Annual aggregation of results final

Annual Aggregation of Results January 2013 – December 2013

Market Development Facility

Date: February 2014

Australian aid – managed by Cardno on behalf of the Australian Government

Table of Contents 1. Introduction to the Market Development Facility and the Annual Aggregation of Results ...... 5 Why Publish an Annual Aggregation of Results?................................................................................... 5 The Pathway to Pro-Poor Growth, Jobs and Income .............................................................................. 6 Systemic Change and Indirect Impacts ................................................................................................... 7 Communicating Results along this Pathway........................................................................................... 7 Summary of Report Sections .................................................................................................................. 9 2. MDF’s Approach to Results ........................................................................................................... 10 How MDF contributes to Poverty Reduction ....................................................................................... 10 MDF Impact Logic and Headline Indicators ........................................................................................ 11 Three Universal Impact Indicators ......................................................................................................................................... 12 Three Intermediary Headline Indicators ............................................................................................................................. 12

DFAT Indicators ................................................................................................................................... 13 How MDF integrates Gender ................................................................................................................ 13 How MDF measures Results ................................................................................................................ 14 3. MDF’s Facility-Level Results and Projections ............................................................................. 16 Results and Projections until December 2013 ...................................................................................... 16 Results until December 2013 .................................................................................................................................................... 16 Projections based on the Partnership Portfolio as of December 2013 ................................................................... 17

Discussion of Results and Projections as of December 2013 ............................................................... 18 The Pathway to Pro-Poor Growth in Fiji .............................................................................................................................. 18 The Pathway to Pro-Poor Growth in Timor-Leste ........................................................................................................... 19

Business Innovation for Systemic Changes to unlock Pro-Poor Pathways ........................................................... 20 Private Sector Investment Leveraged.................................................................................................................................... 22 Value of Additional Market Transactions ............................................................................................................................ 22

Conclusions: The Value of the Current Portfolio .............................................................................................................. 25

4. Fiji Islands Results and Projections .............................................................................................. 27 Poverty reduction in Fiji ....................................................................................................................... 27 Progress to date ..................................................................................................................................... 28 Business Innovations and Regulatory Reforms ................................................................................................................ 31 Private Sector investment leveraged (USD) ....................................................................................................................... 32 Value of Additional Market Transactions ............................................................................................................................ 32

Effective Outreach .......................................................................................................................................................................... 32 Net Additional Employment ...................................................................................................................................................... 32 Net Additional Income (USD) .................................................................................................................................................... 33

Relevance for Gender Equality ............................................................................................................. 33 Other Private and Public Sector Contributions ..................................................................................... 34 Lessons Learned.................................................................................................................................... 35 Success Stories: Partner Profiles ........................................................................................................... 35 5. Timor-Leste Results and Projections ............................................................................................ 38 Progress to date ..................................................................................................................................... 38 Market Development Facility | 2

Country Projections and Results ........................................................................................................... 39 Business Innovations and Regulatory Reforms ................................................................................................................ 40 Private Sector investment leveraged (USD) ....................................................................................................................... 40 Value of Additional Market Transactions ............................................................................................................................ 41

Effective Outreach .......................................................................................................................................................................... 41 Net Additional Employment ...................................................................................................................................................... 41 Net Additional Income .................................................................................................................................................................. 41

Poverty reduction and Gender Equality in Timor Leste ....................................................................... 41 Other Private and Public Sector Contributions ..................................................................................... 42 Lessons Learned.................................................................................................................................... 42 Success Stories: Partner Profiles ........................................................................................................... 43 6. Communication, Networking and Presence ................................................................................. 44 Annex 1: Quality at Implementation (QAI) Reporting Information ............................................. 47 Additional Commentary for QAI Reporting Criteria ............................................................................ 48 1. Relevance ....................................................................................................................................................................................... 48

2. Effectiveness ................................................................................................................................................................................ 50 3. Efficiency........................................................................................................................................................................................ 52

4. Monitoring and Evaluation .................................................................................................................................................... 55 5. Sustainability for both Fiji and Timor-Leste .................................................................................................................. 55

6. Gender Equality .......................................................................................................................................................................... 56 7. Cross-Cutting Issues and Commitments for both Fiji and Timor-Leste ............................................................ 57

Source of Data and Degree of Confidence in MDF Data Quality for QAI Reporting .......................... 58 The Australian Government’s Contribution to MDF’s Results for QAI Reporting ............................. 59 Annex 2: MDF’s Impact Logic, Hierarchy of Objectives and Menu of Indicators ...................... 61 Annex 3: MDF Results Estimations for Four Countries ................................................................. 68 Annex 4: Intervention Detail Sheets .................................................................................................. 75

List of Tables Table 1: Overall MDF Projected Results Based on MDF Existing Partnerships as of December 2013 .............................................................................................................................................................. 18 Table 2: MDF Partnerships, Innovation and their relation to Pro-poor Growth Potential and Systemic Changes ................................................................................................................................................. 20 Table 3: MDF Partnerships in Fiji ........................................................................................................ 28 Table 4: Fiji Projected Results based on portfolio as of December 2013 ............................................ 30 Table 5: Other Private and Public Sector Contributions in Fiji ............................................................ 34 Table 6: Partnerships in Timor-Leste.................................................................................................... 39 Table 7: Timor-Leste Projected Results based on portfolio as of December 2013.............................. 40 Table 8: Other Private and Public Sector Contributions in Timor-Leste .............................................. 42 Table 9: MDF's Communications, Engagements and Synergies in 2013 ............................................. 45

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List of Figures Figure 1: Life Cycle of a Partnership and Timeline of Results Figure 2: The simplified MDF impact logic and expected changes per level

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List of Boxes Box 1: Early signs of markets starting to work better........................................................................... 24 Box 2: Fiji Success Stories ................................................................................................................... 36 Box 3: Timor-Leste Success Story........................................................................................................ 43

Abbreviations and Acronyms APPR

Annual Programme Performance Report

CAPF

Comprehensive Aid Policy Framework

DCED

Donor Committee for Enterprise Development

DFAT

Department of Foreign Affairs and Trade

FJD

Fiji Dollar

FTE

Full Time Equivalent

MDF

Market Development Facility

PAF

Performance Assessment Framework

QAI

Quality at Implementation

RM

Results Measurement

USD

US Dollar

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1. Introduction to the Market Development Facility and the Annual Aggregation of Results The Market Development Facility (MDF) stimulates investment, business innovation and regulatory reform to create additional jobs and increase the income of poor women and men in rural and urban areas around the world. MDF began in July 2011 in Fiji and has since expanded to Timor-Leste (2012) and Pakistan (2013). MDF’s current funding ends in June 2017.

To stimulate investment, business innovation and regulatory reform, MDF negotiates partnerships with strategically positioned private and public sector organisations in its countries of operations.

Each partnership is comprised of a tailor-made package of activities that enables the partner to innovate, invest and/or issue reforms in such a manner that small farms and firms benefit from better access to production inputs, services and end markets. This makes them more productive and helps them grow, which, in turn, creates jobs and increases incomes for poor women and men. Thus, each partnership agreement has a demonstrated link with pro-poor growth, job creation and income generation. In addition, the changes that partner companies and organisations make encourage and support others to also make changes which promote sustainable pro-poor growth.

MDF’s portfolio of partnerships expands year by year as MDF negotiates more partnerships with more organisations in more countries. MDF’s Annual Aggregation of Results reports on the value of this expanding portfolio on an annual basis. It informs the Australian Government, the broader development community and wider audiences across Australia and MDF countries about the programme’s contribution to business innovation and regulatory reform, investment, improved access to inputs, services and markets, and ultimately job creation and income generation for poor communities.

Why Publish an Annual Aggregation of Results?

The 2013 Annual Aggregation of Results is the first report of its kind to be published by MDF. It covers the twelve-month period from January 2013 through to December 2013. Results are presented at both the country level as well as for MDF overall.

This report is being published two years into the programme as the first results are coming in now.

MDF intends to now publish this report every February. Each report will cover results measured within the past twelve months as well as cumulative results. For this first edition, these are one and the same.

The Annual Aggregation of Results serves the following purposes: 1. To inform the Australian Government and other stakeholders of MDF’s achievements to date, whether it is on track, the scale of its impact and its projected achievements. For this reason, the report is aligned with the Department of Foreign Affairs and Trade (DFAT) reporting schedule and requirements and provides information necessary for the Quality at Implementation (QAI) reporting and Annual Programme Performance Report (APPR) – see Annex 1 for additional reporting requirement information.

2. To share this information with the broader development community to promote transparency in results measurement and communication and to contribute to the comparability of results between approaches and countries. With this aim in mind, the Donor Committee for Enterprise Development (DCED) developed the Standard for Results Measurement in Private Market Development Facility | 5

Sector Development. As a multi-country facility, MDF is uniquely positioned to support this aim and this report is accordingly compliant with DCED criteria for annual reporting.

3. To discuss achieved results in their context, provide insight into ‘why MDF does what it does’ and in this manner contribute to the discussion on good development practice.

This report contains information about Fiji, which is furthest along in implementation, and TimorLeste, which is one year in. Implementation in Pakistan started in December 2013 and therefore has been excluded from this current report.

The Pathway to Pro-Poor Growth, Jobs and Income In order to successfully use this report’s information, it is important to understand the pathway to propoor growth, jobs and income, and how results within MDF develop. Figure 1 below shows the lifecycle of an MDF partnership and its typical timeline. It also shows at what points in time results measurement tasks take place and what indicators become available through those measurement tasks.

As is demonstrated in the diagram, it can take anywhere from 18 to 36 months to see MDF’s goal level impacts of income and employment.

Figure 1: Life Cycle of a Partnership and Timeline of Results

The key factors that determine how long it will take to see goal level impacts include: •

how long partnership activities take to complete; and

•

how fast the market is able to respond to the improved access to production inputs, services, sales opportunities and regulatory reforms triggered by these partnership activities.

Each partnership contains a tailor-made package of activities – carefully designed and negotiated to reduce a specific systemic constraint to growth in a specific sector of the economy of a particular country. Factors to consider include the nature of the constraint to be addressed, the capacity of the partner, the responsiveness of small farms and firms in a sector, and the state of the economy in

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country. All these influence the speed and scale of implementation and, therefore, both speed and scale can vary significantly between partnerships.

Intermediary changes and high-level impacts can only be measured and attributed to MDF after the partner activities are complete and MDF support comes to an end. Typically, MDF measures up to two business or agricultural cycles after activities are complete. Again, cycle times differ depending on the sector, business and crop-types involved.

For example, if a particular partnership’s activities take up to 12 months to develop after signing a partnership, the market takes some time to respond, and impacts are measured two years from completion of activities. Impact is then measured, validated and known about three years after signing a partnership agreement. Again, this timeline is indicative and will vary significantly between partnerships.

Currently, MDF is in the activity phase of most partnerships in Fiji and for all partnerships in TimorLeste. Partners in Fiji and Timor-Leste are often less-developed businesses and partnership activities are more intensive, involving physical expansion and business and management capacity building.

Therefore, completing the activity phase takes time.

Nonetheless, the first few partnerships in Fiji have started to influence markets – see Section 2 for more details. Given this stage of implementation, this first aggregation reports will show results at the activity-, the output- and the outcome-level. This might include the number and types of innovations, regulatory reforms and private sector investment leveraged.

Systemic Change and Indirect Impacts As MDF aims to achieve sustainable and broad-based pro-poor economic growth by triggering systemic market changes, it measures direct and indirect impacts. Direct Impacts are the impacts experienced by beneficiaries directly as a result of the partner’s activities. Indirect Impacts are what others experience as a result of wider systemic change. The latter could be from other businesses crowding into markets ‘opened’ up with the help of MDF partnerships or small farms and firms copying the positive change in behaviour experienced by the direct beneficiaries. These could also be through firms adapting the innovations for other sectors or for other benefits. Small farms, firms and poor workers who are considered to benefit from the programme while not having had direct contact with the programme demonstrate that systemic changes are taking place and that changes are sustainable and can continue to evolve outside of the programme.

MDF is currently working on a more precise definition of what it considers systemic changes. MDF’s results measurement system will be updated once this new definition is ready.

Communicating Results along this Pathway MDF uses effective outreach, net additional employment, and net additional income as Headline Indicators for measuring impact on the poor. MDF also uses three Intermediary Headline Indicators to capture changes in the partner’s capacity to influence a systemic market constraint to pro-poor growth and the market response to this. To do this, MDF captures: partner investment; the number of business innovations and regulatory reforms implemented; and the value of additional market transactions triggered by these investments, innovations and reforms (the market response).

These intermediary indicators help assess the quality of a partnership in terms of partner commitment (by investing their own funds) and sustainability (an increase in commercially sustainable market transactions). They also demonstrate progress on the pathway to pro-poor growth, jobs and income.

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MDF headline indicators are measured for every partnership, but that in addition to this, each partnership has its own specific indicators that are also measured to track and understand the progress of that specific partnership. More details on the MDF headline indicators and how MDF measures results follows in Section 2.

In addition to using a number of headline indicators along the pathway to pro-poor growth, jobs and income, this report also provides two types of information to show the connection between actual results to date and the potential ‘yield’ of the portfolio a few years down the line, when partnerships and markets had the time to mature. Actual results are those results that have been measured and validated. Projections are used to understand the anticipated changes and scale of impact before that impact has been realised.

Actual Results indicate the actual impacts that have already been measured through completed impact assessments. Each partnership has its own unique measurement plan, which determines when and how impact assessments will be conducted to measure actual results. For some partnerships, an impact assessment is only completed one to two years after partnership activities are completed (Refer to Figure 1). Therefore, full results are only known after two years. However MDF starts measuring much earlier to get a sense of what is happening and whether improvements need to be made to an activity. MDF typically uses early field assessments and monitoring activities to do this - throughout the Output, Outcome and Purpose levels - to capture and understand whether the changes are occurring according to the impact logic and whether adjustments need to be made to maximise the impact of the partnership. Through these activities MDF can keep track of early signs of impacts for each partnership before measuring total attributable impacts. Actual results are measured using different tools for each partnership, following best research practices. Partnership results are then aggregated to the sector level, and then to the country level – accounting for overlap between beneficiaries of different partnerships to avoid double-counting.

Projected results, or projections, are based on detailed calculations per partnership to estimate the likely impacts that will occur for each existing partnership. Existing partnership are those which are already signed and still ongoing. MDF projections are made to anticipate the total achievements of each partnership. Projections are made using well thought out assumptions based on findings from sector studies, secondary information, field observations, expert opinions, and other sources. They are made after the signing of a partnership agreement or when there is enough information to reasonably make these assumptions. Projections are reviewed every six months, and updated annually based on actual impact assessments and other research conducted by MDF which confirms or alters the assumptions made. Projections are used by MDF to help anticipate the impact of its portfolio and to see if partnerships are on track. By anticipating impacts through making realistic projections for its key quantitative indicators, MDF also stays compliant with the DCED Standard. Later in the life cycle of a partnership these projections are updated with actual results. MDF’s projections will change over time, increasing as MDF’s portfolio of partnerships grows and fluctuating as previous assumptions are verified.

It is important to note that projections are based on existing partnerships and so are not a complete picture of what MDF will achieve. As new partnerships are signed, projections will be calculated for the new partnership and MDF’s total projections will grow. To assess the significance of these actual results and projections, a comparison can be made with MDF’s initial results estimations. These estimations were developed very early into the programme and are meant to communicate the order of magnitude of results that should be possible to achieve in each country, based on budgets and implementation time periods. Refer to Annex 2 for an overview of these initial estimations and how they were developed.

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Summary of Report Sections This report covers information on actual results achieved and projected results. It provides background and narrative about the market changes and impacts achieved to complement these indicators. It also covers topics relevant to QAI and APPR reporting, such as data quality, integrity and the Australian Government’s contribution to results.

Section 1 provides an introduction to this report, a description of the pathway to pro-poor growth, jobs and income, how results within MDF develop, and how results are communicated.

Section 2 describes how MDF’s results measurement system works and the indicators that MDF uses to measure and aggregate results according to its impact logic.

Section 3 provides an overview of MDF’s actual and projected results at the Facility level.

Section 4 provides a detailed summary of progress for Fiji, with details on changes achieved so far, the innovations of each partnership agreement and stories of success.

Section 5 provides a detailed summary of progress for Timor-Leste with details on changes achieved so far, the innovations of each partnership agreement and stories of success.

Section 6 summarises MDF’s communications, networking and presence that has been developed in each country in the previous year. These elements enable MDF to share its achievements, build support for its approach, and contribute to key partners, the local community, the development community and governments gaining an understanding of the Australian Government’s contribution to development.

The annexes to this report include: Annex 1: Information for DFAT’s QAI Reporting: Presents supplemental information on the key criteria for QAI reporting for MDF and its relevant countries, to assist each country Post in QAI reporting.

Annex 2: MDF results estimations for four countries: MDF has developed initial results estimations for headline indicators for each country in which it is active or likely to be active.

Annex 3: MDF’s hierarchy of objectives: Contains further information on MDF’s impact logic, hierarchy of objectives and the menu of indicators; together they form the backbone of the MDF results measurement system.

Annex 4: Intervention Detail Sheets: Provides a detailed overview of each existing partnership, including activities and expected changes and results.

MDF’s other reports and communications materials provide supplemental information on implementation progress, management and MDF’s strategy. Taken together, the list of materials below and this report provide a comprehensive picture of MDF’s work, its progress and its achievements. 

For information on how MDF works, its country sector strategies and the MDF results measurement system, refer to ‘How MDF Works’ brochures, Country Strategy briefing documents, and Sector Assessment and Sector Strategy Reports, available on MDF’s website: www.marketdevelopmentfacility.org.



For information on implementation, management, finance or progress updates on specific partnerships, refer to Monthly Updates to DFAT, MDF’s Annual Strategic Plans and MDF’s Semester Reports.

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2. MDF’s Approach to Results This section provides a brief overview of how MDF contributes to poverty reduction, definitions on its headline indicators, how it integrates gender equality and how its results measurement system works.

MDF’s results measurement system is designed to comply with the DCED Standard for results measurement. A pre-audit review of the system, in Fiji in December 2013, confirmed that MDF conducts results measurement in line with the DCED standard. A full audit is planned for Fiji for the second half of 2014. Other countries, which commenced operations later, will be audited in the future.

How MDF contributes to Poverty Reduction As mentioned, MDF stimulates investment, business innovation and regulatory reform to create additional jobs and increase the income of poor women and men in rural and urban areas in selected countries around the world. MDF’s systems approach to pro-poor growth is based on the notion that sustained poverty reduction comes from connecting poor women and men to solutions that increase the productivity of their small farms and firms and to opportunities that increase sales or employment.

In every country there is demand for produce from self-employed small farmers, products from entrepreneurs and for labour in certain economic sectors. Affordable solutions that increase farm yields, improve production in small workshops, or give poor women and men access to services are available. High-yielding seeds in small sachets, fertiliser blends, efficient composting techniques, disease control, efficient irrigation techniques, low-cost machinery, basic skills training, pre-paid mobile phone services, micro-insurance schemes and mobile money all exist. What is often lacking are the pathways through which these solutions can reach poor women and men in a sustainable manner. The system around poor women and men has gaps.

MDF invests in ‘systemic changes’ - in pathways that help reduce these gap by entering into partnerships with private and public sector organizations who are in a strategic position to bring these solutions and opportunities closer to small farms and firms. The purpose of each partnership is to make the system around the poor work better; and the content of each partnership is driven by what these partners require in terms of scale and innovation (in products, services, production methods, organizational set up, etc.), so that solutions and opportunities can reach poor women and men in a cost-effective, sustainable manner.

Thus, this aggregation report will refer to lime miners, chocolate makers, relaxation drink bottlers, mud crab growers, rice processors and hotel operators, but the reason MDF invests in them is because in their respective economies these companies are of systemic significance, potentially able to reduce a gap that prevents pro-poor growth from reaching its potential. Investments, whether in factories, industrial kitchens, machinery, extension services, supply chains or the feasibility of local lime mining are all part of the package required for a specific partner in a specific country to unlock this potential. All partnerships have a demonstrated link with poverty reduction – they have the same basic impact logic: a market starts to work better, small farmers and firms benefits from increased access and opportunities, which translates into growth, additional employment and increased income.

To supplement its sector strategies, MDF takes a deeper look at poverty and gender in the key sectors where it works by conducting a study on poverty and gender. While the sectors that MDF works in are chosen because of their relevance to poverty reduction, the purpose of these studies are to further assess within each sector: who is poor and why within the sectors; the mechanisms, choices and strategies they use to move out of poverty; and what prevents this from happening. The study is also Market Development Facility | 10

meant to analyse gender roles and controls so that MDF’s strategy and impacts can better reach both men and women.

The poverty and gender study was completed in Fiji in 2013. The study focused on qualitative research in poverty and gender (with ethnicity as a cross-cutting theme). It was conducted across three regions of Fiji, on Viti Levu, Vanua Levu, Taveuni and the Yasawas. More details on the Fiji study can be found in Section 4.

The Timor-Leste poverty and gender study will be conducted in the first half of 2014 and the Pakistan study is likely to commence in early 2015.

With a deeper understanding of poverty, pathways out of poverty, gender roles and gender opportunities, MDF can better identify and target opportunities for equitable growth, which are relevant for all poor producers, workers and consumers – both women and men.

MDF Impact Logic and Headline Indicators Each partnership follows the lifecycle as described in Section 1 and follows the same basic impact logic in line with MDF’s hierarchy of objectives –despite the variation in activities and outputs.

MDF’s impact logic, hierarchy of objectives and menu of indicators form the core of its results measurement system. The logic and hierarchy do not change between countries and sectors and all partnerships are assessed against this hierarchy and make use of this menu of indicators. Refer to Annex 3 for more details on the MDF hierarchy of objectives, menu of indicators and results measurement system.

However, not all indicators can be aggregated across partnerships to produce a comprehensive picture of MDF achievements. Therefore, MDF reports aggregated results for a select six Headline Indicators. These are the three Universal Impact Indicators, as identified by the DCED, combined with three Intermediary Headline Indicators.

Figure 2 depicts a simplified diagram of MDF’s impact logic. It shows the expected changes that will occur at each level, with the headline indicators measured at each level (in bold). More details on the headline indicators are provided in the section below.

Figure 2: The simplified MDF impact logic and expected changes per level

Effective Outreach Additional value of market transactions

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Three Universal Impact Indicators To assess its impact on growth and poverty reduction, MDF measures and aggregates three Universal Impact Indicators, as outlined in the DCED Standard. These universal impact indicators are measured across partnerships, sectors and countries. MDF defines these indicators according to the following points, and where MDF’s definition differs from that of the DCED, the description is provided in the footnotes: 

Effective Outreach: The total number of beneficiaries – small farms, firms and workers – that are able to increase their productivity and/or benefit financially from MDF’s partnerships. 1 This includes those beneficiaries with income from self-employment activities or those benefitting from additional employment. This indicator measures the scale of MDF’s impact.



Net Additional Employment: Net additional employment created, calculated in mandays aggregated into Full Time Equivalents (FTEs), using 240 working days per year and 8-hour working days. This indicator measures the number of jobs generated as a result of MDF’s partnerships.



Net Additional Income: Net additional income earned by beneficiaries, calculated as additional income minus additional expenses (converted from local currencies into USD for comparison). 2 This indicator measures the amount of income generated as a result of MDF’s partnerships.

Using these common indicators across its portfolio allows MDF to aggregate and compare its results across its sectors and countries.

Three Intermediary Headline Indicators As these impact indicators are dependent on a series of changes that take longer to achieve – sometimes more than two years – MDF also measures indicators to show the intermediary results of its portfolio. These intermediary indicators are also measured across partnerships, sectors and countries and are aggregated for MDF’s whole portfolio. They include: 

Number of business innovations and regulatory reforms: A business innovation can be the introduction of a new product, service, business practice or production method, or the targeting of new suppliers and customers. Innovations can be new to the business, the sector or even the country. A regulatory reform is a change in the rules and regulations of the economy that reduces transaction costs, stimulates investment and/or opens a market.

Partnership Agreements may be signed, which introduce one or possibly multiple innovations and/or regulatory reforms.



Value of private sector investment leveraged (USD): The amount of money the partner invests in the development and implementation of the innovations or regulatory reform. The investment can be made directly in partnership activities or in further improvements to products or services resulting from a partnership. The investment can be

1

Note that this definition is broader than the DCED universal indicator. MDF’s definition includes workers (persons benefitting from the additional employment created) whereas the DCED definition does not.

2 Note that MDF’s definition includes net additional income earned by all beneficiaries (small farms, firms and workers) whereas the DCED definition does not include net income earned by workers.

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made directly by partners or additional investment leveraged by partners from private funding sources. 

Value of Additional Market Transactions (USD): The value of additional market transactions generated as a result of MDF’s partnerships. This indicator shows how much market transactions are increasing as a result of MDF’s partnership, representing increased economic activity, which contributes to pro-poor growth. The market transaction is unique to each partnership and depends on the nature of each partnership.

The transaction measured can be between MDF’s business partner and beneficiaries, or between MDF’s business partner and its target market. It measures the payments made between the actors, covering the additional revenue generated from the product or service on behalf of either the partner or the beneficiaries. The indicator is measured at the partner level and measured as revenue, and so should not be confused with net income to beneficiaries or net income to partners

DFAT Indicators As MDF’s results measurement system is designed to aggregate three impact indicators, MDF uses these indicators as the basis of calculation for other indicators, if required by DFAT. At the time of writing, new DFAT indicators have not been identified and so are excluded from this report. In the future, if new performance assessment indicators are agreed with DFAT, they will be incorporated into the report.

How MDF integrates Gender MDF is a market development programme focused on improving income and employment opportunities for the poor, and therefore gender outcomes are specific to economic empowerment.

This includes economic advancement through increased income or return on labour, access to opportunities and assets, services and support to advance economically, and decision-making authority over resources.

As part of MDF’s programme design, gender is identified as a cross-cutting issue. This means it is integrated into MDF’s results measurement system and Sector Strategies. All staff are responsible for implementing MDF partnerships against the gender strategy and each country has a gender anchor; a country staff member that oversees gender-related issues.

MDF’s approach, which uses an indirect facilitation method, means that beneficiaries are not preidentified. MDF, therefore, has less direct control over who participates and benefits from its activities. However, MDF integrates gender considerations into its programme strategy to ensure that gender outcomes are positive, or at a minimum do not leave anyone worse off. Through in-depth gender studies, relevant to MDF’s sectors of work, MDF develops a thorough understanding of whether women can benefit from potential activities in each sector, and how. It considers these issues when designing activities with partners in order to have a greater impact on both men and women.

