Pro-Poor Value Chain Development - Capacity.org

Box 7.1 Graduating from PSNP Plus
Ato Alebachew Abate is 41 years old and lives in Kobo Woreda. Using a 1,500 ETB
(about 100 US$) loan from the Amhara Credit and Saving Institution, facilitated
by Save the Children - UK, he purchased 10 goats in 2010. After fattening them,
he sold them for 2,800 ETB, from which he repaid half the original loan. He
re-invested the remaining 2,050 birr in 9 more goats, which he later sold for
2,700 ETB. He has since paid off his debts and increased his household assets
by purchasing an ox, three female goats for reproduction and six male goats for
fattening and sale. With a current working capital of around 7,000 ETB, Abate
meets the criteria for ‘graduating’ from the PSNP Plus programme, freeing up
resources to be invested in other poor families.
Paulos is a 43-year-old subsistence farmer from Urji Kebele. Like other members
of the community, he struggled to provide for his wife and children due to the
fragmentation of family land over the years, coupled with low productivity. After
receiving technical training and support from PSNP Plus, Paulos established a
small business to manufacture transitional beehives and supply other households
with bee colonies. This has increased his yearly expected income to around
30,000 ETB (1,700 US$).
The PSNP Plus programme has shown that if carefully implemented, the BOAM
value chain development approach can contribute to poverty alleviation. The use
of multi-stakeholder platforms proved to be an innovative and effective means
of encouraging direct participation by a diverse range of interests including
private processors and traders, micro-finance institutions, NGO representatives,
government officials, research institutions, and project beneficiaries. By facilitating
stronger institutional relationships and clarifying financial and social incentives
for participation, the MSP approach also created a conducive environment for the
replication and upscaling of best practices. Moreover, PSNP Plus has demonstrated
to private and parastatal micro-finance institutions that they can profitably and
sustainably extend credit to poor subsistence farmers.
PSNP Plus made concerted efforts to encourage business relationships between
actors at the middle of the value chain (processors and traders) with poor
subsistence farmers. This ‘pull’ effect, modelled on the BOAM approach, was
accompanied by ‘push’ measures such as the facilitation of productive asset
transfer and access to finance for targeted poor households but strongly informed
by the business relationship. The reason for this two-pronged approach was that
market-oriented solutions alone would not have succeeded in integrating vulnerable
households into the value chains. By helping smallholders to enhance their
resilience at the same time, they were now in a better position to invest in increased
production and meet the requirements of the market. At this point ‘win-win’ supply
agreements could be established between farmers’ organisations and processors or
traders. Ultimately, as the impact assessments show, this will not only help graduate
poor households from the productive safety net but, perhaps even more importantly,
it will ensure that the households do not fall back in the face of drought and other
livelihood shocks.
Disclaimer:
This article is made possible by the generous support of the American people
through the United States Agency for International Development (USAID). The
content is the responsibility of SNV and does not necessarily reflect the views of
USAID or the United States Government.
Adapting the value chain approach
105