Private Sector Development brochure

Private Sector Development

Promoting growth of the private sector to encourage economic growth

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Contents The Importance of Private Sector Development

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Our Global Experience

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Market Development Agriculture & Rural Development

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Business Environment Reform

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Public-Private Dialogue & Business Advocacy

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Financial Sector Development

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Entrepreneurship & Skills Development

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Labour & Employment

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Trade Development & Integration

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State Enterprise & Agency Reform

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Focus: Helping Kenya’s Rural Poor Gain Better Access to Agricultural Markets

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Private Sector Development

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The Importance of Private Sector Development One of the most effective ways of tackling global poverty is improving the livelihoods and income opportunities available to poorer people.

We are a leading international authority on supporting sustainable and inclusive private sector development in developing and post-conflict economies around the world.

We work with a wide range of private and public sector organisations to deliver innovative, practical solutions that generate lasting pro-poor economic growth, even in the most challenging environments.

Our expertise includes: arket development & Making Markets Work for M the Poor (M4P) Agricultural & rural development Business environment reform & investment promotion Public-private dialogue & business advocacy Financial sector development Entrepreneurship & skills development Labour & employment Trade enhancement & economic integration State enterprise, parastatal & agency reform

Private Sector Development

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Our Global Experience We have worked across the world with many clients and governments on an award-winning portfolio of projects, promoting growth of the private sector to encourage economic growth. Throughout this brochure, you will find examples of our work – you can see a small selection here. For further information on our wider portfolio, visit www.adamsmithinternational.com/exploreourwork.

Liberia: Promoting stability and market development (Grow) We are applying the Making Markets Work for the Poor approach to support the growth of agricultural markets, and enable more Liberians to work their way out of poverty.

Nigeria: Growth and Employment in States (GEMS3) We are improving Nigeria’s business environment through investment, land and tax interventions in order to offer lasting improvements in economic opportunities for the poor, and particularly for women.

Our Offices London | United Kingdom New Delhi | India Nairobi | Africa Sydney | Australia

Regions: Private Sector Projects The Americas & Caribbean Central & Southern Africa West Africa East Africa Middle East & North Africa Europe & Former Soviet Union Central Asia South Asia & Asia Pacific

Regions: Other Projects Various

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Nigeria: promoting inclusive advocacy & dialogue (ENABLE) We are working with media houses, business associations, governement departments and research institutions to deliver more inclusive, sustainable advocacy and dialogue on business environment issues.

Mentoring young entrepreneurs across MENA Working across Morocco, Tunisia, Libya, Egypt, Jordan and Yemen, we are offering mentoring to young entrepreneurs to help them grow their businesses and encourage economic growth.

Nepal: Making rural markets work for the poor (Samarth) We are working across Nepal’s rural markets to combat problems limiting expansion, such as disease management and mechanisation, whilst tackling social constraints affecting many poor people.

Laos-Australia Development Learning Facility We are managing the Laos-Australia Development Learning Facility, to provide high-quality performance assessment through all of Australia’s Department of Foreign Affairs and Trade rigorous monitoring and evaluation across all of the Department of Foreign Affairs and Trade rural development activities.

Zimbabwe: Business Environment Reform (ZIMBISA) We work with a variety of public and private sector organisations to promote constructive and substantive consultation and dialogue on pressing Business Environment issues.

DRC: Enabling market participation by all communities (ELAN) We are running the ÉLAN project, managing interventions across a wide range of sectors, including coffee, river transport, micro-hydro, mobile money, rice and seed to improve how these markets work for poor men and women as consumers, entrepreneurs, farmers and workers.

Kenya Market Assistance programme We are helping Kenya’s rural poor gain better access to agricultural markets with interventions focused on the dairy sector, water services and rural media.

Private Sector Development

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Making Markets Work for the Poor Adam Smith International is one of the world’s leading practitioners in market systems development, with particular experience in the Making Markets Work for the Poor (M4P) approach.

We are successfully implementing large M4P programmes across numerous countries in Africa and Asia. Our expertise encompasses all stages of the programme cycle, from high-level donor support and design and implementation to results measurement and reporting.

Our work delivers sustainable, large-scale impact for millions of women and men around the world.

