Junior Davis and Felicity Proctor Natural Resources Institute (UK) [email protected]

Rural Economic & Enterprise Development: A framework for

analysis & joint action

Dhaka, Bangladesh 23rd November, 2004.

Junior Davis and Felicity Proctor

Natural Resources Institute (UK)

[email protected]

2

Workshop Objectives

Present the Rural Economic and Enterprise Development (REED) Framework

Exchange relevant current and planned project and programme experience between practitioners and review in the light of the REED framework

Review the potential utility of the REED framework in the Bangladesh context

Consider options for follow up action research and learning in partnership with the NRI led programme

3

Hoped for Outputs

Better understanding of REED as a framework to support multi-stakeholder processes for rural economic development and poverty reduction

Shared learning between Bangladeshi programme practitioners set within rural and local economic development

Emergence of a learning platform/network on REED/LED to support ongoing and future programme interventions

Agreement on whether and how to take forward work on the validation of REED in the Bangladeshi context and possible future uptake

4

What is Local Economic Development

Local economic development is about local people working together to achieve sustainable economic growth that brings economic benefits and quality of life improvements for all in the community. “Community” is here defined as a city, town, metropolitan area, or sub national region (World Bank, 2004).

5

Focus Tools

1960s to early 1980s: mobile manufacturing investment,

attracting outside investment, especially the attraction of foreign direct investment

hard infrastructure investments

To achieve this regions/government/NGOs used: massive grants subsidized loans usually aimed at inward investing

manufacturers & tax breaks subsidized hard infrastructure investment

1980s to mid 1990s: the retention and growing of existing local

businesses still with an emphasis on inward investment

attraction, but usually this was becoming more targeted to specific sectors or from certain geographic areas

To achieve this regions/government/NGOs provided: direct payments to individual businesses business incubators/workspace advice and training for small- and medium-sized

firms & technical support business start-up support some hard and soft infrastructure investment

During this third (and current) wave of LED, more focus is placed on:

soft infrastructure investments public/private partnerships networking and the leveraging of private

sector investments for the public good highly targeted inward investment

attraction to add to the competitive advantages of local areas

To achieve this regions/government/NGOs are: developing a holistic strategy aimed at growing local

firms & providing a competitive local investment climate

supporting and encouraging networking and collaboration

encouraging the development of business clusters encouraging workforce development and education closely targeting inward investment to support

cluster growth; supporting quality of life improvements

Three Waves of local Economic Development

Research on local economic development highlights:

Significant role played by extensive and established local economy clusters

Municipal/ local government plays a key role in impacting these economies

Constraints are often inadequate political decentralization and regressive urban planning regulatory frameworks

A purely "industrial" or “agricultural” focus excludes: • extensive livelihood linkages in the rural and urban

economy, • governance aspects. • importance of extensive trade networks inter-connecting

distinctive local economies both rural and urban

The Rural Economic and Enterprise Development is a framework based on the analysis of successes and experiences of programmes and projects by an international group of practitioners from different professional backgrounds and countries.

REED framework offers a flexible tool for joint analysis, planning, evaluation and learning among stakeholders concerned with rural economic and enterprise development.

It is an example of an holistic and spatial approach to local, rural and urban development.

What is REED?

Joint donor initiative (GTZ, DFID, SDC, IFAD, CTA, FAO, WB) to overcome fragmentation

Framework developed based on success factors of operational experience from a diverse range of programmes (Berlin workshop November 2002)

This was developed using the Learning Wheel methodology.

The Evolution of REED

4. Functioning and effective infrastructure

(hard and soft)

3. Active private sector

institutions and links

8. Local organisation, groups and associations

(representing the poor) as building

blocks

9.Active participation

and ownership of development

processes by well linked

stakeholdersFostering

Rural Economic and Enterprise Development

1. An enabling environment that provides for an

attractive investment climate and dynamic

entrepreneurship 2. Effective mechanisms and structures that address local

needs

5. Access to integrated and open markets

6. Access to effective and

efficient support

services and resources

7. Adaptive management capacity and

entrepreneurial competence

within business and enterprises

10. Ongoing learning from success and

failures by all stakeholders

Use of the framework in the planning process for poverty oriented LED in rural and urban areas

As a checklist in the planning process

As a tool to define priorities with stakeholders and decision makers

As a guideline in participatory planning with stakeholders

As a tool for joint planning with different projects and donors

As resource material for the REED/LED planning process

Using REED: in the planning process

Using the framework as a tool for selecting amongst intervention priorities (gateway function)

For example:

local and regional economic development

promotion of value chains

training and human resource development

rural and urban business development services

microfinance

....

