VSLAs and Enterprise
Development
Practical Lessons from CARE Ethiopia and
Bangladesh
Access Africa
Pursuing financial inclusion for 30,000,000 poor HHs across Africa by 2018
Market Engagement Strategy
Promoting poverty reduction of 10 million HHs by 2015 through market-based, value chain approach
VSLA and Market Engagement @ CARE
Financial Inclusion Integrated Approach Market Engagement
Emphasis on: savings-led financial
inclusion
Observation: organic joint
marketing
Emphasis on: deliberate sequencing of VSLA and enterprise
development
Observations: complex but high
potential, more than one way to do it
Emphasis on: enterprise
development and value chains
Observation: organic joint
savings
Continuum of Experience
Financial Inclusion
VSLA Initiatives in West Africa
Integrated Approach
Productive Safety Net Project Plus in Ethiopia
Market Engagement
Strengthening the Dairy Value Chain
Continuum of Experience
Strategies: 1. Improving milk production and collection
system2. Improving access to input and output
markets3. Improving the milk transportation network4. Ensuring access to quality services5. Improving the policy environment
Strengthening the Dairy Value Chain (SDVC) Project: Doubling the dairy-related incomes of 35,000 rural smallholding and landless households in Bangladesh.
Bangladesh Dairy Value Chain
Current Aug, 2011
Target
Participating Households 36,020 35,000 Farmer Leaders 3,294 3,500 Milk Collectors 283 350 Livestock Health Workers (LHW) 201 165 Information Service Centers (ISC) 49 50 Community Agri-Shops (CAS) 100 - Artificial Insemination (AI) 9,136 12,000 HHs' Avg. production (lit/day) 1.70 2.40 HHs' milk consumption (lit/day) 0.39 - HHs' Avg. milk sales income (Tk/day) 35 45
Market Engagement Progress
SDVC Performance
• Initially organic, then project promoted
• 1,182 producer groups representing 36,020 producers (83% women)
• 63% groups formalizing savings activities (n=863)
• Nearly 50% of savings groups invest exclusively in dairy sector
Savings Emergence in SDVC
• Total savings: $58,734
• Re-investment in dairy sector: $23,834
• Other investment: $8,646
• Collective cushion: $34,900
40% - Dairy-re-lated activities
15% - Non-dairy-related investments
45% - Cash on hand
Key Savings Stats
VSLA-lite model developed to provide groups with key guidelines and avoid promoter overload
Producer group promoters trained in savings promotion
Promoters introduced savings through existing producer groups
Savings adoption and savings rates integrated into participatory performance tracker used by groups
Ongoing monitoring analyzed savings application
Savings Promotion Model
Successes, Challenges, Lessons
Successes and Lessons Challenges and Lessons
High-rates of reinvestment in dairy helping to overcome critical constraints to upgrading
Increased groups coherence and capacity to participate in dairy sector
Reduced cannibalization of key value chain assets to respond to short-term cash flow needs and/or shocks
Emergence of new hybrid group / individual enterprises with women co-investing in improved breeds
Organic emergence of savings led to non-uniform promotion and adoption Management and governance quality varies across groups and key principles such as rotating governance not always pursued
Producer groups sometimes larger than optimal savings group size, driving challenges
Blend of most poor and less poor members demands more sophisticated share system to be successful
The bottom line: Savings groups support VC promotion but require deliberate strategy
Financial Inclusion
VSLA Initiatives in West Africa
Market Engagement
Strengthening the Dairy Value Chain
Continuum of Experience
Integrated Approach
Productive Safety Net Project Plus in Ethiopia
Market Focus
Strategies:1. Push CFI HHs upward via VSLA promotion, producer
marketing group formation, microleasing arrangements, financial literacy, business skills and advanced business skills training
2. Pull CFI HHs upward via private sector engagement in multi-stakeholder platforms, forward and backward linkages and new financial product development
3. Purposeful VC selection, intervention sequencing and combination in order to enhance resilience and asset building
Productive Safety Net Project Plus (P+): Improving resiliency and asset base of 47,000 chronically food insecure households as a means to facilitate their graduation to food security
Integrated Approach
P+ Goal and Objectives
GOAL
PSNP HOUSEHOLDS
Livelihood assets increased &resiliency enhanced
Graduation from food aid
Objectives
Access to Microfinance(Financial assets increased)
Access to Markets(Engaged in functioning markets)
Access to Water, Sanitation(Health &productivity improved)
Learning andSharing(Enabling environment enhanced
Asse
t Sta
biliz
ation
|
Ass
et A
ccum
ulati
on
PSNP Transfers (Consumption Support)
Pull
Stra
tegi
es
Food Insecure
Food Secure
Chronically Food Insecure
PSNP Beneficiaries
*Increase Financial literacy *Establish / strengthen producer groups
* Increase use of technology and inputs
* Promote VSLAs
*Create linkages to extension services
* Support on- and off-farm enterprise selection
*Increase linkages to formal financial services
*Transition out of participant relationships
* Support multi stakeholder platforms
* Enhance market information systems
* Increase linkages between SMEs and output markets
* Support financial services providers to reach down market
Push Strategies
*Transition out of participant relationships
*Increase capacity of extension services.
