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2.3.2 Entrepreneurship: Capacity strengthening on economic activities

Indicators: a) GP and LL on entrepreneurship strengthening in IE identified.

b) Challenges on entrepreneurship in IE identified and possible means to overcome challenges identified and analysed.

Data Analysis Methods: Identification of GP and LL on capacity strengthening for starting, improving, growing economic activities. Analysis of GP and LL to determine adaptability and scalability. Identification of challenges identified during promotion and implementation of capacity strengthening on starting, improving, growing economic activities and determine if/how these were overcome.

RECOMMENDATIONS:

1. Conduct needs analysis to determine the service support needs of the IE members. This should include, in addition to training on entrepreneurship and other related subjects, attention to the complete (holistic) personal situation of the community members. This would entail their social, psychological, economic, health, education situation. Rather than implementing actions to address all the identified needs, however, projects/programmes can identify and provide linkages to external available services.

References:

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2. Use integrated (holistic) models for skills development in IE combining:

  • Functional literacy
  • Entrepreneurship-business management
  • Environmental conservation
  • Occupational safety and health
  • Labour rights of workers 
  • Gender awareness and right issues
  • Leadership training
  • Include in basic management on issues such as:
  • Business feasibility determination
  • Book-keeping
  • Separating business from personal expenses, calculating working capital needs (including owner(s)‘and worker(s)’ labour costs)
  • Financial literacy on micro-credit and/or insurance schemes
  • Marketing
  • Production management including stock keeping and stock record keeping.

Reference: RNSF analysis.

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3. Share training model for people dependent on the IE with relevant local training authorities for wider replication.

References:

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4. Develop sets of good practices with clear operational targets to be met in IE associations/cooperatives/groups.  In many projects, the measurement of the quality of the functioning of associations/cooperatives/groups is insufficiently included in monitoring. Good practices and lessons learned should be used to inform improvements in functioning of the IE groups. Implement a systems approach with feedback loops to improve implementation of activities in the groups.

References:

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5. Be aware in project design and sustainability planning that entrepreneurship promotion programmes usually require an extended time horizon before employment effects become apparent.

References:

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6. Ensure that projects and activities to support IE operators and workers are:

  • Clearly oriented to their specific needs and not too general
  • Do not try to cover too many different aspects and consequently lose focus
  • Ensure a wider demonstration effect of projects
  • Managers/supervisors of trainees in micro finance institutions fully accept and support the training of their staff.

Reference: The Role of Labour Market Policies in Poverty Alleviation, 2009-2015, Final evaluation, SIDA, Stockholm

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7. Consider all the possible constraints that might lead business pilots to fail to grow including:

  • Business models that are not sufficiently commercial.
  • Other external factors limit the commercial proposition and ability to scale commercially.
  • Market demand turns out to be very limited.
  • The business cannot access growth capital.
  • Structural or capacity constraints to growing the business
  • There is a lack of ambition or incentive to grow
  • There are no, or very limited, economies of scale for the business.

Reference: From Paper to Practice: Learning from the journeys of inclusive business start-ups, Final project/program report, SIDA 2013, Stockholm

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8. Support capacity strengthening of informal economy operators in accordance with their needs but verify if they have specific needs in the areas of:

  • Collective decision making
  • Investment in and implementation of business plans
  • Record keeping
  • Available financial services and knowledge on how to access and use them
  • Value-adding/value chain processes
  • Mechanisms to access (new) markets and buyers
  • Risk management.

Reference: RNSF analysis.

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9. Include special attention to women’s capacity strengthening including through village savings and loan groups.

References: 

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10. Note when designing community level projects on IE that a meta-analysis of entrepreneurship development programs found projects oriented to youth and urban populations were more likely to have positive impacts. If working in rural areas, project design will need to be especially well detailed with solid theory of change and include intensive technical support.

Reference: Entrepreneurship Programs in Developing Countries: A Meta Regression Analysis, World Bank, 2013, Washington DC.

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11. When organising a training course, use a well-defined participatory strategy with clear and detailed criteria to identify and select beneficiaries. Participation should not be limited to project design but be included in all actions.

Reference: Support to household food security and livelihood of vulnerable and food insecure farming families - Final evaluation, FAO 2013, Rome.

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12. Ensure that communications about available project services are well formulated and disseminated. Communication should focus on raising the trust and confidence of youth or other community members who may have limited or discouraging prior experience of accessing loans or other services. Ensure that communications on available services include a gender perspective to ensure females also access the services.

Reference: UNIDO, 2015, Productive work for youth in Armenia – supporting young entrepreneurs, Midterm or interim evaluation, UNIDO, Vienna.

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13. Consider a wide range of livelihoods opportunities for people dependent on the IE outside of standard types of IE activities. Examples may include establishment of sales agent networks for diverse products, latrine installation, mobile hairdressing services, etc.

Reference: Mendez England & Associates, 2012, Final Performance Evaluation of USAID’s “Cambodia Micro, Small And Medium-Sized Enterprises Ii/Business Enabling Environment” Project, Final evaluation, USAID, Washington DC.

