Approaches and tools for inclusive value chain development: lessons from Uganda for improved impact
Value chain development (VCD) with smallholders forms a central element of the poverty reduction strategies of governments and NGOs in developing countries. Nevertheless, too little is known about how VCD interventions are designed and implemented, the approaches and tools used, and the challenges faced in the process. This paper helps to fill this gap with evidence from six cases in Uganda. For each case, data was collected from interviews with NGOs, government organizations, buyers, and smallholder business organizations. Results indicate that use of available VCD guides and tools facilitated productive partnerships among chain actors, engagement with support organizations, and feedback mechanisms on intervention processes. Results also challenge NGOs, government agencies, and researchers to better understand the circumstances of resource-poor chain actors, the implications of VCD on gender relations, and the cultural and business context when designing and implementing VCD. This calls for stakeholders to employ a broader approach to VCD, using a combination of available and new tools, and to seek out deeper collaboration with key actors within and outside the value chain.
Value chain development in Vietnam: a look at approaches used and options for improved impact
Despite the widespread use of value chain development (VCD) approaches to poverty reduction, there has been limited debate on how VCD is implemented in the field, from the approaches, methods, and tools used, to the investments and partnerships made. The article presents five case studies: tea, dairy, horticulture, cinnamon, and fish in Vietnam. For each case, we conducted interviews with development agencies, producer organizations, and principal buyers. The cases examined how VCD interventions were designed, the role of different stakeholders in the implementation process, and the challenges faced by practitioners and chain actors to achieve impact at scale. Results suggest that VCD interventions tended to focus on supporting smallholder participation in high-value, fast-growing markets, but based on a narrow set of activities, mainly around upgrading smallholder production capacities and establishing producer associations. Overall, collaboration with downstream buyers and service providers was muted and, in a few cases, non-existent. Opportunities for increased impact exist based on increased collaboration between practitioners and researchers to employ VCD tools in specific contexts, as well as to design new tools for addressing specific needs and facilitate joint learning on the implementation process and related outcomes. The findings also suggest a need for dedicated approaches to supporting producer organizations, given their central role in the implementation of VCD interventions.
Value chain development in Nicaragua: prevailing approaches and tools used for design and implementation
This article draws on four contrasting cases of value chain development (VCD) in Nicaragua to assess approaches and tools used in design and implementation. We interviewed 28 representatives from the international NGOs leading the interventions, the local NGOs that participated in implementation, principal buyers, and cooperatives. Despite the complexity of market systems, results showed a relatively basic approach to VCD, reflected in: 1) reliance on a single tool for design and implementation; 2) expected outcomes based on technical assistance and training for smallholders and cooperatives; 3) local NGOs and cooperatives with key roles in implementation; and 4) limited engagement with other chain actors, service providers, and researchers. We conclude with a call for a broader approach to VCD, based on a combination of tools to account for multiple, context-specific needs of diverse stakeholders, deeper collaboration between key actors within and outside the value chain, and evidence-based reflection and learning.
Building a viable maize hybrid value chain in Nepal: recent successes and the road ahead
In Nepal, expanding the production of hybrid maize seed has been prioritized by the government to meet the country’s growing demand for maize grain. Over the past 15 years, Nepal has released seven new hybrid maize varieties, but only two varieties were commercialized until 2019. This article takes a value chain perspective to assess how a hybrid maize seed system can be developed in Nepal. We collected data from 415 maize-growing households, 11 seed producing businesses, 95 seed retailers, 15 service providers, and 21 end-use industries. Findings showed that the seed companies lacked capacity in production, business operations, and marketing while agro-dealers and farmers have depended on imported varieties. Upgrading the chain will require the provision of technical and financial services and a supportive regulatory environment. For seed businesses, this means improved access to parental lines and increased capacity to build demand for new hybrids in a competitive market place.
Value chain development for rural poverty reduction: A reality check and a warning
Over the past decade, the value chain development approach has increasingly been adopted by governments, donors, and NGOs to reduce rural poverty. The design of related interventions often assumes that poor households: 1) have sufficient resources to effectively participate in value chain development; 2) do not face substantial trade-offs when using these resources; and 3) are able to assume higher risks when reinvesting capital and labour. However, insights from our own experiences and the literature show that these assumptions often do not reflect the realities and the needs of the poor. We argue that value chain development with poor and vulnerable populations, particularly in rural areas, requires additional conceptual frameworks, analyses, and interventions. In particular, we encourage donor agencies and development practitioners to adopt an asset-based approach to the design, implementation, and assessment of target value chains and to identify the non-market interventions needed for enabling particularly disenfranchised groups to meet the minimum asset thresholds for their successful participation in value chain initiatives.
