|Pastoralists obtain better income from the sales of their animals thanks to VSLAs|| Evaluations of the Village-level Savings and Loan Association (VSLA) model suggest that participation in the program has an overall positive impact on various indicators of members’ wel-fare, including the development of income-generating activities (IGAs), education expenses, access to health services, nutri-tional levels and quality of housing. In the light of these findings, PRIME facilitates the formation of VSLAs under the Private Sector Provider (PSP) approach, which eventually cpacitates the private provider to run the VSLAs through member contribu-tions, and VSLA members to be able to pay for the service. The PSP approach complements the VSLA model by ensuring sus-tainablity and circumventing reliance on donor funding. One of such VSLAs is found in Golicha village, Did Yabllo Kebele, Yabello Woreda in Boena Zone of Oromiya Region. The asso-ciation, which has 25 members was formed 11 in August 2014. The group meets every month and everyone saves 12 Birr. Ten birr goes to savings while two birr goes to a social security fund, which is used to support each other during a crises.Karru Nura, a 50-year old widow, is one of the members of this group. She is keen to tell what exactly a VSLA membership has benefitted her. Just a couple of months ago, Karru had to send money to her two children who are at the university (one in Haremaya and in Jimma). She didn’t have cash at the momemt. The price of cattle and goats was rather low then. Karru bor-rowed 2,000 birr (USD 100) from the credit group. In a seven weeks’ time, Karru sold a cow at a good price and repaid her debt. By doing so, she has saved a lot of money, at least 1000 birr (USD 50) by her estimation. “I am just telling you an in-stance,” says Karru; “otherwise, membership of this association has several benefits. After all, it has instilled the culture of sav-ing in us. We think twice before spending our hard earned money.” Before this association, whenever people ran into a small financial need, they sold their animals; often, at a very low price. The money left over was often spent unwisely. Even if some people wanted to save, they had to go to the nearest bank in Yabello town, which is not so friendly to community members who can’t read or write.
Pastoralist Areas Resilience Improvement thorough Market Ex-pansion (PRIME) project has so far facilitated the formation of more than 96 VSLAs across Borena Zone, benefitting over 2050 households and enabling them to increase their capacity to generate income, meet their immediate cash needs and con-trol their financial resources.
Please click the link to donwload this success story, VSLA Membership Contributes to Resilience
“membership of this association has several benefits. After all, it has instilled the culture of saving in us.” Karru Nura VSLA member, Golicha village
Bridging the Gap: Financing Economic Growth in Ethiopia’s Pastoral Areas
The challenge: How can we bridge the financing gap among Ethiopia’s pastoral population? Ethiopia has one of the lowest financial inclusion rates in sub-Saharan Africa with only 14 percent of the adult population able to access formal financial services. This figure drops as low as one percent in rural areas.
The solution: USAID’s Pastoral Areas Resilience Improvement through Market Expansion (PRIME) project, implemented by Mercy Corps, includes a six million USD Innovation Investment Fund (IIF) that supports medium- to large-scale enterprises operating within or directly benefitting pastoral areas in the Somali, Afar, and Oromia regional states.
How it mobilized private capital: The IIF facilitates finance to growth-oriented businesses through matching grants/contracts, leveraging local capital for investments in a range of market development activities that improve market linkages, generate employment, and increase financial inclusion.
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How it was inclusive: The financing gap in Ethiopia is most evident for small and medium enterprises, in general, but it is especially acute for Ethiopia’s Muslim population – a group that makes up 34 percent of the total. One of the stipulations in Islamic banking is that charging interest is not allowed, and yet, interest-free financial products are largely unavailable. The Muslim population comprises up to 98 percent of the total population in the areas of PRIME’s interventions, and thus the IIF improves the financial inclusion of these individuals and businesses in the regions in which we work.
How it was innovative: To date, the IIF has signed agreements with six companies for a total value of around six million USD, with private sector cost-share of $24.8 million USD, or 80 percent! Companies that received support include a slaughterhouse, a micro-finance institution and mobile service provider, a private equity firm, a poultry farm and two milk processing facilities.