We implement market development programmes in agricultural value-chains and commodity sectors, and are at the cutting edge of applying M4P to new sectors and systems including: water and sanitation, media, and publicprivate dialogue.Â

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Our market development capabilities include: Project scoping and design Implementing large and complex M4P programmes onitoring and evaluation, including application of the M Donor Committee on Enterprise Development Standard Programme reviews Strategic advisory services

“ By strengthening the market system, the Samarth project is supporting the private sector and the farmers in a more sustainable manner.”

Executive Director of Crop Pro Tech Nepal

Supporting the development of markets in the Democratic Republic of Congo We have designed and are implementing the ÉLAN RDC programme for the UK’s Department of International Development (DFID). The objective of the programme is to deliver lasting improvements in the performance of key markets in which poorer people participate, through the Making Markets Work for the Poor approach.

We identified six target sectors: coffee, micro-hydro, mobile money, rice, river transport and seed. These were chosen for their pro-poor relevance, high growth potential and intervention feasibility. In the coffee sector, we are supporting coffee companies to establish out-grower schemes, promoting investment in the micro-hydro sector and expanding the provision of mobile money services. We are also developing a commercially viable transport business for smallholder agricultural products and building research links to ensure that locally adapted seed varieties are readily available to smallholder farmers.

We aim to deliver £138m of increased income to over 1m women and men

DRC

Improving the underlying pro-poor performance of rural sectors in Nepal

DRC

Our Samarth-Nepal Market Development Programme is aimed at increasing incomes of 300,000 farmers and small-scale entrepreneurs. It operates as a portfolio of individual projects to promote a flexible mix of markets, entry points, partners and types of intervention. We select rural markets on their potential benefit to disadvantaged groups and develop interventions to address specific gender and social inclusion constraints.

The programme works across sectors including ginger, vegetables, dairy, fish and pig farming, along with initiatives strengthening mechanisation, media, input supplies and tourism. One of our most important initiatives supports ginger farmers in managing crop disease by supplying a disease management agent. This intervention is estimated to increase incomes for over 10,000 farmers totalling £1.2m over five years.

Improving average annual incomes by £80 for 300,000 rural poor

Nepal

Private Sector Development

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Agricultural & Rural Development 75% of the world’s poor are subsistence farmers who rely on small plots of land for their food and income. Our approach to agricultural reform is to tackle the underlying causes of low yields and productivity.

We deliver technical assistance to a wide range of market players in the agriculture sector. We support policy and regulatory reform in governments; in the private sector we support private companies, business associations, and farmer cooperatives to develop new products and services, improve outreach, develop new distribution networks and develop more resilient and responsive organisations.

We work in a wide variety of sub-sectors including livestock, dairy, tea, coffee, oilseed and vegetables, and cross-cutting sectors such as input supply, agricultural credit and mechanisation.

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Our agricultural and rural development capabilities include: esigning and implementing large and complex D agriculture development programmes Developing sector and sub-sector reform strategies Service market development trengthening business associations, farmer groups S and cooperatives Mainstreaming gender in agricultural interventions

Promoting stability and market development in post-conflict Liberia After emerging from a destructive 14-year civil war in 2003, Liberia remains one of the world’s poorest countries. Yet it possesses substantial potential for economic growth, particularly in its agricultural sector.

We began a major Swedish International Development cooperation Agency (Sida) funded programme with the Liberian Ministry of Agriculture, aimed at the development of markets and value chains in agriculture in Liberia.

This £14m, 5-year Grow project follows the M4P approach to promote systemic change in agricultural and associated cross-cutting market systems.

Alongside promoting poverty reduction, the programme focuses on interventions that promote stability and reduce conflict. The programme plays a key role in generating inclusive and broad-based growth, whilst promoting sustainable peace.

Delivering improved incomes for 39,000 enterprises by the end of 2018 Liberia

Liberia

Helping Kenya’s rural poor gain better access to agricultural markets Together with our institutional partner, the Kenya Markets Trust, we manage the multi-donor Kenya Market Assistance Programme (MAP), funded by DFID, the Gatsby Charitable Foundation and the Netherlands Embassy.

With a 6-year programme managing a £23m fund, MAP is designed to make markets work better for the poor in key agricultural and basic service sectors, predominantly in rural areas of Kenya. MAP is currently active in the dairy and agricultural inputs sectors, rural water services and rural media, and additional interventions are beginning in the seed and livestock sectors.

£100,000 of increased investment

Kenya

Kenya

“ Since I started buying hay, my milk production has gone up by at least three litres.”

Helen Njeri, Dairy Farmer and MAP beneficiary.

