In less than two weeks, I’ll be moving to Ghana to work as a consultant with an organization called Technoserve. It is my first time to visit West Africa and am excited to learn about the region. Technoserve works to strengthen the economies of the countries it serves by making the industries more efficient and profitable. Founded in the 1970’s, Technoserve began in Sub-Saharan Africa and has since expanded to Latin America and India. Most projects involve agriculture, since the majority of the world’s poor are subsistence farmers, though some focus on tourism, energy, and other sectors. The CEO, Bruce McNamer, explains Technoserve’s approach to economic development in a recent article from the McKinsey Quarterly:
There are significant possibilities in Africa to unlock value in different industry sectors, and these possibilities will grow over time. Success, however, will require the government and business to adopt a strategy based on an analytical and market-oriented approach, customized for the sector and focused on helping enterprises and people make money. While ultimately reliant on commercial incentives and viability, this strategy will probably require up-front, subsidized investments to seed the market, as well the coordination of stakeholders and interventions across the value chain.
In the case of Mozambique’s poultry sector, our nonprofit organization, TechnoServe,1 with a mandate and funding from the US government, undertook a comprehensive value chain analysis starting with demand and working through the supply of feed, to layer and egg production, the feeding and growing of chicks, processing, marketing, and, ultimately, retail consumption. Our team interviewed hundreds of participants in the poultry and feed sectors and eventually assembled a strategic plan that identified and quantified potential demand, the major constraints along the value chain, the high-leverage (and other) points of intervention, and a specific industry-development program.
Between 2004 and 2009, the Mozambican poultry industry grew more than fourfold, with annual production reaching upward of 23,000 tons of chicken meat in 2009 and consumption of locally produced chicken rising to 76 percent of the total market. More than 1,200 poultry jobs have been created. More than 2,500 small-scale farmers were trained and began participating in outgrower production operations, leading to two- to tenfold increases in these farmers’ household incomes. Poultry processors’ annual revenues have increased to $80 million, from $20 million. And the industry continues to grow. TechnoServe’s focus in Mozambique is now upstream (on a host of opportunities for the broader commercialization of the soy sector) and downstream (on the potential for retail chicken franchise stores).
This is a fairly typical project from Technoserve. I will be working as a consultant to the Agriculture Development and Value Chain (ADVANCE) project, which is a USAID-funded program with the aim of increasing incomes for small farmers and making the Ghanaian agriculture industry more competitive. The project has three components, each of which focuses on a different challenge in the industry:
- Component 1: Value chain competitiveness
- Component 2: Market access and development
- Component 3: Access to financial services
I will be working on all three components, with a focus on the first and the third. I am excited about this opportunity, and will be looking forward to share what I learn with my readers here at Develop Economies.
Congrats Josh. TechnoServe is on my list of great organizations, and I am fascinated by the value-chain approach. I’ll take a look at your more recent posts, and look forward to hearing more. In particular, I’m quite interested in two particular questions: a) less technical assistance (due to higher cost) or more capital: what’s better for SME or S&G development (likely varies, but how), and b) when and how does SME development engage the poor (relative to the community) in a meaningful way (presumably with job creation)? It’s my impression that TechnoServe is somewhat similar to my organization, Trickle Up, in that both have made the decision that more costly handholding is essential to make the fundamental change each desires, yet there will be pressure to slim down and scale up like MFIs.
Hey Chris – thanks for the comment. I’m going to write a bunch more about what I’m doing, but it is a project that is unique in the sense that it doesn’t really offer much in the way of tangible things. The ideas is to connect market actors, and establish the relationships, rather than give anything away. So if a rice miller needs a de-stoning machine, the ADVANCE staff connects them with a guy who sells de-stoning machines and a bank to provide the financing. So there is some technical assistance, not much capital, and it is trying to build industries from scratch. It is a tall order, and I’m still figuring it out. I still think the best thing for job creation and SMEs are foreign investment, not aid or development. To answer your second question, it engages the poor in a lot of ways. For one thing, SMEs create jobs, so that has a direct effect. Second, they boost the local economy (ideal SMEs bring in money from outside the community, which circulates indefinitely). Technoserve is interesting because they try to engage the private sector as much as possible, working not only with donors but also with big corporations (like Guinness or Coca-Cola) to set up sourcing arrangements with farmers in the country. I have to check out Trickle Up – it seems like a mini-venture capital operation for the poor. Cool stuff.