Lessons learned: Not every partnership with the private sector will be successful, unless you pay close attention to a number of factors: finding the right business, extensive due diligence, having the right NGO team with the right skills, having the correct agreement/contract format, and putting a good monitoring and evaluation plan in place from the design stage.
This vignette was submitted by Mercy Corps, a global leader in market systems development with initiatives in over 27 countries. To learn more, visit www.prime-ethiopia.org or contact Bethel Tsegaye (firstname.lastname@example.org), Innovation Investment Fund Manager of PRIME – Mercy Corps Ethiopia.
For more information about the structure and best practices of implementing an innovation fund, link to the full report here.
The second vignette comes from Chemonics, where a small investment of public funds was used to bring in private funds at a 5:1 private to public ratio – benefitting 3 million smallholder farmers in the process.
Uganda Feed the Future Commodity Production and Marketing Activity (CPMA)
The challenge: Agricultural productivity in Uganda is low, in part because only approximately 1 percent of farmers utilize fertilizers. The fertilizers in the market are often not appropriate for the land and the package sizes are too large for smallholder farmers.
The solution: Savannah Commodities Co, a locally owned agro-processor, recognized the enormous market potential of providing small packages of custom blended fertilizer to smallholders (which comprise 96 percent of Ugandan farmers), and partnered with CPMA to create a fertilizer blending and packaging facility.
How it mobilized private capital: Savannah approached CPMA and leveraged the program’s deep knowledge of and access to smallholders, as well as the technical assistance it provided to them. Additionally, CPMA agreed to invest more than $168,000 USD to procure fertilizer blending and packaging equipment, in tandem with Savannah’s investment of approximately $850,000 USD, resulting in USAID leverage of 5:1, as required by CPMA. The blending facility will remain part of the CPMA inventory until the conclusion of the Activity, at which point, with USAID approval, ownership may be transferred to Savannah.
How it was inclusive: This investment addresses a market need specific to smallholders by providing one to two kilo packages of fertilizer which is custom blended for their own plots of land, thereby leading to increased yields. Through a combination of Savannah’s existing network of smallholders and CPM’s farmers, Savannah expects to reach over three million smallholders.
How it was innovative: This is the first custom fertilizer blending facility in Uganda, and the first time that Savannah co-invested in procurement of equipment with USAID.
Lessons learned: If there is a demonstrated business need (unmet market demand), you can create a win-win partnership with the private sector. Companies are willing to invest when there is a real business opportunity. USAID funding can exploit those opportunities and leverage the investments. This vignette was submitted by Eileen E. Hoffman (email@example.com), Director of Economic Growth and Trade Practice at Chemonics.
So as we spread out our bedroll for the night, we intend to ponder what we have learned so far in the journey – what we mean by “mobilizing private capital” and how it can support financial inclusion; the different ways we can undertake it; how the financial system works; and what we can do about risk. And in our next post, we will try to make sense of why it all matters and why our Microlinks community should pay attention to it.
