 LIMITATIONS

Research was limited to the countries that respondedpositively to the SD/PSGE request for collaboration.The contractor invested considerable time obtainingpermission from Missions to travel to their countries.

USAID has been the only donor interested inagribusiness development and this interest is quiterecent. Therefore there are very few USAID projectswith a sufficient track record for in-depth evaluation(i.e., any results are very short term in nature). Veryrecently, the World Bank and some German donorfoundations have focused on private sector develop-ment, which often includes agribusinesses.

At the request of the Africa Bureau, a significantportion (17 percent) of the budget for this activitywas allocated to the evaluation of a credit project inMali that was not directly related to project objec-tives. This evaluation was well accepted by the MaliMission, but was not in the original budget and didtake resources away from this (Innovative ApproachesI) undertaking.

1.7 ORGANIZATION OF THEINNOVATIVE PROJECTREPORTS

The entire Innovative Approaches project has twophases. Phase I, this report, covered East Africa and

Phase II added West Africa, Southern Africa, andthree secondary literature studies.

Innovative Approaches research findings are re-ported in separate volumes for East Africa (Kenyaand Uganda), Southern Africa (Zimbabwe,Mozambique, Tanzania), and West Africa (Ghana,Mali, and Senegal). There will also be separate vol-umes reporting on the Secondary Research Findingsand Overall Project Summary and Conclusions.

Each of the regional reports are organized asfollows:

n Introduction

n Key Regional Findings (organized by the fourareas of focus plus monitoring and evaluation,general recommendations, and issues deservingfurther study)

n Country Specific Studies (separate chapters)

— Entities/Case Studies Selected

— Findings on Donor Projects

— Findings on Associations

— Findings on Development Finance Orga-nizations

— Findings on Private Agribusiness Firms

— Lessons Learned and Implications forUSAID Planning — organized by thefour areas of focus plus monitoring andevaluation, general recommendations,and issues deserving further study

Findings on the larger projects and associationswere tabulated in matrix format, responding to thespecific research questions listed in the Scope ofWork. These matrices are included in appendices tothe reports. The research questions, as interpreted bythe consultants, are as follows:

1. What project or activity objectives are relevant tothe areas of focus chosen for study?

2. How are these aspects of the activity innovative?

3. What performance indicators were or are beingused to monitor/measure impact of the activity?

4. How are external influences being managed?

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5. How successful have the relevant interventionsbeen?

6. What new agribusiness opportunities haveresulted from the activity?

7. What monitoring and evaluation mechanisms,systems, and indicators can be suggested?

8. What relevant lessons can be learned from thisactivity? What mechanisms worked and did notwork, and how could the impact be improved/enhanced?

9. What are the relevant implications for USAIDproject design and implementation?

10. What new mechanisms or interventions can besuggested to increase the effectiveness of theseprojects or activities?

11. What indicators of project success can besuggested, and what is the best way to monitorthose indicators?

12. What other useful information should bereported and what are the main unresolvedissues?

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2. Introduction to theEast Africa Study

Individuals representing entities from a broad rangeof sizes and stage of participation in the food systemwere interviewed during the fieldwork in Kenya andUganda. A list of these individuals appears in Appen-dix G; the entities they represent are categorized inTable 2.1. With respect to the table, please note that:

n The focus of this project is on quadrants V, VI,VIII, IX, XI, and XII.

n In general, the viability of commercial entitiesdeteriorates from the top right quadrant (III) tothe bottom left (X), with commercial, project,and association risks increasing (due to the va-garies of nature, lack of management capacity,and tighter margins) in a very similar manner.

n One objective of this project is to identify, basedon lessons learned, sustainable interventions thatwill make agribusiness ventures more viable andvibrant, particularly in quadrants V, VI, VIII, andIX. However, very few firms, projects, or asso-ciations were identified in quadrants VI and IX.

n All firms shown in the matrix were interviewedbut not all are profiled herein (e.g., House ofManji and Sega Farms are very large operationsnot directly relevant to this study). However,executives from these firms are board membersof the associations profiled.

6

Table 2.1 Size Distribution and Focus of Firms, Associations, and Projects Evaluated

Enterprise Size

Tier 1> 100 full-timeemployees:Established exporter

Tier 2a10 - 100full-time employees:New exporters (or notexporting at All)

Tier 2b10 - 100full-time employees:Established exporters

Tier 3 (SMEs)< 10 full-timeemployeesNew or interested inexporting

Production Agricul-ture

Quadrant IStandard CharteredEstate Mgt. (K)

Quadrant IVEchuka Farms herbs &vegetables (K)

Quadrant VII

Quadrant XKESSFA (K)CAAS (U)Natl. Farmers (U)

Agribusiness

Quadrant IILonrho (K)Sega Farms (K)House of Manji flourmilling (K)AAK (K)

Quadrant VEchuka Farms yoghurt(K),Ziwa Roses (U)ANEPP (U)Ronco (U)KTPE (K)Uganda Hort. (U)VOCA (U)

Quadrant VIIIKEDS (K)K-MAP (K)Karzan (K)Uganda Grain Export-ers (U)

Quadrant XISEPSO (K)Vanilla & Silk Projs.(U)Oilseed Processors (U)Harriet Ssali (U)

High Value-AddedProcessing

Quadrant IIIFarmers Choice (K)House of Manji bakery(K)UMA (U)DFCU (U)APDF (U&K)

Quadrant VI

Quadrant IX

Quadrant XII

(K) Kenya

(U) Uganda

Firms are boldfaced; projects are in italics; associations are underlined. Classifications are based on the majorityof the entity’s focus.

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3. Key East Africa Findings

Key findings from the Kenya and Uganda analysesand case studies are presented in this section underthe four key areas of focus, plus findings on monitor-ing and evaluation. The statements combine “lessonslearned” and “implications” from Chapters 4 and 5 ofthis report and are designed to provide guidance toUSAID planners. These statements are based on theexperience of the entities/projects studied in Kenyaand Uganda and on the analyses carried out by theconsultants. Two final sections include general rec-ommendations and issues deserving further study.

3.1 NON-TRADITIONALAGRICULTURAL EXPORT(NTAE) DEVELOPMENT

NTAE are usually defined as exports of agriculturalproducts that have historically not been producedand/or exported from the exporting country. In Kenyaand Uganda these are primarily fresh flowers andvegetables marketed to European countries.

(1) The greatest economic impact from NTAE ac-tivities, both in terms of increasing direct incomeand employment as well as indirect benefits, willcome from assistance focused on established,medium-sized firms (those with 50 to 100 em-ployees). These firms tend to be the ones with areasonable level (e.g., the 50 percent discussedelsewhere) of equity to invest, trained and expe-rienced staff, and reasonable market knowledge.

(2) Given that resources are scarce and assuming thatthe enabling environment is sufficiently supportive,USAID projects should focus support on a fewhigh-potential, medium-sized firms, as determinedby subsector market opportunity studies. Guide-lines need to be developed for these studies.

(3) Flexibility and quick response must be featuresof USAID projects assisting an embryonic NTAEsector because of the rapidly changing condi-

tions that characterize export markets.

(4) Intensive technical assistance (TA) to individualmicro (<5 employees), and to a lesser extentsmall (5–50 employees), exporting enterprises isa sub-optimal use of increasingly scarce USAIDresources. These enterprises tend to have a veryhigh drop-out rate and are unlikely to reach thepoint where they can pay for such services. Thesetypes of firms need to be grouped in some way,such as in an association. (See comments in Sec-tion 3.2 below.)

(5) TA to exporters of fresh produce should strike abalance between high-value (e.g., pre-pack hor-ticultural products), and lower-value (e.g., cleanedand graded pulses) items in order to mitigate riskand maximize export earnings. Higher value (orvalue-added) exports are more complicated, morecapital intensive, and have significantly higherrisks. However, exporters should be encouragedand supported to optimize value added — due tothe potential for higher returns — by processingand/or packaging their products. This not onlycan be a way to utilize product that does not meetfresh export standards, but also can reduce theneed for refrigerated storage and shipping (highvalue/low weight) and thereby minimize air freightcosts. Therefore, the highest grade product shouldbe exported to developed country markets, andquality second-grade product to high purchasingpower regional markets and then to urban domes-tic markets, third-grade product where appropri-ate and feasible should be processed (whereeconomy of scale opportunities exist) and fourth-grade used for animal feed.

(6) TA to producers (farmers) for non-traditionalcrops is best supplied by highly focused servicesprovided by exporting firms that market the prod-uct, or by well-designed donor-supported projects,rather than by government agencies that have amuch lesser understanding of market require-

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ments and often outdated technology.

3.2 ASSOCIATION DEVELOPMENT

Associations may be groups of (a) processors in aparticular agribusiness subsector, (b) general or spe-cialized exporters, producers (farmers), or (c) somecombination of the two.

(1) Planners of association development projects mustdetermine at the outset if the conditions exist forassociation success and what type of programsare needed to stimulate that success. Associa-tions are not likely to develop until an industrygets beyond the embryonic stage, that is, associa-tion development tends to follow, not precede,industry development. Association success crite-ria are: (a) strong leadership with a long-termcommitment, (b) leadership that is trusted bymembers, donors, and government, (c) minimalgovernment influence, and (d) a clear and rela-tively narrow focus. Guidelines need to be devel-oped to assess association success potential. TheAMIS II project has started this process.

(2) Management training for associations, especiallyfinancial management and how to develop or adaptprograms that respond to members’ evolving needs,is a high-yield donor contribution to associationdevelopment when it is well done. Therefore, man-agement training should be a component of anyUSAID program to assist associations.

(3) Matching grants for institutional and activity de-velopment are effective because they stimulatemember involvement and commitment.

(4) Association organizers need to be aware that thereare trade-offs with regard to size and scope ofassociations. “Voice” — the impact that associationpositions can have on policy — usually requires alarge membership, but an association can moreeffectively provide services to its members when ithas a narrow focus, such as flower exporting.

(5) In industry associations that include both big andsmall members, the “big tend to pay while smalltend to use,” a problem that can weaken or

destroy the association. Therefore, a degree ofhomogeneity in size of member’s firms is desir-able.

(6) Vertically integrated producer/processor asso-ciations provide donors the opportunity to suc-cessfully support non-traditional agricultural ex-port development while reaching small-scalefarmers. This type of association is most effec-tive when the exporters are few in number andwork with relatively large-scale outgrowers, per-mitting a more cost-effective working relation-ship.

(7) Well-focused and well-managed associations canbridge the gap between small farmers and thecomplexities of NTAE markets. Working thoughSelf-Help Groups (SHGs) of smaller farmers is away to leverage scarce TA resources. For ex-ample, in Kenya, KESSFA (a small-scale farm-ers association) acts as an intermediary betweenfarmer self-help groups and selected large ex-porters.

(8) Associations will become self-sustainable only ifthey are effectively and efficiently serving mem-bers’ priority needs. A minimum score on anannual membership satisfaction survey, conductedby a third party, should be a condition for contin-ued donor support of an association.

3.3 SMALL AND MEDIUMENTERPRISE (SME)DEVELOPMENT

SMEs usually represent the largest number of agri-businesses in a developing country. Therefore theirsuccess is important to the livelihood of a large por-tion of most developing countries’ population.

(1) Small, marginal enterprises should not be sup-ported until a serious study of their economicviability is completed. Investing project resourcesin small potential (niche) market startup indus-tries is particularly risky and very expensive

(2) Conditions for successful smallholder (producer)participation in NTAE exist when they involve:

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(a) niche markets where producers have veryfew alternative buyers for their output, (b) lowcapital but high labor intensity, (c) a full-servicelocal exporter supporting the business, and (d) awell-established international market with experi-enced buyer/exporters.

(3) The two most important constraints on SMEdevelopment are their (a) lack of marketing ex-pertise and (b) minimal knowledge of and accessto sources of financial assistance (especially work-ing capital) and how to apply for them. Donorassistance should concentrate on these two ar-eas.

(4) Self-Help Groups are a useful way to leveragedevelopment resources aimed at SMEs and inmany instances may be the best way to serve theneeds of small agribusinesses. Another way tomake use of SHGs is to link them with largeenterprises which can provide inputs, technicalassistance and markets. However, this latter typeof activity requires intensive, hands-on manage-ment assistance by donors if it is to be successful.

3.4 FINANCIAL SERVICES

Without access to financing (both debt and equity) itis very difficult for agribusinesses to grow.

(1) The major constraints to agribusiness lending byfinancial institutions are the shortage of commer-cially viable projects and poor loan and invest-ment “packaging” by the borrower, not the lackof available funds. Therefore, technical assis-tance, for at least business plan development andloan or investment “packaging,” should be pro-grammed into any donor-supported financingproject.

(2) Rigorous application appraisal by the lender (a fea-sibility study if the project is large enough to sup-port the cost) is necessary, and the borrower shouldsupply a minimum of 50 percent of the equity in theventure. In many cases, it is advisable for the lend-ing institution to make direct payment from loanproceeds to the major suppliers of equipment toavoid misuse of the borrowed money.

(3) The major financial need of SMEs is workingcapital. However, a general constraint affectingSMEs is their lack of knowledge of availablefinancial resources and how to apply for them.Donors can help SMEs in this area at reasonablecost by providing the services of specialized lo-cal business consultants to appraise and packagesmall projects. However, the skills of these per-sons need to be continuously developed throughdonor-supported training programs. Full cost re-covery for services at the SME (and certainlymicro) level should not be expected.

(4) Defaults on loans to SMEs can be minimized byspecialized TA at a group level supplied throughassociations or self-help groups. One feature ofsuch training should be how to match earningsstreams from a financed activity to the fundsneeded for repayment of the loan. This will helpovercome the problem of the gradualdecapitalization of an SME in order to meet loanpayment schedules.

3.5 MONITORING AND EVALUATION(M&E)

M&E systems are designed to improve the impact ofdonor projects by understanding the progress, or lackthereof, toward objectives as the project is beingimplemented (which may lead to mid-course adjust-ments) and assessing the results versus expectationsupon project completion.

(1) USAID agribusiness project M&E is in an earlystage of development, but it is more advancedthan that for most other donors. Substantial op-portunity exists to enhance USAID project M&E,especially as related to direct and indirect impactby project component and type of beneficiary,and, cost versus benefit analysis. Current mid-term and final project assessments need to bemore rigorous on cost/benefit analysis and focusmore on beneficiary impact evaluation. A projectshould also be assessed a reasonable length oftime (e.g., 2 years) after its completion to deter-mine the sustainability of accomplishments.

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(2) A key assessment that needs to be completedbefore project initiation is the amount a subsectormust grow to achieve a reasonable payback onthe resources invested into that subsector. Forexample, how much does the $64-million Kenyahorticultural exports industry have to grow to geta satisfactory payback on the $15-million KEDSproject?

(3) Progress toward financial self-sustainabilityshould be one of the main measures of performancefor projects providing support to associations. Be-cause the ability to manage cash flow is typicallyweak in associations, the development and moni-toring of a Sources and Uses of Funds schedule isan important performance evaluation tool.

(4) Membership satisfaction is another prime indica-tor of the performance of an association. Mem-bership surveys or polls should be carried outannually, and to ensure credible results theyshould be carried out by professionals. One ele-ment of such a survey for an association thatmarkets producers’ output is a comparison of theprice received from the association versus sellingthrough buying agents — taking into account thevalue of other benefits a member may receivefrom the association. Associations should earn aminimum annual membership satisfaction scorein order to continue to receive donor support.

(5) Project evaluations should include breakouts bytype and size of beneficiary, including costs ofservices provided versus benefits; for example,increased output versus the cost of services pro-vided by size firm. Input/output (cost/benefit)analysis is a useful tool to measure direct benefitsagainst direct costs both for the overall projectand for project components. This should be doneon a quarterly basis and reviewed/managed byUSAID personnel.

(6) The frequency of use of private sector advisorsand the impact of their contribution should bemonitored to ensure that agribusiness project man-agers are utilizing private sector expertise.

(7) Information on the secondary impact of assis-tance to large firms (e.g., employee income and

how it is spent, business generated by purchasesof supplies and equipment from local suppliers,or services provided locally, such as transporta-tion, legal and accounting services, insurance,etc.) should be collected and analyzed. This willenable M&E of the full impact of support tolarger firms.

(8) More random beneficiary sampling should beused, rather than the current sampling, which isguided by project management.

3.6 GENERAL RECOMMENDATIONS

The following lessons learned and implications do notfit into the above areas of focus but they are relevantto agribusiness project design and implementation.

(1) A thorough opportunities and constraints analy-sis is needed before decisions are made aboutMission support to commercial enterprises in agiven agribusiness subsector. This is necessaryto prioritize the subsectors of primary interest.The analysis should pay particular attention tothe competitive advantage of the product in itstarget markets as well as to the availability oftrained personnel and the necessary financial re-sources. Operations Constraint Analysis is a use-ful tool in this process.

(2) Semiannual project review forums (½ day with abroad group of beneficiaries, local governmentofficials, and private sector representatives; ½day with the project team) can be used to coordi-nate project activities, improve their effective-ness, and enhance a feeling of local “ownership”of the project.

(3) Private sector advisors, both expatriate and local,should be used more extensively by USAIDMissions in the design and monitoring of agri-business development projects because they havea much better perspective on the challenges andopportunities they face than do government em-ployees. Direct, local business experience is like-wise important in helping to prioritize and pursuepolicy reform issues related to private sector de-velopment.

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(4) Identifying and developing an effective interme-diary organization (e.g., an association, a FADC,or an NGO/PVO) is important for leveragingscarce project resources in agribusiness develop-ment projects.

(5) Government approval and support for agribusi-ness projects are essential, but implementationshould be independent of direct government in-volvement because the private sector generallyprefers an “arms length” relationship with gov-ernment; government involvement in implemen-tation will slow progress.

(6) Active steering committees, with extensive pri-vate sector participation, must play a strongerrole to ensure success at all stages of projectimplementation.

3.7 ISSUES DESERVING FURTHERSTUDY

The following issues are unresolved questions forwhich there are no apparent answers. Answers tothese questions, however, would enhance agribusi-ness project design and implementation in East Af-rica. Each includes a suggestion for resolving theissue.

(1) How effective is most general market informa-tion? Large firms say they don’t need or use it,and small firms don’t know how to use it. Thereis a need to develop effective ways to measurethe usage of market information versus the costof providing it, especially by type of informationand type of user?

(2) Is broad-gauged baseline monitoring data reallynecessary? Segregating dependent and indepen-dent variables in macro impact measurement isvery difficult, and the cost of direct impact macromeasurement is usually quite high versus thebenefits realized. Consider measuring the progressof assisted firms and the associated indirect ben-efits as a satisfactory way to determine the im-pact of a project.

(3) Can commercial associations be used to improveinput supply, replacing outmoded state or coop-erative channels? Conduct an investigation ofhow commercial associations can be developedand supported to function as middle-men be-tween MSE producers and exporters, thus en-abling some economies of scale.

(4) How can the potential be optimized for outgrower/contract grower schemes on the model of the silkand vanilla projects in Uganda, schemes that havesuccessfully reached out to both small farmersand women? Assess the specific circumstancesand methods for developing sustainable outgrowerschemes, especially for specialty NTAEs.

(5) What is the best and most efficient way to mea-sure the full social and economic impact of sup-port to large-scale enterprises (e.g., Ziwa Rosesproject in Uganda)? If the development objec-tives are to increase broad-based income, em-ployment, and foreign exchange generation, itmay be most efficiently achieved through sup-port to medium and large firms. An assessment isneeded to respond to criticisms of this type ofassistance, that is, giving assistance to the “bigguys” who appear to need it least. Determine thecomparative primary and secondary impact ofsupport for medium and large versus micro andsmall enterprises, including a cost/benefit analy-sis.

(6) What is the best way to effectively communicateneeded agribusiness skills to local agricultureand business schools? Determine how the currentand anticipated skill needs of agribusiness can becommunicated to local agricultural and businessschools and how private sector leaders can playa more active role in curriculum developmentand teaching.

(7) Should or can micro and small enterprise (MSE)support institutions become self-financing? As-sess the financial payback amount and likely termon MSE projects and determine if a reasonablepayback can be achieved. If not, what other M&Eshould be developed to assess these types ofprojects.

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4. Kenya

4.1 ENTITIES SELECTED FORSTUDY

For Kenya case studies the consultants selected sixdonor-supported innovative agribusiness entities andfour private agribusinesses. These include threeprojects (two funded by USAID and one by a GermanNGO), two associations, and one development fi-nance organization. The four private agribusinessenterprises significantly enhanced our understandingof agribusiness in Kenya.

Projects: (with supporting donor in parenthesis)

KEDS — Kenya Export Development SupportProject (USAID)

SEPSO — Small Enterprise Professional ServiceOrganization (Friedrich Naumann Foundation)

K-MAP — Kenya Management Assistance Pro-gram (USAID)

Associations:

KESSFA — Kenya Small Scale Farmers Associa-tion (Hans Seidel Foundation)

AAK — Agribusiness Association of Kenya(USAID support requested)

Development Finance Organization:

KTPE — Kenya Trust for Private Enterprise(USAID)

Private Enterprises:

Karzan Inc.

Lonrho

Standard Chartered Estate Management

Echuka Farms

Most of the donor-supported entities have mul-tiple areas of focus (see Table 4.1). Therefore anassessment of each project, association, or organiza-tion was performed for each area of focus.

The assessments of the projects, associations,and other organizations that appear in the followingsections include summarized Objectives, Impact andDiscussion sections, and the Conclusions reached fromthat case study. Because the first four entities listed inTable 4.1 are large and important, detailed assess-ments, organized according to a standard set of crite-ria, were also prepared. These detailed assessmentsare included as Appendix A to this report. Detailedprofiles of the associations, development finance or-ganization, and private business firms assessed arefound in Appendices B, C, and D, respectively.

4.2 FINDINGS ON PROJECTS

Following are the main findings from each of theprojects assessed.

4.2.1 Kenya Export Development Services(KEDS)

Sponsor: USAID

Project Value: $15 million

Start Date: March 1992

Completion Date: December 1999

Principal Agribusiness-Related Objectives:

Association Development: Improve the capacityof the Horticultural Development Authority (HCDA,a parastatal) to deliver market-relevant services tomembers; strengthen the Fresh Produce ExportersAssociation of Kenya (FPEAK) as a private sectortrade association.

Non-Traditional Agricultural Export Develop-ment: Deliver TA (especially marketing) to exportingfirms; increase NTAE employment and exports; pro-mote policy reform and regulatory change to enhancethe export competitiveness of Kenyan firms; promotedialogue between government and the private sector.

14

Discussion: The KEDS project is working pri-marily with established small and medium-sized2 ex-porters rather than with new exporters. One of thereasons for the project’s success is that many impor-tant policy changes influencing exporters (e.g., liber-alization of the exchange rate) occurred at the begin-ning of the project or before the project was up andrunning. An important aspect of the KEDS project isthe active encouragement of public-private sectordialogue. Such dialogue is essential in a businessenvironment like Kenya’s because distrust and lackof communication are widespread between partici-pants in the two sectors. This improved dialogue isachieved through workshops, conferences, and aKEDS long-term technical advisor housed within theMinistry of Finance.

The most important findings from the assess-ments/case studies form the basis for the conclusionspresented in section 4.6, where Kenya cross-cuttinglessons learned and implications for USAID planningare summarized.

The KEDS firm-level assistance activity utilizesstrategic consultancy visits to companies that requestassistance. Many of these firms, although establishedexporters, generally have very poor market planningskills. The strategic consultancy allows the KEDSteam both to screen potential beneficiaries and toassist the firms in better targeting the use of theirfunds. KEDS assistance has resulted in several firmsintroducing new pre-pack horticultural products intothe EU market.

Impact: Average annual growth in NTAE hasreached 6 percent. As of November 1994, 2,814 firms(primarily medium-sized companies with some ex-port experience) had been assisted. Foreign exchangeearnings from manufacturing, horticulture, and otherNTEs increased 25 percent from 1992 to 1993. Em-ployment in NTAE firms increased 34 percent from1990 to 1993. However, the original project objec-tives — creating one million jobs and $770 million inforeign exchange revenue — are unrealistic.

It is too early to assess the effectiveness of TA toassociations (Kenya Association of Manufacturers,FPEAK, HCDA) in developing the export capabili-ties of their members, but a system for tracking ac-tivities such as trade show attendance, training, anddistribution of publications has been put in place.Trade associations receiving KEDS assistance arenow better able to coordinate their members’ partici-pation in international trade shows, resulting in anincrease in the number of participating companies.

Conclusions: When the policy environment forbusiness is right, projects like KEDS can be effective.KEDS’s hands-on involvement with associations hasbeen critical to helping them refocus their services.However, the process is often slowed by politicalfactors. In general, MSEs do not have sufficient knowl-edge of market planning and budgeting to developrequests to KEDS for assistance and need help in thisarea. TA needs are great and therefore project effortsmust be focused to achieve maximum impact. Also,

Table 4.1 Kenya Innovative Projects and Their Areas of Focus

Project/Association(Donor)

KESSFA (HSF)

KEDS (USAID)

SEPSO (FNF)

K-MAP (USAID)

AAK (Possible USAID)

KTPE (USAID)

Non-TraditionalExport Promotion

Yes

Yes

No

Some

No

Some

AssociationDevelopment

Yes

Yes

No

No

Yes

No

Small & MediumEnterprise

Development

Yes

No

Yes

Yes

Interested

Some

15

potential clients must be rigorously screened to avoidwasting scarce resources.

4.2.2 Small Enterprise Professional ServiceOrganization (SEPSO)

Sponsor: Friedrich Naumann Foundation (Germany)

Project Value: DM 300,000 per year (US$ 216,000)

Start Date:January 1993

Completion Date: 1998

Principal Objectives: Provide business serviceson a fee basis to a broad range of small enterprises;become self-supporting at the end of five years. Fo-cus on young, innovative businesses.

Discussion: SEPSO provides business servicesto micro and small-scale enterprises; the most popu-lar service is assistance with monthly accounting.SEPSO’s plan to become financially self-sustainingwithin five years has caused it to move away fromproviding services to the smallest micro enterprisesbecause they have a limited ability to pay for suchservices. A major challenge for SEPSO is developingits staff to stay ahead of client needs and retainingthat staff once developed. SEPSO staff is 100 percentKenyan.

Impact: SEPSO attempts to establish “partner-ships” with its client firms, following up with themevery month. SEPCO’s main activity is financial con-sulting (accounting), which will hopefully generatebroader-based consultancy work. SEPCO recovered20 percent of costs in the first year and worked with140 clients. Seminars and quarterly lunch meetingsare found to be very useful by clients.

Conclusions: Clients demand sophisticated ser-vices, which means SEPSO must find, train, andretain skilled personnel. Smaller, startup clients havethe greatest need for help, but they also have a limitedability to pay for services; SEPSO has had difficultycollecting from some of them. SEPSO itself, if it is tobecome self-sufficient, must be run like a business.

4.2.3 Kenya Management Assistance Program(K-MAP)

Sponsor: USAID, ODA, private sector firms

Project Value: $560,000 from USAID (1987-1992),£400,000 ($600,000) from ODA

Start Date:1986

Completion Date: Indefinite

Principal Objectives: Reduce failure rate ofKenyan SMEs by providing one-on-one assistancefrom executives of larger Kenyan companies. Work-shops and teaching materials are provided for a fee.Establish ongoing business linkages between largeand small businesses.

Discussion: The objective of the K-MAP pro-gram, in which successful large and medium-sizedKenyan firms allow their top and middle manage-ment executives to provide counsel free of charge tosmall businesses that need management assistance, isto reduce the high mortality rate of small businesses,particularly startups. To date, however, K-MAP hasbeen unable to generate more than 20 percent of itsoperating costs in revenues. Because managementexecutives donate their time to counsel small firmsthe project should be a relatively low-cost method ofassisting small businesses. According to the 1991evaluation, the cost per registered client per year wasKShs 5,068 (about US$100). K-MAP has strongmanagement and strong support from the Kenya busi-ness community — both foreign and local.

Impact: 186 medium and large companies areproviding executives for consulting with smaller com-panies. There have been no defaults on “sponsored”(reduced collateral) loans, to K-MAP clients. Unfor-tunately, a recent evaluation of the program was un-able to determine if K-MAP’s objective is being at-tained because client firms were not monitored forfailure rate, sales, net assets, profits, or any otherrelevant impact indicators. One-on-one consulting isjudged “the most valuable aspect of K-MAP assis-tance.”

Conclusions: Management and training of coun-selors by K-MAP and reporting on their activitiescould be improved. Workshops are difficult to orga-nize but are of great benefit when well done. Clientinvolvement in the preliminary assistance proposalscreening process, and in feasibility studies, is essen-

16

tial for giving the client a feeling of results “owner-ship.” K-MAP has had difficulty getting clients to paythe full cost of services. The involvement of multina-tional company consultants in developing clients ex-port marketing skills is important.