When monitoring activities and measuring results, MDF disaggregates its impact indicators by gender (when possible). Where activities have the potential to create key gender outcomes, MDF will monitor progress towards increased women’s economic empowerment through case studies and qualitative research.

The headline indicators that MDF measures and reports are also disaggregated by gender. This is done in each country based on a gender disaggregation strategy, which is formulated based on the gender Market Development Facility | 13

studies completed by MDF. The gender disaggregation strategy is integrated into MDF’s results measurement system and indicates the strategy by which MDF will project and measure indicators to determine the impacts on men and women separately.

The Fiji gender study was completed with the poverty study in 2013 and the Timor-Leste study will take place in the first half of 2014. More details are provided in Section 4 for Fiji and Section 5 for Timor-Leste.

How MDF measures Results MDF’s results measurement system is designed to comply with the DCED Standard for results measurement. It is a robust system that is used for projecting impacts, monitoring progress and capturing evidence of MDF’s impact, as well as for managing partnerships, making decisions and contributing to MDF’s strategy. It is used to capture learning throughout the life cycle of each partnership, in order to make improvements where necessary and to maximise impact and efficiency.

Results measurement is the responsibility of all MDF team members and so becomes a part of day-today partnership management. As a tool for both learning and capturing evidence, MDF instils a spirit of honest inquiry so that the system is useful to determine what works and what does not, as well as how to make it work better.

Every six months each partnership is reviewed to ensure that the progress and status of each is validated with findings from the field and other lessons learned. Sector strategies are reviewed the same – evaluating where progress is in each sector, where is it going and what can be done differently or more effectively. Where necessary, the team will identify and plan actions to maximise impacts, develop new partnerships to address new constraints, or conduct additional research to support its understanding of the sectors.

Overall, the system is used to develop projections to understand what the scale of MDF’s impact will likely be and to determine if MDF’s work is on track. Results are measured at the partnership level and then aggregated upwards.

Each partnership follows the same life cycle as described above in Figure 1, but the activities, the market changes triggered and timeline against which this happens will be different. For this reason, each partnership has its own results measurement management tool – known in MDF as the ‘Intervention Guide’ – which captures all information on results measurement for the partnership.

A key tool in the intervention guide is the results chain (i.e. theory of change), which maps out the changes that are expected to occur between activities implemented with partners and the goal level impacts of income and employment. MDF develops results chains to (1) map out the logic of change steps that will occur; (2) predict when those changes will occur; (3) accurately define and project the results from each change step; and (4) assess attribution, or the extent to which those results are plausibly attributable to MDF activities.

For each partnership, MDF measures whether the changes along each change step in its results chain occur and to what extent. This helps MDF understand how partner activities lead to the goal level impacts of income and employment. It measures the changes at each level by following a detailed measurement plan developed for each partnership, which identifies what indicators will be measured to verify if changes are happening and the measurement tools and tasks necessary measure those indicators. Each measurement plan also identifies the strategy to assess attribution and to establish the baseline.

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MDF also assesses the environmental sustainability of all its activities with partners. MDF does this through its Environmental Guidelines, which were developed from the Australian Environmental Protection and Biodiversity Conservation Act (EPBCA) and each country’s local environmental regulations. These guidelines include an environmental scan checklist for each partnership which determines whether and what environmental risks are present, and what actions need to be taken to mitigate these risks. MDF completes the environmental scan checklist for each partnership and if potential negative risks are identified, MDF works with each partner to ensure that the necessary steps are followed for developing an appropriate mitigation strategy. MDF then monitors all activities to make certain that the partners follow the Environmental Management Plans (when required) and monitor for any new environmental risks that may develop. All of MDF’s activities therefore comply with both Australian and national environmental regulations.

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3. MDF’s Facility-Level Results and Projections Results and Projections until December 2013 MDF started operations in Fiji in July 2011. The team of Business Advisors and Results Measurements Specialists joined the office in October 2011 to commence a six-month inception phase. The first partnerships were signed in June 2012. Since then the portfolio has grown to twelve partnerships by December 2013 and fourteen at the time of writing.

Operations in Timor-Leste started in late 2012, and strategy development was completed with the first partnership signed in July 2013. A total of three partnerships has been signed by December 2013.

Operations in Pakistan have only recently begun in December 2013 with sector assessments to be completed by May 2014. For this current report, Pakistan has not been included as its sector strategies are still in development. For more details on each country refer to Section 4 for Fiji and Section 5 for Timor-Leste.

The MDF portfolio of partnerships will grow each year and so will its projections and impacts. As previously discussed, partnership activities in the countries where MDF works often take up to twelve months to complete. While intermediary indicators can be assessed and measured during that time, high-level impact indicators take much longer to achieve and are assessed up to two years after activities are complete.

Results until December 2013 At this point in time, most of MDF’s existing partnerships in Fiji and Timor-Leste are still at the activity phase, so large-scale impacts on income and employment have not yet been realised.

However the intermediary indicators that have been assessed show the progression through the partnership life cycle and tell an interesting story. MDF’s current projected impacts also help to understand what the expected scale of impact is based on MDF’s existing portfolio.

To date, MDF has achieved the following: 

MDF has fifteen partnerships across Fiji and Timor-Leste which have resulted in eighteen new innovations in four sectors. These innovations cover areas such as the launch of new agricultural inputs; new tourism products, activities and services; new private sector-funded agricultural extension services; investments in covered agricultural production; investments in new forms of local processing, value addition and marketing; and investments in tourism infrastructure.

Some of these may sound familiar and may not be considered innovative in other parts of the world, but in Fiji and Timor-Leste most of these investments are the first of their kind or at least have distinctly innovative elements. See more on this in the discussion below and in the country sections.

Annex 4 provides details of all partnerships through Intervention Detail Sheets, which describe the background and purpose of each partnership, its activities and the change steps that are likely to occur in order to create additional jobs and income.



Combined, these partnerships have leveraged USD 1,519,700 of private sector investment. This has been leveraged with USD 859,400 of MDF investment, showing

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that for every dollar MDF invested, it stimulated USD 1.76 investment from the private sector. 

As a result of this investment in new innovations, MDF partners have increased the value of market transactions by an additional USD 88,000 last year alone. This shows that as investment and innovation have increased, business activity in markets around the poor is also starting to increase. In other words, as a result of these investments and innovations, the poor have more opportunities to sell their produce or have better access to essential production inputs and services.

In Fiji farmers have access to agricultural lime and benefitted from an increased demand for cocoa beans and fruit and vegetables from the tourism sector. Also the sale of mud crabs to resorts and restaurant began. In Timor-Leste, an increase in market transactions is expected to start this year.



As partner investment and transactions have increased, they have gradually started to expand, creating an additional 17 jobs (FTE) last year, benefitting 22 people with USD 39,500 of additional income.

Note that these jobs are only the early jobs created as a result of partners’ investments in areas such as mining, processing and pond management. The majority of additional jobs and additional income will follow later in the partnership life cycle when better access to or more demand for products and services will create employment on farms and in tourism businesses.

The investments and innovation by partners are only the first steps. In its current portfolio, MDF expects to create 362 jobs (FTE).

Innovation, investment and increase in business activity all demonstrate a clear pathway to pro-poor growth creating job and income opportunities for the poor. As activities are finalised and market transactions increase, the poor will have improved access to goods and services increasing their access to income and employment opportunities. Already, early evidence shows that: 

90 farmers started using a new agricultural input (‘aglime’), which is critical to increasing yields, and was produced as a result of MDF’s partnership. More farmers are likely to have received the product through institutional partners, which have also started purchasing and distributing the new product.

Another 80 cocoa and horticulture farmers are likely to have increased their incomes last year due to increased sales to MDF partners. Again, these are only the first signs that markets around the poor have started to work better. On the basis of its current portfolio MDF expects to have attributable impact on the livelihoods of 11,800 small farms, firms and workers.

Projections based on the Partnership Portfolio as of December 2013 Table 1 provides an overview of MDF’s projected results for its goal level indicators. These projections are based on MDF’s existing portfolio of partnerships. They give an indication of the

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results of these partnerships once they mature and reach their full potential. 3 See Annex 3 to understand MDF’s progress against its initial results estimations. 4 Table 1: Overall MDF Projected Results Based on MDF Existing Partnerships as of December 2013

Indicator

Fiji

Timor-Leste

Pakistan

MDF

Total Projected Results Based on MDF’s current portfolio

Total Projected Results Based on MDF’s current Portfolio

Total Projected Results Based on MDF’s current Portfolio

Total Projected Results Based on MDF’s current Portfolio

11,300

500

To be developed 2014

11,800

350

12

To be developed 2014

362

USD 7,400,000

USD 230,700

To be developed 2014

USD 7,630,700

Effective Outreach (number of beneficiaries – small farms, firms and workers – that are able to increase their productivity and/or benefit financially) Net Additional Employment (Fulltime equivalent) Net Additional Income (USD)

Discussion of Results and Projections as of December 2013 Development outcomes need to be interpreted in their context. MDF’s ability to stimulate broad-based pro-poor growth is influenced by factors such as the presence of strong drivers of growth in respective countries, the size of the economy and population density, the diversity and capacity of private and public partners in the economic domain, as well as to what extent a ‘disenabling’ business environment undermines the pro-poor growth potential. As a result, the scale of impact, and the speed with which a portfolio of partnerships can be built and produce high-level impacts, will vary between MDF’s countries. Annex 3 provides a more detailed discussion on this topic as well as in initial estimation of what MDF may achieve in a number of countries (given a specific budget and implementation timeline).

The Pathway to Pro-Poor Growth in Fiji Although, admittedly, it is early days, in Fiji MDF appears to be on track to generate results in line with expectations. In Fiji, partnerships are complex, risky, always involve multiple ‘change steps’ and often require significant investments in factory lay out and machinery before the partner is able to influence markets relevant for pro-poor growth. This is trigged by Fiji’s economic scenario. Fiji is going through a process of economic restructuring. It needs to reduce its reliance on traditional, but 3

Projected results in the table for Fiji are based on an aggregated total of 8 partnerships, as the projections for the remaining partnerships will be finalised in early 2014.

4 MDF has developed initial estimations for these headline indicators for each country in which it is (or likely to be) active, based on key parameters such as the state of the economy, the number of years MDF will be active and the available budget.

Estimations will be adjusted if and when any of these key parameters change. See Annex 3 for a detailed brief on the MDF results estimations for four countries and the key parameters influencing these.

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increasingly less profitable, export crops such as sugarcane and copra and diversify into new (exportoriented) growth sectors that help reduce its trade deficit, create employment and create demand for its agricultural produce. MDF identified the export of high-value agricultural produce and food items as one such growth sector, and supplies and services to the tourism sector as another one. In 2014 MDF will commence working in a third growth sector called export processing. In this process old, established business loose some of their importance and new entrepreneurs come up.

Take, for example, Adi Chocolates, a local, ‘artisanal’ chocolate maker in Fiji (see Box 3 for a more detailed description). MDF sees opportunities to substantially increase the sale of Fiji-made products into the tourism and export market. Systemic change here is about closing the gap between local produce and international demand by enabling local businesses to enter this space and thus connect the two. One such Fiji-made product with potential is chocolate. Because of a lack of demand cocoa beans are currently often not even harvested and cocoa gardens have been abandoned. Adi Chocolates produces good quality chocolate, but manually, in very small quantities. In order for this company to truly tap into this growth potential and thus connect local supply with international demand, this company needs to go through the following, significant change steps: (1) relocate to new premises and install a completely new production line; (2) undergo certification to meet domestic and international food safety standards; and (3) develop a cocoa garden rehabilitation scheme together with interested farmers to control the supply and quality of cocoa beans. MDF shared the cost of all three of these change steps with Adi Chocolates, who also leveraged private equity investment as well as finance from a local bank.

Such processes take time, but nurturing entrepreneurs such as Adi Chocolates is also fundamental to Fiji’s economic future. In this manner MDF is involved establishing or fitting out nine production facilities (counting until December 13), six of which will be open in the first half of 2014 – the essential first steps for all the partnerships signed in 2012 and one signed in 2013. More openings will follow later in 2014 and 1015.

The Pathway to Pro-Poor Growth in Timor-Leste In Timor-Leste a similar picture is emerging, but for a different reason. Whereas Fiji is restructuring, Timor-Leste is rebuilding its economy after years of conflict; whereas Fiji struggles to grow, TimorLeste is booming, fuelled by public expenditure (which is fuelled by income from natural resources); whereas Fiji needs to find new export markets to grow, Timor-Leste can focus on meeting local demand, connecting farmers to markets, rebuilding agribusinesses and developing new industries to reduce imports. Nevertheless, in terms of who MDF can partner with and which kind of package this partner requires to be instrumental in triggering market change and pro-poor growth, Fiji and TimorLeste are not that far apart: restructuring and rebuilding in a post-conflict scenario have in common that many businesses are owned by first-generation entrepreneurs struggling to find the means to invest, professionalise and reach scale.

In this post-conflict scenario, for MDF to be relevant in Timor-Leste it needs to step into this gap and support genuine, again often first-generation, entrepreneurs to connect farmers to markets, to attract tourists to newly developed destinations and to commence manufacturing or processing of what is being imported. For this it has identified agribusiness, processing and rural distribution as one growth sector and it has identified three greenfield industries with growth potential, namely construction, (import-substitution) manufacturing and tourism.

Applying a systems perspective and concomitant principles leads to partnerships in which enterprise development is a necessary first step towards market development and broad-based pro-poor growth, Market Development Facility | 19

at times combined with regulatory reform to allow enterprises to grow and markets to open up. In Timor-Leste, two of three partnerships signed in 2013 involve considerable investments in new facilities (with a third one refurbishing of an existing establishment). All three partners are expected to open their new or improved facilities in 2014.

It is too early to see whether Timor-Leste is on track. What is encouraging, though, is that in this harsh (yet fast-growing) business environment, businesses are sprouting up. So far there is no dearth of potential partners; MDF’s implementing capacity in country struggles to keep up with the opportunities presenting itself.

Business Innovation for Systemic Changes to unlock Pro-Poor Pathways It will be clear by now that strategically positioned partners in Fiji and Timor-Leste are nearly always local, first-generation entrepreneurs, important for the future economic fabric of these countries but for now with limited outreach. MDF will support these entrepreneurs to invest and innovate and, as result of this, be able to source products from, or supply products and services to, small farms and firms, stimulating broad-based economic growth.

In addition to nurturing entrepreneurship and broadening the economic base in both countries, it is also important to emphasise the innovative nature of partnerships. This is what makes them significant from a systemic point of view; their innovations help fill gaps, reduce constraints, make the system work better and unlock pathways to pro-poor growth. How partnerships and innovations ‘fit’ into systemic gaps and the pro-poor benefits that emerge from this are summarised in Table 2.

Please note that Table 2 only describes the areas in which MDF is active with its current portfolio.

MDF’s portfolio expands continuously, and in time MDF will populate other areas of its sector growth strategies. These strategies can be found on MDF’s website at www.marketdevelopmentfacility.org.

Table 2: MDF Partnerships, Innovation and their relation to Pro-poor Growth Potential and Systemic Changes

Pro-Poor Growth Potential and Systemic Changes Required

Partnerships and Innovations

Fiji – Horticulture and Agro-Export:  Pro-poor growth potential 1: There is demand for Fijian products and produce in the ethnic markets in Australia, New Zealand and America as well as globally; the ‘Fiji brand’ is associated with natural, unspoiled and healthy products (e.g., Fiji Water, Pure Fiji).  Pro-poor benefits if markets work better: Farmers can diversify into more profitable crops, produce larger volumes for sale at higher prices; farmers can develop a more commercial orientation.  Systemic changes required: Exporters acquire the skill and scale to meet demand overseas and influence local supply to meet this demand, for instance by investments in extension services and supply chain management to help farmers increase and diversify production and increase quality; coordination with public research institutions and biosecurity will help deal with cultivation issues and quarantine protocols.

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 Bula Island Foods exports a wide range of frozen, semiprocessed horticulture produce to Australia and was the first exporter to partner with MDF for hiring a supply chain manager cum extension worker. His job is to develop relations with farmers to secure the supply for a growing demand, stimulate farmers to diversify into new, in-demand crops (to increase the sourcing base) and help them overcome cultivation issues (to increase sourcing per farmer).  MDF negotiated similar agreements with Ben’s Trading, Labasa Farm Fresh and Maqere Export. Each of them are strategically located in different parts of the country (West, North, Central) to spread the benefits from cultivation for exports and serve as an example to other exporters in terms of how companies can grow and tap into new export markets by investing in their local supply chain. There are about twenty exporters operational in Fiji.  South Pacific Elixirs is a very innovate exporter. This is the first company globally to produce a patented ‘relaxation drink’ from dried yagona roots (‘kava’) under the brand name ‘Taki Mai’. This is also the first company with a processing facility and a controlled supply chain for yagona roots in Fiji. Production is primarily for exports, but the product is also available in Fiji.

 Pro-poor growth potential 2: Limited access to affordable agricultural inputs limits the choice of crops, lowers farm yields and, ultimately, reduces revenues; there is potential to serve farmers better, especially if inputs can be bundled with demand (e.g., from exporters, the Fiji Sugar Corporation).  Pro-poor benefits if markets works better: Farmers can grow more crops in a more productive and profitable manner.  Systemic changes required: New entrepreneurs start up ‘value for money’ production in niche markets (such as seedlings); input suppliers import more cost-effective, affordable agricultural inputs and equipment; those who source produce from farmers provide inputs through their extension arm; coordination with public research and biosecurity will help deal with cultivation issues and quarantine protocols (e.g., for seeds).

 Standard Concrete, a manufacturer of concrete building materials, is the first company in Fiji to venture into the local mining of agricultural lime under the brand name ‘Aglime’. The price of local lime is one-third that of imported lime, making it much more affordable for local farmers and making the country less dependent on expensive imported lime.  Devesh and Bharros Farms is a newly upgraded nursery that will focus on the production of seedlings for in-demand crops, which are currently not available or severely undersupplied in Fiji, eggplant, papaya, chilies and rock melon. Amongst others, it will supply seedlings to companies such as Bula Island Foods and Farmboy. They need these seedlings to help farmers diversify.  MDF will continue explore opportunities to increase the availability and affordability of agricultural inputs and equipment in Fiji. Also, it will continue to stimulate investments in private sector funded extension services as channels for these inputs.

 MDF also investigates other areas for pro-poor growth within Horticulture and Agro-Export such as export diversification, access to information on cultivation techniques (beyond the information provided through private sector funded extension services) and year-round cultivation. MDF will gradually populate the entire growth strategy with innovate partnerships.

Fiji – Tourism and Related Supply Industries and Services  Pro-poor growth potential 1: Visitor numbers increase and travel outside of the main resorts concentrated in the West if Fiji would be more accessible and cheaper and there is more information on where to go and what to do.  Pro-poor benefits if markets works better: More tourists, traveling to less visited places will stimulate local employment and sales in areas with few economic alternatives.  Systemic changes required: Investments in information, services and transportation links that make it easier and cheaper for tourists to travel to and within Fiji; the marketing of Fiji should be less resort-centric; more competition should be allowed in the transport sector.

 Mind Pearl is an international call centre operator. In Fiji the company will be the first company in Fiji to establish a 24/7 electronic and telephone information and booking service for small and medium-sized resorts and activity providers. The service will allow smaller tourism businesses to take an increased number of bookings from overseas tourists, bringing more visitors to more parts of Fiji and also perhaps helping them in staying longer.  Pacific Destinationz is a leading inbound tour operator in Fiji.

The aim of the partnership is to develop five tourism sites (three of which are totally new) in more remote locations across Fiji.

This will help diversify the Fijian tourism experience and spread the benefits from tourism.

 Pro-poor growth potential 2: Visitors spend more and may stay longer if there would be more activities for tourists to do and more ‘unique’ Fijian products to buy.  Pro-poor benefits if markets work better: Visitors staying longer and spending more, on more locally provided/produced activities and products will stimulate local employment and sales, also in areas with few economic alternatives.  Systemic changes required: New entrepreneurs start up in niche markets and can compete on price and quality with imports; Fiji-made products are sufficiently distinguishable from imports.

 Adi Chocolates is the first indigenous and now, with the support of MDF, also the only mechanised chocolate manufacturer in Fiji.

It is also the first with an extension scheme for farmers to upgrade their cocoa gardens. Adi Chocolates sells not only to resorts but also to tourist directly. The company has initiated hotel tours in which tourists learn about chocolate making. It also launched new products. It demonstrates how a local company, by using local, Fijian, ingredients, can sell into the tourist market and use this as a stepping-stone for exports. In the process, it creates demand for local produce and makes the Fijian tourism experience more authentic. There is also potential for exports.  MDF has also been exploring other options to boost the retailing experience for tourists. The government has a scheme called “Fijian Made”. MDF is planning to work with small manufactures who could fall under this scheme and may also engage directly with the Fijian government on this.

 Pro-poor growth potential 3: Food is a major ‘cost centre’ in resorts; currently a portion of the food consumed in resorts (and restaurants) is imported, whereas this could be produced locally.

There is scope to increase local supply by streamlining supply, increase quality, improve sorting, increase semi-processing, and start production of niche products.  Pro-poor benefits if markets work better: The consumption of

 Farmboy is the first fruit and vegetables wholesaler in Fiji who ventures into processed fresh fruits and vegetables for resorts and restaurants and is currently, with MDF support, investing in a HACCP certified industrial kitchen. Farmboy will aggregate, sort clean, package and process as per resort specifications. The company will provide farmers with seedlings for in-demand crops and can serve as an example for other wholesalers in terms of

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locally produced foods in resorts and restaurants will stimulate local employment and sales; farmers can diversify and produce larger volumes at higher prices and develop a more commercial orientation.  Systemic changes required: New entrepreneurs start up in niche markets; wholesalers acquire the skill and scale to supply as per the demand from resorts and restaurants and are able to influence local supply to meet this demand; resorts adopt payment procedures more suitable for small suppliers; international chefs in resorts are more aware of local food options and alternatives and ‘Pacific cuisine’.

connecting local farmers to the demand from resorts and restaurants.  The Crab Company of Fiji is the first integrated ‘hatchery to hotel’ producer of mud crabs. It will pioneer an outgrower scheme for mud crab cultivation. Like the Adi Chocolates model, it too can use the tourism market as a stepping-stone for exports (if it is able to resolve its problems with the hatchery process).  Tri Peaks will focus on greenhouse crops currently not grown in Fiji or being severely undersupplied in Fiji, such as lettuce, capsicum, herbs and other vegetables. Also it will pilot an outgrower scheme for low-cost covered production. This may serve as an example for expanding the area under covered production in Fiji (currently nearly nil).

 MDF also investigates other areas for pro-poor growth within Tourism and Related Supply Industries and Services such as export diversification, access to information on cultivation techniques (beyond the information provided through private sector funded extension services) and year-round cultivation.

Timor-Leste – Agribusiness, Processing and Rural Distribution  Pro-poor growth potential 1: There is a demand for food items in Dili, which is currently being met through imports because local supply chains are underdeveloped.  Pro-poor benefits if markets work better: Farmers can produce larger volumes and sell at higher prices; farmers can develop a more commercial orientation.  Systemic changes required: Wholesalers acquire the skill and scale to source, store and process local produce and influence local supply to meet urban demand.

 Acelda will be the first company to locally source, process and market rice as per supermarket standards.  MDF intends to partner with a variety of local companies all willing to invest in ‘connecting farmers to markets’.

 MDF also investigates other areas for pro-poor growth within Agribusiness, Processing and Rural Distribution, such access to agricultural inputs, equipment and information, investments in transportation, storage and testing, and policy reform. MDF will gradually populate the entire growth strategy with innovate partnerships.

Timor-Leste – Greenfield Industries: Tourism  Pro-poor growth potential 2: More visitors travel to Timor-Leste and stay longer and spend more.  Pro-poor benefits if markets work better: Visitors staying longer and spending more will stimulate local employment and sales, also in areas with few economic alternatives.  Systemic changes required: Investments in sufficiently comfortable places to stay combined with sufficient information on what to do; marketing of attractive travel packages abroad.

 The Balibo House Trust is investing in a hotel and museum within an old Portuguese fort, as well as in activities around the fort/hotel.  Posada Alecrim is upgrading its hotel and will develop walking tours around Mount Ramelau.  MDF intends to partner with sufficient hotels and tour operators to develop attractive travel packages that will entice tourists to make the journey to Timor-Leste.

 MDF also investigates other areas for pro-poor growth in two other Greenfield Industries, namely construction and manufacturing, with an emphasis on investment/new business start-ups, business services, skills development and, again, regulatory reform.

Private Sector Investment Leveraged Both the scenarios in Fiji and Timor-Leste explain the high level of investment leveraged (USD 1,519,700) and the high leverage ratio of USD 1:1.76. This means that private sector investment in the partnership agreements with MDF significantly exceeds MDF investments. This in turn exceeds initial estimations, which expected a 1:1 ratio in Fiji and 1:0.75 ratio in Timor-Leste.

Value of Additional Market Transactions These investments in innovation have started to bear fruit, albeit in a modest fashion, which it not surprising with so many factory openings in the pipeline. Nevertheless, in 2013 USD 88,000 in additional market transactions was generated. This figure should increase substantially in the Market Development Facility | 22

coming years. Box 1 gives some very early indications of how markets have started to work better.

Market uptake is of course an important determinant for the sustainability of the changes brought about through the partnerships.

Market Development Facility | 23

Box 1: Early signs of markets starting to work better

In Fiji, roughly a year after MDF and Standard Concrete concluded that local mining of limestone in Fiji for agricultural purposes would be feasible, ‘aglime’ is avaiable in branded 40kg bags at Stanard Concrete depots and in the retail outlets of a major Fijian hardware chain. The value of aglime was discussed on national radio and the brand name Aglime even features on the shirt of a local sports team to give it more publicity. In the first six months 120 Tonnes were sold, a modest start, primarily because farmers do not know the product. Lime is essential for reducing soil acidity in Fiji (which will improve soil conditions and yields) but currently there is almost no use of lime because imported lime is too expensive for the average farmer. MDF is currently negotiating a package of activities with Standard Concrete to increase awareness of the product. In addition, Standard Concrete is negotiating bulk purchases with institutional buyers. An order for 3,000 Tonnes for sugarcane farmers is being negotiated with the Fiji Sugar Corporation. Also, the Ministry of Agriculture is likely to issue a tender for another 5,000 Tonnes for dalo, dairy and rice farmers. Projections for effective outreach are based on the success of these deals. Please refer to Box 2 for more details.

