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Document of the International Fund for Agricultural Development for Official Use Only Document of The International Fund for Agricultural Development For Official Use Only REPUBLIC OF GHANA RURAL ENTERPRISES PROJECT (SRS-38-GH) INTERIM EVALUATION Volume I: Main Report & Appendices Report No. 1097 December 2000 Office of Evaluation and Studies RURAL ENTERPRISES PROJECT INTERIM EVALUATION AGREEMENT AT COMPLETION POINT* * The Agreement at Completion Point was prepared in conformity with members of the Core Learning Partnership, viz: Chief Director, Mr. E.P.D. Barnes, Ministry of Environment, Science and Technology; Mr. K Attah-Antwi, Project Coordinator, Rural Enterprises Project; Deputy Director, Mr. K. Okyere , National Development Planning Commission; Mr. M. Manssouri (replacing Mr P. Saint Ange), Country Portfolio Manager, IFAD; Mr. F. Sarassoro, SPMO, UNOPS; and Ms. C. Palmeri, Senior Evaluation Officer, IFAD. In preparation for a possible second phase of the Rural Enterprises Project requested by the Government of Ghana (GOG), the International Fund for Agricultural Development (IFAD) undertook an Interim Evaluation (IE) of the Project in June - July 2000 using the new IFAD approach to evaluation. A Core Learning Partnership of stakeholders set the objectives and key questions for the IE. The members of the Core Learning Partnership, having reviewed the results of the IE, have come to agreement on the following findings, recommendations and follow-up actions. GENERAL FINDINGS, RECOMMENDATIONS AND AGREED FOLLOW-UP 1. Small-scale enterprise development reduces poverty. New and existing businesses assisted by the Project have contributed to increased economic activity, increased employment and poverty reduction in rural areas. The performance and impact of the Project’s technology and business skills training and counselling programmes to create new businesses and employment demonstrate that they can be used as a model for reducing rural poverty in Ghana. Recommendation The REP approach to the development of small scale rural enterprises should be used as a means to stimulate growth and reduce poverty in rural areas. The GOG should consider widespread replication of a number investments and activities tested by the project to promote poverty reduction throughout the country. Agreed Follow-Up The Ministry of Environment Science and Technology supported by the National Development Planning Commission will promote the use of the Rural Enterprise Project model as a means to reduce poverty and stimulate growth in rural areas nationwide. IFAD will favourably consider requests to help finance such efforts. 2. Business Advisory Centres bring most benefits to enterprises. The Business Advisory Centres have been the most successful element of the Rural Enterprise Project model. Their activities have resulted in widespread benefits including increased incomes for entrepreneurs and, for communities, increased employment and economic activity. They have the potential for increased cost-effectiveness and sustainability. However, they could have generated even greater benefits with better support and an expanded mandate (see Specific findings and recommendations below.) Recommendation Training and advisory services such as those provided by the Business Advisory Centres of the Rural Enterprises Project should be central to any technology-led or other intervention for the development of small scale rural enterprises. Agreed Follow-Up The Ministry of Environment Science and Technology and the National Development Planning Commission will include business training and advisory services in their efforts to promote small scale enterprise development in Ghana. Any future IFAD-funded investments or activities in support of rural enterprise development will include support to the provision of such services. 2 3. Costs of handling complementary investments through project management too high, limited direct benefits for assisted enterprises. Feeder roads and financial services realised under the Project did provide direct benefits to the population in the project area in terms of access to services, public goods and finance. However, those benefits did not necessarily accrue directly to assisted entrepreneurs. Clients emphasised that, for them, training was the most important project activity. Complementary investments included in project design were not essential to the success of the activities in technology and business training that proved the most valuable to entrepreneurs. More importantly, these investments and activities required disproportionate PCMU inputs diverting scarce management resources that may well have been better applied to the main source of project benefits, in the main areas of management competence. Recommendation Complementary programmes that help create general conditions favourable to rural enterprise development, especially financial services, should be available to entrepreneurs. However, they should be directly administered by responsible specialised agencies and not by project management units located in ministries with other areas of expertise. Agreed Follow-Up The National Development Planning Commission, MEST and IFAD will emphasise support to developing business skills and transfer of appropriate technologies as the central means for promoting rural enterprise development in the country. They will fund and administer other investments to complement rural enterprise development, such as rural finance, through other national programmes by the relevant agencies, whilst still making every effort to see that investments complement one another. 4. Traditional apprenticeship system holds still untapped potential. The project Apprenticeship Starter’s Programme to fund the apprenticeship fees within the traditional apprentice system correctly builds on existing social and professional structures. However, project support to the traditional apprenticeship system is not sustainable outside a project setting as it has not been institutionalised and does not fit within any currently existing GOG programmes. It does not take into account the markets for traditional apprentices. And, even in association with the project, the traditional system is not supervised and produces apprentices with a wide range of capabilities. Accreditation, sought by apprentices, is not available to those trained under the traditional system. Recommendation A national strategy is required to capitalise on the traditional apprenticeship system by integrating it with vocational education. Agreed Follow-Up MEST, NDPC and IFAD will petition institutions responsible for vocational education to formulate a strategy to link with the traditional apprenticeship system and assist in the formulation of such a strategy. 5. Trade associations excellent intermediaries to reach entrepreneurs . Trade associations have been a critical link between the REP training activities and the clients, by providing potential clients, identifying potential areas for training and providing support to new businesses. They have also provided representatives for the DICs and been the basis for many successful group credit activities. They have developed from their traditional social role when given the opportunity and justification to expand their responsibilities. Recommendation Links with existing associations to strengthen their capabilities and draw upon their resources should be part of any programme to support rural enterprises. Using trade associations as training and technology service providers should be considered. Agreed Follow-Up MEST, NDPC and IFAD will explicitly plan for the direct involvement of local trade associations in any future efforts they make to promote rural enterprise development. MEST and NDPC will encourage others working in the sector to work with trade associations. 3 6. Current RTSCs unsuitable to meet national technology priorities, local technology needs. A national priority is adoption of appropriate, cost-effective small-scale technologies, that are environmentally sustainable. However, the design of the Project’s Rural Technology and Service Centres has not proven the best for meeting that priority. RTSCs were important proof of investment capital inflow and rallying points for local political support where they were located. However, they were designed with overly optimistic projections of potential benefits. Although the quality of output and services is high, as currently structured and equipped, they cannot achieve the level of benefits required to cover their costs. They have been short of guidance, management support and co-operation from national bodies responsible for technology development. They have not yet been given sufficient incentives to respond directly to local conditions or reach clients who need adapted technology, technical services and technical skills transfer. Recommendation. To serve the national priority for the adoption of appropriate small-scale cost- effective technologies that are environmentally sustainable, the Rural Technology and Service Centres model needs major improvements. Incentives should be provided for them to operate in a more business-like fashion, increase cost-effectiveness and create bottom-up processes to obtain client feedback and respond to client needs. Agreed Follow-Up MEST and IFAD will work in the ongoing Rural Enterprise Project with the current Rural Technology and Service Centres and the institutions responsible for backstopping them to improve their orientation and operations. MEST will not advocate creation of additional Centres of this type until an alternative model
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