|An entrepreneur’s business using solar system increases income and creates jobs||Lack of access to energy poses several challenges to residents of rural pastoral Ethiopia, affecting their livelihood tremendously. For example, they cannot operate devices like cell phones, preventing real-time communication and making emergency response extremely difficult. People are forced to use kerosene or firewood for lighting houses at the expense of the environment, health and assets.The business of Dawd Wako, a resident of Borbor Town in Oromiya Ethiopia, is helping pastoralists tackle power issues. Dawd started the business of charging mobile phones in 2009 because he had to fend for himself. With the money his parents raised for him (3,500 birr/USD175), Dawd bought a 60-watt solar system and started to receive mobiles for charging. His excitement didn’t last long, however. Due to lack of knowledge and skills to install and operate the solar system, Dawd couldn’t charge the phones. He had to make several trips to nearby towns and even to Kenya to get the phones charged, and to buy batteries which were breaking down due to improper installation and handling. Dawd’s operational cost was so high that he was about to throw in the towel. Fortunately, a rare opportunity opened up for Dawd in 2013. The USAID-supported project, Pastoralist Areas Resilience Improvement through Market Expansion (PRIME) worked with Dayod Engineering Plc to deliver a 10-day training in solar energy to him and 69 other entrepreneurs, who learned not only how to install solar panels but also how to use and maintain them.That training turned around Dawd’s business. His batteries stopped breaking down. “As for maintenance,” Dawd says proudly, “I’m the expert in solar systems around here.” Today, his income from mobile phone charging is more than 6000 birr (USD 300) a month. Moreover, he promotes and sells Dayod Engineering’s so-lar products to pastoralists for a commission of 10 percent. Dawd has also opened up a butcher shop, which is earning him more than 12,000 birr (USD 600) a month and he is planning to open a restaurant soon. Recently, Dawd hired two employees who sup-port him with the mobile phone charging business. Each earns 600 birr (USD 20) a month. On the whole, Dawd has come a long way. His business has not only changed his life but touched the lives of others, and has become a resource person for his kebele, of which he is proud.PRIME works to significantly improve alternative livelihood options through essential skills transfer including basic employability skills, and entrepreneurship and technical training. Dawd is just one of thousands of young women and men for whom PRIME has facilitated training in these areas.Please click the link to download this success story, Skills-based Training Provides Reliable Access to Solar Power|
“As for maintenance, I’m the expert in solar systems around here.” Dawd Wako, Mobile phone charging service provider
|A member of a social analysis and action group comes up with an innovative way of producing fodder, setting a good example for her community||Huqo Dulacha, a 57 year old mother of six, is a very hard working co-facilitator of the Social Analysis and Action (SAA) group established in Cholkasa Kebele of the Borena Zone in Oromiya Region. Initially developed by CARE, SAA is an approach that is implemented to address root causes of societal and behavioral issues that are holding back communities. The USAID-supported, Pastoralist Areas Resilience Improvement through Market Expansion (PRIME) has adopted this approach to address underlying drivers of vulnerability to climate change and the behavioral and socio-cultural factors limiting adaptive capacity. The approach helps households, communities and local stakeholders reflect on their own perceptions of underlying causes of societal and behavioral issues that are holding back communities. The project has achieved concrete results through the application of this approach. Huqo’s story is an example of PRIME’s success in transforming lives by engaging communities in regularly recurring dialoges leading to an outcome of mutual changeHuqo’s group has so far met four times, and during these meetings, members deliberated on the benefits of fodder production and preservation as a risk management measure. The group also discussed the opportunity to earn extra income from the marketing of feed.To show how the group discussions transformed her thinking, Huqo explains, “Since our first discussion on fodder production, I started planning how I can start producing fodder in my plot. Thanks to the knowledge I acquired from our meetings, I began farming and planting feed crops.” Now, Huqo has proved to her neighbors and fellow-villagers the value of planting feed crops and she is a model fodder crop producer. As Huqo and her neighbors confirmed, others in Huqo’s village have started to benefit from her experience and have already started planting fodder seeds.Huqo Dulacha planted elephant grass and sugar cane when there was hardly any similar experience among the Borena pastoralist communities. At the time of a field visit in June, Huqo had begun harvesting and piling her fodder to reserve for the dry period. She had also started cattle fattening in her yard.PRIME has so far established 11 core groups and 57 sub-groups across its implementation areas, with total beneficiary members of 3096 of whom nearly 1,600 are women.Please click the link to download this success story, Social Analysis and Action Approach Enhances Reselience|
Social Analysis and Action Approach Enhances Reselience“Thanks to the knowledge I acquired from our meetings, I began farming and planting feed crops.” Huqo Dulacha, Member of an SAA in Borena
The USAID-supported, Pastoralist Areas Resilience Improvement through Market Expansion (PRIME) project’s partnership with various businesses is improving market systems by building capacities, strengthening relationships, and aligning incentives in pursuit of shared objectives. PRIME’s interventions are gaining buy-ins from various actors, including government. The interventions are stimulating pressure points within market systems to encourage change that supports increased competitiveness, value addition and support to each other.
PRIME is one of the few projects that have embraced the market facilitation approach in Ethiopia. As a pioneer, PRIME is facing challenges in implementing this approach. There are, however, strong indications that the approach is starting to bear fruits. For an example of such gains, to read this success story click the link below,