Since Adi Chocolates moved into its new factory premises and installed the main parts of the mechanised production line for chocolate in the middle of 2013, the company has started to grow significantly. Production increased around 50% from 1.9 Tonnes of chocolate in 2012 to 3 Tonnes in 2013. The company is expected to continue to grow over the next years to 60 Tonnes per year. The factoy and shop will be fomally opened in the first half of 2014. New varieties of flavoured chocolates were launched in the third quarter of 2013. Apart from supplying chocolate products to resorts, hotels, restaurants and local retail outlets, the company also supplies chocolates to Fiji Airways’ business class passengers. Work with farmers on maintaining cocoa gardens and fermentation of cocoa beans will commence from the second quarter of 2014 with the help of the recently hired Supply Chain and Production Manager.

Despite setbacks with the fit out of the industrial kitchen for the processing of fruits and vegetables for resorts and restaurants, Farmboy has slowly commenced increasing buying from farmers to make them ‘ready’ for further increases once the kitchen is operational. Farmboy is expected to open his industrial kitchen in the first half of 2014.

South Pacific Elixirs, the manufacturer of the relaxation drink ‘Taki Mai’ is test marketing its product and will commence production this coming year. The processing facility will open its doors in the second quarter of 2014.

The nursery to supply the needed yaqona varieties to farmers will be established in March 2014. Taki Mai is currently available at retail booths in Suva’s main shoppig mall and has supplied its drinks to three resort spas.

The Crab Company of Fiji is growing its clientele, but it needs to resolve its problems with the hatchery process before sustained growth can truly take off. Mud crab sales increased to several thousand by serving around eighteen resorts and restaurants. Mud crab is currently on the menu in: the InterContinental Fiji Golf Resort & Spa, the Shangri-la's Fijian Resort, the Sofitel in Denarau, the Outrigger on the Lagoon, the Pearl, Naviti and the Holiday Inn in Suva. The production facility was opened in Februray 2014. The company will gradually start to fill the mangroves pens with nearly mature mud crabs for the final fattening stage, after which it will work on establishing its outgrower scheme.

In addition to the partners mentioned thus far, some other companies are likely to open their new businesses in 2014. In Fiji these are Devesh and Bharros Farms (a nursery), Tripeak Farms (covered production), Ben’s Trading (cold storage, HACCP certification and extension services) and Mindpearl (booking service).

In Timor–Leste these are the Balibo House Trust and Posada Alecrim (hotels) and Acelda (rice sourcing, processing and marketing). Refer to Box 3 for more details on Acelda.

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Conclusions: The Value of the Current Portfolio In Fiji the pace of portfolio development has been slightly slower than expected, but the projected results per partnership are likely to be considerably higher. They balance each other out. The main reason for this slower than expected pace in Fiji is the complex nature of partnerships, which makes partnership activities dependent on very detailed plans, bank loan approvals, Foreign Direct Investment approvals, land transactions approvals, etc. – all of which take time. Of course, developing and managing such complex partnerships also poses a challenge for the Fiji Country Team.

However, this slower than expected pace is offset by the higher than expected scale per partnership.

On the basis of the current portfolio MDF expects to increase the incomes of 10,600 small farms and firms and create 350 additional FTE jobs, giving a total effective outreach of 11,300 in Fiji.

This means that in Fiji, MDF is on track. Of course, these projections are strongly influenced by exceptional partnerships of national significance such as with Standard Concrete and Ben’s Trading.

However, without these two partnerships MDF would be on track as the average effective outreach per partnership looks to be substantially higher than initially estimated.

Jobs prove harder to create. Job creation in small enterprises can only be done in small steps. For this reason MDF intends to start working in a third sector, Export Processing, so that it is able to focus more on large-scale job creation. Overall, with 350 FTE jobs projected, MDF is also on track.

The current portfolio is expected to reach 5,500 females and 5,800 males. Only the fact that an increase in agricultural productivity creates an additional demand for farm labour, which is taken up by a larger proportion of male workers, creates a small bias. By commencing work in Export Processing, which contributes to job creation typically taken up by female workers, MDF will restore the balance.

A word of caution is needed. What these figures indicate is that the partnerships in Fiji show strong potential and can be qualified as ambitious. However, with ambition there is also risk. A partnership with multiple change steps for a first generation entrepreneur is more risky than a small product innovation with a large corporation. Not all partnerships currently in the portfolio will be successful or work as anticipated. Nevertheless, as explained above, in order for MDF to be relevant in Fiji it needs to take this risk; this is the type of partnership that the Fijian economic scenario requires.

For now the conclusion must be that the Fiji Country Team will need to work hard to develop and manage a smaller number but relatively complex partnerships, but what it gets in return for this is significant innovation and outreach by Fijian standard. There is much potential in Fiji, but there is not an easy way of unlocking it.

Overall, whereas initial estimations indicated that it should be possible to create 1,100 FTE jobs and increase the incomes of 12,000 small farms and firms with 85 partnerships, early indicators are that it should be possible to achieve this with a fewer number of partnerships. MDF in Fiji is relatively efficient in terms of private sector investment and effective outreach per partnership. Refer to Section 4 for more details on Fiji.

In Timor-Leste expansion is currently in line with expectations. For Timor-Leste it is too early to make such statements. However, it should be noted that initial estimations to create 900 FTE jobs and increase the incomes of 9,000 small farms and firms were based on 60 partnerships, whereas current budget allocation allows for only 20 to 30 partnerships. This budget allocation is not likely to be sufficient to meet these initial estimations. Refer to Section 5 for more details on Timor-Leste.

Finally, a word on scale. First of all, it is important to distinguish between ‘outreach’ and ‘effective outreach’ as used by MDF. The way outreach is often communicated, it means that a beneficiary has Market Development Facility | 25

been reached or ‘touched’, but without checking if it resulted in measurable benefits for the beneficiary. For this reason, MDF does not communicate outreach: if reaching a beneficiary does not results in measurable changes, then it is a meaningless figure. Instead, MDF puts the bar much higher and only reports on effective outreach: outreach that has resulted in a measurable change in income and employment opportunities.

Of a total of around 65,000 farming households in Fiji, a projected effective outreach of around 10,000 farming households is significant. In both countries MDF can achieve significant, sustainable, and systemic changes, fundamental to functioning of these small economies by investing in its economic fabric.

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4. Fiji Islands Results and Projections Poverty reduction in Fiji In Fiji, 35% of the population is classified as poor with an additional 36% of the population living just above the poverty line. Poverty in Fiji is strongly related to employment and is largely the result of a decline in traditional export industries and little economic diversification beyond these traditional industries.

As described previously, MDF has invested in deepening its understanding of poverty and gender through an in-depth study in each of the sectors to understand how its partnerships can further support and enhance pathways out of poverty and improve gender outcomes. MDF conducted primary qualitative research on poverty and gender (with ethnicity as a cross-cutting theme) across 54 households on Viti Levu, Vanua Levu, Taveuni and the Yasawas between March and July 2013.

Overall findings are extremely positive for MDF’s potential contribution to horticulture and tourism in Fiji, and the integration and advancement of low-income women and men, both iTaukei and IndoFijian, into these sectors. Horticulture and tourism are cornerstones of the Fijian economy, and offer employment and business opportunities as pathways out of poverty to large numbers of households and individuals within those households. Pathways out of poverty result from participation within the sectors and go beyond that, as surplus income is utilised to educate other members of the household and to advance their economic well-being. Despite this positive outlook, there are significant challenges for low-income households, and these vary depending on the sector and the context, including both geographic and socio-cultural.

In the horticulture sector, the majority of the households are low-income, with almost two-thirds interviewed falling below the Basic Needs Poverty Line. In addition to farm labourers and farming households, MDF explored the situation of workers in processing plants. According to the small sample size, these workers have higher incomes (as wage earners) than farmers.

Key reasons which lead to high levels of poverty in the horticulture sector which MDF is currently addressing or aims to address through its partnerships include: Limited access to markets for selling produce; general cropping patterns which lead to only one season of production and oversupply which drives down prices; high costs of inputs and limited knowledge for using inputs more productively; limited cultivation information available on what to grow and how to grow it; and limited access to finance and access to farm land which prohibits farm expansion.

From households interviewed in the study, the poorest households working in tourism are still usually better off than the horticultural households. First, income from wage labour is often (but not always) more consistent than from farming or farm labour. Second, working in the tourism industry does not require significant financial investments as in horticulture with the result that gross and net income are much more equivalent. Finally, other members of the household are often earning from other sources that offer considerable augmentation to overall household income.

Key reasons which lead to high levels of poverty in the tourism sector which MDF is currently addressing or can address through its partnerships include: Limited number of job opportunities (combined with a low turnover rate) making tourism jobs, even those requiring low-skills, highly competitive – with tourism jobs even less accessible to poor households because the location of tourist facilities and preferential agreements with landowners, or family and social networks required

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to access those job opportunities; limited advancement opportunities through skills development and on-the-job training; and seasonal slumps which limit small business expansion possibilities.

The situation for urban poverty is more complex due to the multiple systemic factors that perpetuate poverty including the lack of employment opportunities for those living in informal urban settlements.

MDF will begin working in an urban sector, export processing, in 2014 which will provide economic opportunities for individuals and households living in urban areas.

Progress to date In Fiji, MDF currently works across two sectors: Horticulture and Agro-Export; and Tourism and Related Support Services and Industries, and will soon begin working in a third – Export Processing.

In Fiji, MDF has 12 partnerships as of December 2013: six partnerships are in Horticulture and AgroExports; and six in Tourism and Related Support Services and Industries. Two new partnerships were signed in January 2014 (one in Horticulture and one in Tourism) and one partnership in Horticulture has been suspended due to a lack of partner commitment.

MDF is on track to achieve its intended outcomes in Fiji. In both the Horticulture and Tourism areas, MDF has been successful in partnering with key market actors in implementing initiatives that have the potential to create significant pro-poor impact. For example, in horticulture there is a partnership in agricultural lime which is introducing a sustainable and scalable model of increasing accessibility of improved agricultural inputs that will improve small holder farm productivity and income.

Similarly in tourism, MDF has multiple partnerships which are putting mechanisms into place that will increase the amount of local produce and food products from smallholder farms going into the tourism market. Such initiatives are not only sustainable but will also serve to set an example and stimulate others to provide similar services.

See Table 2 below for a short description of each partnership and Annex 4 for Intervention Detail Sheets, which explain each partnership in more detail.

Additionally, environmental issues are also important elements of sustainable and broad-based economic growth, and all partnerships in Fiji have been assessed and are compliant with Australian and Fijian environmental regulations.

Table 3: MDF Partnerships in Fiji

Partner Tourism Adi Chocolates (AC)

Crab Company of Fiji (CCF)

Farmboy

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Partnership Activity MDF is working with Adi Chocolates, a local chocolate maker with a distinct Fiji brand, to expand its local chocolate production facility and increase sales into the tourism industry. MDF is also supporting the company to work more closely with growers to revitalise existing cocoa plantations and introduce new techniques to growers to increase the quantity and improve the quality of Fijian grown cocoa.

MDF is supporting CCF to establish the first private aqua-culture hatchery in Fiji for producing mud-crabs for supply to the tourism industry. In addition to supporting hatchery improvements, MDF is also supporting the company to increase its crab-growing facility, and to extend crab farming into local communities by establishing an outgrower system.

MDF is supporting Farmboy to establish the first industrial kitchen to process locally grown fruits and vegetables into juices, pulps and frozen foods for supply to the tourism industry. Farmboy supports diversification in agriculture and establishes a stronger link between farmers in Fiji and the tourism industry by encouraging farmers to grow crops which are in demand by the tourism industry.

Pacific Destionationz

Mind Pearl

Tripeaks Farms Horticulture Ben’s Trading

Bula Island Foods

Devesh and Bharros Farms

Labasa Farm Fresh

South Pacific Elixirs

Standard Concrete

MDF is supporting Pacific Destinationz to expand existing and create new community-based tourism activities around Fiji for their tours. This will help build capacity of local communities to host tourists, getting them on the tourist circuit and bringing more tourists to more remote communities.

MDF is supporting MindPearl to establish a new 24/7 electronic and telephone booking service for small and medium-sized resorts and activity providers. The service will allow smaller tourism businesses to take an increased number of bookings from overseas tourists, bringing more visitors to more parts of Fiji.

MDF is supporting Tripeaks to expand its unique hydroponic facility to locally produce more vegetables which are in demand by hotels and resorts in Fiji. Tripeaks will also transfer its ability to produce low costs hydroponic systems to small famers through an outgrower system.

MDF is supporting Ben’s Trading to expand its export processing facility and reach HACCP certification to enter new overseas markets for its fresh and processed root-crops. MDF is also supporting Ben’s Trading to improve its sourcing systems and provide private extension services to its network of growers throughout Fiji to improve the quantity and quality of root-crops produced.

MDF is supporting Bula Island Foods to reach new overseas markets by complying with international packaging standards and by increasing the amount of produce it purchases through private extension services. By working with farmers to increase the quantity and quality of key export crops, Bula Islands will continue to grow, linking more horticulture farmers with export markets.

MDF is supporting Devesh and Bharros farms to establish a commercial seedling nursery which supplies seedlings and instructional information on key crops in demand by the export and tourism markets in Fiji. Access to seedlings and information on their use will help farmers increase their yield and new markets.

MDF is supporting Labasa Farm Fresh to expand its fruit and vegetable processing facility in Vanua Levu and improve its backward linkages with farmers on the island to source more.

Labasa Farm Fresh is currently the only exporter based in Vanua Levu, and its expansion and growth will create a significant and much-needed market for farmers in the North. Note: due to delays in partner activities, this partnership has been suspended until further notice.

MDF is supporting South Pacific Elixirs to develop and grow its unique kava-based relaxation drink for the US market, called Taki Mai. MDF is assisting SPE to improve its laboratory and sourcing systems to increase the amount of kava purchased from local growers, which is then processed using innovative techniques in Ovalau Island, then exported to a growing niche market in the US. MDF is supporting Standard Concrete to produce and market Agricultural Lime (Aglime), a key input for improving agricultural production in Fiji. MDF’s assistance was key to understanding the market demand and feasibility which prompted Standard Concrete to invest in manufacturing local Aglime. As a new product, MDF is also supporting Standard Concrete to educate Fijian farmers about Aglime, its benefits and its use – so that farmers will benefit from improve soil conditions and increased yields.



In Fiji MDF these partnerships have resulted in 12 new innovations.



Combined, these partnerships have leveraged USD 1,252,000 (FJD 2,254,000) in private sector investment. This is being leveraged with USD 687,000 (FJD 1,236,000) of MDF investment. This shows that for every dollar MDF invested, it stimulated USD 1.7 from the private sector.



As a result of this investment in new innovations, MDF partners have increased the value of market transactions by an additional USD 88,000 (FJD 158,000) last year alone. This shows that as investment and innovation have increased, business activity in markets around the poor is also starting to increase.



As partner investment and transactions have increased, they have gradually started to expand, creating an additional 17 jobs (FTE) last year, benefitting 22 people with USD 39,5800 (FJD 71,098) in additional income.

Early signs of impact are also beginning to come in, with three partnerships highlighted below:

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

Standard Concrete: SCI launched Aglime product in mid-2013 and in the first six months since its launch, more than 120 Tonnes of Aglime was sold around Fiji, with key agriculture institutions like Fiji Dairy placing large bulk orders for distribution to their farmers. The Ministry of Agriculture has also supported the promotion and distribution of Aglime throughout Fiji. SCI estimates that at least 90 farmers have purchased Aglime directly in 2013, and five agriculture institutions have placed initial orders, including one of the largest agricultural input retailers with distribution across Fiji’s two main islands. New marketing activities are being planned for 2014 to increase farmer awareness and understanding of Aglime and expand its outreach.



Farmboy: Although there have been delays in completing the processing facility, Farmboy’s increased storage and buying capacity, along with his influence on farmers has encouraged farmers to increase their production, and last year Farmboy purchased 80 Tonnes of additional fruits and vegetables as a result of MDF’s partnership. Based on initial estimates at least 30 farmers have benefitted through increased sales and income as a result.

As Farmboy’s processing facility is complete this year, an even larger volume of fruits and vegetables will be purchased from local farmers and processed for the tourism industry.



Adi Chocolates: As Adi Chocolates production gradually began to increase last year, Adi Chocolates purchased nearly two tonnes of cocoa beans from 50 farmers last year. This includes farmers in Vanua Levu and others in Tailevu and Ra. As the new factory begins full production in 2014, Adi Chocolates will continue to buy more chocolate and will begin to worker closer with farmers to improve their cocoa quality and yields.

Table 3 below shows MDF’s projected results for its existing partnerships. 5 Projections are revised annually as new information is gathered through research and impact assessments; and as activities are modified based on lessons learned. Further details are provided in each of the sections below.

Table 4: Fiji Projected Results based on portfolio as of December 2013

MDF Indicator

Total Projected Results based on MDF’s current portfolio as of December 2013 Male

Female 6

Total

5,800

5,500

11,300

Net Additional Employment

250

150

400

Net Additional Income (USD)

USD 5,600,000 (FJD 10,200,000)

USD 1,800,000 (FJD 3,200,000)

USD 7,400,000 (FJD13,400,000)

Effective Outreach (number of beneficiaries – small farms, firms and workers – that are able to increase their productivity and/or benefit financially)

5

Projected results are based on eight partnerships, as one partnership has been suspended and therefore excluded and projections are still in development for three partnerships.

6 For all of MDF’s interventions in Fiji, gender disaggregation is done according to its gender disaggregation strategy developed from the Study on Poverty and Gender in Fiji, found in MDF’s Results Measurement Manual.

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Business Innovations and Regulatory Reforms All of MDF’s current partnerships in Fiji are creating new business innovations in the horticulture and tourism sectors. Given the current political climate, there are no partnerships which stimulate regulatory reforms at this time, however this will be re-considered after upcoming elections in 2014.

Below is detailed information on the types of innovations that are being introduced in Fiji which have resulted from MDF partnerships.

Tourism Sector 

Four partnerships have developed new locally-made or grown products for input into the tourism sector, including: fresh sustainably farmed mud-crabs; chocolate and cocoa products; processed local fruits and vegetables; and new varieties of in-demand vegetables.

These partnerships are each establishing new methods of producing or processing and setting up improved local sourcing arrangements which include private extension services and outgrower farming. Farmers will benefit from improved production techniques, higher yields and increased income through greater market access. Employment will be created through increased farm and factory labour.

Adi Chocolates, Crab Company of Fiji, Farmboy, Tripeaks Farms



One partnership is offering a 24/7 booking service for small and medium sized resorts and activity providers so that they can increase their tourist bookings from overseas markets. This partnership will allow smaller tourism businesses to access a high-quality booking service which caters to overseas tourists, so they can expand and create more jobs for women and men in Fiji.

MindPearl



One partnership is developing and expanding community-based tourist activity sites to offer a greater variety of activities to tourists and encourage tourists to visit less frequently visited or more remote parts of the country. This partnership will provide capacity building and tour support to local communities which can be included within a variety of tour packages for visitors.

Pacific Destinationz

Horticulture Sector 

One partnership has developed a new locally made input for agricultural production, locally produced agricultural lime, which was previously imported, very costly and, therefore under-used. Local production of aglime will ensure the product is available and affordable to farmers; helping them to improve their soils and yields, increase sales and incomes, and increasing the demand for farm labour.

Standard Concrete



One partnership is supporting a new method of processing the yaqona plant (kava) and improving production of specific varieties of the plant to create a value-added kava product (ultimately a relaxation drink) for new export markets. Farmers will benefit through improved cultivation techniques; and employment will be created through increased factory processing labour.

South Pacific Elixirs (Taki Mai brand)

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

Two partnerships are supporting horticulture exporters to establish private extension services and access new overseas markets through increased production or improved packaging. The extension services within the partnerships will help increase farmer’s horticultural production and will help exporters secure the supply of fresh produce for exporting fresh and processed produce to overseas markets.

Bula Island Foods Limited, Maqere, Ben’s Trading, (Labasa Farm Fresh – currently on hold)



One partnership supports the expansion of local hybrid vegetable seedling production for high-yield and improved varieties of horticultural products that are highly demanded by the tourism and export markets. This partnership will give farmer’s access to new varieties of high-yield seedlings allowing them to not only increase their production but access key markets with the right varieties of crops.

Devesh and Bharros Farms

Private Sector investment leveraged (USD) Private sector investment leveraged shows the amount of money invested or to be invested by partners in these innovations. Investments are made on a cost-sharing basis with MDF. In Fiji, MDF has leveraged USD 1,252,000 (FJD 2,254,000) from the private sector. This shows that MDF is unlocking the potential in each sector, especially considering that in order to leverage this amount MDF invested only half as much (USD 723,000 or FJD 1,302,000). This is a good sign for MDF, as this investment will increase over time as new partnerships are signed.

Value of Additional Market Transactions The value of additional market transactions shows how much business transactions (purchases and sales) are increasing as a result of MDF’s partnership, representing increased economic activity in the horticulture and tourism sectors. It could represent sales or purchases as a result of the new products and services or new ways of doing business that were stimulated by MDF. Given the point in time of most of MDF’s partnerships (activity phase), this figure is starting to grow – reaching USD 88,000 (FJD 158,000) worth of business transactions in 2013 alone.

Effective Outreach MDF’s existing partnerships in Fiji are projected to have an impact on 11,300 beneficiaries. The majority of these beneficiaries are rural households, and MDF anticipates to have an impact on 5,800 men and 5,500 women. Last year, MDF increased income for 22 workers who have benefitted from employment opportunities resulting from partner expansion, and possibly 170 farming households who have benefitted from increased sales to partners or use of new agricultural products (aglime). 7 While most partnerships are in the activity phase, this shows good signs along the pathway to results.

Net Additional Employment To date, MDF has created 17 jobs (Full-Time Equivalent), which has resulted from partner expansion.

As partners have invested and grown as a result of MDF activities, they have created new positions or expanded existing ones. MDF expects to generate employment more widely in the sector – its current 7

Full impact assessments to validate these figures will take place in the second half of 2014.

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projections anticipate 350 new jobs created across the tourism and horticulture sectors, including paid farm-employment. Many of these jobs will be created once productivity and cultivation on-farms has increased as a result of MDF’s partnerships. While small scale farming creates a small amount of paid employment, new partnerships in the Tourism sector and the newly added urban sector (export processing) will contribute to even more job creation. MDF partners are also expected to continue to grow as they increase business activity.

Net Additional Income (USD) Income is being created through additional employment and increased incomes from self-employment or farming activities. So far, MDF has created USD 39,500 (FJD 71,098) of additional income through employment. Increased attributable income has not been validated in all cases, therefore this figure likely under-represents MDF’s total impact to date. MDF expects to generate USD 7,400,000 (FJD 13,400,000) in additional income for small farms, firms and employees, with its current portfolio. This is also expected to increase as MDF’s portfolio grows.

Relevance for Gender Equality The field research conducted by MDF in its gender study supports secondary research that women are involved in all stages of agriculture in Fiji, as well as make up a majority of tourism workers.

Conclusions from the study conducted by MDF indicate that women in the tourism sector have many opportunities for earning individual income and achieving greater financial return on labour than would otherwise be available to them; while women in horticulture are part of a household and tend to contribute to and benefit jointly from increased household earning. The field findings support that there is a strong involvement of women in managing household income and decision making on income/expenditure; and that women benefit equally from an increase in household income. The research conducted was also qualitatively assessed according to a framework for women’s economic empowerment developed for market systems programmes. Full findings can be found in the Poverty and Gender Study for Fiji, available on MDF’s website.

In Fiji, Indo-Fijian women and iTaukei women are part of the household unit, contributing to income generated from horticulture activities and benefitting from increased household income. Women are actively involved in the farm work, usually classifying it as ‘part-time’ or ‘seasonal’, as they have other activities they attend to, although the actual time spent on farm work can be significant. In horticulture, not often do women manage and earn income off their own farm (outside of the household farm), for both ethnicities – and cultural and traditional factors seem to restrict women from holding a title to their own land (either leased or communal). However in the horticulture sector, there are opportunities for women to earn their own income from wage labour – either as farm labourers (more often iTaukei women) or processing labour (both iTaukei and Indo–Fijian), which MDF supports through its partnerships.

The tourism sector is a major source of employment for women. While women typically work in certain types of positions and men in others, there are likely equal number of both entry-level positions and opportunities for advancement for women. There is a much higher number of iTaukei women working in the tourism sector than Indo–Fijian women. This is for a number of reasons: iTaukei women are more likely to take entry level jobs in hotels and resorts as housekeepers or waitresses – although while we did meet some Indo–Fijian who had taken on these roles, it is not the cultural norm. However, Indo–Fijian women are more likely to have skilled jobs such as food inspectors or back office jobs. In handicrafts, many iTaukei women are involved in the production of Market Development Facility | 33

handicrafts, however two Indo-Fijian women interviewed as a part of this study were both involved in handicraft and souvenir retailing, indicating there are opportunities for all women. As the tourism sector grows and more jobs are created, more women will have access to full-time and part-time employment. Emphasis can be given to improving access for poorer Indo–Fijian women in the sector, however socio-cultural factors which are outside of MDF’s control might make results in this area difficult.

The sectors that MDF has chosen to work in Fiji are therefore highly relevant for improving women’s economic empowerment. In both horticulture and tourism, while the activities might differ by gender, both men and women contribute to and benefit from increased household income. As the horticulture sector and agro-exports grow, both men and women will benefit equally from increased income from household farms, and new employment opportunities for both women and men will be created both on and off-farm.

Other Private and Public Sector Contributions MDF also acknowledges the contribution of other publicly funded programmes and private organisations to its activities and to achieving its universal impact indicators in Fiji. Other public or private organisations can contribute to an activity which leads to the impacts that MDF projects or reports, or can implement separate activities which can also to contribute to these same impacts.

