RURAL ENTERPRISE DEVELOPMENT IN HELMAND

Transcription

1 RURAL ENTERPRISE DEVELOPMENT IN HELMAND ANNUAL PROJECT PROGRESS REPORT 2013 UNITED NATIONS DEVELOPMENT PROGRAMME

2 DONORS Department for International Development PROJECT INFORMATION Project ID: Duration: June March 2014 Strategic Plan Component: Poverty reduction and achievement of MDGsSocial and Economic development (3 rd pillar) CPAP Component: Increased Opportunities for income generation through promotion of diversified livelihoods, private sector development and public private partnership ANDS Component: Social and Economic development (3 rd pillar) Total Project Budget: USD 2,301,289 Annual Budget 2013: USD 1,498,535 Implementing Partner: MRRD Responsible Agency: AREDP Project Manager: Mr. Rahmatullah Quraishi Responsible Assistant Country Director: Mr. Shoaib Taimory COVER PAGE: Helmand SMEs during cotton processing training in New Delhi, India (Credit: AREDP)

3 ACRONYMS ANDS AREDP BDSO BDTP CPAP DFID EV HGP IFC MDG MISFA MRRD NOT NSP PRG PSA RED Helmand SIM SpA SME TF UNDP Afghanistan National Development Strategy Afghanistan Rural Enterprise Development Program Business Development Service Officer Business Development Training Provider Country Programme Action Plan Department for International Development Economic Viability Helmand Growth Program International Finance Corporation Millennium Development Goal Microfinance Investment Support Facility for Afghanistan Ministry of Rural Rehabilitation and Development National Open Tendering National Solidarity Program Partial Risk Guarantee Provincial Situational Analysis Rural Enterprise Development in Helmand Società Italiana di Monitoraggio SpA Small and Medium sized Enterprise Technical Feasibility United Nations Development Program

4 TABLE OF CONTENTS I. EXECUTIVE SUMMARY... 1 II. CONTEXT... 2 III. RESULTS:... 3 A. ACTIVITY 1: Selected/targeted Small and Medium Enterprises (SMEs) needs assessed and developed Business Support Action Plans... 3 B. ACTIVITY 2: Targeted SMEs linked with the financial institutions and have received loans... 8 C. ACTIVITY 3: Targeted SMEs have received business and technical advisory services /training and received their graduation certificate from the program... 8 D. ACTIVITY 4: SMEs who have demonstrated innovative business models have received the SME innovation prize... 9 EXPENSES FOR THE YEAR... 9 IV. GENDER SPECIFIC RESULTS V. PARTNERSHIPS VI. ISSUES VII. RISKS VIII. LESSONS LEARNED IX. FUTURE PLANS X. ANNEXES A. Annex 1: FINANCIAL TABLEANNEX 2: EXPENSES BY ACTIVITY B. ANNEX 3: ISSUE LOG C. ANNEX 5: RISK LOG... 17

