Value chain development in Nicaragua: prevailing approaches and tools used for design and implementation
This article draws on four contrasting cases of value chain development (VCD) in Nicaragua to assess approaches and tools used in design and implementation. We interviewed 28 representatives from the international NGOs leading the interventions, the local NGOs that participated in implementation, principal buyers, and cooperatives. Despite the complexity of market systems, results showed a relatively basic approach to VCD, reflected in: 1) reliance on a single tool for design and implementation; 2) expected outcomes based on technical assistance and training for smallholders and cooperatives; 3) local NGOs and cooperatives with key roles in implementation; and 4) limited engagement with other chain actors, service providers, and researchers. We conclude with a call for a broader approach to VCD, based on a combination of tools to account for multiple, context-specific needs of diverse stakeholders, deeper collaboration between key actors within and outside the value chain, and evidence-based reflection and learning.
Over the past decade, the value chain development approach has increasingly been adopted by governments, donors, and NGOs to reduce rural poverty. The design of related interventions often assumes that poor households: 1) have sufficient resources to effectively participate in value chain development; 2) do not face substantial trade-offs when using these resources; and 3) are able to assume higher risks when reinvesting capital and labour. However, insights from our own experiences and the literature show that these assumptions often do not reflect the realities and the needs of the poor. We argue that value chain development with poor and vulnerable populations, particularly in rural areas, requires additional conceptual frameworks, analyses, and interventions. In particular, we encourage donor agencies and development practitioners to adopt an asset-based approach to the design, implementation, and assessment of target value chains and to identify the non-market interventions needed for enabling particularly disenfranchised groups to meet the minimum asset thresholds for their successful participation in value chain initiatives.
Value chain development (VCD) is a common term in today’s development lexicon1, where its use tends to conjure passionate ideas about how development programming can support smallholder participation in growing markets in the interest of economic growth, job creation, gender empowerment, and sustainable use of natural resources, among other goals. Since the early 2000s, Enterprise Development and Microfinance (EDM) has featured considerable debate on how to design market-oriented development interventions with smallholders, often based on positive experiences by a given NGO or project in a particular context. Early articles helped to put VCD on the development agenda, while advancing innovation in market-based project design and implementation. However, after more than a decade of it being firmly placed on the agenda, we still know relatively little about VCD. Apart from isolated case studies, the question of whether VCD has lived up to the expectations of smallholders, of the private sector, and of development agencies remains an open one. This double edition of EDM addresses the design, implementation, and impact of VCD support to smallholders and to small and medium enterprises (SMEs) as an important, yet under-researched dimension of VCD. The eight articles look into the needs and opportunities for increasing the effectiveness of VCD support services, with discussions on: the role of NGOs or governments in VCD; how large-scale buyers and certification programs shape VCD; and the role of finance and impact bonds in VCD. Advancing ideas on how to get the right mix of services, at the right time, to the right people, taking into account variations in the context in which livelihoods and business activities are embedded, will help stakeholders to effectively deliver on poverty and broader development goals.
Editorial: Revisiting the role of business, technical, and financial services in fostering rural entrepreneurship
Over the past 15 or so years authors in Enterprise Development and Microfinance (EDM) have written extensively about the design and implementation of microfinance and its use by the poor, whether to respond to shocks and changing contexts, invest in education, or advance livelihood goals (Figure 1 overleaf). Coverage has ranged from the specifics of designing microfinance schemes, access to them by the poorest, and their impact on wellbeing and poverty. While the debate on microfinance is far from over, it is true that discussions have been more concerned with managing, saving, borrowing, and moving money, than about building viable businesses. Business development involving the poor, which in many cases focuses on rural small and medium enterprises (SMEs), requires us to address the demand for a range of services which, taken together, enhance the capacities of rural SMEs. Such services need to be affordable and reliable, and address the productive and business needs of SMEs, from small-scale processors to multi-tiered agricultural cooperatives. The issues are complex with lingering questions about how different types of service providers, from government agencies and NGOs to various private sector agents, can better design their services; and how, through adequate delivery mechanisms, the capacity and willingness of SMEs to employ such services can be strengthened. In this Editorial, we discuss some of the key issues for advancing rural entrepreneurship via improved services and provide an outlook for future discussions.
Since the late 1990s, value chains and related concepts have captured the attention of researchers and practitioners alike. EDM’s 2017 double special issue on value chain development in agriculture attested to the enduring interest in the subject. Often, however, researchers and practitioners have thought about value chains in quite different ways. This has impeded the formation of a common language around value chains and the evolution of how value chain concepts are applied in rural development. For researchers, value chains are a theoretical framework around which to examine globalizing food markets and the numerous and important ways in which they have transformed relations between retailers, processors, farmers and consumers. For practitioners, however, value chains are actual configurations of farmers and business leaders, operating in the most challenging of business environments, who in theory can derive benefits from increased cooperation and coordination. Unpacking the twists and turns in value chain thinking and applications over time can shed light on why communication between researchers and practitioners has been so challenging, and crucially, future opportunities for more effective dialogue, action, and impact.