4.3 FINDINGS ON ASSOCIATIONS

Following are the main findings on each of the asso-ciations assessed.

4.3.1 Kenya Small Scale Farmers Association(KESSFA)

Sponsor: Hans Seidel Foundation (Germany)

Project Value: DM 250,000 per year (US$180,000)

Start Date: January 1993

Completion Date: January 1996

Principal Objectives: Association Development:Attract 2,000 members within 250-km radius ofNairobi; assist them to form viable self-help groups(SHGs), which in turn become members of KESSFA.

Non-Traditional Agricultural Export Develop-ment: Deliver TA to SHGs to increase productionand marketing of horticultural products. Act as aprincipal in transporting and selling members’ out-put.

Discussion: KESSFA is attempting to assist aselect group of small-scale farmers to break into theEuropean fresh vegetable export market. KESSFAoperates through small, tightly knit SHGs of farmers,with the association’s secretariat acting as intermedi-ary between the producer SHGs and a few largeexporters. KESSFA’s success depends to a great ex-tent upon the ability of the secretariat to act in amanner that guarantees the exporters receive the qual-ity and quantity of product, and timeliness of deliv-ery, that they require. This type of association offersthe leverage needed by donors to reach smallholdersand also to expand NTAEs. KESSFA’s use of pro-ducer SHGs allows them to leverage their efforts.KESSFA’s secretariat provides extensive training inNTAE production to SHG members.

Impact: As of September 1994, 104 SHGs witha total of 2,700 members had been created. Exportersadvance seed to KESSFA, which in turn advances theseed to SHGs and deducts the cost from their mar-keted produce. Members have received 25-30 percenthigher prices for green beans sold via KESSFA thanthey have received from brokers.

Conclusions: KESSFA needs to communicatebetter with potential SHG members so that they real-ize the benefits received from membership in KESSFAand are not tempted by “briefcase” exporters. Top-quality management and effective member trainingservices has enabled this association to get off to asolid start. Diversification beyond green beans isneeded.

4.3.2 Agribusiness Association of Kenya(AAK)

Sponsor: None as yet — seeking USAID assistance

Start Date: 1992

Principal Objectives: Facilitate networking be-tween Kenyan agribusinesses, strengthen linkagesbetween micro enterprises and large-scale producersand processors. The organization is not yet fully ac-tive.

Discussion: The AAK is currently composed ofthe 18 largest agribusiness firms in Kenya and isstruggling to establish itself as a viable associationthat can meet the needs of a diverse membership. Asof early 1995, they did not have a complete under-standing of members’ priority needs nor a detailedplan on how to respond to them. USAID’s role inimproving the likelihood that these capabilities willbe achieved by AAK or by similar associations shouldinclude: (a) sponsoring a member needs survey at thetime of association startup or in the early develop-ment stages, (b) helping the association develop pro-grams to address members’ priority needs, and (c)funding follow-up membership satisfaction surveysto determine how well the established priority needsare being met. Any linkage programs with agribusi-ness MSEs should wait until the AAK is fully func-tional.

Impact: Too early to evaluate

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Conclusions: AAK members will be willing topay dues and/or services fees sufficient to enable theassociation to become self-sustaining only if the as-sociation is effectively serving their priority needs.Even very large, well-financed agribusinesses havedifficulty forming effective associations.

4.3.3 Fresh Produce Exporters Association ofKenya (FPEAK)

Sponsor: 30 percent of support from donors, includ-ing the KEDS Project ($30,000)

Start Date: 1975

Objectives: The collective representation of thefresh produce and floral industry in all matters relatedto potential government legislation and intervention.Providing services to members, such as informationon new technologies.

Discussion: FPEAK was recently “re-cycled” un-der the strong tutorage of KEDS. A new, less fac-tional board was elected and a new chief executive/consultant was hired. The new board is viewed asmore representative of the whole membership; thenew chief executive/consultant is British and has longexperience in Kenya commercial horticulture. Theelection of a non-Kenyan to head FPEAK raisedsome eyebrows, but he was selected by the boardfrom an extensive list of candidates. Ongoing issueswith FPEAK are the allocation of responsibility forindustry development between FPEAK and HCDA, agovernment-sponsored horticulture promotion agency,and the related question of cess proceeds allocationbetween the two organizations. Management mustdeal with a membership not yet aware of or educatedas to the potential benefits from a trade association.

Impact: Too early to assess but there are positiveindications, especially for FPEAK taking more re-sponsibility for horticultural industry development.

Conclusions: An industry-specific associationsuch as FPEAK can focus on meeting members’general needs; subcommittees for flowers and veg-etables enable both to pursue their specialized needs.The new emphasis on market information, technicalservices, and financial information is now demand-driven. The market news service developed and fi-

nanced by KEDS is of most value to medium andsmall firms.

4.4 FINDINGS ON DEVELOPMENTFINANCE ORGANIZATIONS

Following are the main findings on the developmentfinance organizations assessed.

4.4.1 Kenya Trust for Private Enterprise(KTPE)3

Sponsor: USAID

Start Date: January 1988

Completion Date: December 1993

Objective: The objective of the KTPE projectwas to strengthen Kenyan institutional and humanresource capabilities to assist firms via equity financ-ing; 20-40 businesses were to be expanded and/orrestructured and total investment, employment, out-put, foreign exchange generation and tax revenuesincreased. Industrial Promotion Services Ltd. (IPS),an existing company, and Kenya Equity Management(KEM), a new company, were the intermediaries forequity funds disbursement.

Discussion: Basically the market was not readyfor and did not perceive the need to use venturecapital. Kenyan firms typically operate with a veryhigh debt-to-equity ratio and prefer financing viaadditional debt rather than sharing equity with others.Owners do not even want to share accurate financialinformation with potential partners. Inadequate mar-ket opportunity and venture assessment informationand limited entrepreneurial capabilities result in alimited number of viable new ventures. Third partyinvestors are rare due to the minimal “protection”available for their investment.

Impact: all but one (increased tax revenues) ofthe macro measurements for the project were met, butthere is minimal evidence this was directly influ-enced by the project (i.e., the improvements weremostly due to other influence).

Conclusions: KTPE’s overall goals were unreal-istic, even for fully developed venture capital markets

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such as those in the United States. There is consid-erable question whether the venture capital (versusmerchant banking) managerial resources at IPC orKEM were sufficient for the task at hand. Further-more, it appears that USAID program designers andimplementation managers had an insufficient under-standing of venture capital in embryonic markets.

4.5 FINDINGS ON PRIVATEAGRIBUSINESS FIRMS

Following are the main findings on the private agri-business firms assessed.

4.5.1 Karzan Inc.

Karzan Inc. is a medium-sized flower exporter witha good export market. The shift in the EC market todirect (vs. auction) sales has forced Karzan to focusheavily on meeting quality requirements. They workwith three categories of suppliers: small independentoutgrowers, commercial growers, and the company’sown production. The 110 outgrowers (0.5 to 2.5 haeach) receive fertilizer and planting materials andhave their flowers picked up at the farm. Commercialgrowers are larger and have their own cold stores andmeans of delivery. Karzan markets flowers in Europethrough a Dutch agent. Business growth will be pri-marily in joint ventures with commercial growers dueto the cost of working with many small growers.

4.5.2 Lonrho

Lonrho is a large diversified agribusiness with morethan 4,000 employees, featuring extensive verticalintegration. It is one of Kenya’s largest producers oftimber products, seed maize, waddle extract, mush-rooms, milk, cattle, pigs, poultry, as well as pork andbeef products. It obtains 50 percent of its meat fromits own farms and 50 percent from independent farm-ers. The company also has the largest refrigeratedfood distribution system in Kenya-Farmers ChoiceFoods.

4.5.3 Standard Charter Estate Management(SCEM)

SCEM, owned by Standard Charter Bank, manages

production acreage for larger owners, cooperatives,and farming companies. This includes more than277,000 acres producing coffee, tea, sisal, sugar,wheat, mixed farming, horticulture, and cattle ranch-ing.

4.5.4 Echuka Farms

Echuka Farms is a diversified farming and process-ing operation producing yogurt, jams and jellies, freshvegetables, and fresh herbs. It is owned and managedby a dynamic female entrepreneur, Mrs. Chege.Echuka Farms is a testimony to the drive and entre-preneurial capabilities of Mrs. Chege. However, itseems likely that the very wide variety of businessesshe is developing and their small scale will make itdifficult for this enterprise to expand to the next sizelevel. As in the case of most SMEs, financing is asevere limitation to the growth of the business andnew “kitchen scale” businesses have been startedwhen significant capital is required to expand anexisting business. But unlike most SMEs, Mrs.Chege’s unique personality and capabilities haveenabled her to find good local markets for nearly allher production. Lonhro (Farmers Choice) distributesEchuka’s yogurt and other refrigerated products.

4.6 LESSONS LEARNED ANDIMPLICATIONS FOR USAIDPLANNING

In the following sections, “Lessons Learned” and“Implications for USAID Planning” derived from theanalyses in sections 4.2 to 4.5 above are presented.The order in which they are presented is roughly inorder of (1) the anticipated positive impact on USAIDobjectives and operations if they were to be success-fully adopted, and (2) the extent to which the lessonslearned or implication is broadly applicable, that is,applicable to SSA agribusiness projects in general.This ordering is subjective, but represents the studiedopinion of the research analysts and draws upon theirmany years of experience in agribusiness develop-ment in developing countries. The primary source ofthe lessons learned or implication is shown in paren-theses.

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4.6.1 Non-Traditional Agricultural ExportDevelopment

Lessons Learned

n Most NTAE research and extension input mustbe project or exporter (versus government) sup-plied. Exporters can usually only afford to supplytechnical assistance to the larger outgrowers.(KEDS)

n The higher the value added the more difficult it isfor MSE participation in NTAE, but the greaterthe market and margin opportunity. Products thatare easier to produce most often yield lowermargins, which then require larger minimum sizeoperations. Therefore, there is an inconsistencybetween direct participation by MSEs in NTAEand their financial and managerial capabilities.(AAK/KEDS)

n Much of the market information assistance andtechnical assistance must be imported becausethere is little in-country experience. (KEDS/KESSFA)

n The quality of Kenya’s product (especially withrespect to residual pesticide levels) and limitedreliability of air cargo space are the major prob-lems perceived by the EU, the market. (KEDS)

n For flowers, going direct to wholesalers avoidsthe quotas imposed by the Dutch auction, butrequires strong EU partnership(s) and quality con-trol. (KEDS)

n Exporter cooperation (e.g., in associations) mustbe carefully managed due to competitive (cartelpossibility) considerations (i.e., exporter involve-ment could lead to a monopolistic situation).(KEDS)

n The uncertainty of Kenya Air Freight Handling’sexpediting of export cargo is a substantial prob-lem, yet effective and efficient air freight han-dling is crucial to the quality and timeliness ofperishable exports. (KEDS)

n An adequate water supply is essential to fringeseason NTAE; therefore, Kenya’s water avail-ability problems may limit continued NTAE ex-pansion. (KEDS)

n Adequate physical infrastructure is essential tocost-competitive and high-quality NTAE prod-ucts, yet Kenya’s infrastructure is deteriorating,especially rail and road to Mombasa, and portmanagement and power supply consistency arepoor. (All)

Implications

n The greatest economic impact from NTAE projectassistance will be derived from activities focusedon experienced, established, medium-sized (50100 employees) firms. (KEDS)

n Project staff must have direct export commercialexperience to be of significant help to exporters.(KEDS/KESSFA)

n More private/public/donor dialogue is required,especially in the project design stage, to avoidsuboptimal designs that must be corrected whenapplied to the real world. (KEDS)

n More emphasis is needed on processed productsfor export as a way to deal with high air freightcosts and space shortage, and to utilize lessergrade product. (KEDS)

n Sectoral workshops are more expensive and moredifficult to organize than general workshops, buttheir impact can be much greater. (K-MAP)

n Recipient matching (50 percent suggested) isimportant for donor grant effectiveness. Signifi-cant marketing TA must accompany grants (es-pecially to MSEs) if they are to be effectivelyutilized. (KEDS)

n Extensive vertical integration (or at least coordi-nation) is needed for cost, timing and qualitycompetitiveness of high-value exports. (Lonrho)

4.6.2 Association Development

Lessons Learned

n Institutions or associations are only as effectiveas their management personnel. Increasing man-agement/leadership skills through training is onlyeffective to the extent that trained individualsremain with the organization. Developing andretaining key project and association personnelare challenging tasks. (All)

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n Associations can be a good, leveraged way toprovide TA for NTAE, especially to MSEs. (KEDS)

n Associations that do not respond to member needswill not be successful and will not become finan-cially self-sustaining. Therefore, membership satis-faction surveys should be conducted annually. (All)

n To enhance “voice,” more members are needed,even if this means combining subsectors such asflower, fruit, and vegetable exporters. For effec-tive TA, a relatively narrow range of subsectors,types and sizes of firms/members is needed.(KEDS/AAK/KESSFA)

n Balancing the role of a “driving force” (seniorexecutive) within an association is difficult. Astrong leader is needed, but the leaders must notmanage the association primarily for their per-sonal benefit. (AAK/KESSFA)

n The cooperative structure is much more regu-lated and influenced by the Kenyan governmentthan is that of an association. Commercial asso-ciations need to be organized as corporations, notas cooperatives, due to the “baggage” (politicalproblems) cooperatives carry in Kenya and themore pragmatic orientation of a corporate struc-ture. (KEDS/KESSFA)

n Associations must remain focused on commer-cial (vs. political) issues. (KESSFA)

n “Social” problems (e.g., ethnic tension, cliques,poor cooperation) seem more prevalent at theMSE association level. SHGs, on the other hand,are more culturally homogeneous and work to-gether more efficiently. (SCEM/KEDS/KESSFA)

n Poor “real” price information can cause prob-lems for association marketing efforts becausemembers become disenchanted with the pricethey receive from the association for their pro-duce. (KESSFA/SCEM)

n Too many micro participants in a commercialassociation can cause accounting cost problems(i.e., many small accounts with a high mainte-nance cost versus the value of the transactions).(KESSFA/SCEM/SEPSO)

n Tribal chiefs still play a significant role in gainingsupport for rural associations. (KEDS)

n Consistent collection and equitable distribution ofexporter cess payments is needed to achieve andretain credibility for cess payments as an industrydevelopment mechanism. (KEDS)

Implications

n The basis for association sustenance does notseem to be well understood by current USAIDmanagers. (AAK)

n There does not seem to be an objective mecha-nism available for assessing membership satis-faction. (AAK/KEDS)

n Mechanisms for determining the most viable andsustainable associations can and should be devel-oped. A good association “needs assessment meth-odology” is required in order to be able to ad-dress priority needs, establish model associations,devise association performance measurements,and develop sources of financial support. (All)

n A fully integrated commercial association may bethe most viable MSE producer exporter linkage.(KESSFA)

n Donors can help associations focus (or refocus)their efforts during the critical early years. (KEDS)

n SHGs as members of an association may be themost cost-effective way to serve the needs ofsmall producers and enterprises. They can pro-vide double leveraging when they are associationmembers, especially MSEs. (KEDS/KESSFA)

n Associations must have political independence,from both the government and from politicallymotivated power brokers. (KESSFA)

n Technical support from donors, and possiblyalliances with relevant associations in other coun-tries, is very useful for associations involved withexports because it is difficult for them to obtaininformation from outside the country. (KESSFA)

n Do not specify in the design the associations thata project must work with; allow flexibility tosupport those with the most potential and whoare the most cooperative. (KEDS)

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n Potential and current member education programsare important to help differentiate associationsfrom cooperatives. (KESSFA)

4.6.3 Small and Medium EnterpriseDevelopment

Lessons Learned

n SME linkages with large enterprises, and SMESHGs, can make a significant contribution to-ward SME development if these undertakings areaccompanied with close management of the pro-cess. (K-MAP/KESSFA)

n Legal constraints are being streamlined, but ille-gal constraints are still rampant, and SMEs arethe most vulnerable to the latter. (KESSFA)

n A shortage of capital and TA, especially as re-lated to marketing, are the major limitations forSME participation in NTAE. SHGs can helpovercome these limitations, especially in tandemwith well-managed associations. The largest SMEoperating constraints on SMEs are usually re-lated to marketing. (KESSFA/KEDS)

n The MSE dropout rate is very high due to lack offinancing, collateral, and management expertise.(SEPSO)

n Organizational integrity and key individuals’ in-tegrity is very important to help maintain a posi-tive attitude on the part of beneficiary SMEs.(KESSFA/K-MAP/AAK)

n Building and retaining local capacity within anSME support project ahead of clients’ needs ischallenging. (SEPSO)

n MSEs have a minimal knowledge of sources forfinancial assistance and how to apply for it. (SEPSO)

n Agribusiness SMEs’ basic development, support,and service needs are very similar to those offirms in other sectors. (SEPSO/K-MAP).

Implications for USAID Planning

n Leveraging expensive USAID and/or otherproject’s SME development resources is a majorchallenge; SHGs and associations can be veryuseful to help accomplish this. (KESSFA/KEDS)

n Ongoing and hands-on (high direct involvement)services are very important to SMEs. (KESSFA/SEPSO)

n It is difficult to maintain a very commercial ori-entation at the micro level; that is, many enter-prises that want help will never be able to pay forthe needed services. (KESSFA/SEPSO/KEDS/K-MAP)

n “Investing” in startups is very high risk due totheir high failure rate. Avoid “investing indreams.” (SEPSO)

n Direct SME assistance should be primarily fo-cused on local or regional (vs. developed coun-try) markets because their requirements are lessstrict than those of developed country marketsand they are vastly larger (up to 60 times the sizeof export markets). (KEDS)

n Successful MSE marketing services must behighly focused, probably even niche-market ori-ented. (SEPSO)

4.6.4 Financial Services

Lessons Learned

n Sources of finance and how to access them arenot well known by MSEs, a significant barrier totheir growth and development. (K-MAP/AAK/SEPSO)

n Money without TA to effectively use it is oftennot repaid. Therefore, financial services projectsneed to include or identify sources of effectiveTA for their clients. (K-MAP)

n For MSEs, the major constraint is lack of work-ing capital; therefore, MSE credit activities mustfocus on obtaining working capital. (SEPSO)

n The difference between a grant and a loan isunclear at the MSE level. Therefore, communi-cations with the borrower must be very clear onrepayment expectations. (KEDS)

n Matching an earnings stream from a financedactivity to the funds needed for loan repayment isdifficult for MSE management/owners. Loan re-payment is often achieved via de-capitalization.

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Special care must be taken to help lenders setaside funds from the earnings stream of the projectbeing financed to repay the loan. However, loanrepayment can not be the only criterion to mea-sure the success of an MSE financial servicesproject. (KEDS)

Implications

n Design and management of financial projectsmust be carried out by finance professionalsbecause the principles involved are often not wellunderstood by USAID managers. (KTPE)

n Detailed screening of financing applications bybusiness (vs. loan officer) professionals can en-able lower collateral requirements. Experiencedbusiness operations managers are needed to gobeyond profit and loss and balance sheet analy-sis. (K-MAP)

n Success of financing projects will likely requiremulti donor/agency cooperation, given the sub-stantial resources required for a minimum sizeentity. Cooperation between USAID and IFC/WB or other financially oriented agencies suchas CDC will increase the chance of project suc-cess, but will also raise project complexity.(KTPE)

4.6.5 Monitoring and Evaluation

Lessons Learned

n Progress toward financial self-sustainability andthe level of membership satisfaction should bethe primary association performance measure-ments monitored. (SEPSO/K-MAP/AAK)

n Monitoring and evaluation by donors other thanUSAID is generally quite weak, especially quan-titative measurement. (All)

n Much more direct beneficiary-level evaluationand polling is needed. (KEDS)

n The original KEDS goals seem unrealistic. (KEDS)

n One of the main commercial association perfor-mance measurements should be the net price aproducer receives when selling via the associationversus selling through buying agents. (KESSFA)

Implications

n The main focus of performance measurementshould be on the progress or success of assistedfirms, not on macroeconomic statistics, becauseit is very difficult within the comparatively shorttime-frame of a project to directly affect macromeasurements. (KEDS)

n All projects need more breakdowns by type ofbeneficiary (e.g., clients served, cost of efforts,and output increase) and by size of firm. (KEDS)

n More client (exporters, GOK, USAID manager)satisfaction assessment (qualitative) is needed asa part of project M&E. (KEDS)

n A key assessment that needs to be completed be-fore project initiation is the amount a subsectormust grow to achieve a reasonable payback on theresources invested into that subsector. For ex-ample, how much does the $64 million horticulturalexports industry have to grow to get a satisfactorypayback on the $15 million KEDS project? (KEDS)

n Quality, coverage, timeliness, and pragmatism ofquarterly project reports, including an M&Ematrix by project component, needs improve-ment. (KEDS as positive example)

n Better and more specific sources and uses offunds projections is needed for entities andprojects seeking support. (AAK)

n More focus on a project’s value (vs. tonnage)increase is needed for NTAE, especially theamount of in-country value added as the result ofa project. (KEDS)

n Review project objectives at least annually todetermine if adjustments are necessary. (KEDS)

4.6.6 General Recommendations

The following general recommendations based onKenya research do not fit under previous headings.

n Ongoing (at least annual) formal Operations Con-straint Analysis (OCA) for firms targeted forassistance will provide essential information forall commercial projects. (KEDS)

n Identifying and developing an effective interme-

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diary is important for leveraging scarce projectresources. (KESSFA/KEDS)

n Government approval and support are needed, butproject implementation must be independent. (All)

n Projects must remain limited in scope until thestaff is well trained and organized. (SEPSO)

n Local contractors and employees can be veryhelpful if they are properly selected, trained, andmanaged. (All)

n Develop local hire parallel positions for all keyproject personnel. (K-MAP/SEPSO/KESSFA/AAK)

n Cooperatively funded and managed donor projectsare difficult to coordinate, so multidonor supportis most viable for established, well-managedprojects. (K-MAP)

n There is a need for highly focused training andexperience transfer at all levels and for all projects.(KEDS/K-MAP/KESSFA)

n More USAID/embassy dialogue regarding opti-mizing project’s success is needed. (KEDS)

4.6.7 Key Issues Deserving Further Study

Following are issues that have surfaced in the courseof the research and analysis in Kenya and that de-serve further study.

n What is the best way to minimize “briefcase”exporters’ negative impact on contract growersand association members? (KEDS/KESSFA)

n Should projects have a greater focus on local andregional markets? (KEDS)

n What are the comparative results (especially whenconsidering the full multiplier effects of supportfor mega and large agribusiness firms) of projectssupporting mega, large, medium, small, and mi-cro enterprises? (KEDS)

n Are there effective ways to eliminate corruptionand inefficiency among customs officials? (All)

n How can project advisory boards be made moreactive and effective? (KEDS)

n Is the optimal association broadly based so thatit can include a large number of people andtherefore have greater “voice,” or narrowly fo-cused so that it can serve the product-specificneeds of its members? (All)

n What is the best way to identify and developproject mentors at both the USAID and localgovernment levels? (KEDS)

n When in a project’s life should the initiatingsponsor look for multidonor support? (KESSFA)

n Should/can MSE support institutions ever be-come self-financing? (SEPSO)

n For highly effective NTAE development, is sup-porting larger firms the best, or maybe only, wayto achieve quantitative results and returns on re-sources objectives? (KEDS)

n To what extent do significant NTAE participantsand their advisors understand market channel pro-portionality, trends/dynamics, and projections?(KEDS/KESSF/AAK)

n How can responsibilities be most effectively bal-anced and/or allocated between semi-governmentand private sector entities interested in agribusi-ness development; for example, HCDA andFPEAK? (KEDS)

n What is the best way to effectively communicatethe essential agribusiness skills needed by theprivate sector to agricultural and business schools?(All)

n Who should help embryonic businesses (espe-cially micros), given that they represent the high-est risk and the lowest return on resources? (All)

n Should project staff primarily manage or shouldthey provide services themselves? (K-MAP)

n Is the statement in the KEDS project documentthat 75 percent of Kenya’s export fruits, flowers,and vegetables is produced by smallholders evennear the “ball park”? (KEDS)

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5. Uganda Overview and Analysis

5.1 ENTITIES SELECTED FORSTUDY

For the Uganda portion of the study, the consultantsassessed the performance of thirteen innovative projects,associations, development finance organizations, andprivate enterprises concerned with agribusiness devel-opment. These case studies, together with the donoragencies supporting them (in parenthesis), are as fol-lows:

Projects:

ANEPP – Agricultural Non-Traditional Export Promo-tion Program (USAID)

CAAS – Cooperative Agriculture and AgribusinessSupport Project (USAID)

Silk Sector Development Project (European Union [EU])

Associations:

UOSPA – Uganda Oilseed Processors Association(USAID)

UNFA – Uganda National Farmers Association (Dan-ish International Development Agency [DANIDA])

UVGPA – Uganda Vanilla Growers and ProcessorsAssociation (USAID)

UMA – Uganda Manufacturers Association (USAID)

UGEA – Uganda Grain Exporters Association (no spon-sor)

UHA – Uganda Horticultural Association (no sponsor)

Development Finance Organizations:

DFCU – Development Finance Corporation of Uganda(International Finance Corp. [IFC], Overseas De-velopment Authority [ODA], German aid program[DEG])

APDF – Africa Project Development Facility (Interna-tional Finance Corp. [IFC])

VOCA – Volunteers in Overseas Cooperative Assistance(USAID)

Private Enterprises:

Ronco Pyrethrum Project (no donor support)

Ziwa – Ziwa Horticultural Exporters Ltd. (some USAIDsupport)

Harriet’s Flowers (some ANEPP/USAID support)

As in Kenya, many of the Ugandan projects andassociations have multiple areas of focus (see Table5.1). The consultants’ assessment of their performanceexamined these focus areas separately. Performancewith respect to provision of financial services and moni-toring and evaluation were assessed where appropriate.

Summary assessments of each of the eleven casestudies appear in the following section and form thebasis for the conclusions presented in section 5.6. Cross-cutting lessons learned from the eleven case studies, andimplications for USAID agribusiness project planningand implementation, are summarized under each of thefive areas of focus (i.e., NTAE Promotion, AssociationDevelopment, SME Development, Financial Services,and Monitoring and Evaluation).

5.2 FINDINGS ON PROJECT

Summarized findings with respect to three projects— ANEPP, CAAS, and Silk Sector DevelopmentProjects — appear in the following sections. Detailedassessments of these projects, matrixed according tothe key questions, are presented in Appendix A.

5.2.1 Agricultural Non-Traditional ExportPromotion Project (ANEPP)

Sponsor: USAID

Project Value: $13.5 million in NPA in 1992 + $10million of Title III–locally generated currency

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Start Date: 1992

Completion Date: October 1994

Principal Objectives:

Association Development: Originally, TA wasintended to identify and then work with an associa-tion, but this was modified due to the immature na-ture of existing associations. The follow-up projectinitiated in 1995 (IDEA) will further pursue associa-tion development.

NTAE Development: Increase export earnings andemployment, identify new export opportunities, pro-vide TA to exporters, and provide market informa-tion.

Discussion: ANEPP is an example of a projectaimed at expansion of NTAEs through assistance tomedium-to large-scale firms that are just starting to

export. Like KEDS in Kenya, ANEPP has not assistedsmall firms; but unlike KEDS, which is dealing withestablished exporters, ANEPP’s most recent phase4

has attempted to assist Ugandan firms in breakinginto new export markets, such as cut flowers toEurope. One of the challenges in Uganda is to estab-lish a critical mass of reputable exporters in order toovercome Uganda’s bad reputation in European hor-ticultural markets, which was established during thefirst few years of attempts by inexperienced firms toexport products that were often of substandard qual-ity and unreliable delivery. USAID/ANEPP’s Opera-tional Constraints Analysis Project (OCAP), under-taken in conjunction with the ANEPP-supportedExport Analysis and Development Unit (EPADU)and VOCA (Volunteers in Cooperative Assistance),is innovative in the sense that it not only assessesindividual firm’s operational constraints for NTAEs,

Table 5.1 Uganda Supported Activities and Their Areas of Focus

Association/Project(Donor)

ANEPP (USAID)

CAAS (USAID)

Oilseed Processors Association(USAID)

National Farmers Associaton(DANIDA)

Yanilla Growers and PocessorsAssociation (USAID)

Uganda ManufacturersAssociation USAID)

Silk Sector Development Project

DFCU (IFC/ODA/EG)

APDF Uganda (IFC/USAID)

Ziwa (some USAID)

Non-TraditionalExport Promotion

Yes

Yes

No

No

Yes

No

Yes

Yes

Yes

Yes

Yes

AssociationDevelopment

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

No

No

Yes

Small & MediumSize EnterpriseDevelopment

No

Some

Yes

No

No

Some

No

No

Some

No

Yes

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but also follows through with assistance to specificfirms to help them to overcome these constraints.OCAP was successful in helping Ugandan exportersbreak into new export markets (e.g., crocodile skinsand vanilla), increase post-harvest value-added ac-tivities (e.g., silk processing), and establish severalnew successful horticultural exporters to Europe (e.g.,cut flowers). In the process of providing direct assis-tance to exporters, EPADU project managers gainedan improved understanding of the most critical con-straints facing agribusinesses in Uganda. This en-abled a more in-depth understanding of the specificpolicy modifications needed and allows EPADU staffto be more forceful and credible advocates of policyenhancement. It also gave USAID a better focus forthe follow-up project to ANEPP: IDEA.