* Support input suppliers and tech service providers to reach down market
1
2
3
Modified P+ Causal Model
* Provide basic business skills training via SPM
* Provide advanced business skills training
Impact• Nearly 1,000 HHs have graduated from
PSNP• In P+ areas, 60 and 80% of all HHs achieving
graduation have been supported by P+
Outcomes• Financial Inclusion
– 2,000 P+ VSLAs with 37,224 members – Total savings of over $285,188– MFI linkages for 8,232 VSLA HHs, 30,301 people
• Market Inclusion– 13,454 farmers organized into 648 PMGs around
target value chains– 85% HHs reporting they have the knowledge
they need to manage their enterprises
P+ Results to Date
Ato Gediso ShiloSoyama, Dale, Sidama
• Household composition:– Married, 3 children– PSNP since 2005, P+ since 2009
• Microfinance Linkages: – Both Ato and wife are VSLA
members– HH savings of ~3/ month– Linked to Sidama MFI,
successfully repaid $170 loan
• Market Linkages: – Investing in maize, red bean and
shoat fattening VCs – Petty trading as IGA
• Key Outcomes: – No longer homeless– Sending first daughter to school– Improved food availability – Increased assets– Investing in additional income
streams
The Model in Practice
Microleasing arrangement explained to PMG members.
Advanced Business Skills training provided on a demand-driven basis.
SPM and Financial Literacy trainings provided based on group performance
VSLA promoters organize interested HHs into groups of 15-25 members and trainings commence.
VSLA promoters market VSLA opportunity to P+ target HHs. Word of mouth promotes non-P+ HH adoption.
Formal VSLA trainings and ToTs for all implementing partners
Integrated Promotion Model
PMG members engage in VC activity and meet leasing terms
Microlease translation completed.
PMG members trained on technical aspects of VC.
VC promoters organize interested HHs into producer marketing groups (PMGs) of 15-35 members.
VC promoters market opportunities and producer marketing groups to P+ HHs exclusively.
Market and VC analysis conducted at regional and national level
Microfinance Linkages Market Linkages
SPM and Financial Literacy trainings provided based on group performance
VSLA / MFI linkages facilitated based on demand and group
maturity
PMG members pursue VC activity,repay microlease post-harvest Demand-driven
advanced business skills training offered
Key Findings on Delivery
12,000 providers
VC Supporters
VC Actors
Target Group Members
25,000 HHs
Direct Impact GroupVery poor, primarily
women
50,000 HHs
The Importance of the Impact Egg
Targeting, Sequencing and Combination
Starting with VSLA improves outcomes for most vulnerable
Self-selection for VSLA is vital to success
Market aggressively to more vulnerable HHs
May be minimum tipping point to support FHHs
Promote VSLA / group enterprise separation but respect member choice
THANK YOU
Christian PennottiTechnical Advisor,
Economic Development Unit
Email: [email protected] Phone: 404.979.9195
Skype: cpennotti
http://edu.care.org