Transcript CARE Enterprise Partners

CARE International
Effective ways to reach smallholders
international
care australia
care thailand
care canada
care denmark
care germany
care france
care japan
care netherlands
care norway
care austria
care uk
care usa
Value chain financing
18th October 2007
By George Odo
The CARE Africa Venture Fund
“We seek a world of hope, tolerance and social justice, where
poverty has been overcome & people live in dignity & security”
Presentation Content
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Introduction to CARE
Background
Identifying the problem
The Issues & proposed solutions
Some Examples
Key Learnings
Introduction to CARE – The Federation
CARE International
(secretariat in Brussels)
CARE National Members (12) – Australia,
Austria, Canada, Denmark, France, Germany, Japan,
Netherlands, Norway, UK, USA & Thailand*
CARE country offices - Peru, India,
Kenya, Indonesia, etc (67 world-wide)
‘CI’
‘National
members’ &
‘Lead
members’
‘Country
offices’
Introduction to CARE – Vital stats
 One of the largest NGOs in the world
 14,800 staff globally
 About 1169 projects in 16 sectors reaching 48
million people in 67 countries & 60 Country Offices
 Board of 12 ‘National’ members with secretariat in
Geneva
 About US $ 700 million annual budget with 43%
spent in Africa, 34 in Asia, 17% in Latin America
and 6% Middle East and Europe
 Works in both development and emergency
situations
 Key Sectors - ANR (14%), SEAD (6%), WATSAN
(8%), Emergency (4%), Nutrition (4%), HIV/AIDS
(8%), Maternal (4%) & Child health (4%)
Introduction to CARE - How we
spend our funds
Support
costs
9%
Relief Ops
29%
Program
costs
91%
Less than 10% Administration costs!
Development
71%
Background - GDP in relation to Poverty
Background- NGOs role in the ‘Fourth’ position
STATE
MARKET
The fourth
position
Fourth Position Goals and Tasks
Ensuring entitlements by:
•reduction and re-distribution of risk
CIVIL SOCIETY
•Negotiator/mediator
•Validator
•exacting compliance from duty-holders
•reducing costs of compliance
Source: Alan Fowler, NGO Futures – Beyond Aid
Fourth Position NGDO Roles
:
Rights-based
principles
NGDO GROUNDED IN
'AXIOMATIC‘ETHICS
AND VALUES
•Watchdog
•Innovator/demonstrator
Identifying the Problem – CARE’s Making
markets work for the poor approach
CARE’s MMWTP strategy was published
in 2004 in response to UN Commission on
the Private Sector and Development
The commission’s final report Unleashing
Entrepreneurship: Making Business Work
for the Poor (2004) recognized that:
SMEs in developing countries can drive
job creation, innovation and economic
growth.
BUT
Entrepreneurs operating in the informal
economy lacked access to the legal
systems (enabling environment),
financial services & BDS
Identifying the Problem – The three pillars of
Enterprise development
Spectrum of Financial Service Providers
Underserved in the BOP
Internal
Savings
& Loan
schemes,
Money
lenders,
NFP MFIs
FP MFIs,
Cooperatives,
Revolving Input
loan &
guarantee funds
Internal
Savings
& Loans
$100 loans
Small
Economic
Activities
SME Funds,
Social
Venture Funds,
MFI Banks
Commercial banks,
Private Equity &
Venture Capital Funds
Small & Medium
Enterprises
$ 1, 000 to $ 10,000 $ 100,000 to
up to $ 50,000
$ 1,000,000
Large commercial
enterprises &
new ventures
$ 1,000,000 to
$ 5,000,000 & above
Development
Financial Institutions
National & Regional
Investments
& Infrastructure
Access to Financial Services
Proposed Solution
Problem
Solution
High Transaction cost
Aggregation
Lack of collateral
Lack of entrepreneurial
experience
Guarantees through
‘forward’ Market
contracts
Entrepreneurial focused
TA
Weak & Informal
Institutions
Formalize institutions &
governance training
CARE’s approach – Integrating smallholders
“Start with the market….and work backwards”
Aggregation of the smallholders demand for goods or services
Inputs/cash advances
on credit pre financed
By Aggregator/Exporters/buyers
Goods
Inputs
Market
Demand
Aggregator
Produce
Market ‘contracts’
as collateral
Aggregation of the smallholders goods
Examples – Village savings and Loans
Also known as Internal
Savings & Loans, based
upon ROSCAs ‘Merry go
round’ model
S&L Term ends
& distribution to
members
Savings Lending
& repayments
Group organization
Savings Lending
& repayments
Regular modest
Savings
Savings & Lending
Investments into
Micro
enterprises like
smallholder
farming &
consumption
Examples - Aggregation of production
Examples - Aggregation of livestock production
Examples - Aggregation of demand
Key Learnings
 ‘Mimic’ the real world….smart
subsidies...’Aid for Trade’…’Market Aid’
 Avoid distortion
 Sustainability
 Private sector integration
 Traditional grant funding and traditional
development models don’t work
 Blend commercial and grant mechanisms