Impact: The value of all horticultural exportsincreased from $410,000 in 1991/92 to $3.25 millionin 1993/94, and may reach $8.4 million in 1995.Large firms are doing well. With ANEPP help, theyhave overcome many production and marketing con-straints over the past two years and have identifiednew opportunities. Import substitution of packagingmaterials and airport cold store assistance were sig-nificant project-stimulated benefits, as was assistancein crop variety adaptation work. ANEPP identifiedhigh-potential NTAE areas — flowers, spices, as-paragus, and leather leaf, plus regional markets formaize and beans — and assisted with crop trials aswell as helped overcome marketing constraints facedby exporters of these crops. As to policies, EPADUpersonnel provided valuable help in improving theenabling environment.

Conclusions: Subsector market opportunity stud-ies were important for focusing project resources onhigh-potential areas. Projects dealing with agricul-tural exports need a high degree of flexibility to beable to respond quickly to changing market condi-tions. It proved to be better to focus assistance on alimited number of the larger exporting firms. Toachieve an acceptable return on project resources,however, significant capital and management exper-tise needed to be in place in these firms. Intensivedirect TA to small and micro enterprises is not a gooduse of resources due to the inefficiency of direct

support to these enterprises. Also, their dropout rateis very high and the increase in exports that can beachieved in the short to intermediate term is less thancan be achieved for support to medium-sized experi-enced exporters. Better project reporting is needed,especially that which links specific activities to dataon increased NTAE exports. OCA activities need tobe ongoing and annually updated. NTAE technicalassistance is heavily dependent upon the skills andcapabilities of the expatriate consultant(s). Direct OCAexperience is very useful to help policy analysts un-derstand in-depth the needed policy enhancement.

Associations cannot be imposed on groups ofexporters, demand for the creation of an associationmust come from the exporters themselves. Other-wise, they will neither participate in nor support theassociation. Embryonic subsectors will not supportviable associations because there are too few poten-tial members, they do not understand their supportneeds well enough, and they are not deriving suffi-cient sales and earnings from the business to finan-cially support an association.

5.2.2 Cooperative Agriculture andAgribusiness Support Project (CAAS)

Sponsor: USAID

Project Value: $10 million

Start Date: 1991

Completion Date: October 1994

Principal Objectives:

Association Development: Provide support to theoilseed processors association (UOSPA) to increasedomestic production and reduce imports. Create adepartment within UCA (Uganda Cooperative Asso-ciation) to export coffee on behalf of coffee coopera-tives.

Non-Traditional Agriculture Export Develop-ment: Revitalize the edible oil industry, work withnewly industrialized coffee cooperatives now licensedto directly export coffee.

Discussion: The most recent phase of CAASrefocused efforts on providing direct assistance tospecific agribusinesses for the production and export

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of specific commodities. Assistance was provided toa limited number of district unions and primary soci-eties that were believed to have the potential to im-prove coffee marketing, increase the production ofedible oil for domestic consumption, and increaseNTAEs. Unfortunately, due to inherent weaknessesin most cooperatives in Uganda, CAAS has not beensuccessful in creating viable cooperative institutions,nor in establishing the appropriate role of coopera-tives as agribusinesses or as providers of services tofarmers. The original project assumption was thatlow crop production was due to low use of inputs, sothe project focused on improving input delivery tofarmers. It turned out that the problem was not inputavailability, but that returns to the farmer from theuse of inputs were too low to justify their cost. (SeeErickson and Poulin, February 1994.)

Impact: After redesign in 1991, CAAS increasedthe capacity of selected cooperatives to produce andprocess sunflowers, and helped make other coopera-tives more knowledgeable about producing and mar-keting NTAEs. However, only 5 percent of coopera-tive members were affected by the project.

Export diversification work was started success-fully with the first exports of snow peas. About 4,000tons of edible oil were produced in 1994 with the helpof matching grants given to 296 societies. The coffeemarketing board was privatized, and private sectordialogue with the government has increased. A mar-ket price information system installed by the projectseems to be well received by members.

Conclusions: Before undertaking a project toprovide support to and through an entity, assess themid-to long-term viability of that entity, in this casethe cooperatives. When members of associationsmatched donors’ grants with their own funds, thelikelihood of project success increased significantly.Good management is essential to cooperative or asso-ciation success, especially as related to its ability toadjust to changing conditions. Where cooperativesare weak, associations that group producers and pro-cessors are a viable alternative.

5.2.3 Silk Sector Development Project

Sponsor: European Union (EU)

Project Value: ECU 2.2 million (US$2.95 million)

Start Date: January 1994

Completion Date: 1996/1997

Principal Objectives: Strengthen the UgandaSilk Producers Association (USPA), an integratedproducer–processor organization. Create a project di-rectorate that the association will take over at the endof two years. Bring about a sustainable increase insilk exports and smallholder incomes through a credit/extension services package. Change USPA from anexporter-led association to a more producer-oriented,or at least balanced, organization. Make the associa-tion self-supporting in three years.

Discussion: The Silk Sector Development Projectis supported by the European Union, but the sectorhas also received assistance from USAID throughEPADU for the creation of a Silk Producers Associa-tion. This is an example of NTAE development andassistance to small farmers, because the silk is pro-duced by many small outgrowers. It is also an inter-esting example of an integrated association; that is,an association with members that include both pro-ducers and exporters. A Japanese silk company sup-plies the silk worm eggs and buys the dried silkcocoons.

There is good potential for increased value-addedat the farm level (e.g., outgrowers will be dryingcocoons themselves in the silk development centersbeing constructed) because the EU plans to workwith NGOs and women’s groups to do cocoon un-winding and silk weaving. Producers should benefitmore from the new association than they did fromoriginal exporter-led association. The USPA couldbecome the driving force in the industry, providingsignificant inputs and financing to growers, but theremay be friction between processor/exporter membersand grower members. There is no clear plan to makethe association self-financing, and the two-yearphaseover of significant services from external (EU)to association management seems overly optimistic.

Impact: Membership originally consisted of twoexporters so the project insisted on opening member-ship to producers. There are now 400 farmer mem-bers and one or two new exporter members.

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Conclusions: Association management must bestrong and must remain focused on a limited numberof objectives. There must be a clear plan on how tomake the association self-supporting. MSE participa-tion in NTAEs can be successful where the industryis highly labor intensive and not capital intensive andthere is a specialized, niche market for the product.This is true of silk production. An integrated pro-duce–exporter association may be the answer to work-ing with a product as complex as silk production andexport. The industry also lends itself well to intensivehands-on TA. Developing new export businesses ismuch easier with the significant technical and mar-keting assistance of an international firm.

5.3 FINDINGS ON ASSOCIATIONS

Following are the key findings on the associationsreviewed in Uganda.

5.3.1 Uganda Oilseed Processors Association(UOSPA)

Sponsor: USAID

Project Value: $115,000 for first two years (grantthrough CAAS project)

Start Date: Association registered April 1994

Objectives: Ensure availability of high-qualityplanting material via seed multiplication programs;secure working capital credit for members to pur-chase raw material (oil seeds); offer extension adviceto oilseed growers; provide members with oilseedmilling technical training; assist members to find spareparts; and market their output.

Discussion: The Oilseed Processors Associationis made up of SME oilseed processors. They arepredominantly marginally viable crushers who arecaught between a limited supply of raw material anda market heavily influenced by donor sales/donations,large competitor conversion of non–food grade oil tofood grade, and the major (the largest crusher pro-duces 70 percent of output) crusher. These entrepre-neurs have limited mill management experience. Theyare receiving some TA from CAAS/VOCA experts

and the association is trying to arrange for workingcapital financing for its members. Adequate rawmaterial supply and spare parts are two other majorproblems for these businesses.

Given the importance of vegetable oil importsubstitution (to offset the foreign exchange drain itcauses) and the number of farmers that would beaffected by a viable domestic oilseed production andcrushing industry, a greater focus on the industryseems called for. However, are SME crushers the best(all factors considered) leverage point? Is it likelythat domestically produced vegetable oil will everbecome competitive with world market prices usingoilseeds grown by small farmers and crushed by SMEprocessors, except in the highest transport cost loca-tions? Where will the capital come from for economyof scale crude production and refining facilities?

This new association, with members from allregions of the country, has the potential to increase itsmembers oilseed production. If the association is suc-cessful in helping members address and overcometheir operational constraints, there should be a con-siderable increase in vegetable oil production. Theassociation may be able to arrange access to workingcapital for members, but there is little funding for TAto mill operators, most of whom are small. Plans formultiplication of improved oil seeds are sketchy. Whilesupport of UOSPA may benefit a few of the moreviable medium-sized crushers, it seems unlikely thatit will have a significant impact on offsetting veg-etable oil imports and will have considerable diffi-culty becoming self-sustaining.

Impact: Too early to assess.

Conclusions: The best hope for these SMEs tosurvive is a strong association. However, very strongand effective management and years of donor supportwill likely be required for the most viable of thecrushers to become successful. Some of the crushersshould investigate and develop specialty markets toshield themselves from commodity imports. Others,with the association’s help, should consider formingconsortia and consolidate their operations into thebest facility, use others’ equipment for spare parts,and focus on sourcing raw material and marketing.

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With their consolidated volume, they could afford tohire qualified technical, financial, and managerialpersonnel.

5.3.2 Uganda National Farmers Association(UNFA)

Sponsor: DANIDA

Project Value: $4 million for first 5 years

Start Date: September 1993

Completion Date: 1998

Objectives: To raise the living standards of Ugan-dan farmers through enhanced “voice,” and the pro-vision of financial and technical assistance. To be-come the premier agricultural organization in Uganda.

Discussion: The Uganda National Farmers As-sociation is an example of an extremely broad-basedassociation with an ambitious agenda. It is attemptingto replace the government extension service with aprivate countrywide extension service, financed bydonors initially, but eventually by the members them-selves. However, there is some question as to whetherthe underlying objective of the UNFA leadership ispolitical or developmental.

UNFA is structured as a “bottom-up,” farmer-driven organization based on subassociations. It nowmanages extension services in 15 of the 39 districtsof Uganda. Each district will identify two or threehigh-value crops to focus on. Market prices from 39districts and information on recommended suppliersare two important services.

Impact: Too early to assess.

Lessons Learned: The UNFA suffers from alack of focus and overambitious objectives. It is notclear how the association will generate sufficientrevenues to become self-sustaining. The founders arevery politically motivated and in fact the regionalassociation coordinator will work under a regionalgovernment appointee. A key issue is whether thegovernment extension service will allow itself to betaken over by the UNFA.

5.3.3 Uganda Vanilla Growers and ProcessorsAssociation (UVGPA)

Sponsor: Some support from USAID and APDF

Project Value: USAID contributed $36,000 in ex-tension services over last 3 years

Start Date: Association in the process of beingformed

Principal Objectives: To increase productionand export of vanilla.

Discussion: This association is in the process ofbeing formed; until recently it existed in the form ofone vanilla producers group (around 2,000 members)and one vanilla producers cooperative (2,000 mem-bers) working with two vanilla exporters. The asso-ciation will have a strong voice on policy mattersinfluencing the vanilla industry and make it easier fordonors and government to assist the industry throughone association. However, it must become member-driven, most likely more by the exporters (who wantcontinued donor funding) than by the growers. Va-nilla production technology and marketing is providedby McCormick.

Impact: Too early to assess.

Conclusions: The strong role of exporters willmake it easier to ensure Uganda’s reputation forreliable, high-quality vanilla, and the association ismore likely to become self-sustaining (and be able topay for field technical staff). However, exporters’objectives will at times conflict with farmers’ objec-tives, and the integrated structure may weaken farm-ers’ bargaining strength vis-à-vis exporters. In fact,the percentage of export value received by the farm-ers appears low at this time. Success of the associa-tion will require hands-on support and balanced man-agement by the main entrepreneur (Mr. Sekalala ofUVAN), who has been the driving force in industryand association producer and exporter interest devel-opment. New local NTAE industries require the strongsupport of an international firm.

5.3.4 Uganda Manufacturers Association

Sponsor: USAID

Project Value: $250,000 in 1995

Objectives: Build Ugandan industry. Increase hu-man resources capacity regarding business. Promote,protect, and coordinate the interests of industrialists; actas a watchdog and mouthpiece for members; initiate and

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facilitate discussions and exchange information amongmembers on issues of concern; advise government onkey policies affecting the industry.

Discussion: This 400-member organization wasformed in 1966, but did not become seriously activeuntil 1988. Agribusiness firms are an important partof its membership, though the organization repre-sents many types of industries. There are two distin-guishing characteristics of UMA: strong leadershipand a highly professional consulting unit. The mem-bership represents the “cream” of Ugandan manufac-turers, and thus it can identify, attract, and compen-sate top management/leadership and consultants.Association leadership has an interest in SMEs be-cause they believe SME success is crucial to thedevelopment of the Uganda business environment.USAID has worked with the UMA by funding theconsulting unit and its work on SME projects.

Impact: The USAID-supported consulting andSME activities are quite recent but appear to be off toa solid start.

Conclusions: UMA is likely to play a strongleadership role in developing Uganda agribusiness,but will need incentives to maintain an SME focus forpart of their efforts. It can be very effective for stimu-lating policy change and stabilizing improvementsthat have already been made, given its political ac-cess and influence. This is an important role becausesome public sector institutions remain skeptical of anemerging private sector. UMA needs funding to trainstaff and members. Its consultancy and SME devel-opment activities are still heavily financed by USAID.

5.3.5 Uganda Grain Exporters Association

Discussion: Association membership is reservedfor exporters shipping at least $500,000 of grainannually. Initially there were 24 members, but thereare fewer now due to the non-viability of the grainexport business, which was caused by fluctuatingexchange rates (especially an appreciating UgandaShilling), deteriorating seed (and therefore product)quality, and high working capital costs. It seemslikely that the UGEA will continue to flounder until thegrain export business becomes more viable, primarilyvia the use of improved seed/cultural practices and

consistent adherence to an agreement between Kenyaand Uganda regarding grain trade.

Impact: The association is currently inactive soits impact is minimal.

Conclusions: The regional grain export businessis heavily influenced by politics and government of-ficials’ personal benefit–based decisions. As a result,predictability of grain prices and access to the Kenyaexport market are very difficult. The grain exportbusiness needs more support on seed quality im-provement and extension services in order to increasethe quality and productivity of grain output. The“voice” of the UGEA would be enhanced by a broadermembership, but this should not dilute the interestand impact of the larger exporters. One way to achievethis would be to form an exporters and growerssubassociation in a geographic area that has highproduction potential. This would function as a dem-onstration/model of how producers, agricultural R&D,the extension service, and exporters could cooperateon an export market–focused project.

5.3.6 Uganda Horticultural Association

Discussion: The association, which has 80 mem-bers, of which only 20 are exporting, has undergoneseveral changes in recent years. For example, flowerexporting members left the association because theyfelt that their specialized needs were not taken intoaccount; also there was “jockeying” for power at themanagement level. Currently, the membership con-sists of fruit, vegetable, and spice exporting compa-nies. The leadership of the association is now work-ing on forming a larger association with horticultural,flower, and grain companies organized into threedivisions. Members are generally in favor of thisbecause a larger organization can financially supportan adequate secretariat. Most members’ problems arein marketing, not in production.

The concept of an NTAE association that in-cludes the horticultural, grain, and floriculture asso-ciations with divisions or subassociations focused onspecific subsectors would seem to resolve the “num-bers for voice versus focus for services” dilemma.The question of vertical integration (producers, pro-cessors, and exporters) versus horizontal member-

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ship has not been addressed. Bringing together thehorticultural and grain exporters may not be that dif-ficult because they are both struggling, but they dohave very different markets and service needs. Flori-culture is very bimodal; that is, there are 2–3 largeintegrated exporters and many very small growers.Their very different needs (often based on flowertype and target market) make it difficult for them tojoin with others.

Impact: Minimal because it is currently undergo-ing organization/reorganization

Conclusions: The leadership of the UHA believesthat an NTAE association can be successful if it focuseson common membership needs and avoids politicalconsiderations (i.e., power struggles at the managementlevel). Very strong leadership would be required forsuch an NTAE association to be successful.

5.4 FINDINGS ON DEVELOPMENTFINANCING AND TECHNICALASSISTANCE ORGANIZATIONS

The following profiles development finance and tech-nical assistance organizations in Uganda.

5.4.1 Development Finance Corporation ofUganda (DFCU)

Sponsor: Shares are held by Uganda Develop-ment Corp. (UDC), Commonwealth DevelopmentCorp. (CDC), German Development Corporation(DEG), and International Finance Corporation (IFC);each holds 25 percent.

Start Date: Established 1964, refinanced at $2.5million, and rehabilitated in 1990.

Objective: Offer both debt and equity to clientcompanies in Uganda.

Discussion: DFCU views itself as a key player inthe current development boom in Uganda’s privatesector because it combines innovative financing andefficient loan processing. It seeks serious entrepre-neurs with well-prepared business plans and can pro-vide fast service to companies with experienced man-agement and a clear focus. DFCU offers a mix of

financial and technical expertise to client companies.Its technical department has qualified and experi-enced industrial/mechanical engineers and agricul-turists who carry out in-depth technical appraisalsand offer free technical advice, primarily during theapplication for and utilization of new financing orstartup.

DFCU offers equity financing and long-term loansof between $100,000 and $1.5 million in either for-eign or local currency at competitive interest rates(cost +2 points and fee); larger projects can be co-financed by their international shareholders. DFCU’sportfolio is 50 percent agribusiness-related, but agri-business loans are difficult to make. This is becausethe potential borrowers are geographically widespread,it is difficult to set a value on rural land, and it isdifficult to use land as collateral due to land tenureconcerns.

Impact: DFCU’s 25 loans and 15 equity invest-ments include a vanilla processing plant and a horti-cultural concern that exports roses to Europe. DFCUappears to be quite successful and is providing asignificant volume of badly needed debt and equity tolarger private sector firms.

Conclusions: The shortage of viable projects tofinance and poor investment project “packaging” arethe main constraints to expanded business facingDFCU. One method used to minimize defaults is tomake direct payment from loan proceeds to majorequipment suppliers. Due to heavy up-front startupcosts — project analysis and technical assistance —DFCU can only support a reasonably large-sizedproject ($300,000+). Establishing borrower integrity(source of wealth) has proved to be a major issuebecause many potential borrowers have had closeconnections with previous governments.

5.4.2 Africa Project Development Facility(APDF Uganda)

Sponsor: APDF is supported by the InternationalFinance Corporation, but several other agencies in-cluding USAID have provided funding.

Objectives: APDF funds are often used to imple-ment feasibility studies and packages and to solicitfinancing for large ($500,000+) projects, some of

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which are in the agribusiness sector. In Uganda,USAID has encouraged and supported APDF to servesmaller projects in NTAE development.

Discussion: The Operational Constraints Analy-sis Program (OCAP) under ANEPP was financed bya USAID grant after USAID/APDF identified a needfor soft funding to cover the startup costs of snow peaand chili export businesses in Uganda. The snow peaproject does not seem to be supported by a strongcommercial entity, SME or otherwise. Success forthe Mantovu chili project has yet to be determined.

The APDF normally requires a $250,000 minimumsize project because for projects below that level assess-ment costs and the cost of arranging financing are toohigh relative to project size. However, with USAID’sencouragement and financial support in Uganda, APDFhas focused on projects needing at least $100,000 innew investment. APDF’s normal lack of interest in theSME level for NTAE is not surprising given the cost ofAPDF-type assistance for smaller projects and the seri-ous difficulties SMEs face when approaching the exportmarket by themselves.

Impact (potential): Can local consultants be de-veloped and supervised so that they can perform high-quality assessments and help arrange financing forsmaller projects. Most APDF work is currently done byexpensive expatriates. Can funds be pre-committed forprojects that meet established criteria so that work on anew project can be focused on the extent to which itmeets these criteria, thereby making the feasibility andfinancing process more efficient?

USAID support for APDF to work on smallerprojects seems to have succeeded.

Conclusions: Extensive use of expatriate profes-sionals provides a degree of comfort to investors andfinanciers, but it also makes the minimum cost ofproject assessment and financing arrangement quitehigh; therefore only large projects can afford thisexpenditure. It seems that the assessment and packag-ing of smaller projects needs to be subsidized or tohave locals developed to the point where investorsand financiers are comfortable with their work.

This positive experience suggests that a regionalpool of funds available to APDF to selectively develop

smaller projects in sectors of particular interest toUSAID would be very useful in Sub-Saharan Africa.

5.4.3 Volunteers in Overseas CooperativeAssistance (VOCA)

Sponsor: VOCA is a Washington, D.C.–basedvolunteer program.

Objectives: Provide TA to cooperatives andsmall businesses worldwide.

Discussion: Under the VOCA program inUganda, volunteers come from U.S. agribusinessesfor periods of four to six weeks. Assistance, whichmust be requested by the client firm, is coordinatedby the USAID ADO.

USAID has provided VOCA with funding forSME development, and the VOCA program in Ugandais focused on assisting NTAE. Volunteers workedwith the Mantovu chili project — a VOCA volunteerprovided assistance to the chili producers and anotherhelped with drying, grading, and packaging. VOCAalso worked with APDF on financing the chili pro-cessing enterprise.

Impact: Appears positive, but it is difficult todetermine comparative contributions because ANEPP,CAAS, and VOCA were all involved in the chiliproject, and the sustainability of the business is yet tobe determined.

Conclusions: VOCA has noted that land tenuredifficulties make “owners” hesitant to develop sig-nificant investments in property with an uncertaintitle. Post-visit reports from volunteers are a veryimportant learning tool, but are not always forthcom-ing.

5.5 FINDINGS ON PRIVATEAGRIBUSINESS ENTERPRISES

5.5.1 Agro Management Group Inc.

Description: Agro Management Group Inc.(Agro), a California corporation owned by the prin-cipals of the RONCO consulting firm, was estab-lished to invest in agribusiness in developing coun-tries. Their first investment was in the production,

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processing, and export marketing of pyrethrum inKabali, Uganda.

Discussion: Before embarking on the investment,RONCO made preliminary investigations and pro-duced a feasibility study on production, processing,and marketing of pyrethrum, built around an assuredmarket, and followed a strategy of close collaborationwith its U.S. buyer. The project is demand-driven,and although risky, appears at this time to be a soundfinancial investment.

Agro adopted a vertically integrated approach tothe project that allows it to control the critical ele-ments of the production system. Plant introduction,selection, multiplication, and distribution are financedand managed by Agro. The company created its ownextension service to help some 4,000 contract farmersobtain maximum results, and buys the flowers (fromwhich pyrethrum is extracted) from farmers throughits own purchasing department. This service is inno-vative because it is completely financed by the inves-tor and is the first all-female buying service for amajor export crop in Africa.

The 4,000 contract flower growers had 500 acres(227 hectares) producing flowers by January 1993,20 months after the first feasibility study. Plans are toexpand to 1,000 acres (400 hectares) with a target of8,000 growers as more planting material becomesavailable. The project operates on a principle of sys-tematic, fair, and on-time monthly payment for theproduce delivered. To protect the smallholder farmeragainst inflation and devaluation in Uganda’seconomy, Agro instituted a dollar-linked paymentschedule where prices are adjusted to their dollarequivalent each month.

Agro has reached this stage in the project usingits own resources and $1 million from Ronco withoutrecourse to either public funds or financial capitalmarkets. However, Agro has encountered problemsbecause processing of the raw material into the fin-ished product — pyrethrum — was to be carried outunder contract with a plant in Rwanda, which is nowclosed because of the conflicts in that country. Agrois seeking additional financing of $2.2 million to builda processing plant in Uganda. DFCU and the East

Africa Development Bank are potential sources offunds.

Impact: The project will provide a new sourceof smallholder cash income, generate substantial em-ployment, and provide foreign exchange earnings.Agro had 100 percent equity in the venture prior toseeking additional financing. It is now in its third yearof development and more than $1 million has beeninvested.

Conclusions: The speed of implementation ofthis project (prior to the problems in Rwanda) atteststo the rapid response private sector investors andfarmers can make to a business opportunity. Small-holder farmers must be convinced that an investingcompany is sincere and is dedicated to implementa-tion of its project; they want to see rapid action on asteady basis. High initial investment costs can onlybe recouped with high levels of production, obtainedas early as possible in the investment cycle. Politicaland social instability continues to plague foreign in-vestors in Africa.

5.5.2 Ziwa Horticultural Exporters Ltd.

Description: Ziwa is a privately owned com-pany that produces roses and other exports on a 1,000-hectare plot.

Discussion: Ziwa’s owner, Captain Roy, also ownsthe Dairo Air Freight Company and other farms andranches in Uganda. On its 1,000 hectares, Ziwa has 1hectare of roses grown outdoors and 2 hectares underplastic, plus some production of asparagus outdoors andleather leaf under plastic. The company employs 345people full-time, of which half are women, and another30 people part-time. The facility includes a large coldstorage building and a packing/grading shed, as well asinsulated trucks. The manager is Ugandan; a Dutchtechnical specialist is supplied by its Netherlands-basedagent. About 6 million stems were exported by air in1994, partly on Sabena and partly on Captain Roy’s aircargo service. Development costs for “indoor” flowersare about $500,000 per acre.

Ziwa received a grant from USAID/APDF for anexpert to resolve asparagus production problems, whichhave delayed startup of this operation by two years.

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Impact: While there have been no formal studiesof the impact of the enterprise on the surroundingarea, there are reports of substantial positive devel-opment “indicators,” such as new and remodeledhousing, increased use of the local private clinic,increased school attendance, and the appearance ofroadside kiosks. This project is definitely not SMEdevelopment, but the impact on employment andforeign exchange generation has been very substan-tial.

Conclusions: USAID assistance to help resolveZiwa’s asparagus problems came at a critical time inthe development of the company and played a signifi-cant role in helping it through a difficult early stageof development. Selective, high-impact assistance ofthis type seems to represent a very high return toUSAID resources.

5.5.3 Harriet’s Flowers

Description: A female entrepreneur, Harriet Ssali,owns and operates a flower producing and marketingcompany.

Discussion: Mrs. Ssali started growing flowersoutdoors in the late 1980s and sold them in her ownshop. She then imported seeds and bulbs and gavesome to other very small-scale women growers, whomshe also assisted with growing techniques. She usedher own vehicle to collect the flowers and sold themat wholesale and retail in her shop along with foodand beverages. The market for flowers has grownrapidly recently due to increasing income levels andthe developing custom of taking flowers when visit-ing or participating in a celebration. She has talkedwith an agent in Europe about purchasing her flowersbut she has insufficient supply to meet his needs. Arelated problem is that her outgrowers lack funding toexpand production. One year her seeds and bulbswere stolen and she nearly went bankrupt.

Mrs. Ssali developed a $1 million investment pro-posal for outdoor flower growing but lenders found thatshe had insufficient collateral to cover the loan. TheExport Policy Analysis and Development Unit (EPADU)of ANEPP helped develop a proposal for a $240,000financing package, with a business plan, for which Mrs.Ssali is currently trying to find support.

Impact: The benefit of EPADU/ANEPP’s in-volvement has yet to be determined because, at thetime of this study Mrs. Ssali had not been able toobtain financing for her expansion. EPADU/ANEPP’sassistance would have had a much greater impact ifthey had also been able to help her find the neededfinancing as well as help her with the business plan(i.e., function more like APDF for smaller projects).

Conclusions: Moving from micro, local scaleproduction to export quantities requires significantcapital and much supply continuity work. It is notunusual for there to be a stage where a seller has morethan the local market can absorb but too little tointerest an importer. Micros operate with a very small“cushion” and modest setbacks can jeopardize theirentire business. Micro entrepreneurs often need acash flow from other businesses/sources (e.g., from aprepared food and liquor retail outlet for Mrs. Ssali)to finance the development of their best prospects. Alocal marketg and to get a return on less than exportquality production.

5.6 LESSONS LEARNED ANDIMPLICATIONS FOR USAIDPLANNING

The following is organized by key Area of Focus.