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14. Develop inventory of various types of available training materials in different IE areas. Widely share the available types of materials or locations/agencies through which they can be accessed.

References: 

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15. Promote combination of theory and practice during training followed up with technical inputs and support including for marketing of products.

Reference: RNSF analysis.

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16. Be aware that trainers need to have skills in consulting/mentoring so that they can provide the type of technical support to IE operators and entrepreneurs that they prefer and/or need.

Reference: RNSF analysis.

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17. Be aware that some informal economy operators are more interested in receiving consulting/advisory services as opposed to attending training.

References:

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18. Include in project design focus on ensuring experience and equipment sharing between community members following training.

Reference: Realizing minimum living standards for disadvantaged communities through peace building and village based economic development (Indonesia), Final evaluation, UNIDO 2013, Vienna.

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19. Ensure that project design includes provision of support for the acquisition of new technical skills to establish new enterprises start-ups or to expand existing enterprises while also providing market support and access to financial services are important tools to improve the incomes of people dependent on the IE.

Reference: Enterprise Development for Rural Families Programme in Kenya, Final Report, SIDA 2014, Stockholm

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20. Improve support for home-based workers by including mobile sales agents who can link the workers to markets and communicate market demands back to producers.

Reference: Management Systems International (MSI), 2012, Women’s Economic Empowerment: Balochistan Evaluation Report, Final evaluation, USAID, Washington DC.

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21. Include staff with well good expertise on market development in IE projects. Inclusion of such persons can be a good investment and result in better understanding of local markets and foster of better measures to improve access of IE operators to markets.

Reference: Small Farmer Livelihoods and Income Enhancement in Baghlan Province, Afghanistan. Final evaluation, FAO 2013, Rome.

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22. Include mentoring programmes with experienced business owners in entrepreneurship development programmes as this builds the business and financial skills of young entrepreneurs and farmers.

Reference: RNSF analysis.

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23. Consider including older more experienced youth to mentor younger and less experienced youth.

References:

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24. Include cross-cutting attention to business coaching and youth skills enhancement in early project stages in all relevant components to maximize the benefits over the long term.

Reference: Independent mid-term evaluation EGYPT Human security through inclusive socio-economic development in Upper Egypt, UNIDO 2016, Vienna.

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25. Ensure that the types of support provided are well adapted to the context of the community members’ needs and available market. Take into account that capacity strengthening of IE operators may not be the main need of community members but rather that support may be needed to address issues such as market access, the quality of packaging and products, the price of raw materials and the low prices received for products sold. Ensure that the products being developed with community members correspond to the local market desires.

References:

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26. Note possible shortcomings of the “village entrepreneur” model. In this model an individual selected from within a community acts as a ‘touch point’ between a business and local customer to strengthen links between supply and demand in local markets. People who are dependent on the IE are often selected to participate in such models.  This model can have shortcomings, however, stemming from difficulties recruiting village entrepreneurs, low investments, and/or scarce local demand.  While the model can be useful, it is important to bear in mind and try to address the possible shortcomings.

Reference: From Paper to Practice: Learning from the journeys of inclusive business start-ups, Final project/program report, SIDA 2013, Stockholm

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27. Promote collection of data of costs on production, storage transportation, inputs to the IE activity to enhance IE operators’ decision making skills. This applies to both agricultural as well as other rural and urban production.

References:

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28. Promote opportunities for women to enhance their IE livelihoods using skills that they already have but ensure that full analysis is conducted of the market and other barriers that exist to gaining adequate income from these activities. Develop effective approaches to overcome the identified barriers.

Reference: Management Systems International (MSI), 2012, Women’s Economic Empowerment: Balochistan Evaluation Report, Final evaluation, USAID, Washington DC.

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29. Consider facilitating the development of collective marketing for producers.

  • Ensure that to build successful collective marketing:
  • Trust is built through transparency
  • Access to stock keeping areas is facilitated if needed
  • Governance of associations is strengthened

Reference: The Feed - the Future Integrating Nutrition in Value Chains Project (Malawi), Final evaluation, USAID 2015, Washington, DC.

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30. Promote the collection of information and meaningful data about local markets through early-stage project studies. This facilitates the establishment of enterprises at the base of the economic pyramid/value chains.

Reference: From Paper to Practice: Learning from the journeys of inclusive business start-ups, Final project/program report, SIDA 2013, Stockholm.

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31. Recognise that specific IE activities that a project supports may only form a part of that household’s income. Ensure that the time the project expects a household to spend on the IE activity is proportionate to other household income generating responsibilities.

References:

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32. Review contract farming[1] as a potential approach for involving smallholders in agroindustry development, increasing employment and improving the inclusiveness of growth. Note that marginal smallholders may find better prospects as wage labourers on larger farms—including in processing of agricultural outputs—instead  of participating in improved supply chains as independent producers. Consider, however, that in some cases there is evidence that contract farming can benefit better-equipped farmers, excluding the poorest ones. Depending on project objectives, this will need to be taken into account and addressed.

References:

 

SOURCE: RNSF research - Volume 4.2

 

[1] Contract farming can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products. Typically, the farmer agrees to provide agreed quantities of a specific agricultural product (FAO).