5 I. EXECUTIVE SUMMARY The Rural Enterprise Development project for Helmand (RED-Helmand) began in June 2011, to support the Helmand Growth Program (HGP). The project is part of the Afghanistan Rural Enterprise Development Programme (AREDP) of the Ministry of Rural Rehabilitation and Development (MRRD) and is funded by Department for International Development (DFID). The DFID fund is channeled through the United Nations Development Programme (UNDP) which approves the budgets; ensure appropriate Programme appraisal and capacity assessment and co-ordinates the auditing process and evaluation, ensures financial and substantive oversight of the Programme as project assurer, liaises with concerned partners and mobilizes resources. The report describes and highlights the progress made under the RED-Helmand during RED-Helmand is composed of the Small and Medium-sized Enterprise (SME) Development Component which addresses issues of SME facilitation, SME support business development services, providing an enabling environment for SMEs, identification of opportunities, market potential as well as failures and risks and financial services to SMEs. RED-Helmand continued to support Helmand s SMEs to boost their technical knowledge and managerial skills. In the year 2013, Red-Helmand provided three trainings on basic Book-keeping, Marketing, Accounting and Business Management to 30 Helmand SMEs. Additionally, RED-Helmand organized 9 technical training sessions and exposure visits (national and international) for 40 Helmand SMEs working in the Poultry, Nursery, Marble, Handicraft and Mosaic sectors. As a result of the outreach campaign of AREDP, 46 Small and Medium Enterprises (SMEs), including 4 women run SMEs, applied to the third cycle of programme support for SME s. Out of which 23 were selected. After the Technical Feasibility and Economic Viability studies (TF & EV), 21 SMEs (including 2 women-run SMEs) received technical support from AREDP to develop their business plans. SIM-SpA (Società Italiana di Monitoraggio SpA) the consultancy firm hired by AREDP conducted Provincial Situational Analysis (PSA) in Helmand and will guide AREDP interventions at districts and communities levels. The report is expected to release in the first quarter of 2014.The information s reported by SIM-SpA shall be used by AREDP as a baseline for future planning. Progress was also made in implementing the innovation award scheme which was designed to support the innovative ideas of AREDP registered rural SMEs. AREDP awarded innovation award to 4 winner SMEs of RED-Helmand in kind. RED-Helmand has progressed in its implementation despite of the worsening security situation and high-risk zone for business in Helmand. While it is hoped that the security situation will improve in the future, the project faces delays in progress due to lack of skilled labour, inaccessibility to advanced technology, unavailability of electricity in the

6 province and limited SME infrastructure needs. AREDP has continued to cope with these challenges and has implemented modified strategies to move forward and obtain programme goals. Concerning the planning for the next quarter, AREDP planned to arrange technical training and exposure visits for the different SMEs and Business Development Service Officers (BDSOs) of Helmand. RED-Helmand will establish and operationalize the poultry lab to diagnose different poultry diseases in the province. Simple technology and innovation prizes shall be awarded in kind to the potential SMEs. II. CONTEXT The Afghanistan Rural Enterprise Development Program (AREDP) is executed by the Ministry of Rural Rehabilitation and Development (MRRD) of Afghanistan. The overarching goal of AREDP is; increased income and sustainable employment opportunities for men and women through support to rural enterprises. The proposed project RED- Helmand is targeting those businesses that have greater potential for development and so far have not received any/sufficient business development support. The Helmand Growth Program, Economic Appraisal Business Support; Community enterprise and SMEs will benefit from this project, which will invest USD 2,301,289 through the AREDP program to support the small business sector. Private sector development has been constrained by a high level of risk, lack of access to markets and finance, and inadequate infrastructure. A stronger community enterprise sector will provide employment opportunities for women, young people and ex-combatants. It will also improve cooperation in aggregating production to supply for a larger processing sector, sharing access to new technology and delivering training and information. The Helmand Growth Program Business Support Project will provide opportunity for AREDP to use its model to support economic regeneration through small and medium enterprise development. The project proposal is modelled on the core AREDP design which describes how the expected business support/services will be achieved through the implementation of specific activities under component B.

7 III. RESULTS: RED-Helmand is composed of the SME Development Component. This component supports and facilitates SMEs, creates and enabling environment and provides business development and financial services. There are three subcomponents comprised of (i) SME Facilitation (ii) Business Development Support and (iii) Access to Finance for SMEs. The results of the components are organized around the following four activities. A. ACTIVITY 1: Selected/targeted Small and Medium Enterprises (SMEs) needs assessed and developed Business Support Action Plans (i) Provision of Capacity Building Training to SME team In 2013, RED-Helmand arranged a total of three trainings for SMEs to build their soft skills capacities. The trainings focused on different areas of soft skills like Basic marketing, Basic Book keeping and accounting. 30 SMEs participated in the trainings which included 4 run by women. The main objectives of the trainings were to improve the Business management and managerial skills of the SMEs. To assess the impact of trainings, a comprehensive survey was conducted by Helmand BDSOs. The impact assessment of Figure 1: Helmand SME members during soft skills training in Kabul the training showed that SMEs recorded a significant increase in sales and employment after the trainings. In addition, to improve the capacity of BDSOs, AREDP Enterprise development unit arranged a one-day workshop in Kabul. A total of Six BDSOs from RED-Helmand participated in the workshop. The purpose of the workshop was to share the post Mid Term Review scenario and discuss the challenges raised after changes by the World Bank. Some of the changes that were brought in were (i) SME Development Operations have to present detailed reports on their activities, deliverables and plans for the forthcoming year.(ii) Detailed reports to be provided on the impact of AREDP support in terms of Employment Generation, Income Generation and Profitability. (iii) Decisions to be made on value chain development, cluster specific approaches, providing simple technology and innovation awards. A Tailor-made Training on Value Chain Development for BDSOs was arranged by AREDP in Turkey, during February, A consultancy firm Q. Point, trained 3 RED-Helmand staff through presentations by the group s leader on training tools like participatory homework