5.6.1 Non-Traditional Agricultural ExportDevelopment

Lessons Learned

n Assistance to firms with reasonable (e.g., at least30 percent) equity to invest, export experience,and reasonable human resources will provide themost immediate and measurable yield on projectresources and the greatest impact on exports.The highest yield on project resources will comefrom focusing on a few high-potential firms.(ANEPP)

n An exporter must have a reasonably well-estab-lished market and an adequate knowledge of howto serve it in order to achieve NTAE success.(ANEPP/CAAS)

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n Conditions for successful smallholder participa-tion in an NTAE business exist when they in-volve: (a) niche markets where producers havevery few alternative buyers for their output, (b)low capital but high labor intensity, (c) a fullservice (i.e., provides research results and exten-sion) local exporter to support the business, and(d) a well-established international market withestablished buyers (e.g., McCormick and the Japa-nese silk firm). (Vanilla and Silk Associations)

n An integrated producer/processor association maybe the best approach to cooperatively develop anNTAE industry that utilizes small producers. (Va-nilla and Silk Associations)

n MSEs can rarely compete in NTAE unless they aregrouped together in an effective way. (ANEPP)

n Anecdotal evidence indicates very substantial sec-ondary benefits from support of larger projects.(Ziwa)

n The right TA well provided is greatly appreciatedby qualified entrepreneurs. There are very fewlocal technical and export marketing resourcesavailable in Uganda to potential investors.(ANEPP/APDF)

n Use the less exotic, easier to produce crops forregional sales so SMEs have an opportunity toparticipate with less risk. (ANEPP) The input/output and risk factors for greenfield (startup)development require the generation of a reason-ably quick positive cash flow. (Agro/Ronco)

n Good TA is not likely to have a positive effect onpoorly managed entities. (CAAS)

n Exports, not imports, should be the source ofexport promotion funding. A fairly administeredindustry development cess on exports is accept-able to participants. (ANEPP/Silk Association)

Implications

n A comprehensive subsector opportunity analysisis a very logical and important starting point fora new project. (ANEPP)

n A detailed OCA is needed very early in projects(in some cases in the design phase) and must beupdated annually. (CAAS/ANEPP)

n An active advisory board that includes severalprivate sector representatives is needed for allagribusiness projects. Private sector input shouldbe solicited early in the project design process.(CAAS/ANEPP)

n Project team real-world experience (as in EPADU)is very useful for prioritizing and pursuing policyreform. (EPADU)

n Assistance should be focused on commoditieswith a well-established potential market and areasonable understanding by the private sector ofhow to achieve success therein. (ANEPP/CAAS)

n Program flexibility and quick reaction time areboth essential for assistance to embryonicsubsectors. (CAAS/ANEPP)

n Projects should try to achieve a balance betweenhigh-value and low-value commodities (e.g., hor-ticulture and beans) to mitigate risk and maxi-mize export earnings impact. (CAAS/ANEPP)

5.6.2 Association Development

Lessons Learned

n Criteria for success of an association include: (a)strong leadership with a longer term commit-ment, (b) leadership that is trusted by members,donors, and government, (c) minimal govern-ment influence, and (d) a clear and relativelynarrow focus. (CAAS/ANEPP)

n Associations integrating both producers and ex-porting firms that sell to specialized non-traditionalmarkets are most effective when the exporters arefew in number. Exporters can work with a rela-tively large number of outgrowers, but the interna-tional buyer wants to deal with a very limited num-ber of exporters to enable a cost-effective workingrelationship. (Vanilla and Silk Associations)

n Integrated associations provide donors the op-portunity to successfully support non-traditionalexport development while reaching small-scalefarmers reasonably efficiently. (Vanilla and SilkAssociations)

n The vertically integrated association model is diffi-cult to extend to other capital, timing, and specifi-

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cation-intensive NTAEs such as cut flowers, wherethe trend is to move away from reliance onoutgrowers, who are difficult to manage. (ZIWA)

n All association development projects need a for-mal determination of (a) the conditions that mustexist for association success (b) what programsare needed to stimulate that success, and (c) whatit will cost to develop and implement those pro-grams. (CAAS)

n Matching grants for institutional development areeffective because they stimulate member involve-ment and commitment. (CAAS)

n Association management training, especially fi-nancial management, is a high-yield donor con-tribution. (CAAS)

n “Voice” usually requires large numbers, but ef-fective services require a relatively narrow focus.An umbrella (multi-subsector) association canacquire the numbers needed for “voice.” (ANEPP)

n In associations with both large and small mem-bers, “big tend to pay while small tend to use.”(ANEPP) Associations are not likely to developuntil an industry gets beyond the embryonic stage,that is, association development will follow, notprecede, industry development. It is difficult toimpose an association on exporters, the demandfor an association must come from them. (CAAS/ANEPP)

n Associations and cooperatives have not succeededas investors due to indecisive management.(ANEPP)

n Work with troubled institutions, such as Ugan-dan cooperatives, must be highly focused andlimited to those with potentially good managers.Improving incompetent management is very dif-ficult, if not impossible. (CAAS)

n Government involvement with cooperatives (andprobably associations) makes self-financing muchmore difficult. (UNFA)

n Social cooperation problems and conflict oftenmake association formation and success difficultand tenuous. (EPADU)

n It is preferable to establish a new associationrather than try to fix an ineffective one. (ANEPP)

n Large membership associations are often devel-oped as — or become — political pawns. (UNFA)

Implications

n A serious assessment of an association’s (new orexisting) sustainability must be made prior toproviding support; guidelines for doing this areneeded. (CAAS/ANEPP)

n Because association management development isa high-yield donor contribution when done well,it should be an important component of all USAIDassociation assistance projects. (CAAS)

n Providing matching grants to associations willhelp build membership and the credibility of theassociation in the eyes of existing members; grantsshould be for association projects, not for indi-vidual members’ projects. (CAAS)

5.6.3 Small and Medium EnterpriseDevelopment

Lessons Learned

n Lack of equity and export experience are the twomost significant constraints to SME participationin NTAEs. (ANEPP)

n Small, marginal processors should not be sup-ported until a serious study of their economicviability is completed. (UOSPA)

n Criteria for SME success in NTAEs seem to be:existence of a niche market or one with fewalternative outlets, low capital/high labor inten-sity, full service local marketer, and a well-estab-lished market. (All)

n MSE development and NTAE development projectobjectives and implementation methodology arelikely to be quite different. (ANEPP)

n SMEs have a very low tolerance for errors or badluck, given their marginal capitalization. (HarrietSsali)

n SMEs will develop very slowly if they mustdepend solely on their own resources. (HarrietSsali)

38

Implications

n Effective intermediaries such as associations,NGOs/PVOs, or an FADC are needed for effi-cient support to MSEs. (All)

n Better guidelines are needed to determine theviability/sustainability of firms being consideredfor project/activity assistance. (ANEPP)

n A reasonably detailed input/output analysis mustbe applied to MSE development activities.(CAAS)

n Consider a special/parallel program for MSEsstaffed with locals. (ANEPP)

n An “Implications for the Development of Indig-enous SMEs” should be a required part of nearlyevery USAID final report (similar to WID). (All)

5.6.4 Financial Services

Notes on Financial Services: Of the projects andassociations reviewed, DFCU and APDF are primarilyfinancial services providers. DFCU is focused on pro-viding both equity and debt to investments, some ofwhich are in agribusiness. APDF’s normal activities areto do feasibility studies and to package and solicitadditional financing for large ($500,000+) projects, someof which happen to be in agribusiness. In Uganda,USAID has supported APDF to serve projects smallerthan IFC’s norm in NTAE development.

CAAS’s matching grants to district cooperativesare not commercial finance (no payback is expected)but seem to represent one of the most effectivecomponents of the project. The fact that grants mustbe matched by local cooperative members (often in-kind) significantly affects the impact of these grants.

The associations assessed in this report all plan toarrange financing for members, but the Silk Associationis the only one with funds built into its supportingproject. The National Farmers Association and the Oil-seed Processors Association plan to arrange for financ-ing from commercial banks on preferential terms basedon borrowers’ membership in the association.

Lessons Learned

n The main challenges to successful financial ser-vices providers are the integrity of borrowers,

geographic spread of agribusiness projects (par-ticularly where roads are poor), and the difficul-ties of pledging rural land as collateral. (DFCU)

n The shortage of viable borrowers and poor invest-ment “packaging” are the main constraints, not alack of available funding. (DFCU, ANEPP, APDF)

n To minimize defaults on loans, lenders much con-duct rigorous appraisals and the borrower shouldsupply a minimum of 50 percent of the equity in theventure. The lending institution should make directpayment to suppliers for major purchases of equip-ment funded by its loan. (DFCU)

n Investments that receive donor project supportand TA have a much better chance of successthan those that do not. (EPADU)

n A reasonably large project ($300,000+) is neededto justify the cost of a detailed feasibility study.(EPADU/APDF) The lower the value of the in-vestment, the less likely that the cost of the finan-cial services will be recovered. (ANEPP, DFCU)

n Land tenure problems make it difficult to use landas collateral for loans. (VOCA)

Implications

n Given the importance of financing and of TA tolarger private investment projects, both of theseelements must be programmed into any donor-supported project of this type. (EPADU)

n Local analysts can and should be developed to doappraisals on and to prepare proposals for smallerprojects. (EPADU)

n More effective and efficient ways to providefinancing (equity and/or debt) to MSEs or throughassociations need to be developed. (All)

5.6.5 Monitoring and Evaluation

Lessons Learned

n Annual association membership satisfaction sur-veys are needed. (CAAS)

n There is a need to monitor the percentage of theexport price that producers receive from market-ing boards or associations that are assisted bydonors. (CAAS)

39

n There is a need to monitor the frequency ofassistance and the actual contribution made toprojects by private sector advisors. This is neededto ensure that project managers are utilizing pri-vate sector input efficiently as well as to measurethe impact of those inputs. (All)

n Training program results should be monitored atthe end of the program and six months afterprogram completion. (CAAS)

n The analysis of broadly based linkages betweenNTAE growth and rural income improvementsneeds considerable enhancement. (ANEPP/CAAS)

n An association must have a specific plan andtime-frame for reaching financial sustainability,especially regarding sources of funds. (ANEPP)

n Information is needed on the secondary impactof assistance to large firms to assess the fullimpact of these projects. (ANEPP/ZIWA)

n The cost of a major project should be related tothe direct value of its results. (ANEPP)

n Local universities can help establish baseline andcontrol samples that can later be used to measurethe change stimulated by a project. Controlsamples would be useful to determine what por-tion of improvements are due to changes in theenvironment and what portion can be directlyattributed to the project. (CAAS)

Implications

n Every project must produce concise, timely, andinput/output-oriented quarterly reports with a clearfocus on overall and sub-part deliverables. Theseprogress measurement reports must be reviewed/managed by USAID personnel on a timely basis.(ANEPP/CAAS)

n Impact measurements need to be broken down toshow results by the size of firm. (ANEPP)

n Much more input/output analysis is needed; thatis, an analysis of direct benefits versus directcosts. This needs to be done for project compo-nents as well as for the overall project. (CAAS/ANEPP)

n When project assistance is limited to or heavilyfocused on indigenous firms, measure the progressof indigenous firms only. (ANEPP)

n An association must have a specific plan andtime-frame for reaching financial sustainability,especially regarding sources of funds. (ANEPP)

n More random beneficiary sampling should beused rather than the current project management–guided sampling. (CAAS)

n If M&E systems rely on macro measurements(e.g., growth in total exports, sector total employ-ment), why limit assistance to indigenous firms?(ANEPP)

n Quantitative macro performance measurementsshould not be used to monitor the success ofMSE development projects. It is very difficult forthese projects to have any significant direct im-pact on macroeconomic measurements within thetime-frame of a typical USAID project. (ANEPP)Value added attributed to all USAID agribusinessprojects in Uganda must reach $25 million/yearby 2000 to achieve a 10 percent Economic Rateof Return (ERR) on expenditures through 1994,yet the maximum projected fruit and vegetableexports in the year 2000 is only $20 million.Flower and other exports attributable to USAIDprojects would have to be very large to reach thetarget growth rate. (All)

5.6.6 General Recommendations

n Private sector advisors need to be used moreextensively, especially in project design, becausethey have highly relevant experience that can beutilized to improve the efficiency and effective-ness of private sector projects. (All)

n Enterprises need reasonable equity and marketingexpertise before a return can be achieved onproject assistance. (ANEPP)

n As much emphasis should be placed on effectiveand full enforcement of existing policies and regu-lations as on the creation of new ones. (All)

n Real-world project team experience is very im-portant to help prioritize and pursue policy re-form. (EPADU)

40

n A good subsector prioritization model based onmarket potential, comparative advantage, OCA,and availability/interest of human resources isneeded very early in commercial projects. (CAAS/ANEPP)

n Detailed OCA is needed very early in a project(including design) and must be updated annu-ally. (CAAS/ANEPP)

n Because marginally viable institutions will notachieve post-assistance sustainability, project de-signers should perform a detailed assessment ofentity viability before providing support. Guide-lines are needed for making this determination.(CAAS/ANEPP)

n Delivering high-powered TA directly to smallprojects and entities is inefficient. (ANEPP)

n Smooth, logical, and timely project succession isvital to maintain local confidence in USAID ac-tivities. (ANEPP/CAAS)

n Semiannual project review forums (½ day with abroad group of beneficiaries, local governmentofficials, and private sector representatives and½ day with the project team) can be very usefulto help coordinate the project, improve its effec-tiveness, and enhance its local “ownership.” (All)

n All expatriates working on projects should havelocal hire counterparts. (ANEPP)

n There is a strong need for USAID managers towork closely with the management of supportedproject activities, especially as related todeliverables reporting and management. (DFCU)

n Keeping policy improvement “on the burner” isthe only way it will get accomplished. Therefore,all projects must contribute suggestions for high-impact policy enhancement as well as how theseimprovements can be best accomplished.(ANEPP)

n There may need to be some additional clarifica-tion and coordination between the objectives andactivities of the Mission’s agricultural develop-ment and private sector development efforts.Agribusiness is a very important sector in Uganda,

and contributes a great deal to the economy;more important, however, is its potential to leadsignificant economic development. The possibil-ity of agribusiness not getting sufficient empha-sis because it “falls in the crack” between agri-culture and private sector areas of responsibilityshould be avoided.

5.6.7 Issues Deserving Further Study

n Is broad-gauged baseline data really necessary?Isn’t measuring and monitoring progress of as-sisted firms satisfactory to determine the impactof a project or activity? (ANEPP)

n What is the best way to determine if an institution(cooperative, association, service entity) is sal-vageable or if another should be developed in itsplace? (CAAS)

n How can exporter control of integrated associa-tions be avoided? (USPA/UVEA)

n How does a project focus on NTAE but retain theflexibility to apply similar TA to the much largerdomestic and regional markets, especially forfirms that will eventually become exporters.(ANEPP)

n What is the best way to determine if existingcooperatives or new associations should be sup-ported? (CAAS) How effective is most generalmarket information? The big firms say they donot need or use it and the small firms do not knowhow to use it. Do we have effective ways tomeasure the usage of market information versusthe cost of providing it, especially by type ofinformation and type of user? (ANEPP)

n How can timing and usage control problems withPL 480 funds administered by local governmentsbe avoided? (CAAS)

n How can UMA be made financially sustainable,especially its consulting division? (CAAS/ANEPP)

n Can associations be used to improve input supplyand replace outmoded state and/or cooperativechannel(s)? (ANEPP)

41

n Why has there been no formal OCA report fromANEPP since late 1992? (ANEPP)

n The silk and vanilla examples show that NTAEdevelopment and broad-based development (i.e.,reaching out to many small farmers and women)are not mutually exclusive. What is the potentialfor outgrower/contract grower schemes involv-ing small farmers in crops other than vanilla andsilk? (Vanilla and Silk Associations)

n What is the best and most efficient way to mea-sure the full social and economic impact of sup-port to large-scale enterprises (e.g., Ziwa Rosesunder ANEPP)? This needs to be assessed inorder to address criticisms of this type of assis-

tance; that is, giving assistance to the large enti-ties who need it least. (Ziwa/ANEPP)

n Is ERR a useful measurement for projects work-ing in very embryonic environments? (All)

n How do donors best balance a policy reformproject’s need for independence from govern-ment with its need for “access”? (EPADU)

n Did CAAS use EPADU’s subsector studies as aguide for which sectors to support? (CAAS/ANEPP)

n What is the appropriate future role for coopera-tives in Uganda agribusiness or in the provisionof services to agribusinesses? (CAAS)

43

Appendix ADetailed Project Assessments*

A - 1 KEDS

A - 2 KESSFA

A - 3 SEPSO

A - 4 K-MAP

A - 5 ANEPP

A - 6 CAAS

A - 7 Silk Development Project

* Refer to the detailed questions which follow for anexplanation of the titles used under the Output column.

1) What project or activity objectives are relevant tothe areas of focus chosen for study?

2) How are these aspects of the activity innovative?

3) What performance indicators were or are beingused to monitor/measure impact of the activity?

4) How are external influences being managed?

5) How successful have the relevant interventionsbeen?

6) What new agribusiness opportunities have re-sulted from the activity?

7) What monitoring and evaluation mechanisms, sys-tems, and indicators can be suggested?

8) What relevant lessons can be learned from thisactivity? What mechanisms worked and did notwork, and how could the impact be improved/enhanced?

9) What are the relevant implications for USAIDproject design and implementation?

10) What new mechanisms or interventions can besuggested to increase the effectiveness of theseprojects or activities?

11) What are the indicators of project success thatcan be suggested, and what is the best way tomonitor those indicators?

12) What other useful information should be reportedand what are the main unresolved issues?

44

A -

1

Inno

vativ

e P

roje

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umm

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ED

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Out

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:K

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Exp

ort

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elop

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ervi

ces

Spo

nsor

:U

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ID

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rt D

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Mar

198

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Dec

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, 19

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:$15

mill

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1)

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2)

How

is

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3)

Per

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icat

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radi

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gric

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spec

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)

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tode

liver

“m

arke

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nt s

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to

mem

bers

(ser

vice

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at c

ompl

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ther

tha

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plic

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lly.

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tify

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xpor

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; in

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ithin

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M.

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port

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gram

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cuse

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; ta

ilore

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ram

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s in

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esan

ins

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then

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king

she

et f

orac

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uppo

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g K

AM

, F

PE

AK

, &

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.In

clud

es s

uch

indi

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rs a

s nu

mbe

rs o

f pe

rson

nel

trai

ned,

pub

licat

ions

, M

IS s

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offe

red

tom

embe

rs,

trad

e sh

ow a

ttend

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& p

artic

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utre

ach

activ

ities

(e.

g.,

held

tw

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DA

).

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iver

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to

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ms.

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iver

ind

irect

TA

thr

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IE

SC

.In

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se e

mpl

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in t

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firm

s.In

crea

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xpor

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y ta

rget

ed f

irms.

Pla

ce s

peci

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mph

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on

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icul

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oduc

ts d

ue t

o th

eir

loca

l co

nten

t (in

clud

ing

labo

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apac

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o ge

nera

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gnex

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loc

al o

wne

rshi

p.

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icy

refo

rm p

rogr

am h

as h

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com

plis

h m

ajor

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icy

&re

gula

tory

cha

nges

tha

t ha

ve e

nhan

ced

com

petit

iven

ess

ofK

enya

’s N

TA

Es.

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o im

port

ant

has

been

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DS

’ ac

tive

prom

o-tio

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logu

e be

twee

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e go

vern

men

t &

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ate

sect

or.

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ing

first

tw

o ye

ars,

dev

elop

ed s

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egic

con

sulta

ncy,

an

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rtas

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men

t ca

rrie

d ou

t by

KE

DS

& a

n ex

port

er’s

man

agem

ent

team

res

ulte

d in

ide

ntifi

catio

n of

the

firm

’s n

ext

stra

tegi

c ex

port

mar

ketin

g m

ove.

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vide

s a

“rea

l-wor

ld”

chec

k be

fore

fun

ding

.

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vera

ge a

nnua

l gr

owth

in

NT

AE

.D

irect

firm

-leve

l as

sist

ance

to

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4 fir

ms

as o

f N

ov.

1994

(to

tal

valu

e: $

240,

000)

; to

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t. ex

port

firm

s as

sist

ed 1

4 ou

t of

28.

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ease

in

fore

ign

exch

ange

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ning

s fr

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ring,

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ture

& o

ther

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’s o

f 25

% f

rom

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3 (%

incr

ease

in

sale

s/ea

rnin

gs f

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s to

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xtye

ar).

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NT

AE

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from

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incr

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in

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s to

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ear)

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bjec

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of

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bs &

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real

istic

.

45

Non

-Tra

ditio

nal

Agr

icul

tura

l E

xpor

t D

evel

opm

ent

(esp

ecia

lly h

ortic

ultu

re)

Out

put

Are

a of

Foc

us

Ass

ocia

tion

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elop

men

t,S

tren

gthe

ning

, S

uste

nanc

e

Priv

ate

assn

s. n

ow c

oord

inat

e th

eir

mem

bers

’pa

rtic

ipat

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in i

nter

natio

nal

trad

e sh

ows

(for

mer

ly d

one

poor

ly b

y go

vern

men

t).

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ult

isan

inc

reas

e in

the

num

ber

of c

ompa

nies

part

icip

atin

g &

the

val

ue o

f sa

les

gene

rate

ddu

ring

the

show

s.M

ore

US

AID

/Em

bass

y di

alog

ue n

eede

d.

Too

ear

ly t

o de

term

ine

how

effe

ctiv

e T

A t

oas

sns.

(K

AM

, F

PE

AK

, H

CD

A)

has

been

in

inte

rnal

izin

g ex

port

ana

lytic

al c

apab

ilitie

s;ho

wev

er;

they

app

ear

bette

r ab

le t

o de

liver

tra

dein

form

atio

n tr

aini

ng,

& e

xpor

t pr

omot

ion

serv

ices

to a

gro-

proc

esso

rs,

hort

. pr

oduc

ers

& e

xpor

ters

;an

d be

tter

able

to

addr

ess

polic

y co

nstr

aint

s to

expo

rt i

nves

tmen

t &

exp

ansi

on.

KE

DS

han

ds-o

n in

volv

emen

t w

ith a

ssns

. ha

sbe

en c

ritic

al i

n he

lpin

g re

focu

s th

eir

serv

ices

so

as t

o be

tter

mee

t m

embe

rs’

need

s &

rea

lign

thei

r re

spec

tive

role

s vi

s-à-

vis

expo

rter

s.U

nfor

tuna

tely

, po

litic

s ca

nnot

be

avoi

ded

in t

hepr

oces

s, &

the

pro

cess

tak

es t

ime.

Ass

ns.

are

only

as

effe

ctiv

e as

the

man

agem

ent

pers

onne

l (p

ublic

or

priv

ate)

. T

rain

ing

peop

le,

(e.g

., in

man

agem

ent)

is

effe

ctiv

e to

the

ext

ent

that

you

can

kee

p th

e tr

aine

d in

divi

dual

s in

the

orga

niza

tion.

Ext

ende

d “t

eam

” re

trea

ts w

ork

wel

l if

prop

erly

orga

nize

d &

man

aged

.P

ublic

/priv

ate

sect

or d

ialo

gue

oppo

rtun

ities

are

very

ben

efic

ial.

Do

not

spec

ify e

xact

ins

titut

ions

pro

ject

mus

tw

ork

with

, al

low

fle

xibi

lity

to s

uppo

rt t

hose

mos

tw

illin

g.

Sev

eral

firm

s w

ho h

ave

rece

ived

KE

DS

ass

ista

nce

have

the

new

pre-

pack

pro

duct

s in

to t

he E

urop

ean

mar

ket.

Man

ufac

turin

g fir

ms

assi

sted

are

prim

arily

tar

getin

g P

TA

mar

-ke

ts,

& h

ave

used

the

ass

ista

nce

for

prod

uct

& p

acka

ge d

evel

-op

men

t, pr

omot

ion

& a

dver

tisin

g, &

mar

ketin

g pl

ans/

surv

eys.

Nee

d m

ore

focu

s on

pro

cess

ing

busi

ness

es.

Str

ateg

ic c

onsu

ltanc

ies

have

ass

iste

d sm

all

& m

ediu

m-s

cale

expo

rter

s to

ref

ocus

the

ir re

ques

ts f

or E

DF

fun

ds t

o in

clud

eob

ject

ives

tha

t w

ill h

elp

real

ize

new

mar

ket

oppo

rtun

ities

&in

crea

se e

xpor

t sa

les.

Stil

l to

o ea

rly t

o m

easu

re i

mpa

ct o

f gr

ants

(e.

g.,

on e

xpor

t sa

les)

of a

ssis

ted

firm

s; f

irst

plan

ned

impa

ct a

sses

smen

t is

for

ear

ly19

95.

Ken

ya f

reig

ht f

orw

arde

rs y

et t

o be

priv

atiz

ed.

Whe

n po

licy

envi

ronm

ent

is r

ight

, &

the

inf

rast

ruct

ure

adeq

uate

,co

mm

erci

al v

entu

res

& a

pro

ject

suc

h as

KE

DS

sup

port

ing

them

can

succ

eed.

Sm

all

& m

ediu

m-s

ized

firm

s do

not

hav

e in

-dep

thkn

owle

dge

of m

arke

t pl

anni

ng &

bud

getin

g, t

here

fore

ED

Fap

plic

ants

nee

d as

sist

ance

dev

elop

ing

thei

r re

ques

ts t

o in

clud

eob

ject

ives

tha

t w

ill h

elp

real

ize

new

mar

ket

oppo

rtun

ities

&in

crea

se e

xpor

t sa

les.

KE

DS

TA

(i.e

., st

rate

gic

cons

ulta

ncie

s) i

nth

is a

rea

has

been

crit

ical

to

the

succ

ess

of t

he g

rant

pro

cess

.T

A n

eeds

are

diff

eren

t fo

r di

ffere

nt s

ize

expo

rter

s, e

spec

ially

mar

ket

info

rmat

ion

need

s.P

roje

ct e

ffort

s m

ust

be f

ocus

ed f

or m

axim

um i

mpa

ct.

Cha

nges

in

or a

dditi

ons

to o

bjec

tives

dilu

te t

he i

mpa

ct.

Ass

ista

nce

to “

Wan

t-to

-be”

exp

orte

rs i

s in

effic

ient

use

of

proj

ect

reso

urce

s.E

xpor

ter

coop

erat

ion

mus

t be

car

eful

ly m

anag

ed d

ue t

o co

mpe

ti-tiv

e (c

arte

l po

ssib

ility

) co

nsid

erat

ions

.

The

re m

ay b

e a

good

ret

urn

on i

nves

tmen

t to

gra

nts

to s

mal

l &

med

ium

-siz

ed f

irms

once

the

y ha

ve r

ecei

ved

the

initi

al m

anag

e-

4)

New

Opp

ortu

nitie

s

5)

Suc

cess

of

Rel

evan

tIn

terv

entio

ns

6)

Less

ons

Lea

rned

46

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

Ass

ns.

can

be a

sui

tabl

e &

cos

t-ef

fect

ive

vehi

cle

for

prov

idin

g T

A t

o no

n-tr

aditi

onal

com

mod

ity e

xpor

ters

,bu

t th

ey m

ust

be w

ell

man

aged

& s

erve

the

nee

dsof

the

ir m

embe

rs.

Don

ors

can

play

an

impo

rtan

tro

le i

n he

lpin

g as

sns.

foc

us t

heir

ener

gies

pro

perly

the

first

few

yea

rs.

It is

diff

icul

t to

ant

icip

ate

wha

tth

e ne

eds

of e

ach

assn

. w

ill b

e; a

pro

ject

with

built

-in

flexi

bilit

y to

add

ress

the

se c

hang

ing

need

sis

pre

fera

ble.

Nee

d on

goin

g, f

orm

al o

pera

ting

cons

trai

nts

anal

ysis

by

type

& s

ize

firm

.

Exp

and

cove

rage

to

incl

ude

assn

s. f

ocus

ed o

nsm

all

farm

ers

& m

icro

ent

erpr

ises

, su

ch a

s S

EP

SO

& K

ES

SF

A.

Mem

ber

satis

fact

ion

surv

eys

(sho

rt,

form

al);

mem

ber

case

stu

dies

(lo

ng,

info

rmal

); f

irm-le

vel

impa

ct o

f se

min

ars/

wor

ksho

ps.

Por

tion

of e

xpor

ts t

hat

mee

t or

exc

eed

min

imum

qual

ity s

tand

ards

.M

ore

focu

s on

the

val

ue o

f ex

port

s vs

. to

nnag

e.O

vera

ll qu

ality

, co

vera

ge &

pra

gmat

ism

of

quar

terly

repo

rts,

inc

ludi

ng a

n M

&E

mat

rix.

men

t as

sist

ance

& c

ouns

elin

g in

how

bes

t to

use

the

mon

ey(s

till

too

early

to

do a

n an

alys

is o

f th

e K

ED

S-a

ssis

ted

firm

s).