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Business Environment Reform Unfavourable laws, policies, and regulations deter investment and job creation vital to generating sustainable and equitable growth. We deliver sustainable solutions to key business environment constraints.

We are world leaders in Business Environment Reform (BER) issues. We work on a variety of BER issues, including business registration, taxation, land registration, investment promotion, and agricultural policy and regulation, so businesses can reap the long-term benefit of a better business envrioment. We deliver practical advice to governments and policy-makers.

We also work with non-government actors, such as business associations and media houses, involved in the BER process. Our work helps to make these organisations more effective advocates, increasing the “demand� for BER and providing valuable feedback to policy-makers.

Adam Smith International’s BER and investment promotion capabilities include: Supporting legal, policy and regulatory reform Mainstreaming gender in business environment reform uilding institutional capacity in government and B non-government actors

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GEMS3: Making it easier to do business in Nigeria We are working with private and public stakeholders at national, state and local government levels on the Growth and Employment in States 3 (GEMS3) programme. The programme makes it easier to do business in Nigeria, offering lasting economic improvements for the poor, and particularly for women.

We focus on three core areas: tax harmonisation, reducing and formalising the number of charges affecting small businesses and professionalising tax collection; systematic land titling and registration, allowing quicker access to affordable and secure titles and subsequently improved access to finance for the poor; and investment initiatives, working to ensure Nigeria is an attractive destination for investment.

From December 2013, 5,700 full time jobs have been generated and over 24,000 enterprises have benefited from £2.5m in additional income.

24,000 enterprises benefit from £2.5m in additional income

A++

Nigeria

In 2014 the programme was rated an A++ project by DFID: the highest score it can give to any of their projects where the ‘outcome substantially exceeded expectation’.

Nigeria

Reforming Afghanistan’s investment climate to encourage investment and job creation In order to stimulate investment into Afghanistan’s economy, we supported the introduction of the Investment Climate Facility, Harakat. Established with £30m of funding from DFID, Harakat is an independent, Afghan-led not-forprofit organisation designed to improve the investment climate in Afghanistan.

Our team was responsible for registering the organisation as an NGO (nongovernmental organisation) in Afghanistan; creating appropriate governance and management structures; recruiting and mentoring the Afghan management team; establishing the management, administrative and financial systems and processes needed to operate the facility; and generating the initial pipeline of projects for grant funding needed to build early momentum and interest. They were responsible for raising awareness and understanding of Harakat’s work through the design and implementation of a communications strategy.

10,000 jobs generated through enhanced investment

Afghanistan

Afghanistan

“ Adam Smith International’s support has been instrumental in helping Harakat to establish itself as a proactive and responsive grantmaking facility in what is a highly complex and challenging environment. Adam Smith International is professional and one of the best consultancy firms.”

Suleman Fatimie, CEO, Harakat (The Afghan Investment Climate Facility)

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Public-Private Dialogue & Business Advocacy One of the most effective ways of delivering sustained improvement in the business environment is to improve the effectiveness of public-private dialogue and advocacy.

A weak business environment is one of the major constraints to business formation, growth and investment. Promoting substantive, inclusive dialogue and advocacy allows local actors to set reform priorities and address constraints that matter most to them.

We have developed a highly innovative approach to dialogue and advocacy. We work across governments, business associations and chambers of commerce, media houses and research institutions to improve the interaction between the public and private sectors. We also support actors in launching sustainable Public-Private Dialogue (PPD) platforms, providing an institutionalised, inclusive space to discuss business environment issues.

“ In 30 years of my time in the ministry, I have not seen anything like this [policy consultation event] before. This consultation will make the policy stronger. As the private sector drives the country’s economy it is essential to include them in conversation about this policy. I appreciate ENABLE very much in helping us organize such an event.�

Director of the Federal Ministry of Health, Nigeria

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Our dialogue and advocacy capabilities include: upporting governments to better consult and engage S with the private sector

Improving the organisational and advocacy effectiveness of business membership organisations

Supporting media groups to not just improve the coverage but advocate business issues upporting the creation of effective and sustainable S dialogue platforms Facilitating issue or sector based dialogue

ENABLE: Improving advocacy and consultation on business environment issues ENABLE is the first donor programme to apply the principles of M4P and systems thinking to business environment reform.