The follow organisations have contributed either directly to partnership activities or have other ongoing activities which may contribute to similar results: Table 5: Other Private and Public Sector Contributions in Fiji

Type of Organisation Private Sector Partners

Organisation Name

Contribution

Adi Chocolates

Cost-sharing in partnership activities

Ben’s Trading

Cost-sharing in partnership activities

Bula Island Foods

Cost-sharing in partnership activities

Crab Company of Fiji

Cost-sharing in partnership activities

Devesh and Bharros Farms

Cost-sharing in partnership activities

Farmboy

Cost-sharing in partnership activities

Labasa Farm Fresh

Cost-sharing in partnership activities

MindPearl

Cost-sharing in partnership activities

Pacific Destinationz

Cost-sharing in partnership activities

South Pacific Elixers

Cost-sharing in partnership activities

Standard Concrete

Cost-sharing in partnership activities

Tripeaks Farms

Cost-sharing in partnership activities

Fijian Government Organisations

Ministry of Primary Industries (Ministry of Agriculture)

Implementing a cocoa rehabilitation programme; and contributing to exporter upgrades for achieving HACCP certification.

Other Donors or Donor-Funded Programmes

IACT

Contributing to upgrades for achieving HACCP certification in select partners, in addition to contributing to the HACCP certification process; has also contributed to marketing activities with select partners.

PARDI

Contributed through operational studies/consultancies to improve operations for select partners.

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PHAMA

Contributing to upgrades for achieving HACCP certification in select partners, in addition to contributing to the HACCP certification process.

ITC

Contributing to upgrades for achieving HACCP certification in select partners.

Lessons Learned In Fiji, MDF’s strategy is focused on economic diversification and while there is entrepreneurial activity, many businesses in Fiji need to scale up their capacity, expand their markets and use new ways of sourcing, and professionalise their business operations. While there are obstacles to this process – including legislation, limited access to capital and difficulties finding appropriately skilled employees – MDF has adjusted to partnering with businesses in this context and will consider ways to address these obstacles through additional partnerships should they continue to inhibit business development.

Success Stories: Partner Profiles Each year, MDF will also provide a few stories of success. These stories will highlight changes and benefits that have been realised by individuals, groups or businesses impacted by MDF. Because MDF is in the early stages of its partnership activities, the stories below focus on MDF’s Partners.

These profiles describe how these Partners, with the support of MDF, have been able to take a big step to help stimulate pro-poor growth in Fiji.

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Box 2: Fiji Success Stories

Standard Concrete Industries: Making the leap into agricultural lime Limestone extracted in Fiji has always been used for construction purposes. But for the first time in Fiji, Standard Concrete Industries will produce local agricultural lime for use in farming.

Most soils in Fiji are very acidic. Lime can be used to reduce this acidity, which in turn improves the health of plants and increases farmers’ harvests. However, because it must be imported, lime is very expensive and not widely available. So while it is highly beneficial, it is rarely used by farmers.

Standard Concrete Industries is the largest concrete manufacturer in Fiji and has a limestone quarry in operation in Tailevu.

Standard Concrete had long considered moving into the production of agricultural lime, and was able to do so with the support of Market Development Facility (MDF), the Australian Aid Programme’s job creation and income-generation programme for the poor.

MDF helped Standard Concrete to conduct a feasibility study which identified the level of demand for agricultural lime in Fiji and determined the investment needed to begin production to meet that demand.

“The manufacture of agricultural lime from locally extracted limestone is something that we have been looking at for some time now,” says Mosese Volavola, General Manager of Standard Concrete. “Unfortunately due to the lack of local knowledge and awareness of the benefits of agricultural limestone, there is currently very little demand for this product. However with the support of MDF and the Australian Government in creating awareness and educating our local farmers, we are very confident that sufficient demand will be created to allow us to produce this product locally at an affordable price. If we can realise the full potential of this brand new product, the positive economic impact on our local agricultural industry will be quite significant.”

Early in 2013, Standard Concrete held events with major industries in Fiji, such as dairy, sugarcane and rootcrops, to secure a market for its product. MDF supported training for Agricultural Extension Officers and Lead Farmers on the benefits and use of aglime and the importance of soil health and testing; so that other farmers can be trained and taught about aglime and use it to improve soil conditions and yields.

SCI launched Aglime product in mid-2013. In the first six months, more than 120 Tonnes of Aglime was sold around Fiji, with key agriculture institutions such as Fiji Dairy placing large bulk orders for distribution to their farmers. SCI estimates that at least 90 farmers have purchased Aglime directly in 2013. The Ministry of Agriculture has also supported the promotion and distribution of Aglime throughout Fiji.

MDF is currently in discussions with SCI on how to further market Aglime to farmers in order to maximise its reach and impacts.

These additional activities will educate farmers on the proper use and availability of aglime and take place in 2014. For Standard Concrete, this represents a brand new line of business, and through MDF’s support the company has been able to deliver a new product to the agriculture market in Fiji. With more than 65,000 farms across Fiji, the impacts of this MDF-partnership will be widespread for Fiji’s farmers. With an established local supply of agricultural lime, small farmers will have access to a low-cost solution to their improve soils, their harvests will increase, and their incomes will rise as a result.

Agricultural Lime expert and Soil Scientist, Paddy Shannon (left) gives training to Fiji’s Agricultural Extension Officers on the benefits and use of aglime and importance of soil health prior to the public launch of Standard Concrete’s Ag-lime, so that they may pass the information to Fiji’s farmers.

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Adi Chocolates: A sweet future for Fijian cocoa Adi Chocolates uses locally-grown cocoa beans to produce artisan chocolate for hotels, tourists, the local market, and for export.

With the support of MDF, Adi Chocolates is upgrading its manufacturing facility to produce more chocolate products and strengthening relationships with cocoa growers in Fiji. Adi Chocolates is working directly with Fijian cocoa growers to improve the quality of locally-grown beans and to buy greater volumes of these beans.

Most cocoa growers had abandoned their cocoa trees when prices dropped and buyers disappeared in the late 1980s. With Adi Chocolate’s expanded production and increased demand for good-quality local beans, growers across Viti Levu and Vanua Levu are restarting their harvests to meet the new growing demand, creating additional incomes for these rural households. Located on Denaurau Island, the center of Fiji’s tourism industry; Adi Chocolate’s expanded chocolate factory has already bolstered sales to the industry, producing a total of 3 tonnes of chocolate last year (versus 1.9 Tonnes in the previous year).

Adi Chocolates is currently purchasing cocoa beans from 50 farmers throughout Fiji, mostly concentrated in the North on Vanua Levu. Last year nearly 2 Tonnes of cocoa was purchased in Fiji. As Adi Chocolate’s prepares its strategy for working with cocoa growers to revitalise cocoa plantations and improve quality, more benefits are expected to follow.

“The success of our business hinges on ensuring healthy future harvests of local cocoa in Fiji,” says Tomo Zukoshi, Managing Director of Adi Chocolates, “Working with MDF has allowed us to develop a comprehensive plan to address the needs of our growers. Together, we will make possible a new chapter for the story of sustainable cocoa in Fiji.”

Tomo Zukoshi, MD of Adi Chocolates, purchases cocoa beans.

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5. Timor-Leste Results and Projections Progress to date MDF became operational in Timor-Leste towards the end of Calendar Year 2012. MDF began scoping research for sector selection in early 2013 and the first partnership was signed in July 2013.

Two initial sectors were chosen: Agribusiness, Processing and Rural Distribution; and Greenfield Industries with a focus on manufacturing, tourism, construction and ‘first of its kind’ investments in the diversification of Timor-Leste’s economy.

To date, three partnerships have been signed, two in tourism, one of the Greenfield Industries, and one in Agribusiness, Processing and Rural Distribution. The two partnerships under the Greenfield Industries sector are part of a broader MDF strategy of stimulating investments in tourism infrastructure as well as introducing customised hospitality training solutions for raising the overall quality of service within the industry. Additionally, these two partnerships will set up a circuit of key destinations around the country for visiting tourists. In line with this, the current partnerships are based in the iconic tourist sites of Mount Ramelau in Central Timor-Leste and the town of Balibo in the Western District. Through development of such key tourism sites with modern and high quality facilities supported by well-trained staff it is expected that number of visiting tourists will increase as well as the number of days they spend in remote districts, bringing new income opportunities to local communities.

The first partnership in the Agribusiness, Processing and Rural Distribution sector focuses on the opportunity to create more reliable and less costly access to markets by introducing a new crop trader and introducing upgrades in transportation, processing and storage as well as market information.

Through this partnership MDF is expecting to introduce a new model of processing local raw materials, starting with local rice paddy, into products which can compete with imports. Apart from processing, MDF is also focusing on improving packaging of the product and providing consumer and product information. Through such innovations, MDF and the partner aim to introduce high quality processed local products into the domestic market, increase the market share of local products and raise consumer consciousness around quality.

Given the nascent nature of the private sector in Timor-Leste, a number of characteristics that make for a vibrant private sector are missing. The thin private sector translates to a lack of successful examples of enterprises, either in Agribusiness or Greenfield Industries, for other potential enterprises to follow. Thus it was important for MDF to get in as early as possible to develop partnerships and start highlighting opportunities that exist in the sectors. Additionally, these partnerships provide the momentum for MDF to expand into other strategic areas in each of the selected sectors.

The Partnerships in Timor-Leste are briefly described in Table 5. For more information on these partnerships, see the Intervention Detail Sheets in Annex 4.

Additionally, environmental issues are also important elements of sustainable and broad-based economic growth, and MDF has taken steps to increase understanding of these important cross cutting issues in the context of Timor-Leste and is ensuring that these issues are incorporated into each of its partnerships.

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Table 6: Partnerships in Timor-Leste

Partner

Partnership Activity

Greenfields Balibo House Trust

MDF is supporting Balibo House Trust to develop and launch a new high-quality tourism hotel and café at the newly refurbished Balibo Fort Museum. This will be the first international tourist standard hotel in the region and will help bring more tourists to the area, extending their stay in the districts and creating income and employment opportunities for the local community.

Pousada Alecrim

MDF is supporting Pousada Alecrim to upgrade its hotel accommodation and to improve its marketing to bring more international tourists to the area. Increased tourists will result in income and employment opportunities for the local community and encourage others to invest in tourist infrastructure in the districts.

Agribusiness Acelda

MDF is supporting Acelda to process and package quality local rice for the domestic retail market – effectively competing with imports. MDF is supporting Acelda to establish its milling process, market its product to retail markets, and to improve backward linkages with farmers. As a consistent buyer driven by market demand, Acelda will help give farmers a secure and reliable source of income for their local rice paddy.

Country Projections and Results MDF’s three partnerships in Timor Leste are at the early stages of activities. These partnerships have resulted in the following: 

MDF and partners have invested in 6 new innovations, described in more detail below.



Combined, these partnerships have leveraged USD 267,700 in private sector investment.

This is being leveraged with USD 136,400 of MDF investment. This shows that for every dollar MDF invested, it stimulated USD 1.9 from the private sector. Projections and details on other indicators are provided in Table 5 and below.

Although at the early stages of activities, these three partnerships are significant in terms of the constraints that they address. The partnership with Acelda under the agribusiness sector is focused on stimulating expansion and investment in local sourcing, processing and marketing of local products to local markets. Thus far, apart from coffee, there has been little investment in this for other local products, and MDF’s partnership will establish the first of its kind local rice processing facility.

Similarly, the partnerships under the Greenfield Industries with Balibo House Trust and Pousada Alecrim tackle the under-served areas by investing in tourism infrastructure bottlenecks and improving capacity to deliver high quality hospitality services to visiting tourists.

Projected results for the universal impact indicators are presented in Table 6 for MDF’s three partnerships in Timor-Leste.

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Table 7: Timor-Leste Projected Results based on portfolio as of December 2013

MDF Indicator

Total Projected Results based on MDF’s current portfolio as of December 2013

Effective Outreach (number of beneficiaries – small farms, firms and workers – that are able to increase their productivity and/or benefit financially)

Male

Female 8

Total

330

170

500

Net Additional Employment

6

6

12

Net Additional Income (USD)

USD 115,500

USD 115,200

USD 230,700

Business Innovations and Regulatory Reforms MDF’s current portfolio of partnerships in Timor-Leste are creating new business innovations, which are described below. 

Two partnerships are improving tourist infrastructure and quality of services in the districts. One is establishing a hotel at the newly renovated fort in Balibo; while another is upgrading a hotel to comfortably accommodate visitors to Mount Ramelau. Both of these partnerships will also improve the quality of services as well as room and board options for tourists in those locations, providing a base for tourists to stay longer in the districts and explore other areas, creating more off-farm income and employment opportunities for the local communities.

Balibo House Trust; Pousada Alecrim



One partnership is working with a local company to locally source and commercially process and package high-quality local food for the domestic market, which will effectively compete with imports. Beginning with rice processing for domestic markets, the partnership will also develop a model for local sourcing, which will extend into other crops and serve as an example to other local processors to replace imported foods with those locally grown. This will give local farmers a reliable and consistent market to sell their surplus, increasing incomes.

Acelda

Private Sector investment leveraged (USD) Private sector investment leveraged shows the amount of money invested or to be invested by partners in these innovations. Investments are made on a cost-sharing basis with MDF. In Timor-Leste MDF has leveraged USD 267,700 from the private sector. This shows that there is an active private sector in Timor-Leste with the willingness to invest in innovation if provided with the right incentives and assistance. MDF has itself invested USD 136,400 to leverage this investment. As MDF continues to develop new partnerships, private sector investment leveraged will continue to grow.

8

For all of MDF’s interventions in Fiji, gender disaggregation is done according to its gender disaggregation strategy developed from the Study on Poverty and Gender in Fiji, found in MDF’s Results Measurement Manual.

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Value of Additional Market Transactions The value of additional market transactions shows how much business transactions (purchases and sales) are increasing as a result of MDF’s partnership, representing increased economic activity in the horticulture and tourism sectors. It could represent sales or purchases as a result of the new products and services or new ways of doing business that were stimulated by MDF. Given the point in time of most of MDF’s partnerships (activity phase) – this figure has not yet been projected or measured, but additional market transactions will start to occur for all interventions in 2014.

Effective Outreach MDF’s three existing partnerships in Timor-Leste are projected to have an impact on 500 beneficiaries. This includes rural households and workers, primarily in the districts. The majority of the projected effective outreach is expected to come from the Agribusiness partnership due to the large volume of raw materials that needs to be sourced from local farmers in support of the partnership. Although the Greenfield Industries partnerships are not projected to contribute to effective outreach at similar levels, they are significant especially because they create non-agriculture income opportunities in rural areas.

Net Additional Employment MDF expects to generate 12 new jobs from its three partnerships, across the two sectors. This employment is primarily from processing and tourism which is key part of MDF’s strategy in developing off-farm income opportunities. This employment is also expected to be created primarily in the districts, bringing more stable incomes to rural households. In agriculture, employment creation is possible to a limited extent due to increase in cultivation area or intensity. However, due to the high cost of labour in Timor-Leste it may not always be the case. Thus on-farm employment creation due to increased commercialisation of agriculture is an aspect that remains to be seen in MDF partnerships.

Net Additional Income Income will be created through additional employment and increased incomes from self-employment or farming activities. Given MDF’s current portfolio, MDF expects to generate USD 230,700 in additional income. This is also expected to increase as MDF’s portfolio grows. As is expected, additional incomes generated for farmers are smaller in value but covers a larger number of households. On the other hand, additional incomes generated through opportunities in the tourism related partnerships are larger, but benefit fewer households in number.

Poverty reduction and Gender Equality in Timor Leste MDF will conduct a poverty and gender study in Timor Leste in the first half of 2014. The purpose of this study is to further assess: who is poor and why within the sector; the mechanisms, choices and strategies they use to move out of poverty; and what prevents this from happening. While there are numerous studies which have been conducted in Timor-Leste on levels of poverty throughout the country, MDF’s study will focus on gathering information and insights into how people earn income (the different sources and methods used), the decisions they make regarding income and expenditures, and it will draw conclusions on why these households are poor and what are potential pathways to move out of poverty. With this information MDF will evaluate its sector strategies and revise, if Market Development Facility | 41

necessary, or enhance them by identifying specific opportunities to address the constraints that are keeping rural families from progressing out of poverty.

In addition, the study will analyse gender roles and controls so that MDF’s strategy and impacts can better reach both men and women. MDF will assess the different roles of men and women in rural households and the current level of women’s involvement in farming and other income earning activities. It will also identify the challenges they face for increasing economic empowerment, as well as other cultural and social limitations. The study will identify potential opportunities to enhance the economic empowerment of women in the sectors where MDF works which will be incorporated into MDF’s sector strategies.

In Timor-Leste the study will initially be focused in the districts outside of Dili. Therefore the study will focus on rural farming households, as they make up the majority of households in the districts, however, insights will be gathered, where possible, into the importance of alternative sources of income from non-agricultural sectors such as manufacturing, construction and tourism.

Other Private and Public Sector Contributions MDF also acknowledges the contribution of other publicly funded programmes and private organisations to its activities and to achieving its universal impact indicators in Timor-Leste. Other public or private organisations can contribute to an activity which leads to the impacts that MDF projects or reports, or can implement separate activities which can also to contribute to these same impacts.

The follow organisations have contributed either directly to partnership activities or have other ongoing activities which may contribute to achieving the projected impacts: Table 8: Other Private and Public Sector Contributions in Timor-Leste

Type of Organisation Private Sector Partners

Organisation Name

Contribution

Balibo House Trust

Cost-sharing in partnership activities

Acelda

Cost-sharing in partnership activities

Posada

Cost-sharing in partnership activities

Lessons Learned Timor-Leste has a difficult business environment, however despite this, there are growing businesses and there is increasing entrepreneurial activity. This provides ample opportunity for MDF to identify and develop partnerships. Thus far the key drivers of such opportunities have been: 

Acknowledgement of the need to diversify into new areas as a way of mitigating risks of dependence on single products;



Understanding the benefits of investing in new areas of business to enjoy first mover advantages; and



Appreciation of the support provided by MDF as a way of capitalising on long recognised opportunities.

It is expected that in the coming months, these drivers will play a vital role in helping MDF identify and develop partnerships under the MDF strategies for Timor-Leste.

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Success Stories: Partner Profiles Each year, MDF will also provide a few stories of success. These stories will highlight changes and benefits that have been realised by individuals, groups or businesses impacted by MDF. Because MDF is in the early stages of its partnership activities, the story below focuses on one of MDF’s Partner, and how it, with the support of MDF, has been able to take a big step to help stimulate propoor growth in Timor-Leste.

Box 3: Timor-Leste Success Story

Acelda: Leading the way in local food processing In Timor-Leste agriculture production for most farmers rarely goes beyond subsistence levels of farming. Farmers usually plant want they know they need for subsistence, and then a minimal surplus which is sold only to nearby local markets, as there are no consistent and reliable buyers. On the other side, there is currently no investment by local food processors to develop stronger links with local farmers to increase and improve the crops sourced locally. Without this investment and commitment, there is no incentive for farmers to increase production, as they stay reliant on small local markets and erratic government buy-back programs. Because of the high-cost and difficulty securing enough volume of local crops, food processers prefer to use imported food.

Acelda, however is taking that leap with the support of MDF to become the first company to commercially process and package high-quality local rice for the domestic market. Acelda currently processes locally sourced candlenut into oil for export markets. The company has been interested in processing other local products for the domestic market but needed additional support to help set up and strengthen sourcing arrangements.

MDF is supporting Acelda to develop a realistic supply chain, which is based on forecasted demand from the domestic market and improving sourcing and relationships with local farmers. The presence of Acelda as a consistent buyer of large volumes of rice will give the farmers incentive to increase and improve their production, earning more income from farming.

MDF is also supporting Acelda to make the step into rice milling by expanding their processing capacity to include rice milling and training staff to produce high-quality rice. Most local milling suffers from quality issues such as large amounts of broken grains, dust and foreign particles. While Acelda is not the first company to mill local rice in Timor-Leste, they are the first to commercially produce large volumes of high-quality milled rice.

MDF is also providing technical support to design and implement a marketing campaign for the new local rice. Acelda will package the milled rice in quality packaging, complete with nutritional and product information for local retail markets to effectively compete with imported rice. Acelda will also introduce different varieties of rice. Such product differentiation amongst local products is a first in Timor-Leste at such a commercial level.

According to Sr. Higino, of Acelda, “Cooperation between Acelda and MDF is a positive plan because through this partnership [rice] processing and storage facilities will be implemented in Baucau District, Baucau Sub-district, Gariwai village and Darasula subvillage. MDF and its mission demonstrate professionalism, by working with [businesses] to ensure Timorese people are benefited from development activity.”

As Acelda develops a successful and innovative model for sourcing local crops, value adding through processing, and retailing locally – MDF hopes that other food processors and traders will begin to copy the model and invest in developing such supply chains. With more local buyers, farmers will have an incentive to plant more and will increase their incomes by selling larger volumes to these buyers on a regular basis.

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6. Communication, Networking and Presence MDF strives to be a leader for good development practice in the market systems approach to sustainable, broad-based pro-poor economic growth. MDF also establishes its role as a reliable business partner and a source of high-quality market intelligence and insight in the sectors and countries where it works.

MDF uses effective communications to achieve this and to build support for its approach. MDF engages key partners, stakeholders, the local community, development community and government in development issues; and adds to the understanding of the importance of the Australian Government’s contribution to development.

MDF has actively participated in or presented at industry and development community events and has developed partnerships and synergies with other development programmes in each country. Table 9 summarises each area for each country. As MDF has only just begun operations in Pakistan, it has been excluded from this Table.

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Table 9: MDF's Communications, Engagements and Synergies in 2013

MDF Communications in 2013

Facility-Wide MDF Website: 3,614 Unique Visits since its publishing. MDF’s website contains information for the public on its approach, partnerships, results and publically available sector and country specific research.

Communications: MDF has developed the following communications materials.

MDF Monthly Updates: Regular monthly updates on implementation and management, circulated to Post and Country Steering Committees.

How MDF Works: brochure explaining MDF’s approach for all stakeholders, tailored to each country.

Fiji

Timor-Leste

Strategy Summary: A Five page summary on MDF’s strategy in Fiji for all stakeholders.

Briefing Note: MDF Briefing Note for Post and Government of Timor-Leste.

Press and Public relations: 2 Media releases issued which were published in 6 local media outlets (combined).

MDF Six-monthly Newsletter: launched for the first time to 213 recipients around the world.

Networking and Presence: MDF has actively participated in or presented at the following industry and development community events. MDF is regularly engaged in countrylevel industry meetings and events - that exhaustive list is not included here, as that is a part of day-to-day implementation. The events highlighted here include those related to the broader development community; or opportunities where MDF has presented its work and its approach to a wider group of stakeholders.

Presentation at the launch of Phase 2 of the DFAT-funded Pacific Horticultural and Agricultural Market Access programme (PHAMA), August 2013.

M4P Peer learning Event: MDF Business Advisors participated in the event in Bangkok to network and share experiences with similar projects to explore challenges, lessons learnt and emerging solutions, May 2013.

Presentation to Master students of Development Economics at the University of the South Pacific.

Presentation at the Australian High Commission to a group of visiting representatives from the Food and Agricultural Organisation.

Roundtable on Fiji Post’s country plan under the Pacific Women Shaping Pacific Development initiative, June 2013.

Pacific Values Chains Conference, Secretariat of the Pacific Community, April 2013.

Fisheries Sector Stakeholder workshop, ACDI/ VOCA, March 2013.

Ministry of Agriculture and Fisheries/ Rural Development Programme seminar, April 2013.

DFAT Programme Evaluation Capacity Building Programme workshop, May 2013.

UNCDF Informal Discussion on Financial Sector Policy and Financial Inclusion, May 2013.

Workshop and presentation of Seed System Security Assessment by Catholic Relief Services, SoL and Ministry of Agriculture and Fisheries, October 2013.

Participation in discussion on frontline service delivery challenges by DFAT, December 2013.

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MDF Communications in 2013

Facility-Wide

Fiji Hygiene Practices and Food Safety Systems based on HACCP, World Trade Workshop, February 2013.

Timor-Leste

Participation in private sector roundtable organised by the Embassy of the United States of America, December 2013.

Presentation and Participation in Fiji Post’s Poverty and Social Analysis Workshop, December 2013.

Development Partnerships and Synergies: MDF has developed partnerships and synergies with other development programmes

MDF continues to share information to develop and enhance partnerships with other development programmes including Pacific Agribusiness Research for Development Initiative (PARDI), Increasing Agricultural Commodity Trade (IACT), Fiji Community Development Program (FCDP), International Trade Centre (ITC), and Fiji Crop and Livestock Council (FCLC).

MDF develops synergies and partnerships with other development programs on a country-level.

MDF has signed MoUs with IACT, PHAMA and FCLC.

HACCP Group: MDF is also coordinating with a variety of other development programs on improving the services around HACCP certification.

MDF is a member of the Steering Committee for the International Fund for Agricultural Development (IFAD).

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MDF continues to engage with other stakeholders to share information and develop and capitalise on synergies. These include Seeds of Life (SoL) and the Rural Water Supply and Sanitation Program (BESIK). MDF also engages with other agencies (USAID and UN); and other NGOs (Mercy Corps, ACDI/VOCA, Empreza D’iak). MDF will develop formal agreements with some of these organisations where useful.

Have a draft MoU with SoL covering collaboration on dialogue related to the growth and development of a sustainable seed market system in Timor-Leste.

Held initial discussions on sanitation (toilets, building materials) and hygiene products (soaps, women’s hygiene products) markets with BESIK.

Annex 1: Quality at Implementation (QAI) Reporting Information

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Additional Commentary for QAI Reporting Criteria This annex covers additional information to assist DFAT to complete QAI reporting – according to the seven criteria evaluated.

1. Relevance Fiji MDF is focused on stimulating sustainable, private sector-driven, pro-poor market development which will create new and diversified livelihood opportunities for the poor in Fiji. MDF remains a key part of DFAT’s Country Strategy under the Creating Resilience and Economic Opportunities Pillar (CREO). It falls under Development Outcome 1: increased net incomes for poor people, and has been branded as ‘DFAT’s job creation program for the poor’.

Despite Fiji being described as a middle income country, a third of its population is living in poverty with an additional third highly vulnerable to fall into poverty. In addition, unemployment is high and the economy has been stagnant for the last decade with a growing trade deficit.

MDF remains relevant in Fiji because it designs its country strategy based specifically on this economic context and the potential within Fiji. With the decline of Fiji’s traditional export industries, there is a need for economic diversification and alternative income earning and employment opportunities. Only a few export oriented sectors have shown promise over the last few years, two of which are tourism and horticulture (fruits and vegetables). Because they represent a major part of the Fijian economy, have long-term growth potential, and are relevant for poverty reduction, MDF has chosen to focus on the tourism and horticulture sectors. In horticulture, there is potential for pro-poor growth by improving farmer yields and income through better cultivation techniques and access to inputs, diversifying production, more continuous year-round production, and increasing access to both international and domestic markets. In tourism, there is potential for pro-poor growth by increasing local sourcing, increasing tourist arrivals and expenditure, and diversifying Fiji’s tourism product to include more activities in more places throughout the country.