Is h

elpi

ng h

igh-

valu

e ho

rtic

ultu

re &

cut

flo

wer

firm

s pr

ovid

ing

assi

stan

ce t

o a

subs

ecto

r th

at w

ould

do

quite

wel

l an

yway

?E

stab

lishi

ng a

50%

mat

chin

g re

quire

men

ts f

or g

rant

s is

ve

ryim

port

ant

to g

et t

he m

ost

serio

us p

artic

ipan

ts.

Str

ateg

ic c

onsu

ltanc

ies

wer

e ad

ded

to i

ncre

ase

the

effe

ctiv

enes

sof

firm

-leve

l su

ppor

t. E

xpor

t m

arke

t an

alys

es u

nder

take

n by

KE

Ds’

& c

hann

eled

to

expo

rter

s vi

a as

sns.

gav

e K

ED

S &

ass

ns.

mor

e cr

edib

ility

, &

als

o im

prov

ed K

ED

S a

bilit

y to

ide

ntify

exp

ort

oppo

rtun

ities

for

mem

bers

(an

d as

sist

ed f

irms)

.D

egre

e of

val

ue a

dded

in

expo

rted

pro

duce

(as

ref

lect

ed i

n hi

gher

pric

es r

ecei

ved

by e

xpor

ters

).E

xten

t to

whi

ch p

rodu

cers

or

expo

rter

s co

ntra

ct d

irect

ly w

ith r

etai

lch

ains

or

key

dist

ribut

ors

of p

rodu

ce i

n E

U m

arke

ts (

vs.

Tho

roug

hag

ents

).S

ix-m

onth

fol

low

-up

of p

erfo

rman

ce m

easu

res

with

ass

iste

d fir

ms,

as w

ell

as h

ow w

ell

they

met

the

obj

ectiv

es a

gree

d to

in

orde

r to

rece

ive

the

gran

t.A

djus

t pr

ojec

t ob

ject

ives

as

proj

ect

mat

ures

due

to

chan

ges

inU

SA

ID e

mph

asis

& l

ocal

as

wel

l as

int

erna

tiona

l m

arke

t co

ndi-

tions

.

7)

Rel

evan

t Im

plic

atio

ns f

orU

SA

ID P

roje

ct D

esig

n &

Impl

emen

tatio

n

8)

New

Mec

hani

sms

toIn

crea

se P

roje

ct E

ffect

iven

ess

47

A -

2

Inno

vativ

e P

roje

ct S

umm

ary

- K

ES

SF

A

Out

put

Are

a of

Foc

us

Cou

ntry

:K

ES

SF

AT

itle:

Ken

ya S

mal

l S

cale

Spo

nsor

:H

ans

Sei

del

Fdt

n F

arm

ers

Ass

oc.

(Ger

man

y)

Sta

rt D

ate:

Jan.

199

3C

ompl

etio

n D

ate:

Jan.

199

6P

roje

ct V

alue

:250

,000

DM

yea

r, U

S $

370,

000

year

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

1)

Rel

evan

t O

bjec

tives

2)

How

Inn

ovat

ive

3)

Per

form

ance

Ind

icat

ors

4)

Suc

cess

of

Rel

evan

tIn

terv

entio

ns

5)

New

Opp

ortu

nitie

s6)

Les

sons

Lea

rned

Attr

act

2,00

0 m

embe

rs w

ithin

150

km

. ra

dius

of

Nai

robi

(sm

all-s

cale

, av

g. 1

ha.

, ho

rt.

farm

ers)

;as

sist

the

m t

o or

gani

ze i

nto

viab

le u

nits

(S

HG

s)-

who

the

n be

long

to

KE

SS

FA

.

Get

ting

hort

. fa

rmer

s to

geth

er i

nto

viab

le s

elf-

help

gro

ups

(S

HG

s);

also

add

ress

ing

smal

lfa

rmer

NT

AE

mar

ketin

g is

sue

(i.e.

, K

ES

SF

Aco

ntra

ctin

g di

rect

ly w

ith e

xpor

ters

).

Mem

bers

hip

in K

ES

SF

A.

Pric

e re

ceiv

ed b

y m

embe

rs (

com

pare

d to

pric

esre

ceiv

ed f

rom

bro

kers

).

Stil

l to

o ea

rly t

o ev

alua

te s

ucce

ss o

f S

HG

s &

KE

SS

FA

’s w

ork,

par

ticul

arly

tra

inin

g.

Stil

l to

o ea

rly t

o de

term

ine.

A

n in

nova

tion

KE

SS

FA

wou

ld l

ike

to

try

is t

o pa

y fa

rmer

sdi

rect

ly i

nto

thei

r ba

nk a

ccou

nts

(mai

ntai

ning

priv

acy

for

farm

ers)

; bu

t E

SS

FA

eed

sys

tem

sad

vice

.W

ould

lik

e to

pro

vide

tra

nspo

rt (

now

pro

vide

d by

agen

ts)

to t

he m

ore

diffi

cult

to r

each

far

mer

s.

SH

Gs

mus

t be

sm

all

(bet

wee

n 20

& 4

0 m

em-

bers

) &

hav

e so

met

hing

in

com

mon

(e.

g.,

wat

er

Del

iver

dire

ct T

A t

o S

HG

s.In

crea

se p

rodu

ctio

n &

am

ount

of

hort

icul

tura

l pr

oduc

ts m

arke

ted

Mar

ket

mem

bers

’ ou

tput

at

pric

es b

ette

r th

an t

hose

of

the

agen

ts.

KE

SS

FA

is

atte

mpt

ing

to g

ive

smal

l-sca

le f

arm

ers

mor

e le

vera

gein

dea

ling

with

exp

orte

rs b

y ac

ting

as p

rinci

pal

& n

egot

iatin

g fo

rth

e S

HG

s w

ith e

xpor

ters

; E

xpor

ters

adv

ance

see

ds t

o K

ES

SF

A,

who

in

turn

adv

ance

s th

em t

o fa

rmer

s (c

ost

is d

educ

ted

afte

rfa

rmer

s’ p

rodu

ce i

s so

ld).

Jan.

199

4–2,

100

mem

bers

(10

4 S

HG

s);

Sep

t. 19

94–2

,700

mem

bers

.

Mem

bers

hav

e re

ceiv

ed o

n av

erag

e 25

–30%

hig

her

pric

es f

orgr

een

bean

s th

an p

rices

fro

m K

ES

SF

A r

ecei

ved

from

bro

kers

; bu

tne

ed t

o ta

lk t

o m

embe

rs a

bout

suc

cess

of

mar

ketin

g ef

fort

s by

KE

SS

FA

.

KE

SS

FA

has

tar

gete

d se

vera

l N

TA

E’S

cro

ps,

incl

udin

g gr

een

bean

s, s

now

pea

s, a

voca

dos,

man

goes

, &

pas

sion

fru

it.C

urre

ntly

not

wor

king

on

mor

e va

lue-

adde

d ac

tiviti

es c

lose

r to

the

farm

, bu

t ar

e co

nsid

erin

g co

ld s

tore

s to

put

far

mer

s in

a p

ositi

onto

con

trac

t w

ith p

re-p

ack

expo

rter

s.

KE

SS

FA

is

face

d w

ith t

he p

robl

em o

f fa

rmer

s pr

oduc

ing

mor

eth

an t

he a

mou

nt K

ES

SF

A n

egot

iate

d fo

r w

ith e

xpor

ters

; K

ES

SF

A

48

Non

-Tra

ditio

nal

Agr

icul

tura

l E

xpor

t D

evel

opm

ent

(esp

ecia

lly h

ortic

ultu

re)

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

e

sour

ce,

trib

e,)

to g

ive

them

str

ong

ties.

The

y jo

inK

ES

SF

A a

s a

grou

p, b

ut p

ay a

s in

divi

dual

s.

Alth

ough

stil

l ea

rly,

KE

SS

FA

may

be

a go

od m

odel

of h

ow t

o br

idge

the

gap

bet

wee

n ex

port

ers

& s

mal

l-sc

ale

farm

ers.

T

he m

ost

impo

rtan

t in

terv

entio

n is

the

hand

s-on

tra

inin

g re

late

d to

for

min

g &

mai

ntai

n-in

g vi

able

SH

Gs.

M

ay n

eed

to f

orm

wom

en-o

nly

SH

Gs

so t

hey

do n

ot l

ose

out

to t

he m

en b

ecau

seof

the

exp

ort

crop

foc

us.

KE

SS

FA

wou

ld l

ike

to p

rovi

de c

redi

t &

inp

utse

rvic

es.

Mem

ber

surv

eys

(sho

rt,

form

al);

mem

ber

case

stud

ies

(long

, in

form

al);

far

m-le

vel

impa

ct o

f as

sn.

Can

KE

SS

FA

ove

rcom

e cu

rren

t pr

oble

m o

f so

me

farm

ers

selli

ng p

rom

ised

pro

duce

to

othe

r tr

ader

s.

30–3

5% o

f m

embe

rs a

re w

omen

(m

ay b

e a

dang

erof

los

ing

wom

en d

ue t

o e

xpor

t cr

op o

rient

atio

n, &

the

tend

ency

for

men

to

dom

inat

e in

the

are

a of

expo

rt c

rops

)

7)

Rel

evan

t Im

plic

atio

ns f

orU

SA

ID P

roje

ct D

esig

n &

Impl

emen

tatio

n

8)

New

Mec

hani

sms

toIn

crea

se P

roje

ct E

ffect

iven

ess

9)

Sug

gest

ed I

ndic

ator

s

10)

Oth

er I

nfor

mat

ion

then

fee

ls i

t m

ust

purc

hase

the

pro

duct

; th

e lo

cal

trad

ers

bein

gus

ed b

y K

ES

SF

A t

o co

llect

pro

duce

try

to

frus

trat

e K

ES

SF

Abu

ying

effo

rts;

sol

utio

n w

ould

be

for

KE

SS

FA

to

buy

its o

wn

truc

ks (

but

may

be

an e

xpen

sive

sol

utio

n).

Ear

ly c

ritic

al t

est

will

be

whe

ther

KE

SS

FA

will

mai

ntai

n its

com

mer

cial

orie

ntat

ion

& b

e sk

illed

eno

ugh

to n

egot

iate

suc

cess

-fu

lly o

n be

half

of t

he f

arm

ers

with

exp

orte

rs (

and

com

pete

with

othe

r ex

port

ers)

. P

robl

ems

may

aris

e if

they

los

e th

eir

com

mer

-ci

al o

rient

atio

n fo

r a

“let’s

hel

p al

l th

e sm

allh

olde

rs”

philo

soph

y.

In f

utur

e, f

orm

ano

ther

com

pany

with

sha

re c

apita

l so

ld t

om

embe

rs,

with

the

ir ow

n co

ld s

tore

& t

rans

port

atio

n, e

xpor

ting

dire

ctly

.

Incr

ease

in

mar

kete

d ou

tput

by

SH

Gs

(par

ticul

arly

of

new

cro

ps);

diffe

renc

e in

pric

es r

ecei

ved

by m

embe

rs f

rom

KE

SS

FA

and

the

pric

es b

eing

pai

d by

tra

ders

(al

read

y be

ing

mea

sure

d) o

ver

seve

ral

seas

ons.

You

ng m

en i

n pa

rtic

ular

are

attr

acte

d to

pro

duci

ng h

ort.

crop

s &

join

ing

KE

SS

FA

.

49

A -

3

Inno

vativ

e P

roje

ct S

umm

ary

- S

EP

SO

Out

put

Are

a of

Foc

us

Cou

ntry

:K

enya

Titl

e:S

EP

SO

Sta

rt D

ate:

Jan.

199

3C

ompl

etio

n D

ate:

1998

1)

Rel

evan

t O

bjec

tives

2)

How

Inn

ovat

ive

3)

Per

form

ance

Ind

icat

ors

4)

Suc

cess

of

Rel

evan

tIn

terv

entio

ns

5)

New

Opp

ortu

nitie

s

6)

Less

ons

Lear

ned

FN 1)

Sup

port

the

dev

elop

men

t of

a K

enya

n m

iddl

e cl

ass.

2)

Est

ablis

h a

succ

essf

ul m

odel

for

SM

E s

uppo

rt e

ntiti

es e

lsew

here

.S

EP

SO

1)

Pro

fitab

ly p

rovi

de b

usin

ess

serv

ices

to

smal

l en

terp

rises

; sp

ecifi

c go

als:

20%

cos

t re

cove

ry f

irst

year

; in

crea

se b

y20

% p

er

year

; fin

anci

ally

sel

f-su

stai

ning

at

the

end

of 5

yea

rs.

2)

Sus

tain

& i

mpr

ove

exis

ting

busi

ness

es (

focu

s on

you

ng,

prom

isin

g, i

nnov

ativ

e bu

sine

sses

).3)

E

stab

lish

stro

ng b

usin

ess

part

ners

hips

with

clie

nts.

SE

PS

O e

stab

lishe

s an

ong

oing

par

tner

ship

with

the

firm

s it

assi

sts;

fol

low

s up

with

clie

nts

ever

y m

onth

. T

heir

prim

ary

activ

ity,

finan

cial

con

sulti

ng,

is a

mea

ns t

o ge

nera

te b

road

er b

ased

con

sulta

ncy

wor

k (i.

e.,

is a

mar

ketin

g/cu

stom

erre

latio

ns t

ool).

Thi

s in

crea

ses

thei

r ab

ility

to

cove

r m

ore

of t

heir

activ

ities

/exp

ense

s th

roug

h ch

argi

ng f

ees.

Sha

res

in t

he c

ompa

ny a

re o

wne

d by

sen

ior

man

ager

s so

com

pany

suc

cess

is

impo

rtan

t to

the

ir pe

rson

al s

ucce

ss.

Six

cur

rent

sta

ff, t

he t

arge

t is

, N

ine:

Tw

o T

echn

ical

, tw

o ac

coun

ting,

tw

o m

arke

ting.

SE

PS

O’s

rev

enue

s vs

. co

sts

as p

er p

lan

rath

er t

han

the

num

ber

of s

emin

ars

held

. C

urre

ntly

not

mon

itorin

g cl

ient

s’pe

rfor

man

ce.

Sta

rted

lat

e 19

93;

Rec

over

ed 2

0% o

f co

sts

in f

irst

year

. C

urre

ntly

hav

e 14

0 cl

ient

s (1

5–20

% a

gric

ultu

re-b

ased

), w

hobe

com

e S

EP

SO

clie

nts

if th

ey a

re w

illin

g to

pay

reg

istr

atio

n fe

e of

100

0 S

hs (

$20)

. M

ost

popu

lar

serv

ice

is:

acco

unt-

ing;

is

espe

cial

ly a

ppre

ciat

ed b

y cl

ient

s w

ith n

o tr

aini

ng i

n ac

coun

ting.

S

emin

ars

wer

e ju

dged

ver

y us

eful

by

seve

ral

clie

nts

as a

mea

ns t

o le

arn

mor

e ab

out

appr

oach

es t

o bu

sine

ss &

mar

ketin

g, s

ourc

es o

f fin

ance

, &

for

ex

posu

re t

oot

her

entr

epre

neur

s w

ith s

imila

r pr

oble

ms .

199

4 re

venu

e K

Sh

700,

000

($35

,000

).Q

uart

erly

lun

cheo

ns f

or m

embe

rs a

re r

ated

ver

y us

eful

by

mem

bers

.

Str

engt

hs,

Wea

knes

ses,

opp

ortu

nitie

s an

d T

hrea

ts a

naly

sis

done

for

clie

nts

incl

udes

ide

ntifi

catio

n of

new

opp

ortu

ni-

ties,

suc

h as

pos

sibl

e ne

w m

arke

ts,

prod

ucts

, et

c.;

& a

lso

deve

lops

new

con

sulti

ng b

usin

ess

for

SE

PS

O.

Clie

nts

say

sem

inar

s ha

ve b

een

very

hel

pful

with

res

pect

to

lear

ning

mor

e ab

out

mar

ketin

g.

Clie

nts

are

dem

andi

ng q

uite

sop

hist

icat

ed s

ervi

ces;

req

uire

s sk

illed

SE

PS

O e

mpl

oyee

s to

pro

vide

thi

s te

chni

cal

assi

stan

ce,

ther

efor

e it

is i

mpo

rtan

t to

bui

ld i

nter

nal

capa

city

ahe

ad o

f bu

sine

ss v

olum

e.

Nee

ds o

f ag

ribus

ines

s

50

Out

put

clie

nts

are

very

sim

ilar

to o

ther

clie

nt’s

nee

ds.

Mos

t cl

ient

s do

not

kno

w a

bout

sou

rces

of

finan

ce;

for

man

y th

eir

need

for

fund

s ar

ises

fro

m c

ash

flow

pro

blem

s. S

EP

SO

nee

ds t

o be

an

ongo

ing

busi

ness

par

tner

, no

t an

out

side

sup

plie

r.C

lient

s ne

ed s

truc

ture

& s

yste

ms

for

orga

nizi

ng t

heir

busi

ness

es,

espe

cial

ly m

arke

ting

and

acco

untin

g.

Sm

alle

r &

star

tup

clie

nts,

hav

e lim

ited

abili

ty t

o pa

y fo

r se

rvic

es,

espe

cial

ly t

hose

inv

olve

d in

sea

sona

l bu

sine

sses

. T

he d

evel

op-

men

t of

sta

ff (a

nd s

tron

g ba

ck-u

p) t

o st

ay c

urre

nt &

ahe

ad o

f cl

ient

s ha

s be

en a

maj

or c

halle

nge;

bec

ause

sta

ff of

ten

leav

e af

ter

bein

g tr

aine

d. A

ccou

ntin

g is

a n

eede

d se

rvic

e, b

ut i

s hi

ghly

com

petit

ive

so i

t is

use

d as

a d

oor

open

er t

hat

will

hop

eful

ly l

ead

to a

n on

goin

g re

latio

nshi

p.

Pro

ject

s as

sist

ing

entr

epre

neur

s/sm

all

busi

ness

es s

houl

d th

emse

lves

be

set

up l

ike

a bu

sine

ss,

& e

valu

ated

usi

ng t

hesa

me

crite

ria a

pplie

d to

clie

nts

(i.e.

, by

loo

king

at

the

botto

m l

ine)

. T

he a

bilit

y to

gen

erat

e en

ough

rev

enue

s (b

y sa

tisfy

ing

clie

nts)

to

beco

me

finan

cial

ly s

elf-

sust

aini

ng a

fter

a pe

riod

of a

roun

d 5

year

s ru

n sh

ould

be

an i

mpo

rtan

t ob

ject

ive

and

eval

uatio

n.

In t

he f

utur

e, S

EP

SO

wou

ld l

ike

to i

nclu

de a

ven

ture

cap

ital

faci

lity

(equ

ity a

ssis

tanc

e),

whi

le m

aint

aini

ng b

usin

ess

serv

ices

to

clie

nts.

M

ore

use

of o

ther

ser

vice

pro

vide

rs a

s su

bcon

trac

tors

(e.

g.,

for

ISO

900

0).

1)

Gro

wth

rat

e in

num

ber

of c

lient

s.2)

N

ew b

usin

ess

succ

ess

rate

.3)

N

umbe

r of

em

ploy

ees

befo

re &

afte

r en

gagi

ng S

EP

SO

’s s

ervi

ces.

4)

Sal

es v

olum

e/va

lue

befo

re &

afte

r S

EP

SO

.5)

C

lient

’s r

even

ues-

cost

s pr

ofita

bilit

y.6)

C

lient

sat

isfa

ctio

n su

rvey

s.

SE

PS

O i

s ha

ving

diff

icul

ty c

olle

ctin

g pa

ymen

ts f

rom

clie

nts.

To

a ce

rtai

n ex

tent

, th

ose

firm

s m

ost

need

ing

assi

stan

ce a

reth

e on

es l

east

abl

e to

pay

for

it

(rai

sing

the

que

stio

n, s

houl

d S

EP

SO

be

expe

cted

to

be c

ompl

etel

y fin

anci

ally

sel

f-su

stai

ning

?).

Frie

dric

h N

aum

ann

Fou

ndat

ion

fee

ls t

hat

one

way

to

achi

eve

leve

rage

is

to s

et u

p a

wor

king

mod

el,

(i.e.

,an

org

aniz

atio

n lik

e S

EP

SO

), t

hat

can

be r

eplic

ated

in

othe

r se

gmen

ts o

f th

e m

arke

t (e

.g.,

outs

ide

Nai

robi

, ag

ribus

ines

s-fo

cuse

d).

Prio

r co

oper

atio

n w

ith t

he K

enya

n F

eder

atio

n of

Em

ploy

ers

was

aba

ndon

ed d

ue t

o m

inim

al f

eder

atio

n co

ntrib

u-tio

ns.

Act

iviti

es a

re 7

5% d

irect

bus

ines

s se

rvic

es (

mos

tly a

ccou

ntin

g/fin

anci

al)

& 2

5% t

rain

ing.

Sta

ff is

100

% K

enya

n, a

lso

all

Kik

oyu.

Are

a of

Foc

us

Sm

all

and

Med

ium

Ent

erpr

ise

Dev

elop

men

t

7)

Rel

evan

t Im

plic

atio

ns f

orU

SA

ID P

roje

ct D

esig

n &

Impl

emen

tatio

n

8)

New

Mec

hani

sms

toIn

crea

se P

roje

ct E

ffect

iven

ess

9)

Sug

gest

ed I

ndic

ator

s

10)

Oth

er I

nfor

mat

ion

51

A -

4

Inno

vativ

e P

roje

ct S

umm

ary

- K

-MA

P

Out

put

Are

a of

Foc

us

Cou

ntry

:K

enya

Titl

e:K

enya

Man

agem

ent

Spo

nsor

:S

ome

US

AID

+ O

DA

+ P

r. S

ecto

r A

ssis

tanc

e

Sta

rt D

ate:

1986

Com

plet

ion

Dat

e:O

ngoi

ngP

roje

ct V

alue

:‘87

- ‘

92 -

$56

0,00

0 fr

om A

ID

1)

Rel

evan

t O

bjec

tives

2)

How

is

it In

nova

tive

3)

Per

form

ance

Ind

icat

ors

4)

Ext

erna

l In

fluen

ces

5)

Rel

evan

t S

ucce

ss

6)

Mea

sure

men

t Im

prov

emen

ts

Incr

ease

priv

ate,

for

mal

sec

tor

grow

th b

y pr

ovid

ing

one-

on-o

ne a

ssis

tanc

e to

SM

Es

by e

xecu

tives

of

the

larg

er K

enya

nco

mpa

nies

.P

rovi

de w

orks

hops

& t

rain

ing

to S

ME

s to

enh

ance

the

ir ra

te o

f de

velo

pmen

t.P

rovi

de m

ater

ials

(bo

okle

ts,

mag

azin

es,

tape

s, e

tc.)

to

help

dev

elop

SM

E m

anag

ers.

Red

uce

the

smal

l bu

sine

ss m

orta

lity

rate

thr

ough

the

pro

visi

on o

f m

anag

emen

t &

tec

hnic

al a

ssis

tanc

e; e

stab

lish

linka

ges

betw

een

smal

l &

lar

ge b

usin

esse

s

Fun

ded

by p

rivat

e en

terp

rises

(m

ostly

maj

ors)

& d

onor

s.S

ubco

ntra

ctin

g ex

chan

ge b

etw

een

big

& s

mal

l bu

sine

sses

.P

rogr

am f

or r

educ

ed (

150%

to

50%

) lo

an c

olla

tera

l re

quire

men

t by

1+

yea

r cl

ient

s; p

roje

ct g

ets

smal

l co

mm

issi

on.

Wor

ksho

ps o

n “B

uild

ing

Con

stitu

ency

for

Eco

nom

ic C

hang

e”

- fo

rum

s w

ith g

over

nmen

t, la

rge

com

pani

es,

& S

ME

sre

gard

ing

polic

y &

ena

blin

g en

viro

nmen

t is

sues

.

Sur

viva

l &

gro

wth

rat

es o

f re

gist

ered

clie

nts.

Def

aults

on

“spo

nsor

ed”

loan

s.P

rogr

ess

tow

ards

sel

f-su

ffici

ency

. 1

993

= 4

0%,

1994

= 2

0% (

expa

nded

sta

ff),

1999

tar

get

=10

0%.

Atti

tude

of

clie

nts,

spo

nsor

s, c

ouns

elor

s, &

gov

ernm

ent

tow

ard

K-M

AP

.

Suc

cess

of

larg

e co

mpa

nies

& t

ime

avai

labi

lity

of c

ouns

elor

exe

cutiv

es.

Sup

port

fro

m d

onor

s &

sou

rces

of

TA

, in

clud

ing

univ

ersi

ties

& r

etire

d in

tern

atio

nal

exec

utiv

es.

186

med

ium

& l

arge

“pr

ovid

er”

com

pani

es (

70%

ind

igen

ous)

, 78

act

ive

supp

orte

rs,

& 8

00 c

umul

ativ

e cl

ient

com

pani

es(3

50 a

ctiv

e).

Less

tha

n 10

% f

ailu

re r

ate

for

(scr

eene

d) c

lient

s.N

o de

faul

ts o

n “s

pons

ored

” lo

ans

(new

pro

gram

).T

here

are

add

ition

al d

onor

s su

ppor

ting

the

prog

ram

(e.

g.,

OD

A).

Has

bee

n op

erat

ing

for

8 ye

ars.

Fin

anci

al p

rogr

ess

of a

ssis

ted

clie

nts,

bot

h du

ring

& a

fter

activ

e as

sist

ance

.U

pdat

e cl

ient

sat

isfa

ctio

n su

rvey

(no

t do

ne s

ince

199

2).

Link

con

tinue

d do

nor

supp

ort

to p

rogr

ess

tow

ard

finan

cial

sus

tain

abili

ty (

or a

mou

nt o

f cl

ient

fee

s) &

ave

rage

clie

ntra

ting.

52

Pla

ce m

ore

emph

asis

on

tech

nica

l co

nsul

ting.

Enh

ance

int

erna

l re

sear

ch &

inf

orm

atio

n pr

ovis

ion

capa

bilit

y.C

hair

nonf

inan

cial

sub

com

mitt

ee o

n po

licy

refo

rm o

f K

enya

n go

vern

men

t.E

stab

lish

a se

para

te u

nit

focu

sed

on a

grib

usin

ess

(usi

ng T

A f

rom

the

Dut

ch).

Ong

oing

for

ums

with

ind

ustr

y or

fun

ctio

nal

focu

s.

One

-on

one

coun

selin

g &

wor

ksho

ps j

udge

d m

ost

valu

able

by

clie

nts.

Sec

tora

l w

orks

hops

are

diff

icul

t to

org

aniz

e &

sta

ff bu

t ar

e of

gre

at b

enef

it w

hen

wel

l do

ne.

Bet

ter

coun

selo

r m

anag

emen

t &

tra

inin

g w

ould

yie

ld s

igni

fican

t re

turn

s.K

eep

K-M

AP

sta

ff in

coo

rdin

atio

n &

out

of

dire

ct c

onsu

lting

; us

e pr

actit

ione

rs.

Clie

nt i

nvol

vem

ent

in p

re-s

cree

ning

act

ivity

& a

ny f

easi

bilit

y st

udie

s is

ess

entia

l fo

r cl

ient

“ow

ners

hip.

”T

here

is

som

e di

fficu

lty g

ettin

g cl

ient

s to

pay

the

ful

l co

st o

f se

rvic

es.

Em

ploy

men

t se

rvic

e di

d no

t w

ork

beca

use

clie

nts

wer

e no

t w

illin

g to

pay

.

Com

mer

cial

com

pani

es d

o no

t w

ant

gove

rnm

ent

invo

lved

in

proj

ect

impl

emen

tatio

n.K

enya

n (A

fric

an)

“ow

ners

hip”

is

impo

rtan

t to

pro

gram

suc

cess

/pro

gres

s.B

ig

mul

tinat

iona

ls’

inte

rnat

iona

l m

arke

ting

capa

bilit

ies

is v

ery

impo

rtan

t fo

r m

arke

ting

skill

s de

velo

pmen

t.

Bus

ines

s G

row

th P

rogr

am—

inte

nsiv

e (1

2 w

orks

hops

& 6

con

sulti

ng s

essi

ons

over

6 m

onth

s) f

or y

oung

ent

repr

eneu

rd

eve

lop

me

nt.

Inte

rnal

res

earc

h ca

pabi

lity

for

answ

erin

g m

embe

rs’

ques

tions

& d

oing

res

earc

h on

top

ics

of c

omm

on i

nter

est,

(e.g

.,po

licy

chan

ge i

mpa

ct).

Look

ing

at a

ven

ture

cap

ital

com

pone

nt f

or m

ediu

m-s

ized

com

pani

es.

