Development Associates, Inc.rehabilitation programs use labor-intensive manual labor—roadconstructions, canal cleaning—to generate immediate cash in <strong>the</strong> h<strong>and</strong>s <strong>of</strong>a desperate population. But <strong>the</strong>re is little sustainability in this approach,<strong>and</strong> value added employment takes capital, management, marketing <strong>and</strong>productive efficiencies, all aspects <strong>of</strong> business that require improvementover time.E. Meeting <strong>the</strong> arbitraty target does not appear to represent a useful st<strong>and</strong>ardfor determining <strong>the</strong> impact <strong>of</strong> <strong>the</strong> KBS program.4.7 Number <strong>of</strong> targeted sub-sectors with quality certification programs(cumulative).5. Revenue GenerationTargetsyear 4: 8 ATD: 0 LOP: 14A. Good concept for judging sector/cluster performanceB. Certification programs require st<strong>and</strong>ards, which are <strong>the</strong>n certified as beingmet by individual enterprises. <strong>Kosovo</strong> does not have a set <strong>of</strong> acceptedst<strong>and</strong>ards. These must be created, explained, agreed <strong>and</strong> approved by acertification body, which must be formed. We have observed workinggroup meetings in action, <strong>and</strong> <strong>the</strong>y are taken seriously by <strong>the</strong> participants.But <strong>the</strong> process is not fast, <strong>and</strong> <strong>the</strong> targets are likely not going to be met byproject completion since this is not an output that KBS can deliver on itsown. There must be some local organization that agrees to be part <strong>of</strong> <strong>the</strong>st<strong>and</strong>ards/certification process, both to set st<strong>and</strong>ards <strong>and</strong> to certify that<strong>the</strong>y are being met.C. The <strong>Evaluation</strong> Team paid special attention to this target to attempt todetermine if <strong>the</strong>re is a faster path to fruition <strong>of</strong> a certification program.We did not find one.D. The concept needs to be exp<strong>and</strong>ed <strong>and</strong> made part <strong>of</strong> cluster developmentsupport in any future <strong>SME</strong> program.E. The time frame before project completion makes this target unreachableby KBS.The target deserves some special explanation as it is not a question <strong>of</strong> whe<strong>the</strong>r it can be met—itis question <strong>of</strong> whe<strong>the</strong>r it is reasonable to assign this target when <strong>USAID</strong> has o<strong>the</strong>r priorities thatare important, such as creating sustainability for <strong>the</strong> capacity generated by KBS. There may be areal confusion in goals to be achieved, since <strong>the</strong> Task Order seems to state that fees equalsustainability, when <strong>the</strong> <strong>Evaluation</strong> Team believes that <strong>the</strong> opposite is more likely to be true.Modification 10, page 3, states <strong>the</strong> tasks <strong>of</strong>, “…simultaneously developing post-projectsustainability. This shall be accomplished through:<strong>Evaluation</strong> <strong>of</strong> <strong>the</strong> <strong>USAID</strong>/<strong>Kosovo</strong> <strong>SME</strong> 57 May 2004<strong>and</strong> <strong>Agriculture</strong>/Agribusiness ProgramsVolume I
Development Associates, Inc.A) Kosovarizing <strong>the</strong> business development staff <strong>and</strong> commencing a co-payment strategywhich will be sufficient to cover <strong>the</strong> full cost <strong>of</strong> providing those services.B) ncreasing <strong>the</strong> impact <strong>of</strong> Trade <strong>and</strong> Investment (including B2B <strong>and</strong> Account <strong>and</strong>Auditor Training <strong>and</strong> Certification activities, while developing <strong>and</strong> implementing aplan for sustainability.C) Exp<strong>and</strong>ing <strong>the</strong> focus on Sub-Sectoral Competitiveness through……..”While post project sustainability <strong>of</strong> capacities developed under KBS is a very important topic,<strong>the</strong> relationship <strong>of</strong> sustainability to <strong>the</strong> collection <strong>of</strong> fees for KBS services is murky. Thereappears to be no good reason to charge fees if those fees