8 and case development. The RED-Helmand Staff learned what value chain is and how it is analysed to develop improvements. What role BDSOs can play in the chain and how they can stimulate chain actors, supporters and influencers with inclusive approach for value chain development. One of the goals of AREDP is to establish sustainable linkages between rural enterprises and internal and external markets. In order to introduce the local products to urban markets, AREDP arranged a second round exhibition in Kabul during April A total of 2 handicraft SMEs from Helmand participated in the exhibition. The Handicraft SMEs from Helmand appreciated AREDP s efforts and earned Afs.31, 500 from their sales in the exhibition. (ii)smes Exposure Visit and Trainings for enhancing their business capacity During 2013, AREDP provided various SMEs with exposure visits and trainings to build their capacities. In 2013, RED- Helmand arranged 2 poultry trainings and exposure visits to Haryana and New Delhi in India for 9 poultry SMEs from Helmand. During trainings and exposure visits Poultry SMEs learned poultry farming, breeding methods and management, classification of chicken, management of broilers and other important components of poultry farming. Figure 2: trainees during practical session in India In addition, RED-Helmand arranged a national exposure visits to Parwan for 4 nursery SMEs from Helmand. The trainings/exposure visits raised up skills of SMEs in nursery raising technology, home based nursery, communal nursery, commercial based nursery, value addition of flowers, establishment of nursery, nursery hygiene, management of nursery, causes of plant diseases in nurseries and tunnels farming. In June 2013, RED-Helmand arranged 12 days exposure visit/technical training for 6 improved seeds SMEs from Helmand. During this exposure visits/technical training nursery SMEs learnt how to process, treat, test and package seeds.

9 Success story of Technical training for Helmand mosaics SME s in India Before AREDPs intervention and training the SMEs were utilizing traditional and very basic level methods for cutting, designing, compacting, mixing raw materials. These poor methods were creating wastage of raw materials, which directly affects quality and prices. Since AREDPs intervention, SME members gained the skills of using modern techniques of production; new designs and colours in mosaic products and technical experience with Indian Mosaic technical staff. According to the concrete and mosaics SMEs owners, the new techniques and ideas which they have gained in India on mosaics, concrete bricks, tiles and ceramics and concretes production were applied after the training. The impact assessment analysis carried by AREDP, shows a remarkable rise in income and sales of Helmand SMEs. Thirdly, in June, RED-Helmand arranged a five days handicraft know-how training for 4 Helmand SMEs in Islamabad. The SMEs gained practical knowledge about handicraft industry in Pakistan, new products in handicraft business and brought back new skills to Afghanistan. In September RED-Helmand organized a ten days training in Haryana, India for 5 SMEs working in the marble sector of Helmand. The participants received training on types of mosaic tiles, cement production process, dry pressed bricks and mud bricks. Figure 3: SME members during training in Islamabad Fourthly, in June 2013, RED-Helmand organized; a 12 days on-site technical training for chips SME from Helmand. The participants learned new techniques of slicing, frying, packing and packaging of chips. Similarly, RED-Helmand organized in November 12 days technical training for 5 carpentry SMEs from Helmand in Delhi. The training enhanced the skills of the participants in furniture production, veneering, laminating and shaping timbers and woods.

