Extract of Agreement at Completion point

Interim evaluation

In preparation for a possible second phase of the Rural Enterprises Project requested by the Government of Ghana (GOG), the International Fund for Agricultural Development (IFAD) undertook an Interim Evaluation (IE) of the Project in June - July 2000 using the new IFAD approach to evaluation. A Core Learning Partnership of stakeholders set the objectives and key questions for the IE. The members of the Core Learning Partnership, having reviewed the results of the IE, have come to agreement on the following findings, recommendations and follow-up actions.

General findings, recommendations and agreed follow-up

Small-scale enterprise development reduces poverty. New and existing businesses assisted by the Project have contributed to increased economic activity, increased employment and poverty reduction in rural areas. The performance and impact of the Project's technology and business skills training and counselling programmes to create new businesses and employment demonstrate that they can be used as a model for reducing rural poverty in Ghana.

• Recommendation The REP approach to the development of small scale rural enterprises should be used as a means to stimulate growth and reduce poverty in rural areas. The GOG should consider widespread replication of a number investments and activities tested by the project to promote poverty reduction throughout the country.
• Agreed follow-up The Ministry of Environment Science and Technology supported by the National Development Planning Commission will promote the use of the Rural Enterprise Project model as a means to reduce poverty and stimulate growth in rural areas nationwide. IFAD will favourably consider requests to help finance such efforts.

Business Advisory Centres bring most benefits to enterprises. The Business Advisory Centres have been the most successful element of the Rural Enterprise Project model. Their activities have resulted in widespread benefits including increased incomes for entrepreneurs and, for communities, increased employment and economic activity. They have the potential for increased cost-effectiveness and sustainability. However, they could have generated even greater benefits with better support and an expanded mandate (see Specific findings and recommendations below.)

• Recommendation Training and advisory services such as those provided by the Business Advisory Centres of the Rural Enterprises Project should be central to any technology-led or other intervention for the development of small scale rural enterprises.
• Agreed Follow-Up The Ministry of Environment Science and Technology and the National Development Planning Commission will include business training and advisory services in their efforts to promote small scale enterprise development in Ghana. Any future IFAD-funded investments or activities in support of rural enterprise development will include support to the provision of such services. The Ministry of Environment Science and Technology and the National Development Planning Commission will include business training and advisory services in their efforts to promote small scale enterprise development in Ghana. Any future IFAD-funded investments or activities in support of rural enterprise development will include support to the provision of such services.

Costs of handling complementary investments through project management too high, limited direct benefits for assisted enterprises. Feeder roads and financial services realised under the Project did provide direct benefits to the population in the project area in terms of access to services, public goods and finance. However, those benefits did not necessarily accrue directly to assisted entrepreneurs. Clients emphasised that, for them, training was the most important project activity. Complementary investments included in project design were not essential to the success of the activities in technology and business training that proved the most valuable to entrepreneurs. More importantly, these investments and activities required disproportionate PCMU inputs diverting scarce management resources that may well have been better applied to the main source of project benefits, in the main areas of management competence.

• Recommendation Complementary programmes that help create general conditions favourable to rural enterprise development, especially financial services, should be available to entrepreneurs. However, they should be directly administered by responsible specialised agencies and not by project management units located in ministries with other areas of expertise.
• Agreed follow-up The National Development Planning Commission, MEST and IFAD will emphasise support to developing business skills and transfer of appropriate technologies as the central means for promoting rural enterprise development in the country. They will fund and administer other investments to complement rural enterprise development, such as rural finance, through other national programmes by the relevant agencies, whilst still making every effort to see that investments complement one another.

Traditional apprenticeship system holds still untapped potential. The project Apprenticeship Starter's Programme to fund the apprenticeship fees within the traditional apprentice system correctly builds on existing social and professional structures. However, project support to the traditional apprenticeship system is not sustainable outside a project setting as it has not been institutionalised and does not fit within any currently existing GOG programmes. It does not take into account the markets for traditional apprentices. And, even in association with the project, the traditional system is not supervised and produces apprentices with a wide range of capabilities. Accreditation, sought by apprentices, is not available to those trained under the traditional system.

• Recommendation A national strategy is required to capitalise on the traditional apprenticeship system by integrating it with vocational education.
• Agreed follow-up MEST, NDPC and IFAD will petition institutions responsible for vocational education to formulate a strategy to link with the traditional apprenticeship system and assist in the formulation of such a strategy.

Trade associations excellent intermediaries to reach entrepreneurs. Trade associations have been a critical link between the REP training activities and the clients, by providing potential clients, identifying potential areas for training and providing support to new businesses. They have also provided representatives for the DICs and been the basis for many successful group credit activities. They have developed from their traditional social role when given the opportunity and justification to expand their responsibilities.