cannot be used to sustain services in <strong>the</strong>future. According to <strong>the</strong> past Regional Contract Officer, <strong>the</strong> fees must be added <strong>and</strong> <strong>the</strong>nsubtracted from <strong>the</strong> Chemonics voucher, effectively washing <strong>the</strong> transaction. Therefore, no onebenefits from <strong>the</strong> fees paid, but <strong>the</strong> paying clients clearly lose. And by paying KBS for services,clients use funds <strong>the</strong>y could pay local institutions that could use <strong>the</strong> fees to build capacity <strong>and</strong>continue services after KBS ends.Fees might have been included in <strong>the</strong> Task Order to prove that some KBS services are valuableenough that, even in <strong>the</strong> constrained economy <strong>of</strong> <strong>Kosovo</strong>, clients will pay. Those services thatlead to immediate income gains—such as certified accounting training—are most easilymonetized. In 2003, some 60% <strong>of</strong> KBS fees originated in accounting <strong>and</strong> audit training.However, sustainability is not reached by charging client fees based upon <strong>USAID</strong> contractor’scosts, even for local hire staff. Sustainability is reached by providing services, for which <strong>the</strong>re isa dem<strong>and</strong>, at a price point <strong>the</strong> local enterprises will bear.There is no way to make KBS sustainable in its present form, <strong>USAID</strong> contractors do not work atprice points appropriate for local consulting services. However, components <strong>of</strong> KBS can beintegrated into local institutions, many already created with KBS assistance. These includeSCAAK, for certified accounting training, <strong>the</strong> <strong>Kosovo</strong> Export Association (KEA), <strong>and</strong> <strong>the</strong> manyassociations or working groups associated with <strong>the</strong> 12 product lines under <strong>the</strong> competitivenessinitiative. If <strong>the</strong> fees collected from some KBS services could be used to support localassociations, <strong>the</strong>n <strong>the</strong>re would be some merit in <strong>the</strong>ir application. However, fees collected fromlocal associations <strong>and</strong> paid to KBS—such as from SCAAK, or fees foregone for T&I services--from KEA, confound sustainability goals.The fee discussion needs to be held with a better underst<strong>and</strong>ing <strong>of</strong> four elements:1. Revisiting with <strong>the</strong> new Regional Contracting Officer, <strong>the</strong> potential use <strong>of</strong> fees, presentlywashed through <strong>the</strong> KBS voucher, to bolster sustainability <strong>of</strong> local agencies <strong>and</strong>institutions;2. If 1. above is not contractually possible, <strong>the</strong>n disregarding <strong>the</strong> fee requirement in <strong>the</strong> TaskOrder so that local associations can receive full benefit <strong>of</strong> KBS training or trade linkagesto improve <strong>the</strong>ir chances <strong>of</strong> sustainability;3. Allowing KBS staff to be seconded to local agencies <strong>and</strong> institutions to create capacity<strong>and</strong> sustainability during <strong>the</strong> final months <strong>of</strong> <strong>the</strong> project; <strong>and</strong><strong>Evaluation</strong> <strong>of</strong> <strong>the</strong> <strong>USAID</strong>/<strong>Kosovo</strong> <strong>SME</strong> 58 May 2004<strong>and</strong> <strong>Agriculture</strong>/Agribusiness ProgramsVolume I
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FINAL REPORTVOLUME IEVALUATION OF T
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FOREWORDThis report requires some i
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Development Associates, Inc.IPMIRIR
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EXECUTIVE SUMMARYI. FINDINGS1. USAI
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EVALUATION OF THE USAID/KOSOVO SME
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Development Associates, Inc.KOSOVO
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Development Associates, Inc.A. GENE
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VOLUME IIEVALUATION OF THE USAID/KO
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Development Associates, Inc.Exhibit