Programme Design

Business Management Assistance and Linkage Strategies in East Africa, Christy and Fine, 2004

    Description
    This report reviews some of the current BDS projects in East Africa, in terms of their support to supply chain development. The Rockefeller Foundation's ProVenEx (venture capital) Fund seek to obtain social and financial returns from its investments through more systematic and effective utilization of past investments in agricultural research.

    Evaluations of investments in seed companies in Kenya and Uganda aimed at accelerating dissemination of new maize varieties that would raise the productivity and output of small-scale producers, increase their incomes, and enhance food security (rural incomes) for them and the general populace suggested that capital was not the only requirement for achieving desired results. Also necessary were a range of business services, particularly those pertinent to agribusinesses.

    For investments to be successful, capital must be paired with appropriate management assistance and access to value-added business networks. ProVenEx has attempted to combine the two on a customized basis in most of its investments, but has found it especially challenging in eastern Africa.

    The report identifies business services associated primarily with the investment cycle, organizing them according to two phases of the cycle - vetting an opportunity and managing the investment - and examines the factors bearing on the contractual relationship between client and service provider.

    Summary of results
    A principal conclusion is that enterprises do not access business services because they cannot easily access information about the track record of individual providers. One of its recommendations, therefore, is the establishment of a referencing bureau, analogous to a credit bureau, which would make available information about the past performance of service providers.

    The study also notes a trend among some international NGOs and government agencies that provide business services - a deliberate shift toward a more commercial culture by increasingly distancing themselves from an operating milieu characterized by bureaucratic risk and moving to one in which commercial risk becomes far more prominent. A defining feature is a business and commercial rather than "aid" relationship with clients.

    Another finding focuses on the impact existing institutional arrangements and procedures for certification of new seed varieties have on their adoption by smallholder farmers, seed producers, and distributors. Also interesting are the insights obtained from a commercial perspective, such as the changes in value chains and how these in turn affect innovations in products and production processes.