Editorial: New approaches to old problems: systemic change as a unifying objective
Systemic approaches to development have, over the last decade, gone from a niche concern to what is arguably a paradigm shift, in discourse at least. In academia, the global value chains literature has shifted focus to align behind global production networks literature in being more inclusive of the multidirectional flows and institutional dynamics of systems (Hess and Yeung, 2006; Coe et al., 2008; Bair, 2008). In practice, donors have begun to align behind systemic approaches demonstrated by USAID’s shift from Value Chains to Value Chain Systems (USAID, 2014) and the £1 bn of programmes commissioned under a systems banner over the past decade (authors’ analysis of programme documents). The systemic approach to development intervention is grounded in the works of Polanyi, Porter and New Institutional Economics, and has analytical synergies with work on complex adaptive systems (Hall and Clark, 2010; Ramalingam et al., 2008, 2014). However, this journal has played a significant role in the conceptual development of the operational side of market system approaches, and their principal articulation, Making Markets Work for the Poor (M4P) (Elliott et al., 2008; Bear et al., 2003; Hitchins et al., 2004; Taylor, 2013; Bekkers, 2008; Bear and Field, 2008; Jones, 2012; Hitchins and Jain, 2011; Johnson, 2009), codified in the Operational Guide (DfID and SDC, 2008; Springfield Centre, 2015).
Editorial: Expanding the debate on financial services
This volume of Enterprise Development and Microfinance (EDM) addresses from different angles and in different ways the capacities and needs of financial service providers to effectively reach to the poor. Some articles explore options for increased operational efficiency of microfinance institutions (MFIs), while others focus on the capacity of service providers to expand beyond microfinance. Some take a more global view, while others focus on experiences in specific countries, namely China, India, Togo and Brazil. Taken together, the articles provide fresh fodder for debates on how financial service providers can achieve sustainability and better support the poor’s capacity to deal with risk and uncertainly. The articles also provide important insights into how government and donors can better support service providers—or at the very least reduce the barriers that limit the impact and reach of service provision. Hopefully the rich debate here and elsewhere in EDM on financial services will inspire deeper reflection on how to increase the coverage and effectiveness of non-financial services, such as rural advisory services and business development services.
Editorial: Towards leaner and more effective value chain development
Value chain development (VCD) is a common term in today’s development lexicon1, where its use tends to conjure passionate ideas about how development programming can support smallholder participation in growing markets in the interest of economic growth, job creation, gender empowerment, and sustainable use of natural resources, among other goals. Since the early 2000s, Enterprise Development and Microfinance (EDM) has featured considerable debate on how to design market-oriented development interventions with smallholders, often based on positive experiences by a given NGO or project in a particular context. Early articles helped to put VCD on the development agenda, while advancing innovation in market-based project design and implementation. However, after more than a decade of it being firmly placed on the agenda, we still know relatively little about VCD. Apart from isolated case studies, the question of whether VCD has lived up to the expectations of smallholders, of the private sector, and of development agencies remains an open one. This double edition of EDM addresses the design, implementation, and impact of VCD support to smallholders and to small and medium enterprises (SMEs) as an important, yet under-researched dimension of VCD. The eight articles look into the needs and opportunities for increasing the effectiveness of VCD support services, with discussions on: the role of NGOs or governments in VCD; how large-scale buyers and certification programs shape VCD; and the role of finance and impact bonds in VCD. Advancing ideas on how to get the right mix of services, at the right time, to the right people, taking into account variations in the context in which livelihoods and business activities are embedded, will help stakeholders to effectively deliver on poverty and broader development goals.
Editorial: Revisiting the role of business, technical, and financial services in fostering rural entrepreneurship
Over the past 15 or so years authors in Enterprise Development and Microfinance (EDM) have written extensively about the design and implementation of microfinance and its use by the poor, whether to respond to shocks and changing contexts, invest in education, or advance livelihood goals (Figure 1 overleaf). Coverage has ranged from the specifics of designing microfinance schemes, access to them by the poorest, and their impact on wellbeing and poverty. While the debate on microfinance is far from over, it is true that discussions have been more concerned with managing, saving, borrowing, and moving money, than about building viable businesses. Business development involving the poor, which in many cases focuses on rural small and medium enterprises (SMEs), requires us to address the demand for a range of services which, taken together, enhance the capacities of rural SMEs. Such services need to be affordable and reliable, and address the productive and business needs of SMEs, from small-scale processors to multi-tiered agricultural cooperatives. The issues are complex with lingering questions about how different types of service providers, from government agencies and NGOs to various private sector agents, can better design their services; and how, through adequate delivery mechanisms, the capacity and willingness of SMEs to employ such services can be strengthened. In this Editorial, we discuss some of the key issues for advancing rural entrepreneurship via improved services and provide an outlook for future discussions.
This issue presents four articles that explore important and timely issues for the design and implementation of financial services for the poor and otherwise underserved clients. The articles make clear that despite the strong interest and continued investments in inclusive financial services, we still have a long ways to go in terms of addressing the practical issues that influence outcomes and ultimately impact. Among the questions addressed in these articles are: Do women make risker bets that men in credit repayment? Do investments in client relations, such as capacity building, lead to improved performance for financial service providers? How can financial service providers meet the needs of those who are likely to be excluded from sources of financial services. The papers employ a mix of methods, from project-specific qualitative case studies to national-level representative quantitative studies.