We support a variety of public and private sector organisations. As a result of our support, 19 business membership organisations have improved their advocacy capacity and performance; 14 media houses have launched new or improved small-business products; 7 government agencies have introduced new consultation practices; 7 research institutions have initiated new business environment research products and 12 public-private dialogue platforms have been created. ENABLE partners have delivered over 80 dialogue and advocacy events leading to reforms across a range of issues, from multiple-taxation to fertiliser subsidies to central bank policy. These reforms have improved the business environment for over 2m micro-entrepreneurs and small-scale farmers, leading to an increase in income of ÂŁ131m.

ÂŁ131m of increased income for over 2m people

Nigeria

Nigeria

Zimbisa: Improving consultation and dialogue on business environment issues in Zimbabwe Zimbisa supports key stakeholders in the public-private dialogue system such as government, business membership organisations, the media, research institutions and think-tanks to engage in evidence-based non-confrontational dialogue that results in an improved business environment.

Drawing on the principles of the Making Markets Work for the Poor approach, Zimbisa acts as a facilitator, building the capacity of local actors without carrying a pre-conceived agenda for reform and without directly performing functions that should be performed by local actors themselves.

The goal is to bring about sustainable change so that Zimbisa’s partners continue to engage in effective dialogue long after the programme has finished, helping to catalyse new investments and growth for the economy to lift many Zimbabweans out of poverty.

Promoting a better business environment for poor men and women

Zimbabwe

Zimbabwee

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Financial Sector Development Financial services, both formal and informal, can play a vital role in the lives of poorer people. They allow people to invest in and expand their businesses, deal with crises, such as crop failure or illness, and transfer money affordably and safely.

A well-developed financial sector allows governments to mobilise private capital for productive investment, delivering improved infrastructure provision and higher economic growth. Affordable and accessible financial services also play a crucial role in the ability of poor men and women to invest in productive activity and to reduce vulnerability.

We have extensive expertise in financial sector reform, from the development of commercial banking sectors to the design and implementation of Financial Sector Deepening programmes. We also work in the insurance sector and in capital markets development.

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Our financial sector development capabilities include: Policy, legislative & regulatory reform Central Bank reorganisation & reform Capital market development Bank restructuring & privatisation Insurance sector reform & privatisation Monitoring, evaluation & analysis of policy delivery

Improving access to financial services for Zambia’s poor In partnership with DAI, we are implementing Financial Sector Deepening Zambia (FSDZ), a £13m programme promoting coordination and connections between consumers, financial service providers, government, and other key market players.

As a facilitating agency, FSDZ acts as a catalyst to develop an efficient and vibrant financial sector that offers a wider range of financial services through diverse channels to more financially capable households and micro, small and medium enterprises (MSMEs).

Over the next 5 years, the programme will help to increase the percentage of people in Zambia classed as financially included to 50% of the population, and help expand income opportunities and reduce vulnerability for over 130,000 poor households and MSMEs..

Reducing the financial vulnerability of over 130,000 households and small businesses

Zambia

Strengthening Nepal’s financial sector

Zambia

Nepal’s financial sector is highly exposed to a number of risks that undermine its stability and could trigger a financial crisis with significant consequences to an already fragile economy. In response, we are undertaking a macroeconomic financial sector reform project providing high quality technical assistance to the Central Bank (Nepal Rastra Bank) and the Ministry of Finance to help better identify and manage risks.

This includes a programme of special inspections of at-risk financial institutions, providing institutional support and capacity building to enable transition to International Financial Reporting Standards, and the development and implementation of a deposit credit and guarantee system. This project is closely linked with the World Bank’s two financial sector Development Policy Credits.

Giving Nepal the tools to guard against financial crisis

Nepal

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Entrepreneurship & Skills Development The success of every economy is dependent on the availability of a skilled workforce that can sustain the sectors where growth can be best achieved.

In many developing countries, there is a gap between the demand and supply of skilled labour. Investments required to address this gap are often overlooked.

We have extensive expertise working with governments, large corporations, business associations and small and medium enterprises to address this gap. Our experience ranges from supporting government, developing skills and training policy and curricula, development of apprenticeship schemes offering access to employment in technical industries and mentoring for entreprenuers who can provide the next generation of employment opportunities. We are adept at embedding interventions within ministries, companies, chambers of commerce and enterprises that are best positioned to make change happen to ensure sustainability.

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Our skills development capabilities include: Technical & vocational education training Apprenticeship schemes Mentoring Reskilling Personnel development Awareness raising Policy development

“[FORSA] is an inspirational programme. [I’m] looking forward to implementing what I learned to move myself and my business forward.”