10 Success story of Mosamair Improved Seed know-how training and Exposure Visit to Kashmir, India Before AREDP Support and intervention the SMEs were working on traditional basis. The SME members didn t know how to use the advance seed processing machineries used in agriculturally developed countries. After AREDP Support the Improved Seed SMEs learned and gained knowledge on the maintenance of nucleus and breeder seed production in self and cross pollinated crops, drying, cleaning, treating, producing hybrids and certified seeds. They were also exposed to the stages of seeds viz dormancy germination storage and marketing, quality in terms of viability, vigour, health and moisture; Seed marketing, marketing structure and organization, Seed storage and seed longevity. Boost Improved Seed SME from Helmand shows a 20% of its employment and 25% of its sales after this training. The Helmand Mosamair Improved Seed SME from the province also showed a 15% rise on its employment and 20% of its sales. Before AREDP Support; the SMEs were selling their products to local farmers and after the training the SME members learnt how to sell their products in national markets. RED Helmand Registered and Supported SMEs. Marble SMEs 16% Confecti onary 2% Dairy farming 7% Cotton seeds 11% Capentar y 12% Nursery 3% Figure 1: Registered SME s Metal Work 2% Poultry SMEs 26% Food 2% handicra ft SMEs 10% Improve d Seeds 7% Confection ary 3% Dairy farming 2% Marble SMEs 18% Capentary 13% Cotton seeds 10% Nursery 5% Figure 2 Supported SME s Metal Work 2% Food 2% Poultry SMEs 30% Handicraft SMEs 10% Improved Seeds 5% * The first figure represents 57 registered SMEs and the 2 nd figure is the sectoral representation of the 40 supported SME s. Out of 57 registered SMEs; so far 40 SMEs (10% of the supported SME s are Female) have been provided with support for exposure visits and technical trainings. It resulted in improved business management, market linkages, productivity and increase in profit of SMEs. After AREDP support to SMEs, employment increased in total by 52 %, while sales increased by 17% (Including 4% by women).

11 Increase in employment after AREDP support 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Male Female Increase in employment 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Employment in percentage Fig 1: Increase in Fe/male employment Figure 2: Increase in direct, indirect and seasonal employment iii) Establishing Poultry Laboratory in Helmand The poultry diagnostic laboratory will provide comprehensive services to diagnose and help in the control of all types of endemic diseases of avian species; including diseases with zoonotic potential. Based on the feasibility study by international consultants in 2012, AREDP finalized the concept of starting a poultry laboratory lab in Helmand. During 2013, AREDP procurement department issued Request for Quotation for equipments of poultry lab. AREDP procurement department received quotations from different companies and they are working to award contract to the competitive company soon. Meanwhile, AREDP is planning to send 13 trainees (2 lab technicians + 10 Agriculture faculty students+ 1 BDSO) to India during January for technical training in poultry diagnostic laboratory. (iv) Conduct third Client awareness campaign for SMEs As a result of effective campaigning during the 3 rd cycle, 46 rural SMEs applied for AREDP support. After a screening process 23 SMEs were selected. The BDSO team conducted Technical Feasibility and Economic Viability studies (TF & EV) which look at the technical capacity of the SMEs and conduct a market analysis. After this process, BDSOs supported 21 SMEs with the development of Business Plans. After finalization of the business plans, the MOUs between the SMEs and AREDP were signed. (v) Conduct Provincial Situational Analysis Study for component B of the project in Helmand Provincial Situational Analysis (PSA) study shall provide policy recommendations aligned with the mandate of AREDP to guide its interventions at districts and communities level. The PSA will enable the program to deliver demand-driven support to those SMEs that best add value to the development of the provincial economy. During 2013, SIM-SpA, the consultancy firm contracted to carry out Helmand PSA, reports its findings based upon the data collected; the major constraints that hamper the development of the rural economy comprise are lack of infrastructure, lack of integration of women in the provincial economy, limited security, lack of knowledge, capacity and access to updated technology and economic information, wide environmental