Sal

es,

earn

ings

, &

em

ploy

men

t gr

owth

of

assi

sted

clie

nts.

Tim

e in

vest

men

t of

cou

nsel

ors

& t

imel

y fil

ing

of r

epor

ts.

Ave

rage

lev

el o

f ex

ecut

ive

part

icip

atin

g as

cou

nsel

ors.

Rat

ings

on

annu

al c

lient

sur

vey.

40%

of

clie

nts

are

wom

en.

Wor

ksho

p pa

rtic

ipan

ts p

ay 5

0% o

f co

sts.

Man

y (2

0%)

agrib

usin

ess

clie

nts;

mat

ch t

hem

with

agr

ibus

ines

s co

unse

lors

; bu

t th

eir

need

s ar

e si

mila

r to

oth

ers.

Ave

rage

clie

nt h

as 1

0 em

ploy

ees.

12 f

ull-t

ime

staf

f.

7)

New

Opp

ortu

nitie

s

8)

Less

ons

Lear

ned

9)

Rel

evan

t Im

plic

atio

ns

10)

New

Mec

hani

sms

11)

Sug

gest

ed I

ndic

ator

s

12)

Oth

er I

nfor

mat

ion

Out

put

Are

a of

Foc

us

SM

E D

evel

opm

ent

& S

uste

nanc

e

53

A -

5

Inno

vativ

e P

roje

ct S

umm

ary

- A

NE

PP

Out

put

Are

a of

Foc

us

Cou

ntry

:U

gand

aT

itle:

AN

EP

P/P

h3 (

3rd

Pha

se A

NE

PP

) A

gric

ulut

ural

Non

-Tra

ditio

nal

Exp

ort

Pro

mot

ion

Pro

ject

Sta

rt D

ate:

1992

Com

plet

ion

Dat

e:19

94P

roje

ct V

alue

:$13

.5 m

illio

n N

PA

in 1

992

+ $

10 m

illio

n

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

1)

Rel

evan

t O

bjec

tives

2)

How

is

it In

nova

tive?

3)

Per

form

ance

Ind

icat

ors

4)

Man

agem

ent

of E

xter

nal

Fa

cto

rs

Orig

inal

ly,

TA

was

int

ende

d to

ide

ntify

& w

ork

with

an

asso

ciat

ion;

thi

s w

as m

odifi

ed d

ue t

oth

e im

mat

ure

natu

re o

f ex

istin

g as

sns.

F

ollo

w-

up p

roje

ct (

IDE

A)

will

fur

ther

pur

sue

asso

cia-

tion

deve

lopm

ent.

How

will

the

Van

illa

Ass

ocia

tion

coa

lesc

e &

stay

tog

ethe

r w

ithou

t U

VA

N d

oing

mos

t of

the

wo

rk?

Dev

elop

men

t of

the

NT

AE

sub

sect

or w

illst

imul

ate

inte

rest

in

the

rele

vant

ass

ns.

Incr

ease

exp

ort

earn

ings

.In

crea

se e

mpl

oym

ent

in N

TA

E s

ecto

r.Id

entif

y ex

port

opp

ortu

nitie

s &

pro

mot

e ex

port

s.P

rovi

de T

A t

o ex

port

ers.

Div

ersi

fy e

xpor

t ba

se.

Obj

ectiv

es c

an b

e gr

oupe

d in

to f

our

area

s: -

R

emov

al o

f pr

actic

al d

iffic

ultie

s -

P

rovi

sion

of

mar

ket

info

-

Dev

elop

key

tec

hnic

al s

kills

in

R&

D s

uppo

rt s

ervi

ces

-

Dev

elop

men

t of

, &

sup

port

to,

sec

tor

assn

s.

EP

AD

U (

supp

orte

d by

AN

EP

P)

is a

goo

d m

odel

of

an a

uton

o-m

ous

polic

y an

alys

is u

nit

with

a v

ery

posi

tive

impa

ct o

n po

licie

saf

fect

ing

NT

AE

exp

orte

rs &

gro

wer

s. O

CA

P (

Ope

ratio

nal

Con

-st

rain

ts A

naly

sis

Pro

ject

), u

nder

take

n by

EP

AD

U/A

NE

PP

, w

ithfu

nds

& T

A a

ssis

tanc

e fr

om A

PD

F,

iden

tifie

d, o

n bo

th a

for

mal

&in

form

al b

asis

, sp

ecifi

c op

erat

iona

l co

nstr

aint

s to

NT

AE

s,pr

ovid

ed T

A t

o hi

gh p

oten

tial

firm

s to

ove

rcom

e th

em,

& u

sed

the

OC

A r

esul

ts t

o he

lp b

ring

abou

t po

licy

chan

ge.

Onl

y ex

-am

ple

foun

d of

pos

t-fin

ance

ass

ista

nce

by A

PD

F.

Han

ds-o

nw

ork

of E

PA

DU

, pr

imar

ily b

y lo

cals

, to

stim

ulat

e 2n

d tie

r fir

ms

topu

rsue

opp

ortu

nitie

s.

Prim

arily

pro

cess

ind

icat

ors,

suc

h as

num

ber

of p

eopl

e ta

ken

over

seas

, sp

ecifi

c se

rvic

es p

rovi

ded

by t

he p

roje

ct,

phys

ical

esta

blis

hmen

t of

cro

ps i

n th

e tr

ials

pro

gram

. A

lso

chan

ges

(dou

blin

g) o

f ex

port

val

ues

of a

ll co

mm

odity

gro

ups

with

inho

rtic

ultu

ral

sect

or &

inc

reas

e in

ave

rage

uni

t va

lue

(i.e.

, am

ount

of v

alue

add

ed).

54

5)

Suc

cess

of

Rel

evan

tIn

terv

entio

ns

6)

New

Opp

ortu

nitie

s fr

omth

e P

roje

ct

7)

Sug

gest

ed M

easu

rem

ent

& E

valu

atio

n Im

prov

emen

ts

Ver

y m

inim

al p

rogr

ess

mad

e du

e to

the

ver

yem

bryo

nic

natu

re o

f th

e su

bsec

tor.

A b

road

-bas

ed e

xpor

ters

ass

ocia

tion

coul

d be

deve

lope

d fa

irly

soon

.

Est

ablis

h fo

rmal

crit

eria

for

don

or a

ssoc

iatio

nsu

ppor

t &

com

mun

icat

e to

ass

n.

Con

side

ratio

n gi

ven

to e

xcha

nge

rate

im

pact

in

1994

. H

igh

tran

spor

tatio

n co

sts

to E

urop

ean

mar

kets

rel

ativ

e to

tho

se o

fW

est

Afr

ican

com

petit

ors

mak

e so

me

othe

rwis

e hi

gh-p

oten

tial

crop

s no

ncom

petit

ive

from

a p

rodu

ctio

n st

andp

oint

. E

PA

DU

polic

y m

odifi

catio

n su

cces

ses

big

help

re:

ena

blin

g en

viro

n-m

ent.

Val

ue o

f al

l ho

rt.

expo

rts

has

incr

ease

d fr

om $

410,

000

in 1

991/

92 t

o $3

.25

mill

ion

in 1

993/

94 (

expe

cted

to

be $

8.4

mill

ion

in19

95).

OC

AP

onl

y m

argi

nally

suc

cess

ful;

min

imum

siz

e pr

ojec

tfo

r A

PD

F a

ssis

tanc

e to

o la

rge

vers

us l

ocal

nee

ds.

Pac

kagi

ngim

port

sub

stitu

tion

& a

irpor

t co

ld s

tore

ass

ista

nce

very

hel

pful

.G

ood

loca

l ca

paci

ty-b

uild

ing

for

NT

AE

, O

CA

,& p

olic

y m

odifi

ca-

tion.

Pro

ject

man

agem

ent

& f

inan

cial

ass

ista

nce

to v

arie

tyad

apta

tion

wor

k w

as a

sig

nific

ant

bene

fit.

1st-

tie

r fir

ms

doin

gw

ell,

have

ove

rcom

e m

any

prod

uctio

n &

mar

ketin

g co

nstr

aint

sov

er t

he p

ast

two

year

s &

ide

ntifi

ed n

ew o

ppor

tuni

ties

via

AN

EP

P t

echn

ical

ass

ista

nce.

AN

EP

P i

dent

ified

(th

roug

h ba

selin

e st

udie

s) t

hree

hig

h-po

tent

ial

NT

AE

are

as o

n w

hich

to

focu

s re

sour

ces:

fre

sh h

igh-

valu

e(f

low

ers)

, st

rong

reg

iona

l m

arke

t po

ssib

ilitie

s (m

aize

& b

eans

),&

non

peris

habl

e hi

gh-v

alue

(sp

ices

); a

lso

iden

tifie

d ne

w c

rops

(e.g

., as

para

gus

& l

eath

er l

eaf)

pre

viou

sly

not

grow

n in

Uga

nda;

purs

ued

crop

tria

ls &

hel

ped

over

com

e m

arke

ting

cons

trai

nts

face

d by

ass

iste

d fir

ms.

Str

atify

firm

s in

to t

he t

hree

siz

e gr

oupi

ngs

& f

ollo

w p

erfo

rman

ce(e

.g.,

sale

s, r

etur

ns,

empl

oym

ent

of a

ssis

ted

firm

s) b

y si

ze.

Mea

sure

sec

onda

ry i

mpa

ct o

f la

rge

firm

ass

ista

nce

(e.g

., Z

iwa)

.N

eed

bette

r pr

ojec

t pr

ogre

ss r

epor

ting.

Bas

elin

e m

acro

dat

a is

poor

, bu

t is

it

real

ly n

eces

sary

? If

M&

E f

ocus

es o

n m

acro

mea

sure

men

t, w

hy l

imit

assi

stan

ce t

o in

dige

nous

firm

s? C

anpr

ogra

m s

ucce

ss b

e m

easu

red

by t

he p

rogr

ess

of j

ust

thos

efir

ms

assi

sted

? Li

nk s

peci

fic a

ctiv

ities

to

the

mea

sure

men

tses

tabl

ishe

d fo

r th

e pr

ojec

t (e

.g.,

wha

t sp

ecifi

c ac

tiviti

es c

ontr

ib-

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

55

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

8)

Less

ons

Lear

ned

9)

Rel

evan

t Im

plic

atio

ns f

orU

SA

ID P

roje

ct D

esig

n &

Im

ple-

men

tatio

n

Can

not

impo

se o

rgan

izat

ion

on g

roup

s of

expo

rter

s; d

eman

d m

ust

com

e fr

om t

hem

.G

ood

man

ager

s &

str

ong

lead

ers

as w

ell

as a

tight

foc

us l

ead

to s

tron

g as

sns.

E

mbr

yoni

csu

bsec

tors

will

not

sup

port

via

ble

assn

s.“V

oice

” re

quire

s nu

mbe

rs,

but

serv

ices

mus

t be

high

ly f

ocus

ed.

In

assn

s. w

ith b

oth

larg

e &

smal

l m

embe

rs,

the

larg

e te

nd t

o pa

y &

the

smal

l to

use

.

Wel

l-foc

used

& m

anag

ed a

ssns

. m

ay b

e ab

leto

brid

ge t

he g

ap b

etw

een

smal

l fa

rmer

s &

the

com

plex

req

uire

men

ts o

f in

tern

atio

nal

mar

kets

(e.g

., si

lk &

van

illa

assn

s.)

uted

how

muc

h to

the

dou

blin

g of

NT

AE

exp

orts

).

Sub

sect

or o

ppor

tuni

ty s

tudi

es w

ere

impo

rtan

t fo

r id

entif

ying

hig

h-po

tent

ial

area

s fo

r pr

ojec

t fo

cus.

Pro

ject

s de

alin

g w

ith a

grib

usi-

ness

es &

exp

orte

rs n

eed

a hi

gh d

egre

e of

fle

xibi

lity

to b

e ab

le t

oqu

ickl

y re

spon

d to

rap

idly

cha

ngin

g ne

eds

of t

he m

arke

t. B

ette

rto

foc

us o

n a

limite

d nu

mbe

r of

exp

orte

rs t

han

to t

ry t

o he

lpev

eryo

ne.

Mic

ro &

sm

all

ente

rpris

es c

an r

arel

y co

mpe

te i

nN

TA

Es

unle

ss g

roup

ed t

hey

are

toge

ther

in

an e

ffect

ive

way

. T

herig

ht T

A w

ell

prov

ided

(e.

g.,

with

goo

d in

tern

atio

nal

cont

acts

&te

chni

cal

supp

ort)

is

muc

h ap

prec

iate

d by

the

ent

repr

eneu

rsw

ho N

TA

E p

roje

cts

wan

t to

enc

oura

ge.

Poo

rly “

pack

aged

”in

vest

men

t pr

ojec

t pl

ans

are

a m

ore

impo

rtan

t co

nstr

aint

tha

nla

ck o

f fin

anci

ng.

Get

exp

ort

supp

ort

fund

ing

from

exp

orts

not

impo

rts,

thu

s an

inc

reas

e in

exp

orts

= a

n in

crea

se i

n av

aila

ble

fund

ing.

Del

iver

ing

high

-pow

ered

TA

to

smal

ler

proj

ects

is

inef

ficie

nt (

e.g.

, A

PD

F).

Ent

erpr

ises

nee

d si

gnifi

cant

cap

ital

&m

anag

emen

t ex

pert

ise

befo

re a

ret

urn

can

be a

chie

ved

onpr

ojec

t as

sist

ance

. R

apid

res

pons

e to

clie

nt n

eeds

is

very

impo

rtan

t in

NT

AE

dev

elop

men

t.

Obj

ectiv

es o

f N

TA

E p

roje

cts

(e.g

., fo

reig

n ex

chan

ge g

ener

atio

n)sh

ould

not

be

conf

used

with

obj

ectiv

es o

f pr

ojec

ts a

imed

at

deve

lopi

ng m

icro

ent

erpr

ises

/sm

all

farm

ers.

Inc

lude

dom

estic

mar

ket

deve

lopm

ent

for

SM

Es

who

may

eve

ntua

lly b

ecom

eex

port

ers.

Lac

k of

equ

ity &

exp

ort

expe

rienc

e ar

e th

e tw

o gr

eate

stS

ME

con

stra

ints

. M

ost

shor

t- t

o in

term

edia

te-t

erm

NT

AE

gro

wth

will

com

e fr

om e

xist

ing

expo

rter

s.

56

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

Ste

erin

g co

mm

ittee

s ne

ed t

o pl

ay a

str

onge

r ro

le a

t al

l pr

ojec

tst

ages

. W

ork

with

sm

all-s

cale

firm

s/fa

rmer

s ne

eds

to f

ocus

on

over

com

ing

cons

trai

nts

to i

ncre

ased

pro

duct

ion,

mar

ketin

g of

low

-val

ue c

rops

,& r

each

ing

pote

ntia

l re

gion

al m

arke

ts (

e.g.

, us

eas

sns.

for

inp

ut d

istr

ibut

ion,

con

tinue

d su

ppor

t to

R&

D,

&di

ssem

inat

ion

of n

ew t

echn

olog

ies)

. E

stab

lish

a ne

w o

rgan

iza-

tion

for

NT

AE

dev

elop

men

t (E

PA

DU

) if

the

exis

ting

one

(UP

EC

)is

not

fun

ctio

ning

; av

oid

“bea

ting

on a

dea

d ho

rse.

” F

ocus

on

less

exo

tic b

ut h

igh-

volu

me

pote

ntia

l cr

ops

(e.g

., m

aize

&be

ans)

for

a g

reat

er &

qui

cker

eco

nom

ic i

mpa

ct.

Upd

ate

OC

Aan

nual

ly.

Est

ablis

h a

loca

lly s

taffe

d sm

all

proj

ects

dev

elop

men

tun

it fo

r pr

ojec

ts s

mal

ler

than

AP

DF

can

han

dle

& f

or “

ongo

ing”

supp

ort

(i.e.

, us

e du

al p

rogr

ams)

. A

ll se

nior

pro

ject

op

erat

ing

pers

onne

l sh

ould

hav

e lo

cal

coun

terp

arts

.

How

hav

e as

sist

ed f

irms

by s

ize

cate

gory

inc

reas

ed t

heir

sale

s&

pro

fitab

ility

& e

xpan

ded

thei

r em

ploy

men

t? N

umbe

r of

firm

sm

akin

g ju

mp

from

2nd

to

1st

tier

& t

heir

expo

rt/e

mpl

oym

ent

leve

ls.

Soc

ioec

onom

ic i

mpa

ct s

tudy

foc

usin

g on

rur

al a

rea

surr

ound

ing

assi

sted

firm

s. M

easu

re i

ncre

ase

in e

xpor

ts f

rom

indi

geno

us f

irms

only

bec

ause

the

se a

re t

he m

ajor

foc

us o

fa

ssis

tan

ce.

Effi

cien

cy o

f sm

all-s

cale

mai

ze &

bea

n pr

oduc

tion

need

s to

incr

ease

in

orde

r to

tak

e ad

vant

age

of s

igni

fican

t re

gion

al e

xpor

top

port

uniti

es.

Mar

ket

info

rmat

ion—

is

it w

orth

the

exp

ense

(i.e

.,th

ose

regu

larly

exp

ortin

g do

not

nee

d it)

or

shou

ld i

t be

vie

wed

as a

n ed

ucat

iona

l to

ol f

or t

he 2

nd &

3rd

tie

rs?

Big

gest

im

pact

of

AN

EP

P m

ay b

e in

crea

sed

awar

enes

s of

the

com

plex

ities

of

inte

rnat

iona

l m

arke

ting

(how

to

mea

sure

?).

The

dis

cont

inui

ty o

fID

EA

not

ach

ievi

ng a

sm

ooth

tak

eove

r fr

om A

NE

PP

has

res

ulte

din

the

with

draw

al o

f su

ppor

t fr

om s

ome

mid

-str

eam

pro

ject

s &

alo

ss o

f U

SA

ID c

redi

bilit

y by

loc

als.

Thi

s se

ems

to r

epre

sent

poor

ly m

anag

ed p

roje

ct “

cont

inui

ty.”

Max

imum

fru

it &

veg

etab

leex

port

s (n

ot i

nclu

ding

flo

wer

s) b

y th

e ye

ar 2

000

are

estim

ated

to

be o

nly

abou

t U

S$2

0 m

illio

n v

ersu

s A

NE

PP

’s c

ost

of $

23.5

mill

ion

.

Tec

hnic

al a

ssis

tanc

e in

the

are

a of

str

engt

heni

ngas

sns.

(e.g

., m

anag

emen

t &

gro

up d

ynam

ics)

.S

tren

gthe

n ex

istin

g as

sns.

, &

per

haps

cre

ate

anum

brel

la a

grib

usin

ess

assn

. th

at w

ould

giv

em

embe

rs a

str

onge

r co

llect

ive

voic

e in

pol

icy

deci

sion

s th

at a

ffect

the

m.

Ide

ntify

, un

ders

tand

, &

mea

sure

the

crit

eria

for

ass

n. s

ucce

ss,

espe

cial

lyfo

r S

ME

ass

ns.

Doe

s an

ass

ocia

tion

have

a s

peci

fic p

lan

&tim

efra

me

for

reac

hing

fin

anci

al s

elf-

sust

aina

bilit

y,in

clud

ing

sour

ces

of f

unds

?

Can

ass

ns.

be u

sed

to i

mpr

ove

inpu

t di

strib

utio

n(&

rep

lace

old

gov

ernm

ent

chan

nels

)?

10)

Sug

gest

ed N

ew M

echa

-ni

sms

to I

ncre

ase

Pro

ject

Effe

ctiv

enes

s/N

ew P

roje

ctO

ppor

tuni

ties

or A

ppro

ache

s

11)

Sug

gest

ed N

ewIn

dic

ato

rs

12)

Oth

er I

nfor

mat

ion/

Key

Issu

es

57

A -

6

Inno

vativ

e P

roje

ct S

umm

ary

- C

AA

S

Out

put

Are

a of

Foc

us

Cou

ntry

:U

gand

aT

itle:

CA

SS

(A

fter

1991

re-

orie

ntat

ion)

Coo

pera

tive

Spo

nsor

:U

SA

ID

Sta

rt D

ate:

1991

Com

plet

ion

Dat

e:O

ct.

1994

(ex

cept

PL4

80 &

Co-

op B

ank

Fin

anci

ng)

Pro

ject

Val

ue:$

10 m

illio

n

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

1)

Rel

evan

t O

bjec

tives

2)

How

is

it In

nova

tive

3)

Per

form

ance

Ind

icat

ors

4)

Ext

erna

l In

fluen

ces

5)

Suc

cess

of

Rel

evan

tIn

terv

entio

ns

Pro

vide

sup

port

to

oils

eed

proc

esso

rs a

ssoc

iatio

n(U

OS

PA

) to

inc

reas

e do

mes

tic e

dibl

e oi

l pr

oduc

-tio

n &

red

uce

impo

rts.

Cre

ate

depa

rtm

ent

unde

rU

NE

X (

subs

idia

ry c

ompa

ny o

f U

CA

) to

exp

ort

for

coffe

e co

oper

ativ

es.

Fac

ilita

ting

linka

ges

betw

een

prod

ucer

coo

pera

-tiv

es &

priv

ate

expo

rter

s of

cof

fee.

An

asso

ciat

ion

of p

roce

ssor

s as

a m

echa

nism

for

stim

ulat

ing

dom

estic

pro

duct

ion

& r

educ

ing

impo

rts.

Diff

icul

t to

det

erm

ine

appa

rent

ly m

inim

al q

uant

ita-

tive

mea

sure

men

ts w

ere

esta

blis

hed.

Wid

espr

ead

by i

nept

itude

& t

heft

coop

erat

ive

man

agem

ent.

Gov

ernm

ent

will

not

app

rove

de-

regi

ster

ing

defu

nct

coop

erat

ives

, ev

en t

houg

h th

ela

w a

llow

ing

it pa

ssed

. N

ewly

lib

eral

ized

env

iron-

men

t, bu

t th

ere

is s

till

grea

t di

stru

st o

f fo

rmer

top

-do

wn,

gov

ernm

ent-

influ

ence

d co

oper

ativ

es.

Afte

r its

red

esig

n in

199

1, C

AA

S s

ucce

eded

in

incr

easi

ng t

he c

apac

ity o

f se

lect

ed c

oope

rativ

es t

opr

oduc

e &

pro

cess

sun

flow

ers

& h

elpe

d m

ake

sele

cted

coo

pera

tives

mor

e kn

owle

dgea

ble

abou

tpr

oduc

ing

& m

arke

ting

NT

AE

s. O

nly

5% o

f co

op-

erat

ive

mem

bers

wer

e af

fect

ed b

y th

e pr

ojec

t.M

atch

ing

gran

ts h

elpe

d pa

y fo

r co

oper

ativ

efa

cilit

ies

& b

uild

per

ceiv

ed v

alue

of

coop

erat

ives

to

me

mb

ers

.

Afte

r re

desi

gn,

deve

lop

NT

AE

agr

ibus

ines

ses:

Rev

italiz

atio

n of

edi

ble

oil

indu

stry

.W

ork

with

new

ly l

iber

aliz

ed c

offe

eC

oope

rativ

es n

ow l

icen

sed

to d

irect

ly e

xpor

t th

eir

coffe

e.

Min

imal

: so

me

wor

k on

NT

AE

(e.

g.,

snow

pea

s) i

nnov

ativ

e in

the

cont

ext

of a

ssis

tanc

e to

coo

pera

tives

. S

hifte

d fr

om a

ssis

-ta

nce

to c

oope

rativ

es t

o su

bsec

tor

high

-val

ue N

TA

E a

ssis

tanc

em

id-p

roje

ct.

Exp

ende

d so

me

effo

rt o

n th

e ne

w b

road

ly b

ased

silk

& v

anill

ap

roje

cts.

Hav

e no

t at

tem

pted

to

serio

usly

mea

sure

im

pact

, in

clud

ing

onco

oper

ativ

e pe

ople

tra

ined

.

Impr

ovem

ent

in e

nabl

ing

envi

ronm

ent

& e

cono

my

elim

inat

edne

ed f

or s

ome

of t

he e

arly

pro

ject

com

pone

nts.

Ove

rall

resu

lts s

eem

mar

gina

l ve

rsus

the

fin

anci

al i

nves

tmen

t.E

xpor

t di

vers

ifica

tion

wor

k su

cces

sful

ly

star

ted.

Exp

orte

d 2

tons

of s

now

pea

s; e

xpec

t to

pro

duce

4,0

00 t

ons

of e

dibl

e oi

l in

1994

as

a re

sult

of o

ilsee

d re

habi

litat

ion

proj

ect;

gave

gra

nts

to29

6 so

ciet

ies

thro

ugh

mat

chin

g gr

ant

prog

ram

. C

offe

e m

arke

t-in

g bo

ard

priv

atiz

ed.

Priv

ate

sect

or d

ialo

gue

has

incr

ease

d.M

arke

t pr

ice

info

rmat

ion

seem

s w

ell

rece

ived

.

58

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

6)

Sug

gest

ed M

easu

rem

ent

Imp

rove

me

nts

7)

New

Opp

ortu

nitie

s fr

omth

e P

roje

ct

8)

Less

ons

Lear

ned

9)

Rel

evan

t Im

plic

atio

ns f

orU

SA

ID P

roje

ct D

esig

n &

Imp

lem

en

tatio

n

Mon

itor

new

ass

ns.

rega

rdin

g m

embe

r pr

iorit

yne

eds

& o

ngoi

ng s

atis

fact

ion

(e.g

., in

terv

iew

mem

bers

on

how

the

y ra

te t

he a

ssns

. pe

rfor

-m

ance

rel

ativ

e to

est

ablis

hed

obje

ctiv

es);

for

UO

SP

A i

mpa

ct o

n m

embe

rs’

viab

ility

& p

rofit

abili

ty.

Por

tion

of m

arke

ting

entit

ies’

sal

e pr

ice

rem

itted

to

prod

ucer

s. S

elf-

sust

aina

bilit

y pr

ogre

ss o

f U

CA

.M

onito

r tr

aini

ng e

ffect

iven

ess

with

6-m

onth

fol

low

-u

p.

Hel

ped

esta

blis

h oi

l S

eed

Pro

duce

rs A

ssoc

iatio

n&

Sno

w P

ea G

row

ers

Ass

ocia

tion

Whe

re &

whe

n m

embe

rs a

re c

ontr

ibut

ing

(e.g

.,m

atch

ing

dono

r’s c

ontr

ibut

ion

som

ehow

), t

helik

elih

ood

of p

roje

ct s

ucce

ss i

s dr

amat

ical

ly b

ette

r.G

over

nmen

t m

ust

stay

out

of

com

mer

cial

ly r

elat

edac

tiviti

es.

Bas

ic t

rain

ing

help

s st

rugg

ling

inst

itu-

tions

. M

anag

emen

t m

akes

the

diff

eren

ce i

n th

epe

rfor

man

ce o

f co

oper

ativ

es,

espe

cial

ly t

heir

abili

tyto

adj

ust

to c

hang

ing

cond

ition

s. W

here

coo

pera

-tiv

es a

re w

eak

& n

ot p

rovi

ding

ser

vice

s to

mem

-be

rs,

assn

s. a

re a

via

ble

alte

rnat

ive,

sin

ce m

any

prod

ucer

s st

ill h

ave

a st

rong

nee

d to

get

tog

ethe

r.

Coo

pera

tive

deve

lopm

ent

has

prov

ed l

arge

lyun

succ

essf

ul;

how

will

ass

ocia

tion

deve

lopm

ent

prov

e to

be

mor

e su

cces

sful

? D

espi

te a

lot

of

effo

rt &

mon

ey,

CA

AS

has

bee

n un

able

to

crea

tem

any

viab

le c

oope

rativ

e in

stitu

tions

, or

to

esta

blis

hth

e ap

prop

riate

rol

e of

coo

pera

tives

in

agrib

usi-

ness

or

as p

rovi

ders

of

serv

ices

to

farm

ers.

Dra

mat

ic n

eed

for

bette

r da

ta o

n di

rect

im

pact

& b

road

er b

ased

bene

ficia

ry s

atis

fact

ion

surv

eys.

Mor

e w

ork

need

ed o

n m

arke

tpo

tent

ial

for

prod

ucts

pro

mot

ed &

wha

t it

will

tak

e to

rea

lize

that

po

ten

tial.

CA

AS

ide

ntifi

ed m

arke

t fo

r sn

owpe

as (

alon

g w

ith A

NE

PP

) &

help

ed o

verc

ome

prod

uctio

n co

nstr

aint

s; m

arke

t si

ze &

sus

tain

-ab

ility

to

be d

eter

min

ed.

TA

& a

dvis

ors

are

not

likel

y to

affe

ct p

oorly

man

aged

coo

pera

-tiv

es.