Nabil Hijazi, Jordan

FORSA: Promoting innovation and growth in business through mentoring In response to the Arab Spring protests in 2011, the UK has been promoting a mentoring initiative for small and medium enterprises. FORSA operates in all six of the Deauville Partnership focus countries: Morocco, Tunisia, Libya, Egypt, Jordan and Yemen.

It aims to support new entrepreneurs in the region by providing them with mentors who can provide guidance and expertise to help their businesses grow. The project aims to provide 12 months of mentoring support for a minimum of 250 entrepreneurs.

As such, it intends to sustain progress by promoting the use of mentoring as a development tool for small and medium enterprises.

Mentoring over 250 young entrepreneurs to business success

Addressing the causes of youth unemployment Youth unemployment is a major issue for Kenya, forming one of the top priorities of the Kenyan government. In Mombasa, where youth unemployment runs at 44%, we are implementing measures that will help Mombasa’s youth find employment, directly benefiting individuals, but also stimulating Mombasa’s economy for the future.

The programme delivers improved skills and access to employment through three workstreams. Firstly, improving the human capital of young people from low-skilled and low-income backgrounds with an integrated training, apprenticeship and entrepreneurship programme. Secondly, promoting skills and market development in growing sectors via the creation of public-private partnerships in vocational training, value chain development, and the launch of job search centres. Finally, encouraging the government, academic and private sector to have an impact on youth employment via best-practice strategies, policies and incentives.

Delivering improved skills and access to employment

Kenya

Kenya

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Labour & Employment Even when economic reforms deliver net benefits to society, there are often both winners and losers. We are leading experts on international best practice in labour restructuring and employment, helping displaced workers gain new skills and new jobs.

Through our work we have collaborated extensively with governments, private sector training institutions, non governmental organisations (NGOs) and local banks to develop labour and employment support and reform programmes.

Our innovative approach has been recognised by leading institutions such as the World Bank for whom we assembled the Labour Restructuring Toolkit, the compendium of international best practice in this area.

Our capabilities in labour and employment capacity include: esigning and implementing voluntary retirement D schemes which maintain high levels of transparency and accountability ffering a range of counselling (financial, livelihood, O trauma and social) to retrenched workers and their families I ntroducing new products such as training vouchers for family members of retrenched workers instead of the worker themselves collaboration with banks, offering financial products In such as life insurance and fixed deposits Providing quality livelihood training

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“ Social protection of the garment workers [was] practically absent, so the technical assistance made a substantial contribution to develop and test social protection arrangements in a changing industry environment.”

Axel Weber, Social Sector Specialist (Social Protection), SANS, Bangladesh

Protecting female workers in the Bangladeshi garment sector In 2005, the employment prospects of women in Bangladesh’s garment sector were threatened by a change in trade agreements and the expiration of the multi-fibre agreement, exposing the sector to greater competition.

We provided technical assistance to the Ministry of Women and Children Affairs, in collaboration with the Asian Development Bank. We developed and tested a range of approaches for providing opportunities and protection of workers who had been retrenched or were threatened by retrenchment as a result of the phasing out of quotas.

The team provided training to retrenched women and developed centres to help these women find new jobs. Over 2,000 female garment workers directly benefitted from our support in this challenging economic adjustment process.

Supporting over 2,000 women in the garment sector

Bangladesh

Bangladesh Promoting inclusive growth in Mongolia Mongolia has recently capitalised on its comparative advantage in the mining and minerals sector, resulting in rapid economic growth, but there is concern that significant numbers of people have been left behind and income inequalities have widened.

The government is addressing these issues with a number of social measures.

In association with the Mongolian Center for Development Studies, we are improving policy development capacity and working with the government to formulate a medium-term strategic plan for inclusive growth. This includes institutional development for the Cabinet Office, Ministry of Finance and Ministry of Economic Development on mechanisms and indicators for monitoring inclusive growth in government monitoring systems. The project will improve the capacity of public and private stakeholders to develop policies on inclusive growth.

Protecting citizens from income inequalities

Mongolia

Mongolia

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Trade Development & Integration Ever increasing global trade flows present a huge opportunity for developing countries.

However, many developing countries have been unable to fully harness these gains.

By tapping into global markets, developing countries can create sustainable jobs and incomes for millions of lowincome workers. However, countries face real challenges such as administrative barriers, regional integration, burdensome customs policies and distortionary trade and investment policies which need to be addressed before countries can fully benefit from trade.