In Fiji MDF’s overall strategy focuses on complementing and coordinating with other programs.

MDF cooperates closely with other development programs including IACT, PHAMA, PARDI, ITC and FCDP. MDF also stays in touch with the work that the Ministry of Primary Industries is doing on the ground. While MDF does not cooperate directly with the Fiji interim government, its strategy complements the government’s emphasis on development of these key export sectors and import substitution. The risk of duplicating development efforts is high particularly in agricultural development which receives a significant amount of support from other donor agencies and the Fijian Government. To mitigate this risk, MDF also is careful to coordinate partner activities with these other programs. Out of MDF’s 12 current partners, 7 have received support from other development partners and/or Government. MDF’s investment with these partners is strategically placed not to overlap, but complement support from other organisations, so that impacts are maximised and efficiencies realised.

The economic systems which MDF is influencing to create a better outcome for the poor are constantly changing. Therefore to stay relevant in the context of Fiji MDF continually reviews its strategy at least twice yearly, to adapt to the changing economy and ensure that it remains relevant in Market Development Facility | 48

the Fijian context. To complement its strategy and increase its relevance to poverty reduction in Fiji, MDF conducted a study on poverty and gender in the horticulture and tourism sectors. Insights from the study have helped the programme to understand better how it can contribute more to poverty reduction and gender mainstreaming in Fiji through its partnerships. Because the poor are also concentrated around urban areas, in the near future MDF will add a third sector focusing on export processing to target urban poverty.

MDF’s approach takes advantage of the growing private sector in Fiji. Twelve organisations have already partnered with MDF, including exporters, wholesalers and tour operators and activity providers. Some of the exporters have received national awards as recognition of their performance in the Fijian economy. As the country moves towards a democratic election in 2014, it is expected that MDF will have more avenues to work that promote interest of both Fiji and Australia.

Timor-Leste MDF is a member of the Rural Development portfolio of DFAT in Timor-Leste and the principal vehicle for the Australian Government’s private sector development initiative in country. In TimorLeste, MDF is working on two primary sectors: Agribusiness, Processing and Rural Distribution and Greenfield Industries (Construction, Manufacturing and Tourism). Through these two sectors, MDF aims to work on two of the three key areas identified by the Government of Timor-Leste in the Strategic Development Plan 2011- 2013 for the country, which include oil and gas industries, agriculture and tourism. Alongside the Strategic Development Plan, the chosen sectors of MDF are also coordinated with a number of other rural development programs in the DFAT portfolio, namely Seeds of Life, BESIK and Roads for Development.

Apart from an alignment of the MDF strategy in Timor-Leste with the country’s strategic development plan as well as connections to other DFAT programs, further relevance is drawn from the social and economic context that is prevalent in the country.

The leading role of public sector expenditure towards GDP contributions has been the key characteristic of economic growth in Timor-Leste. Private sector is fledgling at best with minimal contributions to the non-oil GDP of the country. Unemployment is high with major employment generators being agriculture and public sector. Owing to the under-developed nature of the private sector, the number of private sector jobs are few relative to the number of persons entering the workforce every year.

Agriculture, in its current state, is vulnerable due to climatic conditions, poor production and trading practices. Public sector led growth and employment in agriculture is not sustainable in the long term.

Thus, there is recognition that future growth should increasingly come from private sector investment and growth. This private sector investment and growth can aid the diversification of the economy to reduce reliance on oil and gas through the development of both agriculture and non-agriculture sectors. Private sector led growth in non-oil sectors is also key for reduction of the imbalance between imports and exports and the strengthening of local markets which leads to more currency circulating in local economies as opposed to leaving Timor-Leste through imports.

At the level of households, there needs to be more stable income earning opportunities to allow for consumption of more and better quality food and purchase of goods and services to aid with education and health. Thus more jobs need to be created off farms for more stable household incomes not reliant on agriculture, while yield and crop diversity in agriculture need to increase to increase incomes and these changes need to happen consistently. In addition, local processing and manufacturing need to take place at a larger scale to diversify the economy, create more demand for local products, and create more off-farm employment. These changes can contribute to increased incomes for producers Market Development Facility | 49

and small businesses, create employment both on and off farms, and improve access to affordable and better quality local goods and services.

Timor-Leste is emerging from an era of conflict in which capital and business knowledge was lost. To support the successful emergence of the country from an emergency situation to one of long term sustainable growth, perspectives need to change from subsistence and self-sufficiency at the household levels to a more commercial orientation. Private sector development can play a key role in making not only agriculture more commercially attractive to producers but also develop and strengthen the other pillars of the economy, notably manufacturing and services. Given the low levels of investment from the private sector, there needs to be a dedicated effort to nurture its growth and guide it to strengthen Timor-Leste’s economy and increase its resilience. MDF, with its mandate to support the growth and development of the Timorese private sector, along with the alignment of its strategy with Timor-Leste’s long term vision for growth, is a relevant vehicle for private sector development.

2. Effectiveness Fiji A recent report by MDF’s Independent Advisory Group stated “In Fiji, MDF is on track to achieve its objectives”. Based on current projections from its existing partnerships, the programme is expected to reach its objectives of increasing incomes for 12,000 households and creating 1,100 jobs in Fiji.

While it is too early to measure the actual impact of MDF’s partnerships on poverty reduction, there is evidence that the key changes influencing poverty reduction have been started.

Overall in Fiji MDF has signed twelve partnerships which have stimulated USD 1,252,000 or FJD 2,254,000 of private sector investment in the horticulture and tourism sectors.

As a result of these innovations – economic activity in the two sectors has increased by USD 88,000 or FJD 158,000 as a result of MDF’s partnerships. Increased investment and economic activity are the first steps to making the market system work better so that poor women and men have access to income and employment opportunities. As MDF’s partnerships develop, the impacts they have on income and employment will be validated beginning this year. Its current twelve partnerships are expected to reach 11,300 people and create 350 jobs. As MDF’s portfolio grows, this is expected to grow.

An early example in the Horticulture Sector: MDF is supporting Standard Concrete Industries (SCI), a concrete manufacturing company, to use its limestone quarries in Fiji to produce and market agricultural lime to farmers. Agricultural lime, or Aglime is a key input to help farmer’s improve soil acidity and increase productivity. SCI launched Aglime product in mid-2013 and MDF is currently in discussions on further marketing Aglime to farmers in order to maximise its reach and impacts. In the first six months, more than 120 Tonnes of Aglime was sold around Fiji, with key agriculture institutions such as Fiji Dairy placing large bulk orders for distribution to their farmers. SCI estimates that at least 90 farmers have purchased Aglime directly in 2013. The Ministry of Agriculture has also supported the promotion and distribution of Aglime throughout Fiji.

In the Tourism Sector, one key example is Farmboy. MDF is supporting Farmboy to establish the first industrial kitchen that will supply processed local fruits and vegetables (juices, pulps, frozen) to the tourist industry in Fiji. Although there have been delays in completing the processing facility, Farmboy’s increased storage and buying capacity, along with his influence on farmers has encouraged

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farmers to increase their production, and last year Farmboy purchased 80 Tonnes of additional fruits and vegetables as a result of MDF’s partnership.

Understandably impacts takes time to achieve but benefits are expected to be sustainable. Generally a two to three year time period is expected from agreement signing and for impact results to start showing. Flexibility in MDF implementation and its robust Results Measurement (or M&E) system which is used to validate impacts as well as day-to-day management, allows MDF to make adjustments and develop new partnerships to maximise its impact.

One key factor is the pace of implementation. Inherent in its approach to build more ownership and sustainability, MDF lets the partner dictate the speed of implementation. In Fiji’s context, this varies significantly for various reasons and presents itself as a challenge. To mitigate this, MDF plans to increase its portfolio of sectors and partnerships and thereby minimise the risk faced by delays in individual partnerships.

The size of MDF’s budget is directly correlated to the number of partnerships it can co-invest in which dictates the scale of MDF’s impacts. Changes in the budget will change the scale of MDF’s investment and impact figures - and with current uncertainties on the budget support from DFAT in the coming years, clarity on this issue would allow MDF to plan properly and develop a robust portfolio of partnerships.

MDF’s governance and management structure also ensures it will continue to deliver effective results.

While MDF Fiji has its own country team, it is supported by an International Core Program Team for technical backstopping and quality assurance which provide necessary guidance as and when required. MDF regularly interacts with DFAT Country Post and the Country Steering Committee to ensure there is guidance and insight into country context. The Independent Advisory Group also ensures the program remains effective and relevant to DFAT strategy.

Timor-Leste MDF in Timor-Leste has emerged from its inception phase late in 2013 into its implementation phase and has a total of three partnerships across its two chosen sectors of Agribusiness, Processing and Rural Distribution and Greenfield Industries (Construction, Manufacturing and Tourism). A number of new partnerships are also in the pipeline. There is recognition for the fact that the research conducted for the Sector Assessments was high quality and the program has been able to turn this insight swiftly into partnerships in a difficult business environment. In its recent report, the Independent Advisory Group (IAG) stated that “Mobilisation of the facility in Timor-Leste has progressed well and has clearly benefitted from the experience, office systems and practices already developed for Fiji. This has allowed the team to focus quickly on the market issues.”

Currently the existing partnerships of MDF are at the early stages of activities impacts have not yet been realised. Thus change in behaviour amongst beneficiaries has not yet been seen, but is expected in 2014. However, considering the weak private sector presence in Timor-Leste, change in behaviour amongst MDF’s private sector partners is evident. This is especially so through their willingness to invest in new areas such as agribusiness and tourism as opposed to continuing to subsist on government contracts or construction. In Timor-Leste, MDF has 3 partnerships with private sector partners which have resulted in 6 new innovations. Combined, these partnerships have leveraged USD 267,700 in private sector investment. This is being leveraged with USD 136,400 of MDF investment.

This shows that for every dollar MDF invested, it stimulated $1.9 from the private sector.

One example of an MDF’s partner’s willingness to invest is Acelda II Unipessoal Lda., a local business primarily involved in processing and exporting of candlenut oil. The company has Market Development Facility | 51

acknowledged and appreciates the risks of limiting its business activities. As a response to this, they have invested with MDF in the risky area of processing and marketing other local products such as rice, while other local businesses continue to rely on abundant government infrastructure contracts or stay with the import-and-sell business model. This certainly can be considered a deviation from the norm for businesses with investable capital.

All potential partnerships are assessed and fit within MDF’s sector strategies, and the activities, theory of change and risks are well articulated from the beginning. Such rigor ensures that impacts of partnerships can be projected with an adequate degree of confidence. These three current partnerships are expected to benefit 500 men and women with USD 230,700 of additional income and create 12 new jobs outside of Dili.

Dependence on and dominance by public sector still poses a threat to MDF’s work with the private sector in Timor-Leste. Subsequently, it is difficult to convince potential entrepreneurs to invest in new areas. As such, enterprises with the most capital to invest, such as companies in construction or retail and wholesale, continue to focus on and reinvest in pursuing government contracts or importing goods for sale to local markets. Influencing local businesses to invest more of their capital in new areas or intensive projects such as local manufacturing of agriculture storage or livestock and poultry feed, can be relatively more difficult. Reliance on government distribution of agriculture inputs and government buy-back programs also create risks for private sector companies looking to grow. These companies either have difficulty selling agriculture products and services which are often provided for free by government programs or cannot compete with the prices that the buy-back programs offer, which are both disincentives for investing.

The size of MDF’s budget is directly correlated to the number of partnerships it can co-invest in which dictates the scale of MDF’s impacts. Changes in the budget will change the scale of MDF’s investment and impact figures - and with current uncertainties on the budget support from DFAT in the coming years, clarity on this issue would allow MDF to plan properly and develop a robust portfolio of partnerships.

MDF’s governance and management structure ensures it will continue to deliver effective results.

While MDF Timor-Leste has its own country team, it is supported by an International Core Program Team (CPT) for technical backstopping and quality assurance which provide necessary guidance as and when required. MDF regularly interacts with DFAT Country Post and other DFAT programs such as Seeds of Life (SoL) and Rural Water Supply and Sanitation Program (BESIK). A Country Advisory Group, to be made up of public and private sector representatives will be established in 2014 to ensure there is guidance and insight into country context. The Independent Advisory Group also ensures the program remains effective and relevant to DFAT strategy.

3. Efficiency Fiji Efficiency is directly related to MDF’s approach and the way it is implemented. MDF signs partnerships with key partners, which involve cost-sharing and which stimulate broader changes in the market beyond MDF’s direct partnerships. This not only ensure greater ownership but also leverages DFAT’s investment. At this point in time, MDF has invested USD 687,000 (FJD 1,236,000) in the Fijian economy, and leveraged USD 1,252,000 (FJD 2,254,000) as a result. While it is too early to measure the impacts of this investment, early signs have indicated that MDF is on track.

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Operationally, MDF gains efficiency through its multi-country set-up, with a core team of managers and a country implementation team. This division allows MDF to control key areas of management and quality of implementation while at the same time introduce flexibility to tailor make its approach for each country needs. It also allows the Fiji Country Team to operate effectively with only one international manager. Local staff have become more experienced with MDF’s approach and with working effectively with partners, so there is increasing efficiency and effectiveness in developing and implementing partner activities. Staff capacity building is an important part of MDF and this effort will continue in the years to come.

For MDF Fiji there is a Country Steering Committee which has met five times and is taking an increasing role in advising the MDF Fiji team on its strategy within Fiji. Within DFAT, there is now more clarity on the roles of each Post and within Canberra, and remaining unclarified issues are expected to be addressed in the short-term.

MDF has progressed according to its workplan. With two sectors, MDF has 12 partnerships and the speed at which MDF is reaching deals with partners is increasing. However, implementing MDF is not without challenges. MDF’s approach involves partners being responsible for implementation of activities with the support of MDF. Slow decision making process by partners in Fiji at times delays the speed with which partnerships are signed and subsequent activities are rolled-out. So while MDF has developed a robust portfolio which continues to grow, a lesson learned in Fiji is that the progress of implementation will be slower given the context within which partners here operate. This has also slowed down budget spending. With support of MDF, however partners are picking up the pace of implementation and as MDF adds more partnerships to its portfolio and adds a new sector, the speed of implementation and spending is expected to increase. In anticipation of this increased activity, MDF has increased its staff size to eleven people from nine people in the last year. In the next few months more are expected to be recruited.

MDF has good relations with other development partners working within Fiji. MDF has signed a Memorandum of Understanding with two so far: PHAMA and IACT. With others such as PFIP, FCDP, ACIAR, and ITC there is constant interaction to ensure common learning is shared and efforts and strategies are synergised. Coordination with other development partners is an important element to minimise distortion in the market as much as possible and also to transfer learning between programs and partners when required.

MDF has consistent reporting which is matched to DFAT’s current reporting timelines. Each year MDF produces an Annual Strategic Plan and two Semester Reports which update on progress against that plan. An Annual Aggregation of Results is also produced which focuses on the impacts to date and projected results for MDF’s existing portfolio. Reports have been focused on building an understanding of MDF and will incorporate even more as partnerships begin to produce results and lessons learned. A financial audit was carried out last financial year showing no major nonconformance. MDF will carefully manage reporting going forward should new formats or timelines be introduced.

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Timor-Leste MDF in Timor-Leste seeks to achieve efficiencies mainly through effectively collaborating with other stakeholders in its chosen sectors as well as capitalising on opportunities within its portfolio of partnerships.

Efficiency is directly related to MDF’s approach and the way it is implemented. MDF signs partnerships with key partners, which involve cost-sharing and which stimulate broader changes in the market beyond MDF’s direct partnerships. This not only ensure greater ownership but also leverages DFAT’s investment. At this point in time, MDF has invested USD 136,400 in Timor-Leste’s economy, and leveraged USD 367,700 as a result.

Operationally, MDF gains efficiency through its multi-country set-up, with a core team of managers (Core Program Team or CPT) and a country implementation team. This division allows MDF to control key areas of management and quality of implementation while at the same time introduce flexibility to tailor make its approach for each country needs. This gave the current Deputy Country Representative and local team the necessary support to manage in the absence of a Country Representative, a position that has proven difficult to fill. The Deputy Country Representative has effectively managed performance and operations of the Timor-Leste office with support from the Team Leader and other CPT Managers. While recruitment for local Business Advisors has been challenging, staff capacity building is an important part of MDF and this effort will continue in the years to come.

As part of sector assessments, MDF has mapped out extensively the roles and responsibilities as well as areas occupied by other development partners, especially other DFAT programs such as Seeds of Life (SoL), Rural Water Supply and Sanitation Program (BESIK) and National Program for Suco Development (PNDS). With SoL, MDF is seeking to collaborate on seed market system research and developing an influencing agenda to change the seed market system to stimulate growth of commercial players in the system. With BESIK, MDF is looking to work together on research covering water purification and sanitation product markets. MDF recognises the danger of duplicating of activities, especially in the chosen sectors. To mitigate this, MDF will continue to look out for opportunities of collaboration with stakeholders in Timor-Leste. Apart from working with stakeholders, MDF also seeks to maximise the benefits from investments made towards partnerships.

This allows for the most effective investments designed to bring the maximum benefit.

MDF has consistent reporting which is matched to DFAT’s current reporting timelines. Each year MDF produces an Annual Strategic Plan and two Semester Reports which update on progress against that plan. An Annual Aggregation of Results is also produced which focuses on the impacts to date and projected results for MDF’s existing portfolio. Reports have been focused on building an understanding of MDF and will incorporate even more as partnerships begin to produce results and lessons learned. A financial audit was carried out last financial year showing no major nonconformance. MDF will carefully manage reporting going forward should new formats or timelines be introduced.

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4. Monitoring and Evaluation MDF’s results measurement system is designed to comply with the DCED Standard for results measurement. It is a robust system which is used not only for capturing evidence of MDF’s impact, but also for management and decision making. It is also used to capture learning throughout the life cycle of each partnership in order to make improvements where necessary, and maximise impact and efficiency. Results measurement is the responsibility of all MDF team-members and so it becomes a part of day-to-day partnership management. As a tool for both learning and capturing evidence, MDF instils a spirit of honest inquiry so that the system is useful to determine what works and what doesn’t and how to make it work better. For more information on how MDF’s Results Measurement (or M&E) system works, please see Section 1 of the Annual Aggregation Report.

Fiji In Fiji, the Results Measurement (or M&E) system is in place including monitoring and feedback mechanisms. Each partnership has a unique measurement strategy to monitor, learn and validate results. Six-monthly review occur for each partnership and each sector to provide a regular time and space to evaluate progress and incorporate learnings into MDF’s strategies. Adequate resources have been dedicated to results measurement in Fiji. All local Fiji staff have been trained in MDF’s system and are responsible for its implementation. The Results Measurement team has grown to include one full-time RM Specialist and two Business Advisors who dedicate half their time to results measurement tasks. The team is also supported by the Results Measurement and Communications Manager who oversees the implementation of MDF’s system and the quality of work and information it produces. Recently, Fiji went through a pre-audit review according to the Donor Committee for Enterprise Development (DCED) Standard for results measurement – which shows that the system is working and is on track. A full audit will take place in 2014.

Timor-Leste In Timor-Leste, Results Measurement is in early stages. All staff have been trained in MDF’s system and are responsible for its implementation. The team will grow to include one International Market Development and Results Measurement Specialist, who will be largely responsible for the day-to-day results measurement work in the country and support local capacity development for Results Measurement in Timor-Leste. The team is also supported by the Results Measurement and Communications Manager who oversees the implementation of MDF’s system and the quality of work and information it produces. In Timor-Leste the system will also go through the DCED audit process however it will take place after 2014.

5. Sustainability for both Fiji and Timor-Leste Sustainability is a key part of MDF’s approach and MDF must ensure sustainability before entering into a partnership. MDF’s flexible yet rigorous approach and its results measurement system allow it to monitor sustainability and make adjustments or develop new partnerships or activities to ensure and enhance sustainability.

MDF’s intervenes directly with its partners to improve their capacity and the sustainability of activities is integrated with local ownership and increased capacity of local partners. Improving the capacity of the private and public sector partners means they can continue to innovate and deliver goods and services which will continue to help poor women and men improve their livelihoods through increased income and employment opportunities. In that way, MDF’s systems and its

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approach ensure that its local partners are in full ownership of all activities and its partnerships are designed to be sustainable after MDF and DFAT’s contribution has ended.

MDF’s systems of ensuring this are described more specifically: Before entering into partnerships: MDF requires that all partners co-invest in activities to demonstrate their commitment, and MDF analyses all partnership activities before starting to determine their commercial sustainability. Before entering into a partnership, MDF analyses its commercial sustainability to ensure the right commercial incentives are in place for its private sector partners.

MDF makes sure that partners lead the activity and demonstrate the right incentives and interest to continue investing in the activity so it will continue in the long-term. Early signs show that to date, all of MDF’s partners have invested a considerable amount of time and resources and have demonstrated the right incentives and interest to own the activities and continue them– where they have not, MDF’s investment has either been cancelled or the partnership adjusted.

Throughout the partnership: MDF assesses the sustainability of each partnership as a part of its results measurement system. This involves quantitatively and qualitatively assessing whether the activity, and the change in behaviour and resulting benefits will continue after MDF. If MDF identifies constraints or risks that indicate an activity might not be sustainable, it will work with the partner to revise the activity so that it can be. MDF also documents these risks early on and MDF’s flexible design and results measurement system allow it to assess and make adjustments to the partnership so that it maximises impacts and sustainability.

Environmental sustainability is addressed through MDF’s Environmental Guidelines, which were developed in accordance with Australian Government and National Environmental Regulations.

These guidelines help MDF assess the potential for negative environmental risks and go through the steps to make sure they are properly mitigated and managed, so that impacts are environmentally sustainable. Criteria 7 below describes MDF’s environmental guidelines in more detail and how MDF manages environmental sustainability.

6. Gender Equality MDF is a market development program focused on improving income and employment opportunities for the poor, and therefore gender outcomes are specific to economic empowerment. This includes economic advancement through access to economic opportunities and access to assets needed to advance economically. While there are many other gender concerns in Fiji, MDF is not designed to influence those outside of access to economic opportunities.

As a part of MDF’s program design, gender is identified as a cross-cutting issue. MDF’s approach, which uses an indirect facilitation method, means that beneficiaries are not pre-identified. So MDF has less direct control over who participates and benefits from its activities. However MDF integrates gender considerations in its program strategy to ensure that gender outcomes are positive, or at a minimum do not leave anyone worse off. Through in-depth gender studies relevant to the sectors where MDF works, MDF develops a thorough understanding of if and how women can benefit from potential activities in each sector, and considers these issues while designing activities with partners to have a greater reach to both men and women.

It is important to note, that there can be socio-cultural issues which affect gender outcomes and not every one of them can be adequately addressed through a market development approach. Where MDF identifies these – it will coordinate with relevant organisations and programs who can.

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When monitoring activities and measuring results, MDF disaggregates its impact indicators by gender (when possible). Where activities have potential to create key gender outcomes, MDF will monitor progress towards increased women’s economic empowerment through case studies and qualitative research.

MDF has adequate resources to address gender outcomes. As a cross-cutting theme, gender is integrated into MDF’s results measurement system and its Sector Strategies. All staff are responsible for implementation of MDF partnerships against its strategy. Each country also has a Gender anchor, which is a country staff-member that oversees gender-related issues in-country. External gender expertise is used on MDF as needed.

Fiji The gender study for MDF’s chosen sectors in Fiji was used to get a better understanding of the specific roles and responsibilities of women the Horticulture and Tourism sectors, and the possible opportunities for furthering women’s economic empowerment. Based on that study, MDF identifies ways to design potential partnerships to enhance its outcomes for women. The study confirmed that in Fijian households in horticulture and tourism, the role in decision making and managing household finances is mostly shared. The sectors where MDF works in Fiji are also well targeted to create and improve income and employment opportunities for women. In the Horticulture sector, women are actively involved at all levels, from farming to farm labour to export processing. While investment decisions related to farm activities are more often made by men, the farming activities and income from farming is shared between both men and women. Through development of the sector, both women and men, iTaukei and Indo–Fijian, can benefit from increased incomes and access to on-farm and horticulture processing employment. The tourism sector also employs a large number of women at all levels and its growth will continue to offer job opportunities to women in Fiji.

Because most of MDF’s outreach in Fiji is based on households, MDF has a strategy based on its research to disaggregate by gender, which is incorporated in its Result Measurement Manual.

MDF has also been actively engaged in gender policy dialogue with DFAT and other stakeholders in Fiji. While MDF has not yet participated in national gender forums, it is prepared to do so through presenting and discussing its research, its lessons learned, and its results.

Timor-Leste MDF’s gender study and disaggregation strategy in Timor-Leste will be completed in the first half of 2014. This will provide greater insight into the roles and responsibilities of men and women in the District households in Timor-Leste. It will also help MDF design partnerships with better gender outcomes.

7. Cross-Cutting Issues and Commitments for both Fiji and Timor-Leste MDF’s goal is to increase income and livelihood opportunities for the poor women and men throughout Fiji. The poor and vulnerable are often excluded from market systems and have limited access to employment and income earning opportunities. To better support its goal, MDF conducts studies not only to identify who is poor, but also to understand the reasons why they are poor. The study has already been conducted in Fiji and is upcoming for early 2014 in Timor-Leste. With a detailed understanding of who is poor and why, MDF re-evaluates its strategy to make sure that it targets its activities to reduce the constraints faced by the poor, allowing them access to the jobs and livelihood opportunities to increase their incomes.

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MDF also has a special attention area in its strategy to improve outcomes for more remote communities. In Fiji this includes the islands in the Northern Division. MDF specifically targets partnerships which will target the poor in rural and remote areas throughout the Northern Division.

For example, a recent partnership designed by MDF specifically targets increasing community-based tourist activities and special emphasis has been on developing activities with communities in Vanua Levu (Northern Division). While the partnership is in very early stages, its design has allowed for increasing income opportunities for remote communities through Tourism.

In Timor-Leste the special areas under Agribusiness, Processing and Rural Distribution are: (1) Improving food and nutrition security through addressing problems around productivity and variety; and (2) Improving market access to remote districts. Similarly, under the Greenfield Industries sector strategy the special area identified is: Developing synergies with development partners. This special area is mainly focused on collaborating on creating commercial opportunities for products and services developed by other development partners, especially under the DFAT portfolio.