Editorial: ‘From the editor’
This January will mark my fourth anniversary as editor-in-chief of Enterprise Development and Microfinance (EDM). Before joining EDM as editor, I had had prior engagement with the journal, having co-authored an article, published in 2012, on impact assessment for value chain development interventions. Also, in the early 2000s I had followed closely the discussion led by EDM on building viable markets for business development services. The decision to take on the editor role still required some thought; after all, I already had a full-time job to contend with, in addition to other responsibilities. Ultimately, the decision to accept reflected my long-standing appreciation for the journal’s unique focus: to promote better development by facilitating exchange of ideas and debate by academics (for the benefit of practice) and by practitioners (to inform research and policy). In the nearly 30 years since EDM launched its first edition, a few other journals have emerged that address business development in a developing country context; however, none of these aims to advance development programming as clearly and unapologetically as EDM.
Since the late 1990s, value chains and related concepts have captured the attention of researchers and practitioners alike. EDM’s 2017 double special issue on value chain development in agriculture attested to the enduring interest in the subject. Often, however, researchers and practitioners have thought about value chains in quite different ways. This has impeded the formation of a common language around value chains and the evolution of how value chain concepts are applied in rural development. For researchers, value chains are a theoretical framework around which to examine globalizing food markets and the numerous and important ways in which they have transformed relations between retailers, processors, farmers and consumers. For practitioners, however, value chains are actual configurations of farmers and business leaders, operating in the most challenging of business environments, who in theory can derive benefits from increased cooperation and coordination. Unpacking the twists and turns in value chain thinking and applications over time can shed light on why communication between researchers and practitioners has been so challenging, and crucially, future opportunities for more effective dialogue, action, and impact.
After nearly six years as editor of Enterprise Development and Microfinance, I am stepping down from this position at the end of 2020. I took the reins of EDM in May 2015 from Clare Tawney at Practical Action Publishing who, in addition to her various other activities at the company, had been serving as EDM’s interim editor. In 2015, I was fairly new in my position as a researcher in the CGIAR and was inexperienced in running a journal. Clare took a chance with me, and I remain grateful for the opportunity. From a personal perspective, I was excited about the opportunity that EDM offered to help shape discussions on how to make market-oriented development processes more responsive to the needs of local stakeholders, more efficient and sustainable, and ultimately, more impactful. Over the recent years I’ve learned a great deal about managing a journal, experiences which I have applied in my work in the CGIAR and which will no doubt be useful wherever I go next. I would like to warmly welcome Linda Jones, PhD, of Cowater International, who will be replacing me as editor as of January 2021.
When Fairtrade is not enough: coffee cooperative development and the role of certification systems
Coffee cooperatives employ certification systems, in part, to structure their relations with growers and buyers, and generate income for business operations and investments. In Central America, development agencies have targeted certified coffee cooperatives for support, based on the assumption that cooperatives are uniquely positioned to deliver benefits to poor coffee farmers. Research on certification systems has focused on the benefits obtained by smallholders from participation in a single system, often Fairtrade. This research examines cooperatives and how they engage with certification systems and the implications of this engagement for building their business. Data was collected in 2018 from four cooperatives in Nicaragua and Honduras. Fairtrade certification and related coffee sales formed the bedrock of their business strategy, but Fairtrade alone was insufficient to sustain operations, even when combined with organic certification, due to insufficient demand. Additional systems, such as UTZ Certified, C.A.F.E. Practices, and Rainforest Alliance were employed. These additional systems allowed cooperatives to sell excess coffee on relatively favourable terms – coffee which otherwise would have been sold as non-certified coffee. Results suggest that engagement in multiple certification systems is critical for sustaining cooperatives in the region, but they also dampen expectations that certification systems can provide a framework for driving long-term systemic change.
Partnerships in Fairtrade coffee: a close-up look at how buyers and NGOs build supply capacity in Nicaragua
This paper examines efforts by buyers and NGOs to build the supply of Fairtrade coffee from the Nicaragua-based cooperative Soppexcca following the coffee crisis. Support was aimed at transforming Soppexcca into a viable business, able to respond to the needs of its coffee-farming members. Results show that Soppexcca made significant gains, including expansion of infrastructure, growth in membership, and increased financial stability. However, important issues remained, related to democratic governance, future growth and stability, and the provision of services. Results suggest that advances in building cooperatives do not easily translate into increased capacities at the household level. While some important gains were detected, in general, producers struggled to intensify coffee production and take full advantage of their access to preferential markets. This paper makes a plea for deeper discussions about how buyers and NGOs can more effectively contribute to building the supply of high-quality Fairtrade coffee, and the need for increased coordination and mutual learning as part of the process.