Our trade enhancement and economic integration capabilities include:

We have been working at the cutting edge of international trade reform for over 15 years. We have worked extensively across developing and transitional countries with numerous donor agencies, such as the UK’s Department for International Development, to support governments in formulating trade policies, establishing national trade regimes that are World Trade Organisation compliant and designing incentives to facilitate trade.

Reform of customs policy, institutions and procedures

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World Trade Organisation compliance and accession Policy analysis of trade regimes ddressing administrative barriers to trade A and investment

Trade facilitation, including customs reform Incentives analysis and removal of anti-export bias Regional economic integration

Promoting trade between India and Pakistan Despite having strong historic trade routes, bilateral trade between India and Pakistan has been negligible since the 1950s.

We are working with the Lahore University of Management Sciences to improve prospects for trade. We build support for cooperation and dialogue between governments and the public and private sectors to promote trade liberalisation. We are building capacity and awareness to advocate the benefits of Indo-Pakistani trade.

The team engages with various stakeholder groups representing farmers, businesses, commerce and trade, and key influencers are now better informed.

21% increase in IndoPakistani trade since 2011

Pakistan

Pakistan Strengthening capacity for regional integration in Kenya We supported Kenya’s Ministry for East African Affairs, Commerce and Tourism in building the institutional capacity to engage on regional trade negotiations, carry out a functional review and establish a new organisational structure. Our advisers, embedded in the Ministry, also helped it develop a monitoring and evaluation system to track key East African Community decisions. The new organisational structure and the M&E systems have been adopted as models for similar ministries in the other EAC countries.

Our involvement has streamlined the running of the Ministry of EAC, and its improved efficiency is allowing it to better support the regional integration pursued within its member countries.

Helping Kenya increase trade with its regional partners

Kenya

Kenya

“ With Adam Smith International’s support, we have made tremendous progress in terms of strengthening MEAC’s capacity to coordinate Kenya’s regional integration process over the last year. The Adam Smith International advisers worked extremely hard alongside my staff to deliver transformational change within the Ministry.”

The late David Nalo, Permanent Secretary, MEAC

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State Enterprise & Agency Reform We specialise in providing privatisation assistance to developing and transitional countries, including recent projects in Afghanistan, Sierra Leone, Tanzania and Zimbabwe.

We have considerable experience in assisting governments in developing and articulating a clear policy framework for privatisation. We adapt quickly to challenging and new circumstances, and can help to build the political support necessary to carry policies through to their successful conclusion.

We have extensive expertise in integrating social, environmental, labour governance and cross-sectoral dimensions into privatisation activities. We are world leaders in labour restructuring, and uniformly achieve success in building effective social, environmental and governance components of restructuring programmes.

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Our State Enterprise & Agency Reform capabilities include: Design of privatisation programmes Strengthening privatisation agencies Development or enhancement of privatisation procedures Drafting or amendment of privatisation laws Supervision of privatisation transactions Implementation of privatisation programmes

Devising and implementing Guyana’s privatisation programme The economy of Guyana had suffered greatly after years of autocratic socialism imposed by a dictatorial regime.

We worked with the new government to formulate an overall privatisation strategy and action plan, but the focus quickly shifted towards assisting in the development and implementation of specific transactions.

We also helped to draft securities and insurance sector legislation, establish the stock exchange, develop the National Asset Register, merge the Privatisation Unit and the National Industrial & Commercial Investments Inc. and strengthen the capacity of the Privatisation Unit.

The greatest achievements of the programme were the 100% exit of government from ownership and management of the financial sector, coupled with improved banking and insurance regulation.

Gross proceeds exceeded $100m, providing 1–2% of Guyana’s GDR per year

Guyana Guyana

Public enterprise reform and social safety net in Madhya Pradesh We worked with the Asian Development Bank (ADB) and DFID to assist the government of Madhya Pradesh in taking forward its public enterprise reform programme, focusing in particular on the implementation of the ADB’s loan tranche conditionalities.

We advised on developing and implementing Voluntary Retirement Scheme procedures, with approximately 20,000 works retrenched and US$150m disbursed. We also implemented the closure of 5 state-owned enterprises, realising savings of approximately US$10m per year, and set up the Technical Secretariat to implement privatisations.

Supporting 20,000 retrenched workers and disbursing $150m of maintenance funds

India

Private Sector Development 25

Case Study: Helping Kenya’s Rural Poor Gain Better Access to Agricultural Markets Developing the agricultural sector to make it more accessible for poorer people.

