CARE International CARE International
Effective ways to reach smallholdersEffective ways to reach smallholders
Value chain financingValue chain financing
18th October 200718th October 2007
By George OdoBy George OdoThe CARE Africa Venture FundThe CARE Africa Venture Fund
care australiacare thailand
care canadacare denmark
care germany
care france
care japancare netherlands
care norwaycare austria
care uk
care usa
international
““We seek a world of hope, tolerance and social justice, where We seek a world of hope, tolerance and social justice, where poverty has been overcome & people live in dignity & security”poverty has been overcome & people live in dignity & security”
Presentation Content Introduction to CARE Background Identifying the problem The Issues & proposed solutions Some Examples Key Learnings
CARE country offices - Peru, India, Kenya, Indonesia, etc (67 world-wide)
CARE National Members (12) – Australia, Austria, Canada, Denmark, France, Germany, Japan, Netherlands, Norway, UK, USA & Thailand*
CARE International (secretariat in Brussels)
‘Country offices’
‘National members’ &
‘Lead members’
‘CI’
Introduction to CARE – The Federation
One of the largest NGOs in the world 14,800 staff globally About 1169 projects in 16 sectors reaching 48
million people in 67 countries & 60 Country Offices Board of 12 ‘National’ members with secretariat in
Geneva About US $ 700 million annual budget with 43%
spent in Africa, 34 in Asia, 17% in Latin America and 6% Middle East and Europe
Works in both development and emergency situations
Key Sectors - ANR (14%), SEAD (6%), WATSAN (8%), Emergency (4%), Nutrition (4%), HIV/AIDS (8%), Maternal (4%) & Child health (4%)
Introduction to CARE – Vital stats
Introduction to CARE - How we spend our funds
Program costs91%
Support costs9% Relief Ops
29%
Develop-ment71%
Less than 10% Administration costs!
Background - GDP in relation to Poverty
STATE MARKET
NGDO GROUNDED IN 'AXIOMATIC‘ETHICS
AND VALUES
:CIVIL SOCIETY
Source: Alan Fowler, NGO Futures – Beyond Aid
Fourth Position Goals and TasksEnsuring entitlements by:•reduction and re-distribution of risk
•exacting compliance from duty-holders
•reducing costs of compliance
Fourth Position NGDO Roles
•Negotiator/mediator
•Validator
•Watchdog
•Innovator/demonstratorRights-based
principles
The fourth position
Background- NGOs role in the ‘Fourth’ position
Identifying the Problem – CARE’s Making markets work for the poor approach
CARE’s MMWTP strategy was published in 2004 in response to UN Commission on the Private Sector and Development
The commission’s final report Unleashing Entrepreneurship: Making Business Work for the Poor (2004) recognized that:
SMEs in developing countries can drive job creation, innovation and economic growth.
BUT
Entrepreneurs operating in the informal economy lacked access to the legal systems (enabling environment), financial services & BDS
Identifying the Problem – The three pillars of Enterprise development
Spectrum of Financial Service Providers
National & Regional
Investments
& Infrastructure
Large commercial
enterprises &
new ventures
Small & Medium
Enterprises
Small
Economic
Activities
Internal
Savings
& Loans
Internal Savings & Loan schemes, Money lenders, NFP MFIs
FP MFIs, Cooperatives, Revolving Input loan & guarantee funds
Development Financial Institutions
Commercial banks, Private Equity & Venture Capital Funds
$100 loans $ 1, 000 to $ 10,000 up to $ 50,000
$ 100,000 to$ 1,000,000
$ 1,000,000 to $ 5,000,000 & above
SME Funds,Social Venture Funds,MFI Banks
Underserved in the BOP
Access to Financial Services
Proposed Solution
Problem Solution
High Transaction cost Aggregation
Lack of collateral Guarantees through ‘forward’ Market contracts
Lack of entrepreneurial experience
Entrepreneurial focused TA
Weak & Informal Institutions
Formalize institutions & governance training
“Start with the market….and work backwards”
Market Demand
Produce
Aggregator
InputsGoods
Aggregation of the smallholders goods
Aggregation of the smallholders demand for goods or services
CARE’s approach – Integrating smallholders
Market ‘contracts’ as collateral
Inputs/cash advances on credit pre financed By Aggregator/Exporters/buyers
Examples – Village savings and Loans
Group organization
Regular modest Savings
Savings & Lending
Savings Lending & repayments
Investments into Micro enterprises like smallholder farming & consumption
Savings Lending & repayments
S&L Term ends & distribution to members
Also known as Internal Savings & Loans, based upon ROSCAs ‘Merry go round’ model
Examples - Aggregation of production
Examples - Aggregation of livestock production
Examples - Aggregation of demand
Key Learnings ‘Mimic’ the real world….smart
subsidies...’Aid for Trade’…’Market Aid’ Avoid distortion Sustainability Private sector integration Traditional grant funding and traditional
development models don’t work Blend commercial and grant mechanisms