12 degradation, lack of economic information and access to credit among businesses, especially rural communities, lack of government support to rural livelihoods, and poor access to the market. The primary information collected through the study will be used by AREDP as a baseline to compare with future analytical results and the outcomes of the program. (vi) Provision of Simple Technology to SMEs During the 2012 Mid-term Review process, the World Bank informed AREDP that the Partial Risk Guarantee (PRG) would be removed from AREDPs scope of activities. The World Bank and AREDP discussed that instead of removing the funds altogether, both sides would collaborate to come up with an alternative means of using the allocated funds to provide support to SMEs. In addition to a number of cash based support approaches that are currently under discussion, AREDP proposed supporting SMEs with technological improvements aimed at promoting growth in their businesses. These technological improvements would also be implemented for RED Helmand supported SME s. During 2013, RED-Helmand finalized the need assessment regarding simple technology for all 36 SMEs and planned to award simple and appropriate technology to the potential SMEs. AREDP procurement department processed the National Open Tendering (NOT) for simple technology and will soon award the technology to the potential SMEs. B. ACTIVITY 2: Targeted SMEs linked with the financial institutions and have received loans To address the issue of limited financial instruments like loans for SMEs; AREDP is in the final stages of hiring Business Development Training Provider (BDTP) for Helmand SMEs. The BDTP will support the SMEs to boost up their skills in making their business bankable. In the future, SMEs will be capable to link their business with financial institutions and apply for loans without any hindrance. In 2013, AREDP negotiated with International Finance Corporation (IFC) to provide Access to Finance training to Helmand SMEs. AREDP finalized the negotiation on Access to Finance training with IFC and they will deliver the training in first quarter of C. ACTIVITY 3: Targeted SMEs have received business and technical advisory services /training and received their graduation certificate from the program AREDP worked throughout the year to procure a Business Development Training provider (BDTP) to support SMEs of the Rural Enterprise Development for Helmand Project. During 2013, the procurement department advertised the position of BDTP twice but was unable to find potential candidates for the position. Now as a change management strategy, AREDP is planned to hire a BDTP through single sourcing because the process was delayed through competitive bidding. The BDTP selection process will be completed in 1 st quarter of 2014 and will deliver training to Helmand SMEs. The BDTP will deliver training to groups/ individual employees of SMEs at their business site, or via collective classroom trainings.

13 D. ACTIVITY 4: SMEs who have demonstrated innovative business models have received the SME innovation prize Awarding and recognizing innovation is one of the generally accepted best practices to promote innovative ideas and their implementation in enterprise development. The Innovation award is both an incentive for entrepreneurs to stay confident and a way of giving recognition to their innovations. The Innovation Award is relevant with the Project Development Objective of the AREDP. It will foster the interest of the enterprise to be more functional and business oriented, identifying the innovative ideas for business development and as a result rural income generation and employment opportunity will be increased, especially the rural women, which is one of the major objectives of AREDP. During 2013, AREDP awarded machineries as innovation award to 4 winner SMEs from 1 st and 2 nd cycle from Helmand which will further enhance their businesses. The winner SMEs showed innovation in Trade, Services in process, Business process and backward/forward Market linkages. EXPENSES FOR THE YEAR During 2013, a total of USD 824,025 was spent for this output. For more details, please see Annex2.

14 Table 1 SME development component overall progress BASELINE 2013 ANNUAL TARGETS Provision of Business 43 TF &EV studies and business Development services to plan developed for SMEs 18 SMEs in soft area Provision of Business Development Services to 0 SMEs Access to Finance for Helmand SMEs 3 handicraft SMEs participated in exhibition Poultry SMEs technical assessment and their laboratory design is done by International expert 6 trainees of marble and mosaic SMEs were provided with exposure visit and training Provision of Business Development Services to 18 SMEs Procure a consultancy firm to deliver training on access to Finance for Helmand SMEs Provision of Exposure Visit Trainings to 10 SMEs to enhancing their Business Capacities Provision of Capacity Building training to 7 BDSOs and 1 operation officer Distribution of Innovation Award to 18 SMEs of 2012 Q1 Q2 Q3 Q ACTUAL COMMENTS N/A N/A N/A N/A Target achieved Target achieved Target not achieved Target achieved Target achieved Innovation award distributed to 4 SMEs Due to lack of consultancy firm operating in Helmand, AREDP was unable to procure consultants to deliver training The rest of SMEs doesn t meet the minimum requirements for awarding Innovation award 10