With our partner the Kenya Markets Trust, we have been managing the multi-donor Kenya Market Assistance Programme (MAP) funded by the UK’s Department for International Development, the Gatsby Charitable Foundation and the Netherlands Embassy. With a 6-year programme budget of £23m, MAP is designed to make markets work better for the poor in key agricultural and basic service sectors in rural Kenya. MAP catalyses innovation in the private sector, facilitating more inclusive business models, realigning the incentives, capacities, relationships and rules governing how markets work and how they shape the participation of the poor, whether as producers, employees or consumers. We are currently active in the dairy and agricultural inputs sectors, rural water services and rural media, and additional interventions have recently begun in the seed and livestock sectors.

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One of our most successful pilot interventions is in the dairy sector. Lack of adequate, good-quality feed keeps milk yields low, resulting in low income for dairy farmers (the average Kenyan dairy cow produces roughly 6 litres/day compared to more than 40 litres in Denmark). With our implementing partners, Technoserve, we designed a quality feed intervention to increase the provision of affordable high quality hay and fodder to small-scale farmers. An initial joint venture called HayNForage (HnF) was established between Nyala and Ndumberi cooperatives reaching an estimated 8,000 farmers in Kiambu and Nyandarura counties.

MAP began by working with HnF to lease a tract of land of 1,182 acres to create a production base for the hay. At the same time, MAP cost shared with HnF on key costs of production, including the mowing, baling and transporation of the hay so that each of the first 60,000 bales would not be sold for more than Ksh100 per bale to cooperative members.

The purpose of this catalytic subsidy was to “buy down” the risk of Nyala and Ndumberi and demonstrate the business case for the two cooperatives of investing in a new service for their members.

“We used to purchase hay from as far as 100 km away at a cost of Ksh 180 – 250 (US$ 2 - 2.8) per bale before we started producing our own hay.”

Jane Muya, a dairy farmer and General Manager of Ndumberi Dairy Cooperative

The programme had a clear exit strategy for this cost sharing arrangement recognizing that sustaining subsidies over time can create an unhealthy dependency on external donor funding. In the first season alone, 54,000 bales of hay were sold by HnF and as demand increased MAP worked with HnF to strengthen its offer to its members and, in doing so, to enable the business to become commercially viable.

MAP’s second phase of support focused on establishing a series of commercial relationships- firstly with an established soil testing laboratory to enable HnF to improve the quality of its product, but also with a number of local banks to finance the purchase of the mowers, balers and trucks needed to drive down the cost of production on a long term basis. HnF also developed a partnership with 2 brand agencies in order to improve its sales and marketing.

To date, MAP’s dairy interventions are estimated to be reaching nearly 48,335 smallholder dairy farmers. In the case of the hay and fodder intervention, foundations are in place to ensure long-term sustainability, with commercial hay producers partnered with MAP already investing over 15 million Kenya shillings in expanding production. HnF itself has recently received a substantial loan from a social investment fund to finance the capital expenditure needed to drive continued expansion and growth in the business.

Throughout 2013, the number of outlets selling quality assured hay has increased from 2 to 36, and the amount of land under cultivation for quality hay has expanded to more than 2,000 acres.

Initial results from HnF suggest that milk yields have more than doubled among those farmers purchasing quality assured hay. Other commercial hay producers have now begun replicating the approach, including Githunguri Dairy, Kenya’s third largest independent milk processor with 42,000 registered members.

Kenya

Kenya

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Adam Smith International is an award-winning professional services business that delivers real impact, value and lasting change through projects supporting economic growth and government reform internationally.

We specialise in the design, management and delivery of complex projects.

Our wide-ranging experience is grouped into two areas: Economic Growth and Government Reform. Economic Growth includes services in Private Sector Development, Infrastructure Development, Extractive Industries Governance and Climate Change. Government Reform includes services in Public Administration Reform, Justice, Security and Peace-building, Revenue Reform, Public Financial Management, Education Development, and Civil Society and Demand-Side Accountability.

Often working in challenging environments and conflict affected areas, we have a proven track record for achieving tangible results.

Find out more For an in-depth look at any of these projects and more of our Private Sector Development experience, visit www. adamsmithinternational.com.

For assistance, please contact: Luqman Ahmad Director of Private Sector Development E: luqman.ahmad@adamsmithinternational.com

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