While MDF’s activities do not directly involve children, MDF’s follows the Australian Government and Cardno’s child protection policy, as it relates to its activities and implementation. This includes a criminal record check on all successful candidates before they begin work with MDF, guidelines on appropriate use of its communications systems, and protocol for use of communications materials involving children. MDF also ensures that all staff sign and comply with DFAT’s Child Protection Code of Conduct.

Currently, there are no direct activities related to disability, however MDF monitors all activities and updates its strategy as and when needed. Positive outcomes for people with a disability which are observed will be recorded, and opportunities to improve the economic outcomes of people with disability will be incorporated into MDF’s strategy as identified.

MDF ensures that negative impacts are avoided and that environmental sustainability has been assessed for all its activities. MDF does this through its Environmental Guidelines, which were developed from the Environmental Protection and Biodiversity Conservation Act (EPBCA) and local environmental regulations in each country. These guidelines include an environmental scan checklist for each partnership which determines whether and what environmental risks are present, and what actions need to be taken to mitigate these risks. The Guidelines then provide a map and guide for the MDF team and MDF’s partners to take all necessary steps to comply with both Australian and National regulations for environmental licensing, EIAs and EMPs as necessary. MDF completes an environmental scan checklist for each partnership and then works with each partner to ensure that the necessary steps required for developing an EMP are followed. MDF then monitors all activities to make certain that the partners follow the Environmental Management Plans (when required) and to monitor for any new environmental risks that may develop.

Disaster risk reduction is also incorporated into MDF’s environmental guidelines. Where risks are high, MDF guidelines ensure that actions required for identification and mitigation are adequately carried out and monitored accordingly.

Source of Data and Degree of Confidence in MDF Data Quality for QAI Reporting MDF’s results measurement system yields reasonable estimates of results using high quality information. When measuring actual results MDF uses a significant amount of primary data which is collected according to international best practices. MDF uses a combination of primary and secondary Market Development Facility | 58

sources of information. Primary research is predominantly done in house to ensure quality, using a mix of research tools which is customised to each partnership. When external resources for data collection and analysis are used they are closely monitored by MDF to ensure quality. MDF uses secondary data where reliable sources exist and where data is highly relevant for the research being conducted. If secondary sources are used, MDF ensures that the data comes from a reliable source and is of good quality.

In adhering to the Standard for Measuring Results in Private Sector Development established by the DCED, MDF adheres to international best practices for research. Also, MDF’s results measurement system will be audited by DCED-approved auditors. These audits provide an external and objective assessment of the results measurement system, which ensures that the system is credible and adheres to the various elements of the Standard.

The Australian Government’s Contribution to MDF’s Results for QAI Reporting The implementation of MDF is entirely funded by the Australian Government in each country where it operates. In each country section, MDF also acknowledges the contribution of other private and public sector agencies which may have implemented activities which can contribute to the same results.

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Annex 2: MDF’s Impact Logic, Hierarchy of Objectives and Menu of Indicators

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MDF’s Impact Logic MDF’s Impact Logic explains how the Facility contributes to poverty alleviation –beginning with its analysis of sectors up to creation of additional income and employment. Work in each country will entail: A.

Developing a deep insight into the functioning of selected economic sectors for each MDF country through comprehensive assessments. These assessments identify constraints to economic growth and potential private and public partnerships in 'support systems' around growth sectors for the development of innovative, commercially sustainable and 'constraint reducing' solutions. Deep insight into what works, what does not, and why, is an essential precondition for the Facility’s core business. Only on this basis can the right strategic partner be identified to work on innovative and commercially sustainable solutions to unlock critical constraints that generate the most pro-poor growth. This ‘insight’ is translated into sector growth strategies, which outline how the Facility will increase competitiveness of key rural and urban sectors — measured by increased productivity, sales, market share, and innovation of target beneficiaries or enterprises (see Figure 1 below).

B.

Designing partnerships with strategic partners based on comprehensive agreements and action plans to create commercially sustainable innovations and trigger systemic change. Sector competitiveness is shaped by the extent enterprises have sufficient access to production inputs, services, information, skills, infrastructure, and regulatory environment.

Where these support systems (i.e. government, banks, education, supply chains, etc.), do not reach enterprises or fail to be relevant for them, competitiveness suffers and growth slows.

Innovative solutions are intended to trigger lasting improvements in the volume, quality, and innovative nature of interaction between target enterprises and relevant support systems, with the purpose of making them more productive and competitive. This relates to improvements in business models, marketing strategies, supply chain management, technical capacities, regulatory procedures, research capacities, etc. The outcomes of systemic change — the 'uptake' by target enterprises — are also the outcomes the Facility should generate: 

Improved service delivery of relevant support systems—measured in better access to production inputs, services, information, skills, infrastructure, or more appropriate rules and regulations—to target enterprises in key rural and urban sectors.

Outcomes are translated into measurable increases in competitiveness (as measured within enterprises). Thus, the Facility outputs can be defined as:  C.

9

Increased capacity of strategic private and public sector players in relevant support systems to service target enterprises in key rural and urban sectors.

Establish a near real-time results measurement system to assess the sustainability and pro-poor results and report on these results in a timely manner. Results are essential for demonstrating the value of the Facility, continuous learning, and updating sector growth strategies. MDF measures three universal impact indicators across countries to demonstrate its pro-poor results: 

Employment: measured as net additional employment 9 created.



Additional income: measured as net additional income generated.

Measured as full-time equivalent (FTE).

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

D.

Effective Outreach: measured as the total number of beneficiaries that benefit financially from the Facility’s partnerships.

Developing a portfolio of sectors and inventions that will yield results. MDF’s approach emphasises tailor-made partnerships with a large variety of partners to ensure sustainability, effectiveness, efficiency, and neutrality in development assistance.

See Figure A2.1 below. Although each partnership is unique, it will follow this basic impact logic.

This logic is complemented by MDF’s Hierarchy of Objectives which translates this logic into measurable information. The Hierarchy further details what changes MDF expects to see and how MDF will measure those changes at each level, from Outputs to Goal level.

Figure A2.1: The Facility’s Impact Logic

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MDF’s Hierarchy of Objectives To fully understand how MDF activities achieve impacts, it is not only necessary to understand the overall logic and process involved, but to relate this strategic direction to specific and measurable indicators for each partnership. This can only be achieved by using clear indicators that show progress at each level of a partnership towards MDF’s goal level indicators of income and employment. MDF has developed a Hierarchy of Objectives with general indicators that measure progress at each level. The Hierarchy of Objectives follows MDF’s Impact Logic outlined in Figure1.

MDF has four strategic levels: Output, Outcome, Purpose and Goal. Each strategic level has a defined objective and its own set of indicators. Table A2.1 below outlines those objectives and indicators measured at each level.

All partnerships should, if successful, generate a change in at least one of the indicators at each level.

The indicators below are broad level indicators and will be broken down further and presented in more detail for each partnership. How they will be measured, when, by whom, and using which method will be provided in detail within each Partnership Guide in the Measurement Plan.

Table A2.1: MDF Hierarchy of Objectives

Level

Definition/Objectives

Menu of Indicators

Means of verification

Goal

To create additional employment and income opportunities for poor women and women in rural and urban areas through sustainable and broad-based pro-poor growth.

Net additional attributable income Net additional attributable Full-time Equivalent (FTE) employment Additional attributable non-cash benefits

Results Measurement System as per DCED guidelines External reports, if any

Purpose

To increase the competitiveness of rural and urban growth sectors.

Effective outreach Attributable increase in productivity Net additional attributable sales Additional attributable market share Attributable innovative and/or Environmentally and Socially Responsible Business practices Signs of wider systemic change: copying

Results Measurement System as per DCED guidelines External reports, if any

Outcomes

Improved service delivery of relevant support systems to rural and urban growth sectors.

Additional attributable transaction value, usage or awareness (in relation to product, service, information, etcetera) for both private and public providers Number of target beneficiaries benefited from the changes in business environment.

Signs of wider systemic change: crowding-in

Results Measurement System as per DCED guidelines External reports, if any

Outputs

Increased capacity of strategic private and public sector players in relevant support systems to service rural and urban growth sectors.

Capacity of players in relevant support systems.

Number of attributable innovative and commercially sustainable solution business solutions and regulatory reforms Additional attributable investment in relevant service delivery

Results Measurement System as per DCED guidelines

Outputs Outputs relate to the increased capacity of the strategic private and public sector players, with whom MDF partners to improve their provision of goods and/or services to target enterprises. Players at this level are those that the Facility partners with to increase or improve their ‘support’ or ‘service’ to enterprises within a sector in a manner that addresses the key constraints of the sector. What is measured here is support market output impact.

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Indicators Key indicators here are ‘increased capacity of players in relevant support systems’; ‘number of innovative solutions adopted to address particular constraints’ and ‘investments made by partners to produce and implement the innovative solution(s)’. This information will contribute to an understanding of whether the capacity of support market players to cater to the needs of enterprises in the sector does increase because of MDF activities. So it will provide a measure of whether partners have better capacity, are able to implement new innovative solutions and invest in implementing such solutions.

Measurement Information at this level will be collected from the partners that MDF works with, or by MDF itself, and the collection will be done while activities are being implemented or immediately after they have ended. Collecting this information early on will help monitor if the partnership is resulting in improved capacity of the support market player and if they see any value in the improved capacity. It can also help MDF adjust the support it is providing to the player and improve the effectiveness of its partnership.

The Facility will keep records of the old practices of the partners and comparable private and public sector players, and will compare that against any new practices adapted by the partners to make the support market work better. The Facility will also keep records of the additional investments leveraged in the production of the innovative solution. Additional investment leveraged from partners in partnerships could be a sign of ‘commitment’ to change serving as a proxy indicator to sustainability.

Outcomes Outcomes relate to how the enterprises in the sector respond to the improved service delivery or introduction of the innovative, commercially sustainable solution triggered by the partnerships. This is dependent on whether the solution is appropriate (affordable, timely, and user friendly) and whether it really addresses a critical constraint and provides improvements so good that target enterprises are willing to respond to it, invest scarce resources in it, and see the commercial benefit in using it.

Impacts at this level reflect the responses of enterprises to the new or improved solution within the sector and so are support market outcome impacts.

Indicators The indicators measured at this point relate to responses of target enterprises. It can be reflected by increased knowledge among target enterprises on better ways of doing things and/or an increase in demand of particular services. At this level the Facility will also monitor wider systemic change occurring in the form of crowding in. This is an indirect impact attributable to the Facility’s work and will be included in the results chains.

Measurement Measurement at this level will take place after the enterprises in the targeted growth sectors have received the new product/service/knowledge. In some cases, information collection on this level may be pushed back to when the target enterprises have had the opportunity to use the new product/service/knowledge so as to be able to also assess their satisfaction. In addition, MDF will also check for instances of other support market players starting to offer the new product, service, or knowledge; and instances of other target enterprises accessing the product, service, or knowledge Market Development Facility | 65

through the crowding-in of other support market players. There is a time lag between initial changes in outputs and the wider systemic changes, which should be considered for measurement. This lag is likely to be at least one business cycle or one cultivation season, often more before other service providers change their behaviour.

Purpose At the purpose level what the Facility aims to achieve and measure is improved performance and competitiveness of target level enterprises or target beneficiaries in each sector. Achievements at the purpose level are measured through the benefits that these enterprises receive as a result of their response to the new product or services. This is the sector level impact. If the enterprises within a sector become more competitive, the sector becomes more competitive.

Indicators This increased competitiveness of enterprises can be measured using different indicators depending on how the growth stimulated by MDF is best captured. If enterprises are generally unproductive or inefficient or need to switch to a new product, new service, or a different value proposition – then productivity is a good way to measure improvements to their competitiveness. If companies need to invest in their capacity rather than a change in production – then sales or market share are more appropriate. If enterprises depend on rapid product development or changes in product mix, then innovativeness could be considered an indicator.

To understand attribution, the Facility will also check to see if the improved performance of the enterprise is due to the innovation instigated by MDF in the support market. The Facility will also monitor another form of wider systemic change at this level: the copying of best practices by other enterprises or beneficiaries in the sector not directly reached through the partnership. This is a form of indirect impact attributable to the Facility’s work and hence will be included in the results chains in the Facility aggregate-level reporting. Just like crowding in, this phenomenon also comes after a period of time, for example one business cycle or one cultivation season.

Measurement Measurement at this level will be carried out at the end of the first business cycle of the target beneficiaries after they have received a particular output. Measurement is done through a sample study of the target beneficiaries to assess if the target beneficiaries get any benefits, how much benefit they get and, if appropriate, if they would recommend use of the output to others. A counterfactual is also measured here to assess the actual attributable impacts experienced by the target beneficiaries.

Goal The ultimate goal level impact of the Facility is its impact on poverty. The objective at this level is additional income for poor business-owners or labourers and additional employment for poor labourers. For measuring purposes, this is termed poverty level impact.

Indicators Additional income is defined as additional net income which is additional revenues minus additional costs. This takes into account additional investments or costs that were needed to earn this additional income or loss of other income sources in order to focus on earning this additional income.

Additional employment will be measured as additional net employment, and is calculated in man-days aggregated into Full Time Equivalents (FTEs).

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Critical pieces of information for this indicator are the number of enterprises and support market players experiencing a change in the targeted sector, and additional income earned. Data on additional income and jobs is collected and calculated at the same time that information on improved performance is collected and is also done via a sample study of target beneficiaries.

Measurement For this level, MDF measures additional income and employment. MDF uses calculations based on supporting research conducted at all levels, to determine the relationship between productivity increases and additional income, and between changes in production and additional labour needs. For MDF’s two goal level indicators: Additional income is measured as additional net income, taking into account additional investments that were needed to earn this additional income or loss of other income sources in order to focus on earning this additional income.

Additional employment is measured as additional net employment. For MDF, sustainable employment will be counted, not temporary or short-lived jobs. Employment created is calculated into Full Time Equivalents (FTEs) so that it can be aggregated across partnerships. For MDF, a person employed full-time is a person who works an aggregate of 240 10 days in a year and eight hours each day. Thus all employment generated will be measured in number of days actually worked and then divided by 240 to get the full time equivalent employment created. Here measurements may be based on actual counting or calculated based on labour elasticity and multiplier effects.

10 This is estimated as 5 workdays per week for 52 weeks a year minus 20 days when work may not be done due to national holidays, off time, etc. This also follows the DCED Standard for Results Measurement definition.

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Annex 3: MDF Results Estimations for Four Countries

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Market Development Facility Results Estimations Results Estimations for Four Countries MDF stimulates investment, business innovation and regulatory reform to create additional jobs and increase the income of poor women and men in rural and urban areas around the world. For this MDF enters into partnerships with strategic players in the private and public sector in each country in which it is active. Each partnership contains a tailor-made package of activities (an ‘intervention’) – implemented and cost shared by the partner – which enables the partner to innovate, invest and/or execute regulatory reform. The number of partnerships is dependent on the implementation period.

MDF measures the effect of the innovation, investment and reform it helped to unlock in terms of the additional jobs and income this generated. Together this forms the effective outreach of the Facility.

This results in the following results estimations (also referred to at times as targets) for four countries for the respective implementation period per country (see Table A3.1).

Table A3.1: MDF Results Estimations for Four Countries (for a four to six years implementation period)*

These results estimations are based on the scale that can be achieved according to original budget allocations. These estimations may be revised to account for the actual scale of implementation which can be achieved as a result of revised budget allocations.

Fiji Effective outreach Number of self-employed small farmers and businesses with increased income Number of new jobs created Investment leveraged (AUD) Effective partnerships resulting in business innovation, investment and/or regulatory reform Implementation window

Pakistan

14,200 12,000

Timor Leste 10,600 9,000

TOTAL

84,000 72,000

Country No. 4** 30,000 24,000

1,100 4.5M 85

800 2M 60

6,000 3M 40

3,000 2M 40

10,900 11.5M 225

138,800 117,000

2011-2017 2012-2017 2013-2017 2013-2017 (6 years) (5 years) (4 years) (4 years) * The figures presented are based from the calculations shown below * * Sri Lanka was used as a model for the estimations for Country 4 (if MDF would focus on the post-conflict north-east)

It should be emphasised that these are early estimations based on what is knowable at this stage for each country and given past experience. MDF results estimations will be reviewed and revised periodically, as more becomes known about the different factors influencing the volume of results that can be achieved.

The factors influencing the volume of results and the variations between countries are briefly explained in the next section of this paper. The section after that explains the indicators and calculations used for the results estimations in Table A3.1. If more countries would join MDF, estimations would be increased following the basic logic explained below.

Factors Influencing the Volume of Results and Variations between Countries The MDF approach can be applied in virtually every country, because it is based on an analysis, which allows it in each country to identify where it should work (pockets of pro-poor growth), what it should focus on (opportunities to unlock that growth) and with whom it should partner for this (the strategic players mentioned above). Following this approach, every intervention is shaped by the context in which it should work and tailor-made as per partner needs and ambitions. But this does not Market Development Facility | 69

mean that the volume of results is the same across countries. The volume of results is influenced by the following factors: 

Drivers of economic growth. Timor-Leste enjoys strong economic growth fuelled by investments in the oil industry, public spending, and to an extent also strong population growth. Pakistan achieves only about half of its economy growth potential when compared to other South Asian economies, caused by a number of factors, security being only one of them; domestic, and in particular urban demand is strong. Fiji struggles with the need to restructure its economy and build up an economic infrastructure in new export products.

Where demand is strong and there is capital circulating around for investment, growth will find it easier to take root.



Size of the economy and population density. Fiji has around 65,000 farming households whereas Pakistan has tens of millions. Product markets (e.g., for seeds) are much smaller in Fiji than comparable markets in Pakistan; services (e.g., market price information via mobile phone) are likely to reach many more people in Pakistan than are alive in the whole of Fiji.

This means that interventions in a large and, in places, reasonably densely populated country such as Pakistan are likely to have, on average, a much larger effective outreach than in small countries like Fiji or Timor Leste.



Maturity and diversity of the private sector, capacity of the public sector. In Timor Leste businesses are few and predominantly small, young, local and to a degree dependent on government contracts – the picture of young nation finding its feet after years of conflict.

In Fiji the scenario is more mixed, with smaller, younger and mostly local businesses leading the charge in diversifying the economy, but also with some larger local business playing a role and a diaspora providing investment capital. Pakistan’s economy is as diverse as the country itself.

This means that in a country like Timor Leste interventions are likely to be with smaller, newer business, with more time and resources going into ‘making these businesses work’ and with less effective outreach per business; that in Fiji there will be a mix of smaller and larger interventions; and Pakistan will likely gravitate towards larger interventions with more established companies, with more energy going into ‘making markets work’ (and thus a bigger effective outreach to small farmers and entrepreneurs).

A similar argument can be made in relation to the capacity of the public sector.



Factors influencing job creation. Labour costs, labour laws, their implementation (or not), the availability of (under) utilised family labour and the overall make-up of the economy all influence the extent to which growth creates employment or is in fact ‘job less growth’. In Fiji labour is several times more expensive than in Pakistan. Whereas in Pakistan increase in agricultural production is likely to create much additional employment, in Fiji it could speed up mechanisation.

This means that in a country like Pakistan each intervention is likely to create substantially more jobs than in Fiji or Timor Leste (which is compounded by the small size of businesses and smaller outreach mentioned above).



Factors impeding economic activity. Conflict, political instability, legal insecurity, security risks, environmental risks, adverse trade and taxation regimes, and the absence of infrastructure and utilities all negatively influence the pace of business.

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All countries in the MDF portfolio struggle with some of these issues, either because they are small island economies facing high transportation costs and strict quarantine measures, or because they are emerging out of conflict, or because they are struggling to contain political instability. Pakistan and Timor Leste are probably in a slightly more disadvantageous position here compared to Fiji. 

Implementation window. Finally, results are not produced evenly over the duration of a program, but are concentrated in the latter half of the program (years 3 and later), because interventions need to researched and negotiated and need time to mature.

This means that a longer implementation window is relatively more efficient and generates relatively more interventions.

Table A3.2 below summarises how the different countries in the emerging MDF portfolio compare against the factors listed here.

Table A3.2: Countries in the MDF Portfolio compared against Results Factors

Fiji Timor Leste Pakistan Country No. 4* Drivers of economic growth * *** ** ** Size of the economy and population density * * **** *** Maturity and diversity of the private sector ** * *** ** Job creation * * *** ** Factors impeding economic activity ** *** **** ** Implementation window **** *** ** ** * Sri Lanka was used as a model for the estimations for Country No.4 (if MDF would focus on the post-conflict north-east) NB: The maximum ‘score’ is five stars (*****), the minimum score is one star (*)

The MDF Indicators and Estimations Explained

Number of effective partnerships resulting in business innovation, investment and/or regulatory reform Each effective partnership between MDF and a partner in the private or public sector will result in business innovation or regulatory reform relevant for triggering sustainable and broad-based growth in a given country – this is the justification for entering in the partnership. As explained, because of its flexible, context-driven way of working, MDF can effectively work in different countries – but the nature of partners and the content of the partnership agreements will differ from one country to the next.

This means that for estimating the number of partnerships per country the main determining factors are: (1) the length of the implementation window; and, to a lesser extent, (2) the maturity and diversity of potential partners. In some countries, MDF is more likely to resort to more and smaller interventions, whereas in other countries to fewer and bigger ones, related to the amount of change partners can handle and what they want or need to go through. This in turn could influence the average total number of interventions to be implemented as shown in Table Three below. Factors impeding economic activity also play a role in all this but are not expected to be significant.

The number of partnerships is not evenly distributed between years: the first year is spent on analysing the economy, building up the capacity of the country team, building up a network of potential partners and starting negotiations, resulting in the first signed ‘deals’; in the second year the program takes off; and from the third year onwards it reaches a mature level of implementation. Thus, because of it longer implementation window, Fiji reaps relatively most benefits from the initial

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investments in research and organisational development. Table A3.3 shows the approximate number of effective partnership agreements in countries and the distribution between years.

Table A3.3: Approximate Number of Partnerships Agreements in Countries and Distribution between Years

This approximate numbers of Partnership Agreements are based on the scale that can be achieved according to original budget allocations. These approximate numbers may be revised to account for the actual scale of implementation which can be achieved as a result of revised budget allocations.

2011 -2012 2012- 2013 2013 - 2014 2014 -2015 2015 - 2016 2016 – 2017* Fiji 1 12 24 24 24 0 Timor Leste 1 10 24 25 0 Pakistan 4 12 24 0 Country No.4** 4 12 24 0 * The last year serves as a spill-over year to meet targets; new interventions will be planned once there is clarity on the contract beyond 2017 ** Sri Lanka was used as a model for the estimations for Country No.4 (if MDF would focus on the post-conflict north-east)

Investment leveraged Each partnership agreement contains an intervention plan in which both the partner and MDF invest.

‘Investments leveraged’ are the contributions from the partners – mostly in cash – to these action plans.

The investment volume per partnership agreement is predominantly influenced by: (1) the partner’s size and maturity (it is not sustainable to ‘overinvest’ in a small partner) and related to this (2) the scope of the intervention (big partners in big countries can handle bigger interventions); and (3) the type of investment needed (investments in market development depend more on relatively cheaper technical assistance; investments in enterprise development depend more on relatively more expensive investments in hardware). Other factors are not expected to play a significant role: in each country, with each partner, MDF negotiates a sustainable cost-sharing arrangement regardless of economic conditions.

As mentioned above, in Fiji MDF will work with a mix of larger and smaller partners and a mix of activities, some geared toward market development, some also toward the enterprise development that sometimes must precedes market development. In Timor Leste the partners are expected to be smaller, with more efforts going into setting up and growing small businesses. In Pakistan the expectation is there is more scope to strike bigger deals with bigger partners in addition to work working with smaller partners. Table A3.4 shows the estimated average investment expected to be leveraged per partner per country. It should be noted that agreements and leverage could differ substantially from one partner to the next.

Table A3.4: Estimated Investment Leveraged per Country (AUD)

No. Partnerships Fiji

85

Type of partnerships expected

Average estimated Investment per partner 53,000*

Total Investment Leveraged

Market development and enterprise 85 * 53,000 development with a mix of partners Timor Leste 60 Enterprise development and market 33,000 60 * 33,000 development with predominantly small partners Pakistan 40 Predominantly market development 75,000 40 * 75,000 with a mix of partners Country No.4** 40 Market development and enterprise 50,000 40 * 50,000 development with a mix of partners * Based on the figures of the first partnerships, when estimations for investment leveraged for all countries were developed ** Sri Lanka was used as a model for the estimations for Country No. 4 (if MDF would focus on the post-conflict north-east) Market Development Facility | 72

Number of jobs created MDF will measure the net additional employment created as a result of the investment, business innovation and regulatory reform unlocked by the MDF supported partnership. MDF defines job creation as the number of net additional full-time equivalent (FTE) jobs created, with 220 days of paid labour equalling one FTE. Two part-time jobs, each for 110 paid days per year, together are one FTE. The number of jobs created is expected to be primarily influenced by: (1) size of the economy), (2) the size and maturity of the partner, and (3) factors impeding economic activity (as these three together influence the scope/outreach of the intervention; and (4) the cost of labour in a given economy. The other factors mentioned above do play a role as well, but for estimating a result these four are deemed most influential.

Fiji is expected to show a scenario in which a limited number of mostly full-time jobs are created as a result of businesses investing in expanding their business. Seasonal work is expected to be less significant. In Timor Leste the number of full-time jobs in expanding business will be a little less (the businesses are smaller), but there is expected to be more scope in other jobs around agriculture (service providers, distribution). Pakistan is again different, with much more scope for employment creation in and around agriculture, seasonal and full-time. It should be noted that especially in Pakistan job creation could be higher if there would be more certainty that political instability and security risks would not impede outreach. Table A3.5 shows the estimated average job creation per partnership per country.

Table A3.5: Estimated Job Creation per Partnership per Country (FTE)

No. Partnerships Fiji

85

Factors expected to influence Job creation

Average estimated FTE Jobs created Per partnership 13*

Total FTE jobs created

Mix of partners, labour relatively 85 * 13 more expensive, relatively less scope of much rural job creation Timor Leste 60 Smaller partners, lack of skilled 13 60 * 13 workers (cheap skilled labour brought in from outside), good scope for rural job creation Pakistan 40 Bigger partners, bigger 150 40 * 150 interventions, labour cheap Country No.4** 40 Mix of partners, labour relatively 75 40 * 75 cheap * Based on projections for the first partnerships, when estimations for job creation for all countries were developed ** Sri Lanka was used as a model for the estimations for Country 4 (if MDF would focus on the post-conflict north-east)

Number of self-employed small farmers and businesses with increased income MDF will measure the net additional income that small farmers and business enjoy as a result of the investment, business innovation and regulatory reform unlocked by the MDF supported partnership.