• Recommendation Links with existing associations to strengthen their capabilities and draw upon their resources should be part of any programme to support rural enterprises. Using trade associations as training and technology service providers should be considered.
• Agreed follow-up MEST, NDPC and IFAD will explicitly plan for the direct involvement of local trade associations in any future efforts they make to promote rural enterprise development. MEST and NDPC will encourage others working in the sector to work with trade associations.

Current RTSCs unsuitable to meet national technology priorities, local technology needs. A national priority is adoption of appropriate, cost-effective small-scale technologies, that are environmentally sustainable. However, the design of the Project's Rural Technology and Service Centres has not proven the best for meeting that priority. RTSCs were important proof of investment capital inflow and rallying points for local political support where they were located. However, they were designed with overly optimistic projections of potential benefits. Although the quality of output and services is high, as currently structured and equipped, they cannot achieve the level of benefits required to cover their costs. They have been short of guidance, management support and co-operation from national bodies responsible for technology development. They have not yet been given sufficient incentives to respond directly to local conditions or reach clients who need adapted technology, technical services and technical skills transfer.

• Recommendation To serve the national priority for the adoption of appropriate small-scale cost-effective technologies that are environmentally sustainable, the Rural Technology and Service Centres model needs major improvements. Incentives should be provided for them to operate in a more business-like fashion, increase cost-effectiveness and create bottom-up processes to obtain client feedback and respond to client needs.
• Agreed follow-up MEST and IFAD will work in the ongoing Rural Enterprise Project with the current Rural Technology and Service Centres and the institutions responsible for backstopping them to improve their orientation and operations. MEST will not advocate creation of additional Centres of this type until an alternative model has been found and demonstrated to be sustainable.

District Implementation Committees are building blocks for better district results. The District Implementation Committee (DIC) model used by REP has facilitated project implementation at district level by including all the stakeholders, particularly clients. It also fits well with GOG decentralisation policies. However, the current level of time put in by DIC members may need to be better rationalised as it could become unsustainable if other related projects operate in a district. Informal co-ordination processes between programmes and projects relating to poverty reduction and small-scale enterprise development at district level are still weak and need to be formalised at both district and national level to improve the effectiveness of coordination.

• Recommendation The approach of working with the district administrations, clients and other stakeholders at the district level should be replicated in future efforts. However, the current DIC approach should be improved by delegating operational responsibilities to lower level units, by creating district level mechanisms for better interaction and coordination among projects, and by including clients and implementing agency representatives in all such activities as in the current DICs.
• Agreed follow-up MEST, NDPC and IFAD will encourage projects to adopt District Implementation Committee approach when working at district level. They will encourage district administrations to delegate operational matters to lower levels and to explicitly provide for coordination when more than one project is working in a given district. They will advocate client and implementing agency representatives in these groups.

Ministry commitment fosters good project management, good project performance. The REP has been a complex project to manage with a range of skills needed. The pilot programme was managed in an iterative way using implementation experience and stakeholder inputs to adapt and modify the activities to improve performance and impact. The support from MEST, and management by the PCMU, have been essential to project success. The National Committee for Rural Small-Scale Enterprises, (NCRSE) created to steer overall project implementation has also worked to coordinate the activities of the several government institutions that are project implementing agencies or stakeholders.

• Recommendation Future programmes should replicate the REP approach to gradual phasing and expansion, so as to allow for adaptation of the approach and modification of activities based on stakeholder inputs and accumulated experience.
• Recommendation Given the MEST performance record and its GOG mandate for the technology development, adaptation and transfer essential to small scale rural enterprise development, MEST should play a leading role in developing and managing future programmes in rural enterprise development investments and projects.
• Agreed follow-up MEST will play a central role in future investments and activities to support the development of small scale rural enterprises. A national level mechanism will be used to coordinate activities in support of rural enterprise development by various government institutions and stakeholders in any future national rural enterprise programme. IFAD will collaborate with MEST in the design and implementation of a Phase II project for rural enterprise development. IFAD will encourage others channelling funds to rural enterprise development to work with MEST in these areas.

Opportunity to be business-minded overlooked by project. The project supported training in business skills to help entrepreneurs keep records that would enable them to see their profits and losses, as well as returns to capital and labour. Yet, neglected to "practice what you preach" by not creating a management information system for itself that would allow it to calculate economic returns to GOG and IFAD funds invested in the project. The Project documented physical and financial progress. It also made some effort to assess development impact. However, it did not monitor the financial and economic costs and benefits of the various project services in such a way as to permit a ready assessment of whether they could be sustained financially, or whether it would be desirable to do so from an economic standpoint. Information collected by the Evaluation Team points to high economic returns on a number of investments made through the project, particularly the BACs. With better data this could have been proved unequivocally to policy makers and investors.