15 IV. GENDER SPECIFIC RESULTS In 2013, RED-Helmand arranged a total of three trainings for SMEs to build their soft skills capacities. The trainings focused on different areas of soft skills like basic marketing, basic book keeping, accounting and management. Sixteen 16 female members from 4 SMEs participated in the trainings. The main objectives of the trainings were to improve the Business management and managerial skills of the SMEs. In June 2013, RED-Helmand arranged a five days handicraft know-how training for 11 members of 4 SMEs in Islamabad. The SMEs gained practical knowledge about handicraft industry in Pakistan, new products in handicraft business and brought back new skills to Afghanistan. To assess the impact of trainings, a comprehensive survey was conducted by Helmand BDSOs. The impact assessment of the training showed that SMEs recorded a significant increase in sales and employment after the trainings. Based on these trainings/exposure visits and exhibitions, 10% of 4 supported SMEs owned by females showed increased in employment by 12%, sales by 9% and improvement in product quality. V. PARTNERSHIPS In the year 2013, AREDP established partnership with International Finance Corporation (IFC), National Solidarity Programme (NSP) and women affairs directory to take advantage from their expertise. Meanwhile, RED-Helmand also gains from the partnership with other AREDP supported provinces through exchange and exposure visit for SMEs. VI. ISSUES Islamic Banking products Most of the SMEs in Helmand, like Kandahar are religiously sensitive and demand Islamic banking products or Sharia complaint products which are not available in the market. This creates a problem in building a relationship of trust with SMEs. In order to mitigate this, AREDP introduced new products of Islamic banking which will bridge the gap of trust deficit with SMEs. Non availability of electricity Smooth and regular power supply is considered a basic requirement of a producer to meet market demand. However, the provincial government has not yet been able to provide adequate power supply to residents as well as to businesses that mostly run their businesses over electricity. Therefore, the SMEs use fuel generators to overcome the power shortage and that increase production costs making it difficult for SMEs to survive in a market where imported goods are available with low prices. To mitigate this issue, AREDP plans to provide solar energy systems to SMEs to minimise their production cost. 11

16 Non availability of raw materials Most of Helmand SMEs need raw materials to help them in production but they are unable to acquire the raw materials due to the worsening security conditions in the province and lack of diversified linkages with suppliers of raw materials. AREDP is making a continuous effort to find a mitigation strategy for this issue. VII. RISKS Lack of skilled labour and advanced technology It is difficult to promote SMEs business competitiveness without modern technology. During the last thirty years, the Helmand businessmen have not received any realistic support from the government or donor agencies to improve their quality production process. In addition, the non-availability of skilled labour in Helmand is another risk for quality production. To mitigate the risk of advanced technology, RED-Helmand sent targeted SME employees abroad for technology transfer. Lack of market information system Market information system is a basic indicator to promote the market. The SMEs have not yet maintained Market Information System to promote their product in national and international markets. This mainly because of their lack of understanding of the new sophisticated system. To mitigate this, AREDP is in the process of hiring consultants or BDSPs to provide SMEs training on market information system. Deteriorating security Insecurity is the major risk towards the achievement of AREDP goals as well as economic development of the region in general. In particular the recent insecurity and fighting has further frustrated and alarmed people specially the businessmen and traders. However, AREDP continued to cope with the situation and implemented modified strategies based on the context to move forward for obtaining programme goals. Some of the strategies include targeting SMEs in comparatively secure districts of the province. Limited basic SME infrastructure The limited basic SME infrastructure affects the production and turnover of the rural enterprises and SME business. In order to mitigate this, AREDP worked with external bodies like the Ministry of Commerce and Industries to concentrate on developing and expanding the infrastructure. VIII. LESSONS LEARNED AREDP has realized that much of the project activities were centralized which has caused delays in many of the activities. AREDP has worked on a decentralized mechanism to authorise the provincial staff to carry out the project activities. This will not only boost up project work but also give the provincial team sense of ownership and the courage to take lead of the work plan. 12