Using REED: in prioritising interventions

Use the framework for monitoring and evaluation:

As a guideline to establish a M & E System

As a tool for discussions with decision makers on changes observed

As a tool for joint evaluation of different projects in the same region

To help define indicators for results and impacts on different levels

As a tool to establish benchmarks for regions and countries

Using REED: in monitoring & evaluation

Each cornerstone contains

The aim of a cornerstone in the overall context of REED/LED

Core elements of the cornerstone

Key strategies to achieve best results

Instruments and means of implementation

Links to websites with information, experiences and best practices

The Cornerstones of Rural Economic and Enterprise Development framework

Cornerstone 1. An enabling environment for an attractive investment climate and entrepreneurship.

Good governance, improved reformed regulation, taxation,

licensing, remove tariff and non-tariff barriers

Cornerstone 2. Effective mechanisms and structures that address local needs.

Effective decentralisation, empowerment of communities

Cornerstone 3. Effective private sector institutions & links

Build capacity of private BDS, enhance organisational capacity, create local business networks

The key elements of the ten REED Cornerstones

15

The key elements of the ten REED Cornerstones

Cornerstone 4. Functioning and effective infrastructure (hard and soft). Identify infrastructure needs of rural SMEs, Providing & maintaining

required infrastructure, integrating into wider systems, quality dimensions

Cornerstone 5. Access to integrated and effectively functioning markets. Access to markets, transparency & stability of markets, market

chain integration & management, market development

Cornerstone 6. Access to effective and efficient support services and resources. Provide information & specialised services, Develop market for service

provision, provide contracted business services, supply inputs, access to finance & R&D facilities

Cornerstone 7. Adaptive management capacity and entrepreneurial competence within business and enterprises.

Management & organisation, production & service generation,

financing, marketing, networking

Cornerstone 8. Local organisations, groups and associations (representing the poor) as building blocks.

Understand organisational arrangements, motivate self-mobilisation, facilitate organisational development, ensure organisational graduation to higher and appropriate levels of formalisation

The key elements of the ten REED Cornerstones

17

The key elements of the ten REED Cornerstones

Cornerstone 9. Active participation in and ownership of joint learning processes by well-linked stakeholders. Identifying stakeholders, building stakeholder convergence,

creating structured platforms & for a for negotiations, creating networks for learning

Cornerstone 10. Ongoing learning from success and failure by all stakeholders Create platforms to share and review information, agree vision and M&E

framework, creating an effective knowledge management system

18

CONTENT KEY STRATEGIES & PROCESSES

POSSIBLE WAYS TO IMPLEMENT

1. 1.Identifying the infrastructure required by rural enterprises

1. 1.Assess the existing infrastructure and identify gaps and the necessary improvements;

2. 2.Improve access to the infrastructure

3. 3.Identify ways and means to reduce the costs of accessing the infrastructure.

1. Survey of existing infrastructure and business needs;

2. Identification of priorities and contributions in multi-stakeholder forums;

3. Increase in the volume of goods or services using the infrastructure;

4. Provision of low-cost solutions to enterprise needs.

1. 2.Providing the required infrastructure

1. 1.Encourage public and private investment in infrastructure;

1. Development of sound proposals for new or improved facilities with benefits to rural enterprise and the public.

1. 2.Privatise state utility service providers;

1. An independent regulatory body;2. Invitations to tender for management of

service delivery contracts.

1. 3.Promote local, self-funded facilities, eg, collective or cooperative services;

1. Development of innovative schemes for self-funding.

1. 4.Establish facilities on a correct and legal basis, eg, access.

1. Investigation into the local regulatory or legal position.

Cornerstone 4. Functioning and effective infrastructure (hard and soft).

The following steps are proposed:

l. Define geographical area (e.g., district, province),

II. The framework could be applied to analyse the existing situation in that area and identify potential areas of improvement.

III. Cornerstones, their interdependencies, strengths and gaps could be identified by detailed analysis and self-assessment.

Scenario for using the REED framework in an LED setting (l)

IV. The gaps or shortcomings blocking the exploitation of the economic potential of the region should be analysed in detail and prioritised by their negative effects on the system.

V. Factors with the greatest negative impact should be addressed through intervention.

VI. Once the possible interventions are identified, implementation strategies can be planned and the roles of the different actors and their mutual expectations can be clarified.