• Recommendation Future GOG investments in rural enterprise development should include management information systems that record the data necessary to calculate returns on investments made with public sector funds.
• Agreed follow-up MEST will ensure that programmes and projects it supports have management information systems that take a private enterprise approach to monitoring the "profitability" of each type of project investment made.

Specific findings, recommendations and agreed follow-up for business advisory centres

The success of the Business Advisory Centres has been to a large extent derived from the enthusiasm and drive of their staff and the degree to which the services they did offer corresponded to needs of a large number rural people, especially women. It appears that BACs could have achieved even greater success and higher levels of impact were it not for insufficient funding, limited technical backstopping, low levels of management support and inadequate supervision from responsible institutions. Partly due to these factors, Business Advisory Centres have missed opportunities not originally foreseen at the time of project design such as working to facilitate skills training and support to the traditional master craftsmen through their trade associations.

• Recommendation In the future the activities of Business Advisory Centres should be expanded and their mandates clearly specified, with defined performance criteria. They should be expanded into Business Development Centres. These Centres should provide existing technology and business management skills training and also facilitate skills training and support to the traditional master craftsmen through their trade associations.
• Agreed follow-up MEST and IFAD will expand the mandates of BACs they work with in the future to become Business Development Centres, clearly specifying performance criteria upon which they will be evaluated. NDPC will encourage others working with BACs to do likewise.
• Recommendation In the future, funding for Business Centre operations should be increased. Core staff, and core budgets, should be used to facilitate identification of counselling and training needs by clients. Whereas, additional operations funds should be used to contract appropriate government, NGO or private organizations to provide services required.
• Agreed follow-up MEST and IFAD will support increased funding to Business Centres and assist them in improving arrangements for contracting counselling and training service providers.
• Recommendation In the future funding for Business Centre backstopping, management support, and supervision of the Centres should be increased. This should also be undertaken on a contract basis. A range of different service providers including NBSSI, NGOs and private organizations that already provide similar services elsewhere in Ghana could be contracted to provide Centres with backstopping and other support they may require.
• Agreed follow-up MEST and IFAD will support increased funding to Business Centres backstopping and they will assist Centres in improving arrangements for contracting backstopping and other forms of management or technical support they require.

As for the project generally, systems for managing BAC activities and staff have not provided readily accessible data for monitoring the activities of the BAC staff in each District. This has prevented the BACs from assessing whether target groups are being reached and from determining whether to modify the balance of training programmes between new and existing clients, or to alter the balance of time dedicated to client counselling.

• Recommendation Business Centres should have management information systems that include record keeping and collection of data on selected indicators that will allow them to determine whether they are meeting selected performance criteria and to assess their own impact, so that such information may be used to modify operations as necessary.
• Agreed follow-up MEST and IFAD will ensure that the Business Centres they work with have management information systems that provide them, and the institutions that oversee their work, with relevant management information on their activities, performance and impact. The information will be used to orient Business Centre operations including the drafting of workplans and budgets.

REP charges very small commitment fees for courses and does not charge for counselling visits or meetings. As the REP model aims to make clients business-minded, and Business Centres increasingly need to cover their costs, some project stakeholders have suggested that clients should pay for services. While it would not be appropriate to charge fees to the unemployed or very low income groups for initial counselling and basic services, there is a case for charging fees for skill upgrading and more frequent counselling as the clients go beyond entry-level, reaping income gains and commercial advantage from higher level services.

• Recommendation Initial ‘living skills' and basic technology training and related counselling contacts for the target poor population should continue to have low commitment fees. Training to upgrade technical skills and introduce business management skills and frequent counselling visits should attract an increasing level of fees reflecting some of the value of this training and counselling.
• Agreed follow-up MEST and IFAD will ensure that the Business Centres they work with introduce fees for services with progressively higher rates to help cover higher level services to relatively more developed enterprises.

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The Agreement at Completion Point was prepared in conformity with members of the Core Learning Partnership, viz: Chief Director, Mr. E.P.D. Barnes, Ministry of Environment, Science and Technology; Mr. K Attah-Antwi, Project Coordinator, Rural Enterprises Project; Deputy Director, Mr. K. Okyere, National Development Planning Commission; Mr. M. Manssouri (replacing Mr P. Saint Ange), Country Portfolio Manager, IFAD; Mr. F. Sarassoro, SPMO, UNOPS; and Ms. C. Palmeri, Senior Evaluation Officer, IFAD.