Pro Poor Development through Value Chain Development Push and Pull. PSNP PLUS : Linking Poor Rural Households to Microfinance and Markets in Ethiopia

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Ezra Merritt
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Pro Poor Development through Value Chain Development Push and Pull : Linking Poor Rural Households to Microfinance and Markets in Ethiopia A USAID Project,

1 Pro Poor Development through Value Chain Development Push and Pull : Linking Poor Rural Households to Microfinance and Markets in Ethiopia A USAID Project, implemented by a Consortium led by CARE and including CRS, REST, SC- UK, SNV, and Tufts University Nicholas Nyathi Senior Advisor, Value Chain Development DAG, March 10, 2011

2 Goal and Objectives GOAL - - PSNP HOUSEHOLDS Livelihood assets increased & resiliency enhanced Objectives Graduation from food aid Access to Microfinance (Financial assets increased) Access to Markets (Engaged in functioning markets) Access to Water, Sanitation (Health &productivity improved) Learning and Sharing (Enabling environment enhanced

3 SNV Ethiopia s Value Chain Development Approach Rationale: Demand Driven Value Chain Development Reliable Outlets Market Intelligence Embedded Services Finance facilities Opportunities Market Intelligence Inputs Farmer Producer Coop Processor Retailer Consumer Market

4 PSNP Plus Push and Pull Strategy I F C P R C -VCD Coaching PUSH -factor -Asset transfer -Micro Finance -Capacity Building -Input Supply -MSPs -Sector Projects PULL -factor -Business2Business -Direct Business Support -Market Intelligence -Service Provision

5 Pull strategies Promoting dialogue among stakeholders with private sector involvement being the catalystic factor, setting priorities for upgrading choices Support businesses to exploit the market opportunities following upgrading choices Promote and broker business relationships based on TRUST Facilitating business to business relationships for private sector to provide embedded services (training on quality improvement, provision of market information, technology support) to fulfil market requirements in terms of volumes and quality Improve capacities of cooperatives for better business response Inform "push" support in terms of required services and capacities for producer organisations strengthening

Push strategies Helping beneficiaries to build their assets through provision of access to financial products and services through VSLA and MFIs, Provide and broker

capacities to adopt improved and appropriate technologies Strengthening the farmers value positioning by improving farmers to respond to market requirements -

6 Push strategies Helping beneficiaries to build their assets through provision of access to financial products and services through VSLA and MFIs, Provide and broker service, inputs and technology required for producers to access market or fulfill business agreement to increase production and improve quality Improving farmers capacities to adopt improved and appropriate technologies Strengthening the farmers value positioning by improving farmers to respond to market requirements - collective marketing/aggregation models, strengthen the business orientation of producer organisations Developing seed multiplication models for improved access to seed varieties

starting to see the potential to engage in business with poor HHs Private sector providing services to poor HH,

7 Value Chains: Objective: Engaged in functional markets PSNP plus HHs beginning to transit from traditional subsistence products to market based and modern production (quality, quantity, production processes) Private sector starting to see the potential to engage in business with poor HHs Private sector providing services to poor HH, training on quality improvements Cooperatives purchasing produce from PSNP HH Market information being utilized by project participants

potential profitable market (asset transfer, changed their product terms/conditions); Products specific to

8 Microfinance: Objective: Increase financial assets Savings behavior of program participants improved PSNP Plus participants engaged in IG activities using loans from their savings groups MFIs beginning to see PSNP HHs as potential profitable market (asset transfer, changed their product terms/conditions); Products specific to clients (Muslim communities) being developed Entrepreneurial capacities improved,demand for credit from PSNP HHs increasing

Value Chains,, Cont MSPs building relations and trust among VC actors and

Synergies taking place among complimentary projects ( ACDI/VOCA) Producers

(including landless PMAs) Linkages forged: Beza mar and Sekota Union Dire

9 Value Chains,, Cont MSPs building relations and trust among VC actors and collectively addressing VC problems (blame games significantly reduced) Synergies taking place among complimentary projects ( ACDI/VOCA) Producers getting together to access inputs collectively and sell their produce (including landless PMAs) Linkages forged: Beza mar and Sekota Union Dire Cooperative Union and PSNP producers Abergelle and Raya farmers Soreti International and Gulete Burka Union

10 Government and Private Sector Support Objective: Policy and Program Impact Government participation and support significant and making PSNP Plus part of their agenda; Government scaling up the PSNP Plus models VSLAs used as instrument to launch other government livelihood activities (Women Affairs unit in East Hararghe) Government dissemination of policies through PSNP Plus related activities (honey & WPB proclamations) Private sector participation in improving sector development issues

11 Constraints and Challenges Access to MF lack of coordination among MF players (Coops, VSLAs, MFIs) A national structure/ industry protocol defining the roles of key players being developed. Product quality and volumes Engaging the private sector to provide embedded services to improve production and productivity Shortages of inputs (feed, colonies, seed) Private sector engaged to multiply colonies Informal seed multiplication, piloting feed technologies Weak PMA Assessing the capacity gaps and formulating capacity strengthening programme

12 THANK YOU!

SNV Ethiopia s Value Chain Development Program

SNV Ethiopia s Value Chain Development Program Support to Business Organisations and their Access to Markets (BOAM) Partners/Financed by: - Embassy of the Kingdom of the Netherlands (2005 2011) - Irish