Mus

t ha

ve s

erio

us s

usta

inab

ility

pla

ns &

mon

itor

sam

e(n

one

evid

ent)

. N

eed

in-d

epth

und

erst

andi

ng o

f co

mm

erci

alop

port

uniti

es &

ope

ratin

g co

nstr

aint

s to

dev

elop

effi

cien

t &

viab

le p

rogr

ams/

proj

ects

.

Foc

us,

focu

s, f

ocus

. D

etai

led

OC

A n

eede

d in

pro

ject

des

ign

phas

e. A

void

ins

titut

iona

l re

scue

, es

peci

ally

whe

n po

litic

ally

influ

ence

d. O

rigin

al d

esig

n as

sum

ed l

ow p

rodu

ctio

n w

as d

ue t

olo

w u

se o

f in

puts

& t

here

fore

foc

used

on

inpu

t de

liver

y vi

aco

oper

ativ

es;

this

tur

ned

out

to b

e a

poor

ass

umpt

ion

(far

mer

sw

ere

not

usin

g in

puts

bec

ause

it

didn

’t pa

y of

f!)

59

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

10)

New

Mec

hani

sms

toIn

crea

se P

roje

ct E

ffect

ive-

ness

/ N

ew P

roje

ct O

ppor

tuni

-tie

s or

App

roac

hes

11)

Sug

gest

ed I

ndic

ator

s

12)

Oth

er I

nfor

mat

ion/

Key

Issu

es

Sin

ce a

ssn.

sus

tain

abili

ty i

s a

func

tion

ofm

anag

emen

t, sh

ould

not

a m

ajor

don

or f

ocus

be i

nstit

utio

nal

man

agem

ent

deve

lopm

ent?

Res

truc

ture

UC

A t

o a

sust

aina

ble

size

with

high

-dem

and

serv

ices

. D

o a

form

al a

naly

sis

ofth

e co

nditi

ons

for

inst

itutio

nal

succ

ess

&pr

ogra

ms

need

ed f

or s

timul

atin

g sa

me.

Fin

anci

al v

iabi

lity

of a

ssis

ted

coop

erat

ives

.P

ortio

n &

num

ber

of c

oope

rativ

e m

embe

rshi

pth

at b

enef

ited

from

the

pro

gram

/ pr

ojec

t.M

embe

rshi

p sa

tisfa

ctio

n sc

ore

from

an

annu

alsu

rvey

.

Sho

uld

the

coop

erat

ive

mov

emen

t lo

ok a

tbr

oad

issu

es s

uch

as l

and

tenu

re?

Und

erw

hat

circ

umst

ance

s is

ins

titut

iona

l re

scue

bette

r th

an e

stab

lishi

ng a

n al

tern

ativ

e or

gani

za-

tion?

Sho

uld

rura

l co

oper

ativ

es g

et i

nvol

ved

with

NT

AE

(es

peci

ally

hig

h-va

lue)

giv

en i

tsco

mpl

exiti

es?

Can

bro

adly

foc

used

ins

titut

ions

(e.g

., co

oper

ativ

es)

be e

ffect

ive

& s

usta

inab

lein

dev

elop

ing

econ

omie

s? H

ow d

o th

eyco

mpa

re i

n ef

fect

iven

ess

to m

ore

focu

sed

&le

ss g

over

nmen

t-in

fluen

ced

assn

s.?

Whe

n &

how

sho

uld

defu

nct

coop

erat

ives

be

diss

olve

d?

Sem

i-ann

ual

proj

ect

revi

ew f

orum

(½

day

with

all

part

icip

ants

&re

pres

enta

tive

bene

ficia

ries

& ½

day

int

erna

l). “

Dev

il’s

Adv

ocat

e”as

sign

ed a

t in

tern

al s

essi

on.

Mor

e fo

rmal

& o

ngoi

ng a

naly

sis

of c

onst

rain

ts &

mea

ns f

or o

verc

omin

g sa

me.

Use

AN

EP

Psu

bsec

tor

anal

ysis

stu

dies

for

opp

ortu

nity

ide

ntifi

catio

n. M

ake

serio

us d

eter

min

atio

n of

ins

titut

iona

l vi

abili

ty

befo

re a

ttem

ptin

gto

res

cue

it.

Con

trac

tor

repo

rtin

g &

per

form

ance

ver

sus

obje

ctiv

es n

eed

tobe

muc

h be

tter

man

aged

. A

ctua

l ex

port

s or

sal

es o

f as

sist

edpr

ojec

ts v

ersu

s co

st t

o ge

nera

te.

Por

tion

of v

eget

able

oil

supp

lied

from

dom

estic

sou

rces

or

decr

ease

in

fore

ign

ex-

chan

ge u

sed

for

impo

rts.

Inc

reas

e in

out

put

of U

OS

PA

mem

-b

ers

.

Why

no

mai

ze &

bea

ns e

xpor

t pr

ogra

m?

Whi

ch s

ubse

ctor

s ha

veth

e po

tent

ial

to s

how

a r

easo

nabl

e re

turn

on

US

AID

’s i

nves

t-m

ent—

base

d on

mar

ket

pote

ntia

l, co

mpa

rativ

e ad

vant

age,

OC

A&

int

eres

ted/

capa

ble

hum

an r

esou

rces

?

60

A -

7

Inno

vativ

e P

roje

ct S

umm

ary

- S

ilk D

evel

opm

ent

Pro

ject

Out

put

Are

a of

Foc

us

Cou

ntry

:U

gand

aT

itle:

Silk

Sec

tor

Dev

elop

men

t P

roje

ctS

tart

Dat

e:Ja

n. 1

994

Com

plet

ion

Dat

e:19

96/1

997

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

1)

Rel

evan

t O

bjec

tives

2)

How

is

it In

nova

tive?

3)

Per

form

ance

Ind

icat

ors

4)

Suc

cess

of

Rel

evan

tIn

terv

entio

ns

5)

Mea

sure

men

t of

Im

prov

e-m

en

ts

6)

New

Opp

ortu

nitie

s

Tw

o-ye

ar p

ilot

proj

ect

will

be

impl

emen

ted

thro

ugh

a pr

ivat

e se

ctor

ass

n.,

the

Uga

nda

Silk

Pro

duce

rsA

ssoc

. (U

SP

A),

with

in w

hich

a P

roje

ct D

irect

orat

e(P

D)

will

be

esta

blis

hed.

The

goa

l is

to

stre

ngth

enth

e U

SP

A s

o th

at i

t w

ill b

e ab

le t

o ta

ke o

ver

all

ofth

e ac

tiviti

es o

f th

e P

D b

y th

e en

d of

the

2nd

yea

r.

Cha

ngin

g U

SP

A f

rom

an

expo

rter

-led

asso

ciat

ion

to a

mor

e pr

oduc

er-o

rient

ed a

ssoc

iatio

n; i

t is

too

early

to

dete

rmin

e ho

w s

ucce

ssfu

l th

is t

rans

ition

will

be.

A c

ompl

ete

inte

rnal

mon

itorin

g sy

stem

to

bees

tabl

ishe

d, i

nclu

ding

ful

l de

tails

of

tech

nica

l,so

cioe

cono

mic

, &

fin

anci

al d

ata

to b

e co

llect

ed b

yU

SP

A.

Too

ear

ly t

o de

term

ine.

Will

nee

d to

mon

itor

US

PA

reg

ardi

ng m

embe

rsa

tisfa

ctio

n (e

.g.,

inte

rvie

w m

embe

rs o

n ho

w t

hey

rate

the

ass

ns.

perf

orm

ance

rel

ativ

e to

est

ablis

hed

obje

ctiv

es)

have

an

impa

ct o

n m

embe

rs’

prof

itabi

l-ity

. A

noth

er m

easu

re w

ill b

e w

heth

er U

SP

A c

ange

nera

te e

noug

h re

venu

es (

e.g.

, fr

om f

ees

for

serv

ice,

exp

ort

cess

, m

embe

rshi

p fe

es)

afte

r 2

year

s to

be

self-

sust

aini

ng.

Brin

g ab

out

a su

stai

nabl

e in

crea

se i

n na

tiona

l ex

port

rev

enue

s&

sm

allh

olde

r in

com

es t

hrou

gh t

he d

evel

opm

ent

& s

tren

gthe

n-in

g of

the

com

mer

cial

ser

icul

ture

(si

lk)

sect

or.

Tot

ally

new

sm

allh

olde

r-ba

sed

NT

AE

. P

lans

to

deve

lop

& a

pply

a re

plic

able

cro

p-cr

edit

pack

age

& e

xten

sion

thr

ough

the

esta

blis

hmen

t of

24

Silk

Dev

elop

men

t C

ente

rs (

SD

Cs)

ser

ving

240

farm

ers.

Ass

n. p

rovi

ded

exte

nsio

n. I

nteg

rate

d pr

oduc

er &

proc

esso

r as

sn.

SD

Cs

to b

e tu

rned

ove

r to

the

ass

n. a

t en

d of

pro

ject

.

Will

hav

e so

me

com

paris

ons

of p

artic

ipat

ing

vers

us n

onpa

rtic

i-pa

ting

farm

ers.

Bas

elin

e su

rvey

of

farm

ers

will

be

follo

wed

up

afte

r 18

mon

ths.

Goo

d st

artin

g lo

g fr

ame.

Too

ear

ly t

o de

term

ine.

Par

ticip

ator

y fa

rmer

ver

sus

non-

part

icip

ator

y fa

rmer

inc

ome

surv

eys

will

be

a go

od m

echa

nism

for

mon

itorin

g im

pact

(i.e

.,ba

selin

e ve

rsus

afte

r se

vera

l ye

ars)

. F

arm

er s

atis

fact

ion

with

cost

ver

sus

valu

e of

ext

ensi

on &

mar

ketin

g se

rvic

es.

61

Out

put

Are

a of

Foc

us

Ass

ocia

tion

Dev

elop

men

t,S

tren

gthe

ning

, S

uste

nanc

eN

on-T

radi

tiona

l A

gric

ultu

ral

Exp

ort

Dev

elop

men

t(e

spec

ially

hor

ticul

ture

)

Goo

d po

tent

ial

for

valu

e-ad

ded

activ

ities

aim

ed a

t w

omen

’sgr

oups

/NG

Os

(e.g

., si

lk w

eavi

ng,

easy

to

star

t w

ith e

xpor

t-re

ject

ma

teri

als

).

If th

ere

is a

nic

he m

arke

t or

one

with

min

imal

alte

rnat

ive

outle

tsfo

r pr

oduc

ers,

low

cap

ital

inte

nsity

, &

hig

h la

bor

inte

nsity

, fu

ll-se

rvic

e lo

cal

expo

rter

(s),

and

an

esta

blis

hed

inte

rnat

iona

lm

arke

t, th

en S

ME

par

ticip

atio

n in

NT

AE

s ca

n w

ork.

Ces

s(t

owar

d se

lf-fu

ndin

g) o

n ex

port

s is

acc

epta

ble

to p

artic

ipan

ts.

Som

ethi

ng a

s co

mpl

ex a

s si

lk r

equi

res

hand

s-on

TA

& s

tron

gex

port

er-p

rodu

cer

ties;

an

inte

grat

ed p

rodu

cer-

expo

rter

ass

ocia

-tio

n m

ay b

e th

e an

swer

for

suc

h N

TA

Es.

Pro

ject

was

pre

cede

dw

ith d

etai

led

subs

ecto

r fe

asib

ility

stu

dy.

Ver

y si

mila

r to

asp

ecia

lized

AD

C.

Ass

n. m

ust

be p

erce

ived

as

bein

g of

ben

efit

toa

ll m

em

be

rs.

7)

Less

ons

Lear

ned

8)

Rel

evan

t Im

plic

atio

ns f

orU

SA

ID P

roje

ct D

esig

n &

Imp

lem

en

tatio

n

Key

cha

ract

eris

tic o

f a

stro

ng a

ssn.

is

good

man

agem

ent

staf

f (m

embe

rs m

ust

belie

ve i

t is

man

aged

wel

l). A

n as

sn.

shou

ld n

ot g

etin

volv

ed i

n to

o m

any

activ

ities

; it

shou

ld s

tay

focu

sed

assn

. m

ust

be s

een

as r

epre

sent

ing

ever

yone

& e

nfor

cing

the

rul

es f

or e

very

one.

Wor

king

with

an

assn

. cl

osel

y fo

r th

e fir

st f

ewye

ars

to g

et t

hem

cle

arly

foc

used

on

prov

idin

gm

embe

rshi

p w

ith n

eede

d se

rvic

es m

ay h

elp

ensu

re v

iabi

lity

over

the

lon

g-te

rm,

ther

e m

ust

be a

cle

ar p

lan

on h

ow t

he a

ssn.

will

bec

ome

finan

cial

ly s

elf-

sust

aini

ng.

63

Appendix BAssociation Profiles

B-1 KESSFA

B-2 AAK

B-3 FPEAK

B-4 UVEA

B-5 USPA

B-6 UOSPA

B-7 UNFA

B-8 UMA

B-9 UGEA

B-10 VHA

64

B-1 Association Profile - KESSFA

Kenya Small Scale Farmers Association (KESSFA)

Basic Objective

Number of Clients

Years in Existence(offering services toclients)

Operating Budget

Percent Self-Financing(or goal toward becom-ing self-financing)

Annual Donor Support

% Post-HarvestAgriculture Business

Number of staff

Major Strengths*

Major Weaknesses*

Assist small-scale horticultural farmers in organizing into self-help groups; act asa broker between these groups & exporters.

2,817 farmers (Nov. 1994), organized into 107 (SHGs)

1 year; formed in 1993Key personnel are from Kenya National Farmers Union, also supported by HSF.

$226,000 Annual revenues: KShs 791,479 (US$16,000)

< 10%; no specific plan to become more financially self-sustaining, but goals are15–20% for year 2, 20–30% for year 3, & 40% by year 4.

KShs 10.5 million (US$210,000)

100% fresh horticultural products; in future would like to work on increasing value-added activities by members.

4 secretariat staff

Allows small farmers access to competitive export markets that they would nothave as individuals.Training programs very well received.Seed supply & what to plant suggestions both important.Very well focused/limited in scope (geographic & number of members).

Limited ability of members to pay membership dues & think about the longerterm.No credit available for members.May be some tribal favoritism.Lack of transport availability from areas without good roads.Highly seasonal business, thus excess capacity off season.Bulk versus value-added ratio is too high.

* Primarily member/client defined

65

B-2 Association Profile - AAK

Agribusiness Association of Kenya (AAK)

Basic Objective

Number of Clients

Years in Existence(offering services toclients)

Operating Budget

Percent Self-Financing(or goal toward becom-ing self-financing)

Annual Donor Support

% Post-HarvestAgriculture

Number of Staff

Major Strengths*

Major Weaknesses*

Facilitate networking between agribusinesses & strengthen linkages betweenmicro enterprises & large-scale producers & processors; promotion of agribusi-ness dialogue especially with financial institutions; & lobbying.

21 firms

Formed in 1992

Not fully active

Plans for study to examine the range of services to be offered to members by theassn. & possibilities for income-generating activities with the goal of attainingfinancial self-sufficiency within a 3-year period.

Seeking USAID funding of Secretariat: $450,000 for 3 years

> 80%

Proposed secretariat staff: 4 full-time, 1 part-time

Members include the most successful agribusinesses in Kenya; potential lobbyingpower is high.

Lack of a thorough understanding of specific information & service needs ofmembers & their willingness to pay for these services. Small-scale & large-scalemembers likely to have very different needs; not clear how linkages between thetwo are to be fostered.

* Primarily member/client defined

66

B-3 Association Profile - Uganda Oilseed Processors Association (UOSPA)

Fresh Produce Exporters Association of Kenya (FPEAK)

Basic Objectives

Number of Members

Years in Existence(offering services toclients)

Operating Budget

Percent Self-Financing

Annual Donor Support

% Post-Harvest Agricul-ture BusinessNumber of Staff

Major Strengths*

Major Weaknesses*

1) The collective representation of the fresh produce & floral industry in allmatters related to potential government legislation & intervention (original objec-tive).2) Providing services; bringing new technologies & information to members (newadditional objective).

> 200; around 50 active members

Established originally in 1975; formal secretariat established for first time in 1992;new & more active board of directors elected in 1994.

$65,000 (1994)

70%

$30,000 (1994)

100%

2 part-time; 6 board members, 1 part-time.

Industry-specific association allows good focus on meeting members’needs. Newemphasis on provision of marketing, technical services (e.g., new varieties);funding/financial information to members is more demand-driven than previously.Market News Service—eveloped & financed by KEDS. Most value is to medium &small firms.

Dealing with a membership not yet aware & educated on benefits of a tradeassociation (e.g., relatively unsophisticated managers, many of whom are farmerswho recently started exporting).Insufficient emphasis on sea freight rate reduction.

* Primarily member/client defined

67

* Primarily member/client defined

B-4 Association Profile - UVGEA

Uganda Vanilla Growers and Exporters Association (UVGEA)

Basic Objective

Number of Members/Clients

Years in Existence(offering services)

Operating Budget

% Self-Financing

Annual Donor Support

Costs versus Returns ofSupport

Number of Staff

Major Strengths*

Major Weaknesses*

Increase production & exports of vanilla

Around 5,000 producers & 2 exporting firms

This assn. is in the process of being formed; until now it has existed in the formof one vanilla producers group (around 2,000 members) & one vanilla producerscooperative (2,000 members), working with 2 vanilla exporters.

Not clearly established; assn. charges 2,000 Shs to join; 1,000 Shs/year fee.Plan is for salary of 27 technical field staff (now being paid by USAID/EPADU tobe paid for by assn. (timeframe not clear).

Searching for donor support; have received assistance from USAID for the last 3years. APDF feasibility study assistance.

USAID spent around $36,000 on extension services to farmers over the 3 years;$25,000 on experts; results: an increase in vanilla exports from $40,000 to$900,000 from 1990 to1994.

27 technical field staff; cost to USAID: $1,000/mo. for 3 years

Have a strong voice on policy matters influencing the vanilla industry; will make iteasier for donors & government to assist industry through one association; mustbecome member-driven, perhaps more by the exporters (who want continueddonor financial assistance) than by the farmers themselves; will make it easier toensure Uganda’s reputation for reliable, high-quality vanilla; will be easier tobecome self-sustaining (& pay for field technical staff) if exporters are alsomembers.

Exporter objectives will at times conflict with farmers’ objectives; may weakenfarmers’bargaining strength vis-à-vis exporters. Success will require ongoinghands-on support and management by the main entrepreneur. Producers percent-age of export value appears low at this time. UVAN dominates exports but theowner has been the driving force in industry & association development.

68

B-5 Association Profile - USPA

Uganda Silk Producers Association (USPA)

Basic Objective

Number of Members/Clients

Years in Existence(offering services)

Operating Budget

% Self-Financing

Annual Donor Support

% Post-Harvest Agri-business1) Revenues2) Clients

Number of staff

Major Strengths*

Major Weaknesses*

Bring about a sustainable increase in national export revenues & smallholderincomes through the development & strengthening of the commercial sericulturesector.

At first, USPA consisted of 2 exporters; when the EU agreed to support them,they insisted on USPA being open to farmers; now have 400 members, & areseeing 1 or 2 new exporters entering the business.

4 years; new integrated assn. started in Jan. 1994

1.3 million Ush average over first 3 years. Ush 60,000/member (US$50) neededfor sustainability

Goal to be self-financing in 3 years; however, EU does not appear to have a clearplan on how this will be accomplished.

ECU 2.2 million over 3 years; includes silk development facilities & farmer loanfacilities.

100%; Good potential for increased value-added at the farm-level (e.g., farmerswill be drying cocoons themselves in the silk development centers being con-structed); EU plans to work with NGOs & women’s groups doing silk weaving.

To be determined. However, by the end of the second year it is supposed to bemanaging most project activities, which are projected to require 4–5 full-timeprofessionals.

Producers should benefit more from the new assn. than from the original ex-porter-led assn. current chairman (also exporter) is seen as fair & impartial & hasbeen a positive driving force behind assn. & industry development. Conceptually,the USPA will become the driving force in the industry providing significant inputs& financing to growers.

May be friction between processor/exporter & grower members; no clear plan tomake assn. self-financing. Two-year phaseover from external (EU) to assn.management of significant services seems overly optimistic.

* Primarily member/client defined

69

B-6 Association Profile - UOSPA

Uganda Oilseed Processors Association (UOSPA)

Basic Objective

Number of Members/Clients

Years in Existence(offering services)

Operating Budget

% Self-Financing

Annual Donor Support

% Post-Harvest Agri-business

Number of staff

Strengths*

Major Weaknesses*

Ensure availability of high-quality planting material via seed multiplication pro-grams; secure working capital credit for members to purchase raw material; offerextension advice to oilseed growers; provide members with oilseed millingtechnical training; assist them to find spare parts; market their output.

40–0; 20 paid members

Registered April 7, 1994; just starting up. Need help in drafting associationstructure, by-laws, organization, etc.

107,135,000 UShs for 2 years (from USAID/CAAS project)

Only 0.6% for 1994 from 20 members, who each paid 15,000 UShs membershipfee

$115,000 USAID/CAAS grant for first 2 years

100%

1 Administrative Secretary; hiring a Project Manager

Potential to increase oilseeds production. Members come from all regions of thecountry. If assn. is successful in helping members address & overcome theiroperational constraints, there should be a considerable increase in vegetable oilproduction. The association may be able to arrange member access to workingcapital.

Lack of member business & oil processing technical skills. Many members notfinancially viable. Some believe UOSPA’s role is to channel donor funds tomembers. Members as of yet not using the assn. to lobby. Under the wings ofUCA. No overall plan for developing the oilseed sector. Largest number ofmembers account for a very small % of production (70% is by 1 firm). Very littlefunding for TA to mill operators. Plans for quality oil seed multiplication aresketchy.

* Primarily member/client defined

70

B-7 Association Profile - UNFA

Uganda National Farmers Association (UNFA)

Basic Objective

Number of Members

Years in Existence(offering services)

Operating Budget

% Self-Financing

Annual DonorSupport

% Agribusiness

Number of Staff

Strengths*

Major Weaknesses*

To raise the living standards of Ugandan farmers through enhanced “voice” & theprovision of financial & technical assistance. To be the premier agriculturalorganization in Uganda.

40,000 in 15 districts; Ush 1,500 to join; 1,000/year.

Approximately 3 years. Formally established Sept. 1993. Major member needsperceived to be credit facilities & marketing services/information.

Around $4 million for first 5 years

Plan: 10% in first year; 20% in 2nd; up to 100% by 10th. Membership proceedsgo 60% to district & 40% to headquarters.

DANIDA has provided $4 million for the first 5 years. Chief Technical, Extension& Marketing Advisors from DANIDA. Early funding from USAID, World FoodProgram, & FAO.

100%; heavy focus on inputs—credit & extension—but some on market informa-tion (domestic S/D balancing).

30 full-time; 15 of which are located in the 15 districts where UNFA is currentlyfully operational

UNFA is structured as a “bottom-up” farmer driven organization based on sub-assns. If successful will eventually replace an ineffective government extensionservice; now manage extension in 15 of 39 districts. Each district will identify 2–3high-value crops to focus on. Market prices from 39 districts & recommendedsuppliers are two important services. Sponsors national agricultural exposition.If 70% of farmers join, will represent 63% of the population.

Lack of focus; objectives very ambitious. Not clear how association will generatesufficient revenues to become self-sustaining. Founders are very politicallymotivated. Regional association coordinator will work under regional governmentappointee. Will current government extension service allow themselves to betaken over? Will assn. workers, especially for supplier recommendations be,“influenced” by less scrupulous vendors?

* Primarily member/client defined

71

B-8 Association Profile - UMA

Uganda Manufacturers Association (UMA)

Basic Objective

Number of Members/Clients

Years in Existence(offering services toclients)

Operating Budget

% Self-Financing

Annual Donor Support

% Post-Harvest Agri-business

Number of staff

Strengths*

Major Weaknesses*

Build Ugandan industry. Increase human resources capacity regarding business.Promote, protect, & coordinate the interests of industrialists; act as a watchdogand mouthpiece for members; initiate & facilitate discussions & exchange informa-tion among members on issues of concern; advise government on key policiesaffecting industry.

410 ordinary plus some associated members; related associations & affiliatedmembers; suppliers to industry

Formed in 1966; serious activation in 1988

$654,000 for UMA secretariat; membership fees range from $55 to $380 depend-ing on company size; consultancy financed by USAID. Income includes gate feesto UMA-owned trade fair grounds.

Secretariat - 98%, 2% from British Council; consultancy financed by USAID.

$255,000. Substantial USAID grants to the Consulting unit for policy & feasibilitystudies, joint government/private sector forums & 2 young MBAs on UMA staff.USAID also supports its consultancy work with SMEs. Total 1995 USAID support$250,000.

Major area of emphasis; both NTAE & import substitution (e.g., vegetable oils).

24-member board; UMA secretariat (chm., v. chm., sec. & treas.) has 16 staff (7graduates); the consulting and Information services group has 8 full time, gradu-ate consultants.

Strong, competent leadership. Focus on informing members of business potential(e.g., market–where & what) policy modifications needed, and availability ofinputs. Interested in establishing export quality standards. Has a consultancy unitto help both SMEs & large companies. No financial accountability problems. Veryconducive relationship with government & the president. Young, highly qualifiedprofessional staff.

Large firms in Uganda are relatively small in global terms. Some public sectorinstitutions very skeptical of an emerging private sector & try to inhibit itsprogress. Some policy (e.g., selective tax exemption) and enforcement (smug-gling) issues make it difficult for the private sector. Need more funding for trainingof staff and members. Consultancy still heavily financed by USAID.

* Primarily member/client defined

72

B-9 Uganda Grain Exporters Association

n Need to export $500,000 to join (serious export-ers only).

n Initially there were 24 members there are fewernow because the grain export business becamenonviable due to fluctuating exchange rates, de-teriorating seed (and therefore product) quality,working capital costs; and few pay but manywant benefits.

n The regional grain export business is heavilyinfluenced by political and government officials’personal benefit decisions. Therefore, it is verydifficult to predict price and access.

n The grain export business needs more support onseed quality improvement and extension servicesin order to increase the quality and productivityof grain output.

n The problems and likely solutions to the grainexport trade are known; the challenge is gettingit done.

B-10 Uganda Horticultural Association

n 80 members; only 20 are exporting.

n It has undergone several evolutions and is stillevolving.

n The flower exporters broke from the associationdue to their perceived specialized needs and lead-ership “jockeying”; now the membership con-sists of fruit, vegetable, and spice companies.

n Association leadership (from Fruitpack) is nowtrying to develop an NTAE association with hor-ticultural, flower, and grain companies organizedinto three divisions.

n A larger association is wanted because the largerthe membership the greater the voice and thegreater the amount of funding available for asecretariat.

n USAID/VOCA did a Horticulture Assn. feasibilitystudy, but their proposal for its structure wasexcessively farmer based.

n Most members’ problems/needs are in market-ing, not production.

n Horticultural association leadership believes thatan NTAE association can be successful if it fo-cuses on common membership needs and avoidspolitical considerations (i.e., power management).

73

Appendix CDevelopment Financing Organizations

C-1 Development Finance Company of Uganda(DFCU)

C-2 Africa Project Development Facility (APDF)

C-3 Kenya Trust for Private Enterprise (KTPE)

C-1 Development Finance Company of Uganda(DFCU)

n Established in 1964 during the beginning ofUganda’s development, refinanced at $2.5 mil-lion and fully rehabilitated in 1990.

n Ugandan company, with most of its shares heldby foreign entities. Shareholders, at 25 percenteach are the Uganda Development Corporation(UDC), Commonwealth Development Corpora-tion (GDC), German Development Corporation(DEG), and the International Finance Corpora-tion (IFC).

n View themselves as key players in the currentdevelopment boom within Uganda’s private sec-tor because they combine innovative financingand efficient loan processing; looking for seriousentrepreneurs with well thought through busi-ness plans; gives fast service to companies withexperienced management and a clear focus.

n Offers long-term loans of between $100,000 and$1.5 million in either foreign or local currency atcompetitive interest rates (cost +2 points andfee); larger projects can be shared with their in-ternational shareholders.

n Will invest equity of between $50,000 and$800,000 for up to 50 percent (like redeemablepreferred shares).

n Staff: 3 expatriates, 12 Ugandan professionals,12 administrative.

n Portfolio 50 percent agribusiness related; agri-business loans are difficult due to the geographicspread of the businesses and the difficulty of

valuing and using land as collateral.

n Has seen a rapid growth in its long and medium-term shilling and foreign currency finance portfolioin the last five years; this growth is attributed to thecompany’s ability to identify profitable projects, getthe finance on line in the shortest time possible, andoffer its services at a reasonable cost.

n Examples of the 25 loans and 15 equity invest-ments include: UVAN, the first vanilla process-ing plant set up in 15 years and enjoying a highdemand on the export market; Nile Roses, a hor-ticultural concern that exports roses to Europe;and Capital Radio, one of the first FM stereoradio stations to go on the air in Uganda,

n Offers a mix of financial and technical expertiseto client companies; technical department hasqualified and experienced industrial/mechanicalengineers and agriculturists who carry out in-depth technical appraisals and offer free techni-cal advice.

n Do rigorous potential project appraisals usingown staff, establish extensive conditions prece-dent with clients, and pay their suppliers directlyafter verification of specifications and appropri-ateness of purchases.

n Provide some advice on inputs but minimal post-loan supervision.

n Biggest challenge is finding borrowers with in-tegrity; viable borrowers/projects are the limita-tion, not the availability of funds; professionalproject management is in short supply and isexpensive.

n Escape (how they get their money and returnsback) is sale of shares to entrepreneur or similarcompany, no stock market.

n In the near future will form a leasing companythat will lease out assets with no collateral secu-rity. Such assets may include production tools

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and equipment, automobiles, office equipmentand furniture, computers, and the like.