Scenario for using the REED framework in an LED setting (ll)

How REED can add value

1. Thinking about economic and livelihood strategies to compliment other spatial planning and management efforts is new. Critical linkages which combine to direct resources and interventions strategically and spatially need to be considered.

2. Public administrations should conceptualize REED/LED strategies in a trans-locational (village, sm. towns, cities) perspective, including its institutional setting and prioritise according to cost effectiveness and socio-economic impact.

3. REED provides a common platform and mechanism to link policy, procedures and interventions from a multidisciplinary perspective.

NRI Action research and shared learning on REED

The research aims to develop further the conceptual framework and project tool for the fostering of rural economic and enterprise development in Bangladesh and South Africa

In pursuit of this, the project aims to: Apply the REED framework and share emerging

practice on pro-poor public policy and institutional support at local and national government levels specifically in South Africa and Bangladesh.

Refine and develop the conceptual framework so that it can address gaps in the framework

Approach

Collaboration with In-country partnersCollaboration with UK and EU partnersConsultation with key stakeholdersPolicy and Institutional focusPolicy dialogue

Methodological issues

Study site selection criteriaUnit of analysisQuantitative and Qualitative Research

Methodologies and tools Issue(s)/Purpose Potential Methodological Tool(s)

Assessment of community physical/natural assets

Participatory Resource MappingSecondary data on economy, employment and demography

Exploration of local resources and development conditions

Transect walksFocus group discussions

Understanding of different SME and MSME activities

Focus group discussions

Gaining in-depth knowledge of specific issues, structures and organizations

Key informant discussionsIn-depth interviews and Institutional audits

Following up and illustrating specific issues Case studies – semi structured interviews

Stakeholder perceptions, attitudes, meanings and values (social assets)

Focus group workshops semi-structured interviews

Impact of sectoral policy frameworks on LED Empirical analysis of secondary dataCase studies – SAM/PAM

Information on the factors that constrain poor’s access to employment and SME development.

HH survey/ secondary data/ questionnaire/ Enterprise questionnaire

Identification of needs for the development of the LED

Focus group discussions, Key informant discussion, enterprise QNR

Policy uptake and dissemination

Stakeholder involvement and shared learning platform at country-level

Input into DFID, World Bank and EU programme and investment processes

Published Outputs and WebsiteNetworkingSeminars and Workshops

Inception Phase

Literature Review Identification of in-country research partners Interactive consultation with policy-makers and in-

country stakeholdersJoint planning with in-country partners, GTZ, UN-FAO

etc.Selection of case-study sites/ regionsDevelop Papers for WB local economic development

conference in Washington and forthcoming GTZ conference in Sri Lanka

Initial workshops and seminars

Proposed in-country activities l

Research activities in each study area:A study which assesses the institutional and policy

context for REED/LED in each countryA review of relevant literature and secondary data, and

dialogue with key stakeholders.A full inventory of the existing data on REED/LEDReach agreement with partners on study/project locationBaseline (community level) survey (case studies) to

identify the range of REED/LED activity in which populations are engaged; develop a typology of REED/LED activities and pro-poor LED orientation cross-sectorally

Extend this initial survey to other areas in the same country

Proposed in-country activities Il

The design, testing and implementation of a pilot of the Rural Economic and Enterprise Development framework in Bangladesh and South Africa.

Knowledge to be gained

Better understanding of current state of knowledge relating to REED/LED in South Africa and Bangladesh

Improved understanding of primary and secondary stakeholder perceptions of REED/LED and its growth potential,

Qualitative and quantitative information on types of REED/LED, and their importance to the poor

Information on the impact of sectoral policy frameworks on pro-poor LED (housing etc)

Qualitative and quantitative information on the factors that constrain people’s access to employment and SME development.

Thanks for your attention!Thanks for your attention!

The reports this presentation is based on are available at:

The Natural Resources Institute website

http://www.nri.org/projects/reed

32

Taking the REED research forward

Time frame: project due to complete research in January 2006 Identify partners (NGO, government, academia, donor etc) Identify opportunities for joint collaboration with existing

programmes/ project at macro, micro or meso levels. Efforts should build on practical fieldwork & existing data/ case

study material Launch in-country REED/LED research in Bangladesh through

an inception workshop February 2005 Participate in co-financed NRI-GTZ REED international

conference, Sri Lanka June 2005 Invite current workshop participants to lessons learned

workshop/event at the end of the in-country research November 2005