17 IX. FUTURE PLANS The overall planned activities will continue and the following will be the main focus of the project in the next quarter: Conduct management, leadership, technical and business simulation training for Helmand BDSO Arranging the technical training and exposure visit for Helmand SMEs Establishment and operationalize poultry lab in Helmand and arranging poultry lab training for 13 participants for poultry lab operations Awarding simple technology to potential SMEs. Procurement of Business Development Training Provider to train SMEs on Business Management and related technical areas. Awarding Innovation prizes in kind for RED-Helmand winner SMEs from 2 nd cycle and 3 rd cycle. 13

18 X. ANNEXES A. Annex 1: FINANCIAL TABLE 14

19 ANNEX 2: EXPENSES BY ACTIVITY 15

20 B. ANNEX 3: ISSUE LOG # DESCRIPTION DATE IDENTIFIED IMPACT/PRIORITY COUNTERMEASURE/MNGT RESPONSE OWNER STATUS 1 Most of the SMEs in Kandahar are religious sensitive and demand Islamic banking products or sharia compliance products which are not available in the market March 2012 The SME and Enterprise Groups seem to be too reluctant in applying for conventional loan in the scheme of lining these enterprise to financial institutions AREDP is working with MISFA and other Financial institutions to develop Islamic banking products for the rural SMEs of seven AREDP covered provinces and particularly for Helmand Afghanistan Rural Enterprise Development Program On-going 2 Smooth and regular power supply is considered a basic requirement of a producer to meet the market demand, but the provincial government is not yet been able to provide adequate power supply to resident as well as to 3 Most of the Helmand SMEs requires to gain raw materials that help them in production the final product for consumers but they cannot gain the raw materials on time because of many factors that involve bad security condition in the province and lack of diversified linkage with the supplier of raw materials. March 2012 March 2012 The SMEs product price is high as compared to imported products, so it leads to low demand for local product As a result of unavailability of the raw materials on time the producer cannot gain efficiency and effectiveness in their production,which is decreasing their profit margin External Involve provincial Government AREDP is procuring Business development training provider in order to train SMEs that how they can strengthen their business capabilities Afghanistan Rural Enterprise Development Program Afghanistan Rural Enterprise Development Program On-going On-going 16

21 C. ANNEX 5: RISK LOG # DESCRIPTION DATE IDENTIFI ED TYPE IMPACT & PROBABILITY COUNTERMEASURES/M NGT. RESPONSE OWNER SUBMITTED/U PDATED BY LAST UPDATE STATUS 1 Lack of skilled labours and advance technology January 2013 Programmatic Effect on production and low turn over the rural SME business AREDP is working to send targeted SME employees abroad for technology transfer and will bring an on-site consultant to help SME in a way that they do not feel the need for skilled labourers from neighbouring countries. Afghanistan Rural Enterprise development program REDHELMAND March 2013 On-going 2 Lack of market information system February 2013 Regional The SME will be having low access to market needs and sometime will misguide the SMEs in term of production AREDP is hiring a BDSP to train SMEs on market information system Afghanistan Rural Enterprise development program REDHELMAND March 2013 On-going 17

22 3 Deteriorating security March 2012 Regional Access to more remote communities becomes more difficult, sometimes interrupting activities of BDSOs. This lead to more limited monitoring and evaluation of the activities and support to SMEs The AREDP staff has built strong ties with the communities. This trust forms the basis of the security of the community workers. The staff involved in the projects has also maintained a low key profile when travelling. Afghanistan Rural Enterprise Development Program BDSOs of REDHELMAND June 2013 On-going 4 Limited SME infrastructure Septembe r 2011 Programmatic Effect on production and low turnover of the rural enterprises and SME business External. Involve ACCI and MoIC Afghanistan Rural Enterprise Developmen t Program BDSOs of REDHELMAND June 2013 On-going 18