C-2 Africa Project Development Facility(APDF), Uganda activities

n OCA program in Uganda was financed by aUSAID grant after USAID/APDF identified aneed for soft funding to cover startup costs ofexport businesses in Uganda (e.g., bringing inoutside experts to manage projects such as roseexports, since no such Ugandan expertise exists).

n Need is not unique to Uganda, although in moredeveloped countries (e.g., Kenya) there is moretechnical expertise available locally.

n Suggests that a regional OCA-type pool of fundsavailable to APDF would be very helpful sincethe are a number of USAID projects in SSA, andAPDF management would like to be able to tapinto a regional fund in order to contribute theirexpertise to these projects where and when ap-propriate.

n Main reason APDF requires a $250,000 mini-mum size project is that below this the costs aretoo high relative to project size; that is, the sameamount of time and other resources tends to beinvested for a $250,000 project as for a $5 mil-lion project,

n Two Uganda examples where APDF has benttheir minimum size rules for USAID (with as-yetuncertain results) include:

Snowpea production —group of smallholders in south-west Uganda: interesting example of USAID assist-ing at the production end with no clear marketingchannel in sight. No exporter in the area was willingto take on the risk of exporting snowpeas for thefarmers group. Without this vital link (ideally estab-lished before production), it is not likely that theundertaking will succeed (i.e., it may turn out thatthese producers would be better off growing maize).

Matovu chilies —total project value of $180,000;entrepreneur puts up roughly $50,000 (i.e., less thanAPDF’s normal 40 percent of total project cost mini-mum). APDF has invested a tremendous amount oftime trying to get this (apparently) entrepreneur to

focus his energies on the project, and brought in achili expert to look at production and marketing is-sues. As is often the case, the entrepreneur is notwilling to risk committing himself totally to the project(i.e., he is still involved with various other things anddoes not focus his energies on this project). It isunclear whether this endeavor will be successful.

n Is proposing to use one or two local consultingfirms, with APDF’s oversight and training; willthen go down to projects of $100,000, but notlower; however, the lower the dollar value, theless able APDF is to recover costs,

n Is no doubt that APDF’s services are needed atthe lower level; issue is the cost-effectiveness ofproviding these services; since smaller firms donot need the same intensity of services, it shouldbe possible to provide them at a lower cost.

C-3 Kenya Trust for Private Enterprise (KTPE)

n Purpose was to strengthen Kenyan institutionaland human resource’s capabilities to assist firmsvia equity financing; 20–40 businesses were tobe expanded and/or restructured and total newinvestment, employment, output, foreign ex-change generation, and tax revenues increased.

n Industrial Promotion Services Ltd. (IPS), an ex-isting company, and Kenya Equity Management(KEM), a new company, were the intermediariesfor equity funds dispersement.

n All but one of the macro measurements (in-creased tax revenues) were met, but there isminimal evidence this was directly influenced bythe project.

n Basically the market was not ready for and didnot perceive the need to use venture capital.

n Kenyan firms typically operate with a very highdebt; toequity ratio and prefer financing via addi-tional debt versus sharing equity with others;owners do not even want to share accurate finan-cial information with potential partners; inad-equate market opportunity information and lim-ited entrepreneurial capabilities means good newventures are not very numerous; third party in-vestors are rare due to the minimal “protection”

75

available for their investment.

n Overall project goals were unrealistic, and wouldbe unrealistic even for fully developed venturecapital markets such as those in the US.

n IPS operates as a holding company, directly man-ages its investments, and “rolls” very few (25percent in 30 years) of its investments.

n KEM operates more as a merchant banking com-pany than as a provider of venture capital,

n There is considerable uncertainly about whetherthe venture capital managerial resources at IPCor KEM were sufficient for the task at hand.

n USAID resources allocated to the project wereinsufficient to support one, much less two, ven-

ture capital firms; there was also insufficientmonitoring, guidance and interaction betweenKEM and USAID and IPS and USAID.

n Due to the devaluation of the KSh in 1993, the US$value of the trust was decreasing since there werefew foreign exchange–based investments and thereturns were insufficient to offset devaluation.

n If the project objectives were to experiment onand learn about the applicability of venture capi-tal in Kenya, this was realized.

n USAID program designers and implementationmanagers had an insufficient understanding ofventure capital in embryonic markets.

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77

Appendix DPrivate Enterprise Profiles

D-1 Karzan

D-2 Standard Chartered Estate Management (SCEM)

D-3 Lonrho

D-4 Echuka Farms

D-5 Ronco Pyrethrum Project

D-6 Ziwa Horticultural Exporters

D-1 Karzan

Karzan is a medium-size of flower exporter with agood export market that can not grow using small-holder sourcing. With the shift in the EC market todirect (versus auction) sales, Karzan is using con-trolled Joint Venture (JV) production arrangementsto meet the quality requirements of this market.

In business 3+ years; mostly non-roses.

n Works with three categories of suppliers; smallindependent outgrowers (6 -7 million stems/year),commercial clients (35 million stems), and JV orowned production (currently 4 million stems).

n Has about 110 small outgrowers, whose plots arebetween 0.5 and 2.5 acres.

n Collects from outgrowers by truck and landcruiser; very few deliver to Karzan’s (K) coldstore.

n Provides fertilizer and some planting materials,but only to outgrowers they know will sell themflowers.

n Grades flowers at the cold store and pays 2times/month on a graded basis.

n Outgrowers ability to expand is minimal due tocapital requirements (cold store) and a limitedmarket size for the easier to grow outdoor variet-ies.

n Clients are larger growers who have from 10–20acres each; they grade their own flowers (some

roses under plastic), have their own cold stores,and deliver to Karzan they range from a bottler toexperienced horticulturists.

n Karzan helped clients establish their operationsand provides ongoing TA (by the 2 Karzan own-ers) and marketing; clients pay Karzan a com-mission for this service.

n Karzan consolidates clients’ shipments, marketsvia their Dutch agent, receives payment from theEC customer, subtracts their commission, andpays the client.

n Capital availability is also a constraint for thesmaller clients since cold stores and transporta-tion equipment is expensive.

n Have recently developed 20 acres of “controlled”production under lights as JVs with a few of theirbest growers,

n JVs will accept Karzan’s advise and know howto manage or hire professional farm/operationsmanagers; smaller firms do not have the scale todo this.

n Use one agent in Holland and sell 70 percent toauctions (under quotas) and 30 percent direct towholesalers.

n Dutch growers started the two auctions andtherefore foreign quotas are being reduced.

n Agent provides daily prices via fax.

n Agent can market more flowers, especially viadirect sales, than Karzan can ship.

n Expect nearly all business expansion to be fromown/JV production due to ability to control out-put type, quality, and timing; the direct market(highest growth channel) will reject off specproduct, not just pay a lower price as at theauction.

n Their JV based expansion will be in specialized,

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high-technology varieties to minimize competi-tion, maximize price, and thus reduce the relativeimportance ( percent) of freight cost.

n Freight was $1.75/kg in late 1994 and $1.86 in1993; the flower shippers together negotiated alower rate (Ethiopia is $0.95/kg.).

n Excess of $0.12/kg. goes to HCDA.

n FPEAK’s impact not impressive, but they didhelp resolve the Kenya Air Freight handling prob-lem.

n Kenya’s advantage is year-round production (i.e.,off-season supply to Europe.

D-2 Standard Chartered Estate Management(SCEM)

SCEM manages vast production acreage for largeowners, cooperatives and multi-shareholder farmingcompanies. Their full service approach has resultedin almost no defaults in a very large (KSh 70 billion)agricultural portfolio. Their efforts at consolidatingsmallholders into larger more efficient units have notbeen very successful, usually due to “social” prob-lems.

n 17 years of experience in estate management;acquired by Standard Chartered in 1984.

n Has 217 employees and manages 277,100 acresproducing coffee (30 percent of Kenya’s acre-age), tea, sisal, sugar, wheat, mixed farming, hor-ticulture, and ranching; largest estate manage-ment company in Sub-Saharan Africa.

n Standard Chartered resources (mostly loans) toenterprises SCEM manages are KSh 70 billion(US$1.4 billion).

n Objectives are to expand and protect StandardCharter’s commitment to Kenyan agriculture (cur-rently 23 percent of its loan portfolio) and effec-tively manage owners’ operations.

n Package includes finance, management, input sup-ply, accounting, and sales agency.

n Agree on business plan and budget with owner(s)at beginning of the year and take full responsibil-ity for implementing agreed plan.

n Draws down pre-established credit lines (securedby property and the crop) for inputs, sells output,and pays off loans, then pays owners from saleproceeds.

n Input supplies are directly imported in bulk withextensive back-up inventory.

n Some estates are jointly owned by cooperative orshareholder groups therefore second party pro-fessional management minimizes internal dissent.

n Have an in-house training facility for farm andestate managers; each managed estate has anSCEM-hired manager,

n Also does feasibility studies, turn-key projects,and provides TA to financial institutions (e.g.,IFC and APDF).

n Agency business most straight forward when amarketing board is involved, thus price informa-tion is well known.

n Has had poor experience managing consolidatedacreage of small horticultural growers; politicalconsiderations, differences of opinion amongmembers, and their accounting system prefer-ences cause problems.

n Developed a plan for a large project for consoli-dating many smallholder dilapidated coffee plan-tations, rehabilitating them, and providingSCEM’s full services; the rehabilitation wouldneed donor financing and this is still being con-sidered by the EU; could not include smallhold-ers of less than 5 acres due to the administration/reporting costs versus potential revenue.

n Have similar estate management activities inGhana, Zambia, Malawi, and Zimbabwe.

n Provided initial assistance to Ziwa’s (Uganda)asparagus and leatherleaf startup, but this wasnot very successful and an ANEPP-provided con-sultant from California had to take over.

D-3 Lonrho

Lonrho is a diversified mega agribusiness in the Kenyacontext and is extensively backward and forwardintegrated. It makes extensive use of contract grow-

79

ers but provides model farms, high-technology in-puts, and its own extension service. It also does mostof its own applied research.

n Agribusiness division has 4,000 employees.

n Highly integrated, high-technology production,processing (much high value added), and market-ing— both export (18 percent, mostly regional)and domestic (82 percent) — organization.

n Originally in forestry, cereal production, and cattlefarming; now one of Kenya’s largest producersof timber products, seed maize, waddle extract,mushrooms, milk, cattle, pigs, poultry, pork, andbeef products (also ostrich farming).

n Important consumer brands include Farmer’sChoice (85 percent processed meats market share),Eldore, Flamingo, and Kenmosa.

n 50 percent of meat raw materials from ownfarms, 50 percent from “small” farmers.

n Supply semen, breeding guilts, and feed to con-tract producers.

n Have the largest refrigerated food distributionsystem in Kenya; also distribute other’s products,including Echuka Farm’s yogurt.

n The efficiency of full integration, professionalmanagement, and scale economies results inhighly competitive processed meat exports.

n Lonrho provides the technology, capital, and in-ternational marketing expertise and the Kenyasmall farmer his labor and the raw material.

n Breed Boran cattle and are exporting both semenand embryos.

n Have game reserves attached to their cattle ranchesas a means to help preserve game in a self-financ-ing manner (i.e., via tourism ([Lonrho Hotels]).

n Wattle operations use 85 percent outside sourc-ing.

n Mushroom operations use wheat straw and spentwattle bark.

n Use outgrowers for seed potato multiplication.

n Provide own extension service for all higher tech-nology contract production and most extensionservices for other contract production.

n Have an agricultural research budget similar toKenya Agricultural Research Institute’s and workon similar projects since KARI’s results are notalways applicable/suitable to Lonrho.

n Use nucleus or model farms to develop and dem-onstrate the best agricultural practices.

D-4 Ronco Pyrethrum Project

n Agro Management Group Inc. (Agro), a Califor-nia corporation owned by Ronco principals, es-tablished to invest in agribusiness in developingcountries; first investment was the production,marketing, and processing of pyrethrum in Kabali,Uganda for export; project provides a new sourceof smallholder cash income, generates substan-tial employment, and provides foreign exchangeearnings; Agro had 100 percent equity prior toseeking additional financing; project now in itsthird year of development and more than $1 mil-lion has been invested.

n Ronco undertook preliminary investigations andproduced a feasibility study on production, mar-keting, and processing of pyrethrum; built aroundan assured market, and following a strategy ofclose collaboration with the U.S. buyer of theproduct, project is demand-driven, and althoughrisky, is a sound financial investment.

n Undertaking all phases of the production, mar-keting, and processing of flowers in Uganda; thisvertically integrated approach allows control ofthe critical elements of the production system;plant introduction, selection, multiplication, anddistribution are financed and managed by Agro;company created its own extension service tohelp some 4,000 contract farmers obtain maxi-mum results; farmer gets high returns to land andlabor inputs while Agro gets greater productionand reduces marketing costs by obtaining greaterquantities of flowers in a more concentrated area.

n Created own marketing service to buy the flow-ers from farmers; this service is innovative be-

80

cause it is completely financed by the investorand is the first all-female buying service for amajor export crop in Africa; hired the agents andtrained them in how to operate a buying center(currently nine); believes in the principle thatservice to client farmers based on honesty andintegrity is essential to the company’s welfareand profits.

n Second principle is systematic, fair, and on-timepayment for the produce delivered; pays all farm-ers monthly, clearing the books on all purchasesmade up to the 20th of the month by the 1st of thefollowing month; to protect the smallholder farmeragainst inflation and devaluation in Uganda’seconomy, instituted a dollar-linked paymentschedule where prices are adjusted to their dollarequivalent each month.

n Have 35 of own extension agents and 2 employ-ees working at a 15-acre closed government re-search station doing varietal and cultural appliedresearch.

n Contract growers had 500 acres (200 hectares)producing flowers by January 1993, 20 monthsafter first feasibility study; will expand to 1,000acres (400 hectares) with a target of 8,000 grow-ers, as more planting material becomes available;speed of implementation attests to the rapid re-sponse private sector investors and farmers canmake to a business opportunity; smallholder farm-ers must be convinced that an investing companyis sincere in its promises and dedicated to itsexecution and want to see action take place rap-idly and on a steady basis; high initial investmentcosts can only be recouped with high levels ofproduction, obtained as early as possible in theinvestment cycle.

n In areas that have the correct elevation and cli-mate, farmers can earn up to $750 per hectarewith little input besides land and labor; this ex-ceeds almost all other possible crops; expect48,000 rural people to benefit from the project;farm income will increase $1.5 million/year inthe growing area.

n Is committed to leaving up to 10 percent of

project profits with associations or groups oflocal pyrethrum growers to empower them to bean economic force in the Ugandan economy.

n Has reached this stage in the project using itsown resources and $1 million from Ronco with-out recourse to either public funds or financialcapital markets.

n Had contract with a plant in Rwanda to processthe product; political conflict resulted in the plantbeing closed; now must build own processingplant.

n Next phase is seeking financing for a $2.2 millioninvestment in a processing plant that will create125–150 additional jobs.

n Expect to get financing from IFC, East AfricaDevelopment Bank and DFCU (and possiblyOPIC) in April 1995 and to export the first prod-uct in early 1996.

D-5 Ziwa Horticultural Exporters Ltd.

n Located in the Mukono District; 50 km. fromKampala on 1,000 acres,

n Owned by Captain Roy, who also owns Dairo AirFreight and many farms/ranches in Uganda.

n Has a Ugandan manager; their full-time Dutchtechnical specialist supplied by their Holland-based agent.

n 345 full-time employees (half women); require20 people/ha. for growing and picking and 10people/ha. for grading and packing.

n Have 1 ha. roses outdoors and 2 ha. roses underplastic (yield around 7.5 tons/acre/year); also growasparagus outdoors and leatherleaf under plastic.

n Large cold storage and grading building plus owninsulated trucks.

n Start-up costs for roses under plastic are in thearea of $500,000/acre.

n Use drip irrigation with fertilizer supplied viairrigation, use 600 cubic meters water/day fromown sources; spray pesticides 3 times/week.

n Have problems with consistency of power sup-

81

ply so own generator required, which runs fre-quently, public power is comparatively (to otherexporting countries) expensive.

n Air freight costs $1.60/kg on Sabina and $1.85on Dairo ($0.05/stem); this compares to $2.10 inKenya; air freight runs about 25 percent of salesprice.

n Costs other than air freight run another $1.00;average sales price is around $6.00/kg.

n Will export around 6 million stems in 1994.

n Received a technical grant from the OCA USAID/APDF project for $96,000 to help resolve aspara-gus problems; California asparagus grower didthe job but they have been delayed 2 years withthe initial problems.

n No formal impact studies, but on-site manage-ment reports major positive development “indi-cators” in the surrounding area, (e.g., housingconstruction/remodeling, private clinic volume,school attendance, road side kiosks).

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Appendix EProject Scope of Work

83

Appendix EBibliography

AFRICA

Holtzman, John S., Richard D. Abbott; Carol Adoum;and collaborators. Agribusiness Develop-ment in Sub-Saharan Africa: Suggested Ap-proaches, Information Needs and an Ana-lytical Agenda, vol. 2: Country Annexes.September 1992.

Swanberg, Kenneth G. A Background Paper: AfricaPrivate Enterprise Fund. August 1993.

Holtzman, John S., Charles J. D. Stathacos, ThomasWittenberg, and collaborators. HorticulturalMarketing in Export in Senegal: Constraints,Opportunities and Policy Issues. December1989. PB-ABF-141.

UGANDA

Eriksson, John, John Balis; and Roger Poulin. Assess-ment of USAID Support for Agribusiness:Uganda Case Study. June 1994

International Science and Technology Institute, Inc.Final Report and Review: Uganda ANEPP-PHH Project. September 1994.

U.S. Agency for International Development. Uganda:Agricultural Non-Traditional Export Promo-tion Program (ANEPP) (617-0133). PD-AAZ-547

Enger, Warren J., Derrick R. Burgess, and J. K.Ahimbisibwe. Oilseed Production and Pro-cessing Sector Analysis. Cooperative Agri-culture and Agribusiness Support Project -Uganda. PN-ABC-992 July 1989.

U.S. Agency for International Development. Uganda:Cooperative Agriculture and Agribusiness

Support Project (617-0111). PD-BBP-984.September 1994.

Kabuga, C. Response to the CAAS Evaluation DraftReport. Uganda Cooperative Alliance. 30August 1990.

Carr, Thomas. CAAS Project Quarterly Report. June1991.

Carr, Thomas. CAAS Project Quarterly Report. Sep-tember 1991.

KENYA

U.S. Agency for International Development. CountryProgram Strategic Plan FY 1990–1995. PN-ABE-620; ISN65206. March 1990.

U.S. Agency for International Development. Kenya:Agricultural Management Project (615-0221). PD-ABD-227. ISN73653. June 1991.

U.S. Agency for International Development. KenyaNational Agricultural Research Project (615-0229) PD-BBD-467. June 1993.

Abt Associates Inc., Postharvest Institute for Perish-ables, and Agribusiness Association of Kenya.Constraints in the Kenyan Fruit Juice Pro-cessing Industry. Final Report. September1993.

U.S. Agency for Internatonal Development. AppraisalReport Horticulture and Traditional FoodCrops Development Project; Republic ofKenya. 1993.

Watkins, Chandra D., and S. Embassy in Nairobi,Kenya. Kenya—verseas Business Report -OBR9301. 1993.

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Appendix FList of Persons Interviewed

KAMPALA, UGANDA

Victor AmannAgricultural Cooperative Development International256-041-258898

James CartwrightISTI

James DunnUSAID256-041-257285

Duane EriksmoenUSAID256-041-235879

Ddingiro-Lwanga GeoffreyZIWA Horticultural Exporters Ltd.256-041-244241

David HeemsbergenVolunteers in Overseas Cooperative Assistance202-383-4961

William KalemaUMA Consultancy and Information Services256-041-236182

Sam Kibalama-KatumbaHorticulture Exporter Assn.

Matthias KibukaUSAID256-041-244087

Rita Laker-OjokATI

Philip MikosEuropean Union256-041-233303

Sami MoussaAfrican Development Bank225-204636

J.S. MugerwaMakerere University256-041-542277

James MulwanaUganda Manufacturers Association256-41-236148

Edison MwangeMakerere University256-041-542277

Prof. Erisa OchiengExport Policy Analysis and Development Unit256-041-231363

Rick PhillipsDevelopment Finance Company of Uganda Ltd.256-041-256125

A. SekalalaUVAN Limited256-041-243490

Karim SomaniCEI256-041-250212

Sam Tulya-MuhikaInternational Development Consultants Ltd.256-041-244725

86

Holly WiseUSAID254-2-331160

Fred ZakeUMA Consultancy and Information Services256-41-236182

NAIROBI, KENYA

Dean AlterUSAID254-2-331160 x500

Joe CarvalhoUSAID

John FlynnUSAID/REDSO/E

Herbert G. MuhiaKenya Small Scale Farmers Association254-2-724904

Christian HegemerHanns Seidel Foundation254-2-742054

John JamesAPDF

Mr. KiplagatAAK

Michael KleshUSAID/REDSO254-2-331160 x2358

Zaine ManjiCarzan Flowers

Ian MorrellFPEAK

Henry OgolaKenya Fertilizer Assn.

Jane UlmanAPDF

Amin GwaderiHouse of Manji Ltd.254-2-555944

Victor PrattKenya Management Assistance Programme254-2-220853

Bernhard LöhrIPM Horticulture254-2-569071

Joseph GichukiSEPSO Ltd.254-2-448576

Peeush MahajanEast African Growers Ltd.254-2-221145

John NgatiaMeridien Securities Kenya Ltd.254-2-339068

Russell ClarkLONRHO Agribusiness (K)254-2-214752

P.F. JennerStandard Chartered Estate Management Ltd.254-2-216378

Dennis WellerUSAID254-2-331160 x2239

Peter HerrmanFriedrich-Naumann-Stiftung254-2-442321

87

John KashangakiAgriconsult Ltd.254-2-227834

Matesh GohilKenya Management Assistance Programme254-2-220853

Thomas HobgoodUSAID254-2-331160 x70

Migwe KimemiaUSAID254-2-331160

Paul GuenetteKenya Export Development Support254-2-221106

Ngure MwanikiAgriconsult Ltd.254-2-227834 x5

Dennis McCarthyUSAID254-2-331160

Jairosi OchinoCargill East Africa Ltd.254-2-22929

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Notes

1 Statement of Work: Monitoring and Impact Assessmentof Innovative Approaches to Agricultural Marketing Sys-tems Development, See Appendix E.

2 USAID Kenya defines micro enterprises as those withfewer than 10 employees, small enterprises from 10 to 50employees, medium enterprises from 50 to 100, andlarge enterprises more than 100.

3 The information for this discussion was obtained entirelyfrom secondary sources.

4 USAID support to agribusinesses began in 1984 and firstfocused on the rehabilitation of agro-enterprises. ANEPPwas initiated in 1988 and its first focus was on policyreform. Phase II (1990–1992) replaced the use of CIPSwith NPA and PL 480 and along with policy reformbegan to emphasize direct assistance to agribusinessesand a focus on a limited number of specific NTAEcommodities. The most recent phase (1992–1994) andthe focus of this study, has continued NPA in support ofpolicy reforms and an increased emphasis on direct assis-tance to agribusinesses.

90

SD Technical Papers

Office of Sustainable DevelopmentBureau for Africa

U.S. Agency for International Development

The series includes the following publications:1 / Framework for Selection of Priority Research and Analysis Topics in Private Health Sector Development in Africa*2 / Proceedings of the USAID Natural Resources Management and Environmental Policy Conference: Banjul, The Gambia /

January 18-22, 1994*3 / Agricultural Research in Africa: A Review of USAID Strategies and Experience*4 / Regionalization of Research in West and Central Africa: A Synthesis of Workshop Findings and Recommendations (Banjul,

The Gambia. March 14-16, 1994)*5 / Developments in Potato Research in Central Africa*6 / Maize Research Impact in Africa: The Obscured Revolution / Summary Report*7 / Maize Research Impact in Africa: The Obscured Revolution / Complete Report*8 / Urban Maize Meal Consumption Patterns: Strategies for Improving Food Access for Vulnerable Households in Kenya*9 / Targeting Assistance to the Poor and Food Insecure: A Literature Review10 / An Analysis of USAID Programs to Improve Equity in Malawi and Ghana's Education Systems*11 / Understanding Linkages among Food Availability, Access, Consumption, and Nutrition in Africa: Empirical Findings and

Issues from the Literature*12 / Market-Oriented Strategies Improve Household Access to Food: Experiences from Sub-Saharan Africa13 / Overview of USAID Basic Education Programs in Sub-Saharan Africa II14 / Basic Education in Africa: USAID'sApproach to Sustainable Reform in the 1990s15 / Community-Based Primary Education: Lessons Learned from the Basic Education Expansion Project (BEEP) in Mali16 / Budgetary Impact of Non-Project Assistance in the Education Sector: A Review of Benin, Ghana, Guinea, and Malawi*17 / GIS Technology Transfer: An Ecological Approach—Final Report*18 / Environmental Guidelines for Small-Scale Activities in Africa: Environmentally Sound Design for Planning and

Implementing Humanitarian and Development Activities*19 / Comparative Analysis of Economic Reform and Structural Adjustment Programs in Eastern Africa*20 / Comparative Analysis of Economic Reform and Structural Adjustment Programs in Eastern Africa / Annex*21 / Comparative Transportation Cost in East Africa: Executive Summary*22 / Comparative Transportation Cost in East Africa: Final Report*23 / Comparative Analysis of Structural Adjustment Programs in Southern Africa: With Emphasis on Agriculture and Trade*24 / Endowments in Africa: A Discussion of Issues for Using Alternative Funding Mechanisms to Support Agricultural and

Natural Resources Management Programs*25 / Effects of Market Reform on Access to Food by Low-Income Households: Evidence from Four Countries in Eastern and

Southern Africa*26 / Promoting Farm Investment for Sustainable Intensification of African Agriculture*27 / Improving the Measurement and Analysis of African Agricultural Productivity: Promoting Complementarities Between Micro

and Macro Data*28 / Promoting Food Security in Rwanda Through Sustainable Agricultural Productivity*29 / Methodologies for Estimating Informal Crossborder Trade in Eastern and Southern Africa*30 / A Guide to the Gender Dimension of Environment and Natural Resources Management: Based on Sample

Review of USAID NRM Projects in Africa*31 / A Selected Bibliography on Gender in Environment and Natural Resources: With Emphasis on Africa*32 / Comparative Cost of Production Analysis in East Africa: Implications for Competitiveness and Comparative Advantage*33 / Analysis of Policy Reform and Structural Adjustment Programs in Malawi: With Emphasis on Agriculture and Trade*34 / Structural Adjustment and Agricultural Reform in South Africa*35 / Policy Reforms and Structural Adjustment in Zambia: The Case of Agriculture and Trade*36 / Analysis of Policy Reform and Structural Adjustment Programs in Zimbabwe: With Emphasis on Agriculture and Trade37 / The Control of Dysentery in Africa: Overview, Recommendations, and Checklists38 / Collaborative Programs in Primary Education, Health, and Nutrition: Report on the Proceedings of a Collaborative Meeting,

Washington, D.C., May 7-8, 1996*39 / Trends in Real Food Prices in Six Sub-Saharan African Countries*40 / Cash Crop and Foodgrain Productivity in Senegal: Historical View, New Survey Evidence, and Policy Implications

* Produced and dissemination under contract to USAID/AFR/SD by AMEX International, Inc. For copies or information, contact:Outreach Systems Assistant / AMEX International, Inc. / 1111 19th Street North / Arlington, VA 22209. Phone: 703-235-5276. Fax: 703-235-5064.

U.S. Agency for International DevelopmentBureau for AfricaOffice of Sustainable DevelopmentProductive Sector Growth and Environment DivisionWashington, D.C. 20523-0046