The number of self-employers farmers and small businesses reached is expected to be primarily influenced by: (1) size of the economy and population density, (2) the size and maturity of the partner, and (3) factors impeding economic activity (as these three together influence the scope/outreach of the intervention).

Fiji and Timor Leste are expected to have interventions with a relatively smaller outreach. Pakistan on the other hand is expected to show a substantially larger outreach. It should be noted that especially in Pakistan this outreach could be higher if there would be more certainty that political Market Development Facility | 73

instability and security risks would not impede this outreach. Table A3.6 shows the estimated outreach to small farmers and business per country.

Table A3.6: Estimated Average Small Farmers and Firms Reached per Country

No. Partnerships Fiji

Factors expected to Influence income Generation

85

Average estimated No. of farmers and Businesses reached Per partnership 131*

Total no. of Farmers and Businesses Reached 85 * 131

Mix of partners in a small economy; many interventions with a focus on supply chains (typically smaller interventions) Timor Leste 60 Relatively smaller partners in a 150 60 * 150 small economy yet with likely more interventions focusing on inputs (typically interventions with higher outreach) Pakistan 40 Bigger partners in a bigger 1,800 40 * 1,800 economy Country No.4** 40 A mix of partners in a medium600 40 * 600 sized economy * Based on projections for the first partnerships, when estimations for outreach for small farms and firms for all countries were developed ** Sri Lanka was used as a model for the estimations for Country No.4 (if MDF would focus on the post-conflict north-east)

Effective outreach Effective outreach refer to the number of individuals – farmers, small business owners, workers – who themselves experienced a real, tangible change in income. The number of individuals ‘touched’, for instance those who were exposed to a new technology but did not use it to their advantage, will be much higher. Also the total number of individuals benefiting in more indirect ways, for instance, as a result of more money being available for household expenditure will be much higher.

The formula for estimating total effective outreach used here = (total number of small farmers and business owners who experienced an increase in income) + (all full-time equivalent jobs * 2). This assumes that only two individual benefitted from each FTE job created. In reality this is likely to more, especially in countries such as Pakistan in which labour is cheap.

Thus, the formula used here is conservative; effective outreach is likely to be higher than estimated here. Table A3.7 shows the total estimated effective outreach per country.

Table A3.7: Estimated Total Effective Outreach

Estimated FTE jobs created Fiji Timor Leste Pakistan Country No.4

1,100 800 6,000 3,000

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Estimated effective Outreach through Job creation 2,200 1,600 12,000 6,000

Estimated effective Outreach to Farmers and Businesses 12,000 9,000 72,000 24,000

Total effective outreach 14,200 10,600 84,000 30,000 138,800

Annex 4: Intervention Detail Sheets MDF Partnerships as of December 2013

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Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Tripeak Farms Upgrading production capacity to increase the year-round supply of hydroponic produce to the tourism sector, and piloting a low-cost backyard lettuce hydroponic system FJ/TO/I6 August 2013 Paul Valemei, Florence Nand Tourism and Related Support Industries: This intervention relates to increasing hotel and resorts access to year-round fresh and processed (HACCP certified) produce and foodstuff

Background information A recent study by MDF found that a considerable proportion of fruits and vegetables being used by the Tourism industry is imported when these items cannot be sourced locally. Many fruit and vegetables in Fiji are grown seasonally, typically only six months during the year. Thus, if the period of production were to be extended, there is strong potential for greater purchases of locally grown produce by the Tourism industry. As weather patterns are the major factor disrupting farmers from growing year-round, especially in the rainy season, introducing protected cropping techniques such as hydroponics is one solution that could go some way in addressing this constraint. As a part of MDF’s strategy to increase the availability of quality fresh produce to resorts year-round, MDF has partnered with Tripeak Farms, one of the leading companies in Fiji with considerable experience in growing fruits and vegetables utilizing hydroponic growing methods. Tripeak Farms works closely with hotel and resort customers in identifying, experimenting and commercially supplying exotic varieties of lettuce and herbs demanded by their restaurant kitchens. MDF is working with Tripeak Farms to upgrade their production capacity to produce new varieties, as well as assist in the setup of low-cost lettuce hydroponic systems among village and individual outgrowers. Bringing lowcost hydroponic systems to rural farmers will allow them produce year-round and access the high-value tourism market, increasing their incomes. By increasing the supply of produce from specialist local growers like Tripeak Farms and its network of outgrowers, the tourism sector is presented with viable locally grown alternatives to purchasing imported produce.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better

•

Outgrowers earn additional income from selling more lettuce year-round.

•

Outgrowers harvest lettuce and sell it year-round through Tripeak Farms to the tourism industry.

Tripeak Farms sells more produce from it own production facility as well as outgrowers to its tourist hotel, resort and restaurant clients all year round.

The tourism industry uses an increased volume of locally grown hydroponic produce, subsequently replacing imports during the off-season; and increasing demand for local produce.

Tripeak Farms produces greater volumes and varieties of lettuce, herbs and vegetables from their expanded production facility.

Outgrowers are fully knowledgeable about growing lettuce, apply correct techniques and have access to hydroponic supplies for maximum year-round production.

Tripeak Farms will also supply hydroponic equipment and supplies to new outgrowers interested in hydroponic growing.

Tripeak Farms has the physical and technical capacity to increase its production of in-demand and exotic varieties of vegetables for year-round supply to hotels and resorts.

Tripeak Farms provides training to outgrowers on growing lettuce using their new low-cost systems

• • • • •

Output: Partner implements activities, increases capacity

•

Activities under Partnership Agreement

•

•

•

MDF will support the partner in upgrading their production capacity to produce new varieties of hydroponically grown lettuce, herbs, and other salad vegetables in demand by hotels and resorts. This will be done through expanding their production facility and improving their technical ability with technical assistance.

MDF will also support the partner in setting up low-cost lettuce hydroponic systems among a select group of village and rural based outgrowers.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: This intervention seeks to increase the year round supply of fresh produce to the tourism sector using low cost hydroponic systems that enable intensive continuous growing throughout the year.

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Standard Concrete Industries Standard Concrete Industries: Establishing the supply chain for locally produced agricultural lime FJ/HO/I1/1 July 2012 Miliana Ratu and Ritesh Prasad Horticulture and Agro-Export: This intervention will provide access to quality production inputs and equipment.

Background information

Currently, agricultural lime is imported in Fiji and so it is very expensive and rarely used. As a result, areas under intensive cultivation face acidic soil conditions which limit the uptake of nutrients from the soil and decrease farmers’ yields. Standard Concrete Industries (SCI) is the largest manufacturer of concrete masonry blocks in Fiji and has an established lime quarry in Tailevu and other licenses elsewhere. The lime extracted is currently used for construction purposes but has not yet been utilised for agricultural or horticultural practices in Fiji. So SCI seeks to diversify their operations into the production and distribution of quality agricultural lime. MDF is working with SCI to first determine potential demand for agricultural lime and then invest in its production and distribution. Because it is a new product in Fiji, significant promotion and educational activities will be needed to spread awareness on the benefits and proper use of lime. Establishing a local supply of agricultural lime will provide a low cost solution for farmers; while also providing farmers with knowledge on the importance of lime to maintain soil structure and fertility. Improved access to and knowledge of agricultural lime can help to improve soil pH, improve yields and increase incomes.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better

• Increased cultivation, harvests and sales will lead to increased incomes for farmers and new employment on farms.

• Farmers’ use of lime will reduce the acidity of soils and increase the yield and quality of their crops. Farmers will be able to harvest more from their land and can even expand cultivation, which will allow them to sell more throughout the year.

• A consistent supply of affordable lime will encourage farmers to engage in better soil management practices.

Output: Partner implements activities, increases capacity

• Once the market feasibility study is complete, SCI will invest in the required machinery and begin producing agricultural grade lime from its quarries in Fiji.

• The marketing and distribution plan will be in place ensuring that the product is readily available to retailers and farmers. SCI will also engage in educational and promotional activities to educate farmers on the benefits and correct use of agricultural lime.

Activities under Partnership Agreement

• A market feasibility study carried out with support of MDF will provide information on the potential demand for agricultural lime in Fiji. Based on this information, SCI will seek Board for approval to invest in the appropriate machinery required to manufacture agricultural grade lime.

• The study will also produce a soil map of Fiji that illustrates the current soil conditions and crops per area. This map will be utilized for promotional and educational activities. Soil testing services will also be examined, however may require a separate intervention in the future.

• MDF will also support the initial move into the production of agricultural lime and the development of a plan for marketing and distribution to ensure key marketing channels are identified and consumers educated on the use and application of lime. This plan will include promotional activities such as demonstration plots and awareness campaigns.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

• As more farmers in Fiji become aware of the benefits of agricultural lime and use it correctly, and locally produced agricultural lime is available at an affordable cost, farmers will use lime to improve their soil conditions.

Innovation: The new product being introduced by this intervention is agricultural lime which is will be locally mined and commercially produced for the first time in Fiji.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

South Pacific Elixirs Establishing a supply chain of yaqona (kava) for a new beverage product for export markets FH/HO/H2 December 2012 Semesa Sikivou and Miliana Ratu Horticulture and Agro-Export: This intervention will provide access to more diversified and new end markets, information on cultivation techniques and input use, and access to quality production inputs

Background information

South Pacific Elixirs (SPE) Ltd is an Australian based company that has recently established itself locally to produce a fruitflavored kava infused beverage targeting the growing relaxation market in the United States and other export markets. SPE has developed a unique way of processing kava to produce six naturally fruit-flavored kava drinks, branded as TakiMai. The drinks use Fijian grown Kava which is sourced and processed in its facility on Ovalau Island. The Taki Mai product is a unique opportunity for Fijian farmers to access export markets through the processing a local crop, which is a major and traditional source of income, to meet international tastes.

To meet its projected demand for TakiMai, three specific varieties of kava are required. To ensure that farmers are planting enough of these varieties, SPE is establishing a supply system to ensure a consistent volume and standardised quality. This includes a mixed system of a company-run nucleus farm, outgrower’s scheme, and nurseries to reproduce and supply farmers with the selected varieties for planting. The outgrower’s scheme will help farmers to plant the right varieties and help them to improve their farming practices, increasing their yields, their turnover and their income.

SPE has also taken up plans to become HACCP compliant to ensure greater market access internationally, which could lead to SPE sourcing from an even larger number of kava farmers throughout Fiji. As the Taki Mai brand expands, SPE will begin to source kava from other areas around Fiji, improving Fijian farmer’s access to export markets.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity Activities under Partnership Agreement

• As a result of selling more kava plants on a consistent basis, farmer’s income will increase.

• Using the skills, techniques and seedlings provided by SPE, farmers increase their kava production and yields and harvest and sell more high-quality kava plants to SPE for processing for export.

• Through SPE’s program, kava farmers learn and use improved techniques for: pest and disease management, soil management, correct use of fertilisers, replanting and harvesting and post-harvest handling.

• Farmers also have access to the needed varieties of kava plants which are in-demand by SPE and plant more of these three varieties.

• Through its sourcing and Outgrower scheme, SPE produces seedlings for the required varieties of kava and provides cultivation training and nursery seedlings to kava Outgrowers in Ovalau.

• SPE processes the kava at its Ovalau facility, which is HACCP certified.

• SPE is setting up its processing facility on Ovalau island where it will purchase kava plants directly from farmers. The factory will process green kava plants for use in the Taki Mai beverage.

• MDF is supporting SPE to expand its processing facility and reach HACCP certification and Good Manufacturing Plan (GMP) for increasing growth into export markets.

• MDF is also supporting SPE to implement its plan for increasing its kava supply through a nursery for kava seedling production and by providing extension services to farmers through an Outgrower scheme.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: The first local commercial producer of kavalactones from fresh green kava roots, targeting export markets. SPE will process kava at their factory in Levuka and will be establishing a nucleus farm and providing grower support for outgrowers.

Processing kavalactones for kava-infused products that they will export.

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Travel Arrangements Fiji Ltd t/a Pacific Destinationz Pacific Destinationz: Upgrading and creating new community-based activities throughout Fiji to host more tourists FJ/TO/17/1 December 2013 Paul Valemei and Florence Nand Tourism and Support Related Industries: This intervention will enable tourists to access more diversified shopping and entertainment activities, and, for tourists to access more convenient, better coordinated and less costly transport linkages.

Background information Pacific Destinationz is a major inbound tour operator that offers transport services to the tourist market. The company serves both corporate and individual clients and currently offers day tours to a number of activity providers, such as village-tours, cultural excursions and adventure activities, around Viti Levu Island. Most activity providers (especially the village-based operations) are located in remote areas with unreliable and infrequent local transport linkages. Furthermore they often lack the marketing and reservation systems to adequately tap into the tourism market on their own. But working with inbound tour operators like Pacific Destinationz allows these activity providers to make it on the tourist map. MDF is partnering with Pacific Destinationz to expand into more activity sides, particularly in less visited areas such as Vanua Levu, which will be offered through the company on its tours. The company will hire a relationship manager to work directly with activity providers to improve their services and physical capacity for hosting tourists and support the marketing of these new activity providers.

Pacific Destinationz will also offer convenient and reliable transportation services to the activity sites, as well as market the activity providers through their extensive network of local and international travel agents. As the local and village-based activity providers receive more tourists – their income will grow. Growth of Pacific Destinationz, and especially their activity tour portfolio, will in turn aid the development of the tourism entertainment and activity market in Fiji.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better

• The employees of the activity providers and village-based men and women will earn additional income from hosting more tourists at these sites.

• Activity providers also receive increased bookings from other tour operators and continue to expand.

• Pacific Destinationz is able to sell better and more consistent tours to these activity sites across Fiji.

Output: Partner implements activities, increases capacity

• Pacific Destinationz work with the local activity providers and improve their ability to provide better and more consistent experiences/services to their guests. Further support provided by the Relationship Manager will involve quality checks and ongoing advice.

Activities under Partnership Agreement

• MDF is supporting Pacific Destinationz to hire a relationship manager to work directly with activity providers to raise their level of service and physical capacity for hosting future tours.

• MDF is also assisting Pacific Destinationz in marketing new activity providers.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

• Activity providers have improved quality of service, better knowledge of how to have an effective tourist product, and are marketed more widely, leading to an increased number of tourists visiting.

Innovation: This intervention will provide tourists with a wider variety and better access to tourist activities; while building the capacity of local villages, communities, and activity providers to host tours.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Mindpearl Fiji Establishing a 24/7 reservation system for small and medium-sized tourism properties and activity providers throughout Fiji FJ/TO/I8 December 2013 Paul Valemei and Reshika Kumar Tourism and Related Support Industries: This intervention will enable tourists to have better access to travel information and bookings.

Background information The underdeveloped nature of booking and reservation systems in the tourism sector, especially among small and medium sized enterprises, limits tourists’ options for planning and booking their holidays in Fiji. Apart from larger 4 and 5-star resorts located in the West, most tourist accommodation and activity providers may not have sufficient resources to offer 24-hour call and email reply services. Thus there are can be lost bookings and revenue incurred by these small and medium sized enterprises when tourists who originate from different timezones are unable to book by phone, or obtain a reply by email in a timely manner. Because of their size and volume, it is not always feasible for these small businesses to establish 24/7 inhouse booking options. This then calls for an ICT service provider which provides a cost effective and reliable booking service which contributes to better returns for businesses. For such reasons, MDF has partnered with Mindpearl Fiji, a Business Processing Outsourcing (BPO) specialist to provide 24/7 reservation and call centre services to small tourist businesses.

Mindpearl will begin with a pilot test for six months to demonstrate results and then will market the service more widely throughout Fiji and possibly the Pacific. With this system, tourists overseas will get to interact with a live person who will facilitate and provide real-time reservation bookings 24 hours a day and 7 days a week. Mindpearl’s BPO business model provides a modern solution for improving the small/medium sized resorts booking services, and which will help tourists to access better booking services so they can adequately plan trips in advance, resulting in longer stays and visits to more locations. With this, small resorts will grow, and local communities and workers will benefit.

Activities and Results Goal: Additional jobs • As a result of the expansion in hotels and resorts, employment at the resorts will increase and income created together with additional income for hotel and resort employees.

Purpose: The poor • As a result of increased tourist bookings through Mindpearl’s 24/7 reservation service, hotels benefit from and resorts occupancy rates increase as they receive more visitors, which will then lead to improved enterprise growth and expansion. performance and sector competitiveness Outcome: Markets • Hotels and resorts use the new service and tourists from overseas make bookings through around the poor wok Mindpearl’s 24/7 reservation service. better Output: Partner implements activities, increases capacity

• With trained staff and new clients, the Mindpearl will offer its 24/7 reservation service to resorts/hotels. As Mindpearl’s initial clients start to show real results, more hotels/resorts will sign up with Mindpearl for the service.

Activities under Partnership Agreement

• MDF is supporting hiring and training of new reservation agents and team leaders in the 24/7 reservation system and customer relations.

• MDF is also supporting Mindpearl to market its new 24/7 reservation service while Mindpearl will work to secure its hotel/resort clients.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: A new outsourced 24/7 reservation service for small and medium sized tourist businesses in Fiji.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Maqere Exports Co Ltd Strengthening Maqere’s backward linkages and upgrading processing capacity to meet expanding demand of target markets FJ/HO/I6 January 2014 Dharmendar Chand and Semesa Sikivou Horticulture and Agro-Exports: This intervention will improve backward linkages and establish private extension services

Background information Maqere Exports Co Ltd is an agricultural export business which sources a majority of its commodities from the Ra-Lautoka corridor. Maqere’s export commodities also include rootcrops, seafood, kava and coconuts. Maqere currently exports all commodities to Auckland. Maqere has noted increasing demand over the last few years which they have been unable to tap into owing to inadequate volumes and insufficient space and processing capacity. MDF is partnering with Maqere to help them utilise their expanded processing facility and improve sourcing of local produce from farmers. MDF’s primary activity is contribution towards private extension services for Maqere, which will equip nearby farmers with advice on better farming, crop care and post-harvest practices. Maqere is strategically placed as the only exporter of horticultural crops operating within the vicinity, which is beneficial to farmers along the Ra - Lautoka corridor who do not have to incur large transportation costs to send their produce to other markets. As such, Maqere is the best candidate for exploring private extension services in the area. Farmers in the area will access to the services and advice necessary to increase their yields, as well as have guidance on how to meet the expanded volumes needed by Maqere, thereby increasing their sales. MDF is supporting Maqere to utilise its expanded processing facility, which will enable Maqere to process increased volumes. This will ensure that Maqere is able to meet expanding demand of its target markets, and therefore continue to expand its sourcing in a sustainable manner from farmers in the area.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better

• Farmer’s income increases as they sell more high-quality fruits and vegetables.

• As a result of Maqere’s growth and expansion, more jobs are created in its processing facility.

• As a result of farmers increasing their cultivation, farmers increase the amount of farm-labour hired.

• Farmers implementing TFA advice experience improved yields and are able to improve the quality of their produce.

• Farmers sell more of the quality produce to Maqere.

• Maqere increases its exports to New Zealand and continues to expand.

• Farmers practice improved farming and post-harvest techniques.

• Maqere processes larger volumes of produce, and is therefore able to buy more produce from farmers.

Output: Partner implements activities, increases capacity

• Maqere, through its TFA, provides advice to farmers on better farming, post-harvest techniques, and export demand.

• Maqere’s expanded facility is fully operational and can operate all equipment with increased storage and processing capacity.

Activities under Partnership Agreement

• MDF is supporting Maqere to hire a Technical Field Agent (TFA) who will provide extension services to supplying farmers.

• MDF is supporting Maqere to purchase and install 3-phase switchboard so that it can begin using its new expanded processing facility and machinery without interruption.

• MDF is supporting Maqere to purchase and install a walk-in-chiller, expanding its capacity for storing fresh produce purchased locally.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: Maqere is the only exporter operating in the vicinity regularly sourcing from farmers in the region.

Implementing new private extension services enabling increased quantity and quality of produce from farmers.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Labasa Farm Fresh Expansion of export processing facility and development of sustainable backward linkages FJ-HO-I4 April 2013 Dharmendar Chand and Andrew Reddy Horticulture & Agro-Exports: Establishing backward linkages and private extension services for farmers in Vanua Levu

Background information

Labasa Farm Fresh (LFF) is a recently established exporter of processed fruits and vegetables and is the only one located in Labasa, Vanua Levu. The business sources fresh produce from local farmers, processes, and exports the commodities to Australia. The business provides a new market opportunity for farmers growing fruits and vegetables in Vanua Levu, which otherwise has limited access to export markets. However the growing Australian market demand and number of orders coming in has outpaced the company’s capacity to process local produce. To address this gap, LFF will increase the size of its processing facility and become HACCP compliant so that it can source more produce from local farmers, increase processing and increase sales into Australia. HACCP compliance will enable LFF to reach greater number of end markets for its products.

Secondly, to source more fruits and vegetables, LFF will also work with local farmers to ensure that the right volume, variety and quality is produced to meet the export demand. To achieve this, LFF will hire an in-house private extension officer, or Technical Field Officer. The Technical Field Officer will assist up to 200 farmers throughout Vanua Levu by training them in improved cultivation practices which are expected to improve the quality and quantity of their yields. LFF will buy a greater variety and volume of fruits and vegetables for export processing, creating increased income for farmers. In addition, the processing facility will create employment and a steady source of income for low-skilled factory workers in Labasa.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better

• As a result of producing and selling more crops, farmers will earn more income and also employ additional farm laborers in their farms.

• As a result of processing increased volume of crops, LFF will earn more income, employ more staff in their processing facility and these staff will also earn more income.

• Farmers in Vanua Levu produce fruits and vegetables according to the export demand and sell more to export markets through LFF. • As LFF purchases an increased volume, improved quality and better range of crops from farmers in Vanua Levu, it can process more and continue expanding its exports to the Australian market.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

• Farmers practice improved farm cultivation techniques as a result of training and increase the volume, quality and range of crops produced.

Output: Partner implements activities, increases capacity

• LFF works directly with farmers in Vanua Levu through its Technical Field Officer to improve their knowledge and skills to increase crop yields and improve quality to meet the larger export volume.

• LFF has increased capacity for processing local produce for export according to HACCP requirements.

Activities under Partnership Agreement

• MDF is supporting LLF to finalise its business plan so that the right investments can be made to expand processing and exports.

• MDF is also working with LFF to ensure its new processing facility is HACCP compliant, a key for remaining competitive in the export market.

• MDF is also assisting LFF to develop private extension program by hiring an in-house Technical Field Officer who will prepare a sourcing plan and work with farmers to improve farming practices.

Innovation: To establish and increase capacity to process high quality semi processed vegetables in Vanua Levu for the Australian market.

At the same time establish and strengthen its supply base by offering private extension services.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Prasad’s Agricultural Services Limited t/a Farmboy Farmboy: Establishing an industrial HACCP kitchen for the processing of horticulture produce for hotels and resorts FJ/TO/I3/1 August 2012 Florence Nand and Paul Valemei Tourism and Related Support Industries: This intervention increase access to year-round fresh and processed (HACCP-certified) produce and local food stuff.

Background information The tourism sector in Fiji is growing steadily and offers opportunities for local companies to supply products and services to the sector which provide hotel and resorts a consistent supply of quality goods. Currently, hotels and resorts import a large amount of fresh and processed foods because of difficulties sourcing locally the needed quantity and quality on a consistent basis. Farmboy is a specialized wholesaler that supplies the hotels and resorts in Fiji with local agricultural produce yearround. The company will expand with a new industrial kitchen to supply more fresh and processed items, such as juice, pulp and frozen fruits, to the tourism industry. With an increased capacity to process and store more fruits and vegetables, Farmboy will be able to source more produce from farmers, and process and sell in the off-season when particular crops are not in ready supply. Farmboy will also be able to process fruits and vegetables that would normally be rejected under the high-quality standards of the tourism industry. For these reasons, Farmboy can offer a competitive price to farmers. Farmboy will offer farmers advice on what to grow, when to plant, how to manage diseases, post-harvest handling, and grading for the hotel industry. The company will also help farmers access the necessary seedlings for crops in demand. As a wholesaler, Farmboy will support diversification in agriculture, encouraging the cultivation of other horticultural crops outside of traditional cashcrops and establish a stronger link between the tourism industry and farmers in Fiji.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity Activities under Partnership Agreement

• As a result of selling more fruits and vegetables, growers’ income will increase. Increased cultivation and processing will create new employment on and off farms.

• Farmers will cultivate more produce and, by selling through Farmboy, will have access to the growing tourism market with fewer rejections. This improves the links between farmers and hotels and resorts.

• A consistent supply of quality produce for hotels and resorts contributes to the use of locally sourced foods within the industry, decreasing the need for imports.

• Farmers will benefit from increased sourcing and extension services provided by Farmboy.

Knowledge of what to grow, quality standards, volumes required, and grading will allow farmers to cultivate crops which meet the demand and requirements of the local tourism industry.

• With a new industrial kitchen and storage facility, Farmboy will be able to process and sell three-times more fruits and vegetables for the tourism industry. Farmboy will buy more fruits and vegetables from existing farmers, and will increase his supplying farmers to 325.

• Farmboy will also work closely with farmers so that they get the advice and inputs they need to grow the right quantity and quality of fruits and vegetables in demand.

• Farmboy’s is setting up Fiji’s first industrial HACCP-ready kitchen supplying the tourism sector with processed produce. Increasing his capacity to handle fruits and vegetables, especially for processing and value-added commodities will allow him to buy more produce from a larger number of growers.

• MDF is assisting Farmboy to establish the industrial kitchen which will be HACCP-ready, and which will increase the amount of fresh produce that Farmboy can buy, process and store to supply resorts and hotels year-round.

• MDF is also supporting Farmboy to improve backward linkages with farmers to increase quantity and improve the quality of supply, and to diversify into crops which are demanded by the tourism industry.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: This intervention will improve year-round supply of horticulture produce to hotels and resorts in Fiji.

Growers will improve and diversify cultivation through the advice provided by Farmboy.

Intervention Details: FIJI Partner: Title: Intervention Number: Date: Intervention Manager(s): Intervention Area:

The Crab Company of (Fiji) Limited Establishing production of local mud crabs through hatching, nursing and outgrowing to supply the tourism industry and export markets.

FJ/TO/I4/1 September 2012 – June 2013 Paul Valemei and Florence Nand Tourism and Related Support Industries: This intervention will increase access to year-round fresh and processed (HACCP certified) produce and food stuff.

Background information

The tourism sector in Fiji is growing steadily and it offers opportunities for local companies to supply products and services to the sector which provides hotel and resorts a consistent supply of quality goods. The current supply of crabs in Fiji is made up mostly of wildly caught crabs which vary in quality and consistency, and therefore their use in local resorts and hotels is limited. Chefs would use more crabs on the menu if they could secure a consistent and quality supply of sustainably farmed crabs. The Crab Company of (Fiji) Limited (CCF) is developing an integrated process for the environmentally sustainable production of local crabs for the tourism industry and export markets that includes hatching, nursing and outgrowing facilities.

This will be the first privately owned hatchery in Fiji. The company will also establish an outgrower program, providing technical assistance to crab-farmers and offering income-generating opportunities in coastal villages, particularly for women. This will establish a year-round supply of high-quality crabs.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity

Activities under Partnership Agreement

• Outgrowers in coastal villages engage in new income-generating activities and increase their income by selling sustainably farmed crabs on a year-round basis.

• Outgrowers will produce and sell more crabs through Crab Company of Fiji to the hotels and resorts in Fiji.

• The company will supply high-quality crabs to the tourism industry and local markets and can potentially move into exports. This establishes stronger links between local producers and the tourism industry and increases local food sourcing.

• With established mangrove pens, increased knowledge and the required inputs, outgrowers will produce up to 100,000 crabs annually in an environmentally friendly and sustainable way, selling them directly back to CCF. • The number of outgrowers is expected to reach 100, the majority of which are women.

• CCF will increase its capacity to supply ponds and individually-managed outgrower pens with crablets for growing and harvesting. An established hatchery and nursery operating at full scale will produce 300,000 crablets.

• An initial outgrower scheme will be established as a pilot, including 20 crab farmers. CCF will provide training, extension services and access to finance for outgrowers to manage sustainable crab farming.

• The company is investing in the expansion of hatchery production, nursery ponds, and outgrowing capacity to produce more environmentally sustainable crabs.

• MDF will support CCF in the expansion of the nursery and outgrower pens in mangroves which will expand production capacity.

• If required, an Environmental Impact Assessment will carried out for activities in the mangroves and necessary steps will be taken to comply with Fijian and Australian laws and standards.

• CCF will develop a pilot outgrower scheme for 20 outgrowers in coastal villages that will be scaled up over time. This will include training, technical assistance, input supplies and access to finance.

• MDF could also support additional research for expanding into exports.

Outreach and Employment: To be determined.

Innovation: This intervention will result in establishing a supply chain for high-quality and environmentally-friendly farmed crabs for the tourism and export markets. This is the only privately owned hatchery in Fiji. It also establishes an outgrower scheme whereby crabs can reach maturity in mangrove pens managed by outgrowers.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Bula Island Foods Supplies BIFS: Establishing backward linkages and private extension services for farmers FJ/HO/ I 3 March 2013 Dharmendar Chand and Andrew Reddy Horticulture and Agro-Export: This intervention will improve backward linkages and private sector extension services and improve access to more diversified end markets.

Background information Bula Island Food Supplies Limited (BIFS) is an exporter of local fresh produce, frozen produce and dry goods to Australia.

BIFS has recently expanded its processing facility to diversify its product base to cater better to the demands of the Australian markets, and seeks to expand its markets into new supermarkets. In order to enter these new markets, BIFS must meet requirements to be competitive including supplying the right volume of produce and improving the packaging for its products.

To achieve these aims, BIFS will upgrade its packaging material and increase its supply base, which would then enable the company to consistently, attractively and competively sell its products in the Australian Supermarkets. Packaging materials will be improved so that BIFS products can complete with processed produce from around the world, and will include the necessary information required by Australian consumers. The produce is currently being sourced from approximately 50 to 60 farmers around Viti Levu and Tavueni. BIFS is planning to hire its own Farm Manager to provide private extension services to farmers. The Farm Manager will work closely with the current and additional supplying-farmers to increase their yields and quality and plant the right types of crops. BIFS will grow its supply base to reach up to 150 to 200 farmers to produce sufficient volumes and export quality produce. Farmers will benefit by improving production techqniues and as a result, will increase their production for export, sell more to BIFS and increase their incomes.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness

Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity Activities under Partnership Agreement

• Increased cultivation, harvests and sales will lead to increased incomes for farmers and new employment on farms for farm labourers.

• Farmers will increase their production of export-quality fruits and vegetables, and sell more to BIFS for export.

• BIFS will have a steady supply of quality fruits and vegetables to increase exports and secure new markets in Australia.

• As other exporters see the benefit in providing private extension services to secure sources of high-quality produce, other farmers around the region will also be able to learn and practice better cultivation techniques to increase their yield and supply the export market.

• Other farmers will also copy cultivation techniques to improve their yields, quality and sell their produce to exporters, or other market such as tourism.

• Farmers will have access to private extension services, getting advice on better cultivation techniques, and export market requirements. With this advice they will be able to produce export quality fruits and vegetables and sell more to export markets.

• With new packing materials, BIFS can sell more processed fruits and vegetables in a greater number of Australian supermarkets.

• BIFS has an improved sourcing plan developed by the Farm Manager, who works closely with farmers to establish a consistent supply base of export-quality fruits and vegetables. The Farm Manager provides information to farmers on better cultivation practices, quality requirements, and crop types and volumes.

• MDF is supporting BIFS to develop appropriate packaging material that meets the Australian Food and Safety standard requirements which will allow the company to sell its products in more diverse retail outlets throughout Australia.

• MDF is also assisting BIFS to develop stronger backward linkages to source additional volumes and influence farmers in terms of crop choice and cultivation techniques with the help of a farm manager.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: The new market for BIFS in Australian supermarkets through improved packaging will enable them to increase their product presence, increase sales, and source more from local producers.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Managers: Intervention Area:

Easy in (Fiji) Limited trading as Adi Chocolates Fiji Adi Chocolates Fiji: Upgrading chocolate manufacturer facility and developing backward linkages to cocoa farmers in Vanua Levu FJ/TO/I2/1 June 2012 Florence Nand and Paul Valemei Tourism and Related Support Industries: This intervention will contribute to more diversified shopping, entertainment and activities for tourists and increase access to year-round fresh and processed (HACCP certified) produce and food stuff.

Background information Although cocoa has been traditionally grown in Fiji, fluctuations in world prices have resulted in a decline in cocoa production and many trees and plantations have been neglected. Without stable and consistent demand and competitive prices, cocoa growers in Fiji are reluctant to invest in improving their cocoa farms and rely on other sources of income. Adi Chocolates is the only domestic processor of quality chocolate with a distinctly Fijian brand and has established relationships with cocoa growers across Fiji. The company is expanding its production to supply more chocolate products to the tourist industry and to increase exports of its Fijian chocolate. Expansion will also increase its need for more cocoa beans. Sourcing these cocoa beans locally helps Adi Chocolates maintain its unique Fijian brand. For cocoa growers, Adi Chocolates will become a stable and consistent buyer that can offer competitive prices. Adi Chocolates will work with growers to revitalize existing cocoa plantations and introduce new techniques to growers to increase the quantity and improve the quality of Fijian grown cocoa.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better

• As a result of selling more cocoa beans at a higher price, growers’ income will increase.

• As more cocoa growers implement revitalization efforts and use new fermentation techniques, they will begin to harvest and sell more high-quality cocoa beans.

• Growers will also receive a more competitive price for high-quality and fermented beans.

• With increased chocolate production and a ready supply of quality cocoa beans, Adi Chocolates will increase its production of chocolate products for the tourism sector in Fiji.

• Adi Chocolates will work with cocoa growers, teaching methods for revitalizing neglected cocoa trees which can increase the amount of cocoa beans a tree can produce. A program for cocoa bean fermentation, which improves the quality of cocoa beans will also be provided to dedicated farmers.

• Adi Chocolates new production capacity will increase its need for local cocoa beans, giving growers an incentive to harvest more cocoa. As a result more cocoa growers in Fiji will revitalize their trees and use modern fermentation techniques to produce high-quality cocoa beans.

Output: Partner implements activities, increases capacity

• Adi Chocolates will open a new chocolate manufacturing facility capable of processing 30 tons of cocoa beans into chocolate products each year. This will increase its demand for cocoa beans. The facility will also be on track for HACCP certification in the future.

• Adi Chocolates will also have an established extension services program and dedicated staff to work with growers on revitalizing cocoa farms and cocoa bean fermentation.

Activities under Partnership Agreement

• Adi Chocolates is opening a new chocolate manufacturing facility to expand its production from 2 tons to 30 tons of chocolate per year.

• MDF is co-investing in this new, expanded chocolate manufacturing facility and is supporting Adi Chocolates to prepare for HACCP certification.

• MDF is supporting Adi Chocolates to develop a cocoa tree revitalization program for cocoa growers in Fiji. Through this program, Adi Chocolates will work with cocoa growers to revitalize cocoa trees and improve the quality of cocoa beans grown in Fiji.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: Adi Chocolates is the only commercial producer of high-quality chocolate for the tourist market in Fiji and offers private extension services to its supplying cocoa growers.

The company will also develop and introduce new techniques for improving the quality of Fijian-grown cocoa.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Namana (Fiji) Limited Improving knowledge-base for production of new and diversified handicraft items made from locally sourced natural materials FJ/TO/I9 January 2014 Sangita Kumar and Reshika Kumar Tourism and Related Support Industries: This intervention relates to improving access to more diversified shopping for tourists.

Background information The growing tourism sector in Fiji provides a great opportunity for local businesses to provide goods and services. This sector however has mostly been reliant on imported products, even for items such as handicrafts and fresh and processed food.

While there is a variety of traditional handicrafts produced and sold in Fiji, the quality can be inconsistent and tourists are in want of a greater variety of items. For this, MDF saw it fit to partner with Namana (Fiji) Limited. Namana is one of the few companies in Fiji which specializes in handicrafts for tourists straight through from design to production to retail. MDF is supporting Namana to increase its capacity to produce a more diversified range of handicraft items made from natural materials. Namana sources raw materials from local villages, and MDF will assist Namana to strengthen its supply chain by working with the village women to improve their ability to handle and process raw materials, which will result in better quality raw materials and better quality end-products. As the company continues to work and source materials from the village women, these women will have the opportunity to earn additional income. MDF will also support Namana to increase its market presence so that it can reach more tourists and expand its product line. In doing so, this intervention will provide a greater variety of high-quality Fijian-made handicrafts leading to more purchases and more money injected back to the local community. Namana can also serve as a role model for local handicrafts producers in terms of design, quality and local sourcing.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness

• Additional jobs will be created at Namana’s production workshop.

• Village-based women earn additional income through sale of raw materials.

• Villagers sell more raw materials to Namana. Other villagers see the benefits and start planting/processing raw materials for other handicraft producers.

• Tourists have access to, and buy more locally made and functional handicraft items from Namana.

• Namana’s sells more products to tourists and expands to produce more functional and diversified handcrafted items.

Outcome: Markets around the poor wok better

• Village women produce and sell better quality raw materials for Namana.

• Namana produces higher-quality and a wider-range of handicraft products for tourists.

Output: Partner implements activities, increases capacity

• Village women are trained on handling and processing of raw materials for better quality.

• In addition, Namana staff develop and produce a new and diversified range of products.

• Namana has as strong promotional and business development strategy to promote its products better to tourists.

Activities under Partnership Agreement

• MDF supports Namana through a craft specialist and local trainers to improve the knowledge of the women who supply natural raw material to Namana.

• MDF assists Namana to develop a business strategy for expansion.

• As Namana develops new products, MDF supports Namana to market its new product range through website/online catalogue, a new exhibition unit, and launch of a brand design.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: Developing new locally made handicrafts for tourists and strengthening local supply chain of raw materials.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Devesh and Bharos Farms Upgrading nursery facility for production of quality seedling and dry seeds on a year-round basis FJ/HO/I7 May 2013 Sangita Kumar and Florence Nand Horticulture and Agro-exports: This intervention will provide access to quality production inputs and equipment.

Background information MDF is partnering with the Devesh and Bharos Farms (DBF) to help set up an expanded commercial seedling nursery to help farmers improve production for more year round availability of fresh and processed produce for the export market and tourism sector. As a result, local farmers will be able to produce high-quality produce in the off-season and be better connected to exporters and tourism buyers with the right products at the right time. DBF currently operates as commercial nursery on a small scale in Votualevu, Nadi. It supplies seedlings of high-quality export and other crops to local farmers. Its existing customers include individual farmers and enterprises such as exporters and associations who recommend and supply inputs such as seedlings and seeds to their farmer networks. With this intervention, the farmers will have access to good quality seedlings which can produce higher yields and new varieties of crops throughout the year. This will also enable them to plant produce during off-season periods. With use of these new inputs, growers will also be able to save production time. As farmers produce more and better quality produce, they will increase sales to exporters and the tourism sector and increase their income. Along with the increase in yield of growers, this will result in a consistent supply of fresh produce into horticulture export and tourism markets.

Activities and Results Goal: Additional jobs and income created

• As a result of access of better quality seedlings and newer varieties, farmers’ sell more resulting in additional income.

• Additional jobs will be created within DBF for its commercial nursery operation

Purpose: The poor benefit from improved enterprise performance and sector competitiveness

• Use of these inputs helps farmers' yield to increase and helps them produce the right types of high-quality produce. They sell more to exporters and wholesalers/middlemen – who supply the tourism and local markets.

• Farmers continue to plant newer varieties of produce which are in-demand by the tourism sector, export and local markets.

Outcome: Markets around the poor wok better

• With the increase in availability of a wide-variety of seedlings from DBF, farmers plant better quality and increase variety of produce all year round.

Output: Partner implements activities, increases capacity

• DBF starts selling high-quality and new variety of seedlings and seeds on year round basis to growers and other entities such as exporters and associations.

Activities under Partnership Agreement

• MDF is supporting DBF to increase its capacity to produce bigger volumes and increased varieties of seedlings using a greenhouse system.

• MDF is also assisting DBF by engaging a nursery expert to provide on-site training and developing a booklet educating farmers on how to plant such seedlings. This will boost DBF’s capacity and competency to operate a commercial seedling nursery.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: This intervention will contribute to production of produce on a year round basis. This also means a new farming method used by the farmers of using raised seedlings and transplanting compared to open field growing method. This will not only reduce their production cycle but increase their yield and income.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: FIJI Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Ben’s Trading Limited Upgrade of processing facility towards HACCP certification, enhancing management capacity and improving backward linkages.

FJ/HO/I5 August 2013 Semesa Sikivou, Andrew Reddy Horticulture and Agro-Exports: This intervention will provide access to more diversified and new end markets, and improve backward linkages and establish private extension services.

Background information

Ben’s Trading Ltd (BTL) is a root-crop exporter that has been in operation since 2006. The company has grown significantly and is now the largest taro exporter and most influential player in the taro industry in Fiji. BTL exports primarily root-crops such as taro and cassava. BTL sources from all over Fiji with an extensive network of farmers, primarily from Taveuni (60% of its current exports) in addition to other islands around Fiji. BTL exports to markets in Australia, NZ, and the USA, and is currently looking to continue expanding by gaining access to new markets in Australia and NZ. A critical prerequisite to this is achieving HACCP certification. Some assistance towards HACCP compliance has been provided by other development partners, and MDF is also contributing to this effort. HACCP compliance will lead to increased export customers and orders and therefore a greater demand for taro in Fiji. As one of the largest buyers, BTL is well placed to work with them to improve the quality and increase quantity of the taro they produce, leading to greater sales volumes and income. To support this, MDF is also contributing towards improving BTL’s business and sourcing management to handle the expansion of the business once sales volumes and demand increase. MDF is helping BTL to establish Private Extension Services, to ensure that BTL is able to source increased volumes of improved quality taro in line with international requirements. It is estimated that BTL will be able to increase its export consignments by 30% within the first year of HACCP certification, and down the line may lead to a 50% increase within a few years, translating into additional incomes for thousands of farmers and their families.

Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity

Activities under Partnership Agreement

Activities and Results

• As a result of selling increased volumes of higher grade export produce to BTL, farmers’ incomes increase. As root-crop farmers use additional labour for planting and harvesting, additional employment is created on farms.

• Additional employment is also created within BTL as factory processing expands to meet increased export volumes.

• Farmers increase yields and quality by implementing the advice from PEOs. • Farmers sell more export-quality root-crops to BTL. • BTL processes increased volumes to meet increased demand of new export markets.

• Farmers are more knowledgeable and improve their cultivation and post-harvest handling techniques, planting according to PEO advice.

• BTL works through its existing sourcing network to source more taro from farmers throughout Fiji.

• Through HACCP certification BTL gains access to more export markets and receives increased orders for root-crops and has capacity to process greater volumes of root-crops for export.

• BTL has improved management systems to better coordinate this expansion and manage sourcing from farmers to match new demand.

• PEOs monitor farmer activities and planting schedules and provide tailored advice, thereby making farmers more knowledgeable on improved cultivation techniques and BTL sourcing requirements.

• Upgrading of BTL processing facility in line with requirements for HACCP certification.

• Hiring of a Business Development Manager (BDM) to establish and implement better management practices to coordinate demand from new markets and sourcing produce from farmers.

• Private Extension Officers (PEOs) hired and trained to educate BTL farmers on better farming practices and improved post-harvest handling techniques, and coordinate planting schedules with overseas market demand.

Outreach and Employment: Research will be conducted tomeasure the outreach and employment generated by this intervention.

Innovation: Accessing more diverse markets to supply more quality Fiji rootcrops to large supermarket chains overseas; and establishing backward linkages through Private Extension services.

Intervention Details: TIMOR-LESTE Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Balibo House Trust Establishment of a well-managed tourist facility in Balibo TL/GF/I1 July 2013 Antonio Gusmao; Inacia Santos Greenfield Industries (Tourism)/ Introducing access to affordable skills training through (accredited) in-house training modules or training service providers; stimulate investments in infrastructure bottlenecks

Background information Supporting Balibo House Trust to establish tourism facility in Balibo fits within MDF’s strategy in Timor-Leste to help diversify the predominantly agricultural economy. One of the principal constraints in the tourism industry is the lack of properly managed board and lodging facilities in tourist destinations outside of Dili. The Trust is an optimal partner to help in addressing this constraint because of their long history of engagement with the community in Balibo as well as their plans to invest in the construction of an international standard hotel within the premises of a famous Portuguese era fort in Balibo. MDF is working with Balibo House Trust to develop a sustainable operating model for the hotel; train hotel staff to deliver high-quality services to tourists; and effectively market the destination as a key tourist destination in Timor-Leste. The Balibo Fort hotel will attract more tourists to visit the area and provide them with the option of staying overnight or stay longer and enjoy service and activities offered by the town of Balibo as well as other tourist sites in the area around Balibo. Key factors which are expected to contribute to the success of this intervention are: establishment of a commercially viable eco-friendly heritage hotel in the regions west of Dili, as well as Balibo’s name recognition in the Australian tourism market, the major target market for this site.

More tourists coming to the area for longer durations will create new income generating opportunities for the local community through sales of food, souvenirs and other services including tour guides. The hotel, fort museum and café will also create new jobs, giving the community alternative avenues for income which is less reliant on vulnerable agricultural production.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity Activities under Partnership Agreement

• New non-agriculture jobs are created due to the hotel and additional tourist services.

• As a result of more tourists visiting Balibo and spending more time in the area, local small businesses and food producers earn more income through increased sales of goods and services to tourists.

• Visiting tourists to Balibo spend more money on purchasing tourist services such as tour guides and bicycle rentals.

• Visiting tourists spend more money on local food products, either through the hotel or through other local restaurants established to cater to increased tourists.

• Local small businesses, focusing on foods, local products and services sell more to visiting tourists.

• More visitors to Timor-Leste are aware of Balibo as a tourist destination, and Balibo receives an increased number of visitors which stay longer in Balibo.

• Balibo Fort Hotel emerges as a key buyer of local food products, as well as a driver for the growth of local service enterprises.

• Balibo House Trust Launches the fully operational tourist facility in Balibo complete with hotel, café/ restaurant, museum and renovated fort grounds.

• The hotel staff have improved capacity to provide international standard heritage tourism services.

• The Hotel Operator and Balibo House Trust have improved ability to organize tourism related information and mount a focused marketing campaign to raise awareness about Balibo.

• MDF assists Balibo House Trust to selecta Hotel Operator who will effectively manage the operations of the Fort Hotel.

• Balibo House Trust completes renovations to fort and finalises construction of the hotel.

• New Staff are recruited and trained in hospitality services.

• MDF assists Balibo House Trust and the newly selected Hotel Operator to effectively market the hotel and Balibo as a key tourist destination in Timor-Leste

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: Establishment of an international standard tourist facility with well trained staff and a customized marketing plan.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: TIMOR-LESTE Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Posada Alecrim Namrau Lda Establishment of a well-managed tourist accommodation and development of tourist support services in Hatubuilico, Ainaro TL/GF/I2 December 2013 Inacia Santos/ Carlos Alves Greenfield Industries (Tourism)/ Stimulate business investment in and the diversification and quality of technical support services as well as stimulating investments in infrastructure bottlenecks

Background information One of the principal constraints in the tourism industry is the lack of properly managed board and lodging facilities in the districts which discourage tourists from staying overnight or extending their visits to tourism sites across Timor-Leste. Thus stimulating business investment in tourist services as well as tourism infrastructure are key intervention areas for MDF in the Greenfield Industries sector. In this area, MDF is working with Posada Alecrim, the largest guesthouse near the frequently visited tourist site of Mount Ramelau. MDF is assisting Posada Alecrim to improve the overall quality of its services and upgrade its facility, which willattract a larger number of existing tourists to visit the community closest to Mount Ramelau. This will be done through investments in upgrading the amenities provided by the guesthouse as well as improve the services offered by the guesthouse staff to visitors. These improvements are expected to attract more tourists to the community as well as convince them to spend more time in the area to enjoy the other activities and sites on offer in Hatubuilico. Ultimately, more tourists who stay longer and spend more money in the area will lead to increased income earning opportunities for the guesthouse, its staff and the local community members.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity Activities under Partnership Agreement

• As a result of more tourists visiting and staying in Hatubuilico, and a larger proportion of visitors staying longer in the area, local small businesses and food producers earn more income through increased transactions of goods and services.

• Visiting tourists to Hatubuilico spend more money on purchasing tourist services such as tour guides.

• Visiting tourists spend more money on local food products through the guesthouse restaurant.

• Local small businesses, focusing on foods and services, sell more to visiting tourists.

• More visitors to Mount Ramelau are incentivized to stay in Hatubuilico due to presence of quality tourist facilities.

• More visitors stay longer to enjoy additional activities and visit other nearby sites.

• New visitors are encouraged to come and visit the area.

• Pousada Alecrim launches an improved accommodation facility which can provide more amenities to visiting tourists.

• Increased capacity of guesthouse staff allows them to provide higher quality hospitality services to visitors.

• Pousada Alecrim’s has improved ability to organise and present tourism information highlighting additional sites and activities to attract more tourists to the area.

• MDF assists Pousada Alecrim to improve the quality of services offered to tourists by the guesthouse through staff training; • MDF assists Pousada Alecrim to improve the amenities provided by the Pousada through upgrades to the guesthouse.

• MDF will support Pousada Alecrim to organise an effective presentation of tourism information (site and activities) to its target market.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: Investment in improving facilities and service quality to improve guest experience; and organization and presentation of tourist information and activities to stimulate longer stays.

Australian Aid- managed by Cardno on behalf of the Australian Government

Intervention Details: TIMOR-LESTE Partner: Title: Intervention Number: Start Date: Intervention Manager(s): Intervention Area:

Acelda II Unipessoal Lda. Assisting in sourcing, processing and marketing of local food products to local markets TL/AB/I1 November 2013 Antonio Gusmao/ Carlos Alves Agribusiness, Processing and Rural Distribution/ Introducing more reliable and less costly access to end markets through more traders buying at farm gate, more frequent and efficient transportation, more market information and storage support

Background information Introducing more reliable and less costly access to end markets through more traders and improvements in transport, storage and market information is a key intervention area for MDF in the Agribusiness, Processing and Rural Distribution sector strategy. The partnership with Acelda II Unipessoal Lda fits well within the strategy and is expected to improve the connection between producers of locally grown crops and the diverse domestic markets in Timor-Leste. Currently Acelda is engaged in Candlenut sourcing and processing as its primary business. Through this intervention MDF will assist Acelda in expanding into other local products, primarily rice. MDF will support Acelda in adding value to local rice by increasing local sourcing of rice paddy, processing high-quality rice, and marketing this products so that local, high quality processed food products are made available in district and Dili markets which can effectively compete against imported products. For farmers, the increased capacity of Acelda to source large amounts of rice consistently, provides these farmers with a stable and recurring market for them to sell their surplus crops. By selling more crops, farmers can earn additional income.

Activities and Results Goal: Additional jobs and income created Purpose: The poor benefit from improved enterprise performance and sector competitiveness Outcome: Markets around the poor wok better Output: Partner implements activities, increases capacity Activities under Partnership Agreement

• As a result of selling more products more consistently, incomes of farmers will increase • • Local farmers sell rice paddy to Acelda more consistently.

• Local farmers cultivate more land to capitalize on increasing demand for rice paddy and other crops.

• Wholesalers and retailers serving district and Dili markets carry increased volumes of locally produced food products.

• Acelda purchases larger volumes of rice paddy from local farmers to meet increasing demand from local markets in district and Dili markets • Acelda sells more local rice to wholesalers and retailers in district and Dili markets • Acelda has increased capacity to design and implement a sourcing plan for regularly purchasing local paddy from local farmers.

• Acelda has the ability to process, package and store high quality local rice through a fully operational rice milling and storage facility.

• Acelda has improved capacity to design and implement a focused marketing campaign to introduce local rice to district and Dili markets.

• MDF assists Acelda to set up system for sourcing local rice paddy through development and implementation of an effective sourcing plan; • MDF assists Accelda in adding value to local rice paddy through expanding its capacity to process high quality milled rice; • MDF assists Acelda in the design and implementation of an effective marketing and branding campaign for the domestic market.

Outreach and Employment: Research will be conducted to measure the outreach and employment generated by this intervention.

Innovation: First commercial rice processor to process local paddy into high-quality rice for domestic markets.

Australian Aid- managed by Cardno on behalf of the Australian Government