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| Synthesis of Discussion on Value Chains in the Poverty Alleviation Context, SDC June 05 |
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| Implementing agency(ies) | SDC |
| Date completed | June 2005 |
| Issues/challenges | poverty alleviation, value chain development |
| Web site | http://www.sdc-valuechains.ch/ |
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Description
This paper summarizes the fourth cycle of SDC’s Value Chains in Rural Areas Community of Practice. This cycle concentrated on value chains in the poverty alleviation context. This cycle was initiated with a set of complementary and sometimes contradicting hypotheses:
1) Change agents. Donors should concentrate on most promising change agents for VC development. This means, start with the ‘winning horse’, collaborate with the private sector and ensure pro-poor mechanisms.
2) Inclusion. Market approaches often lead to different kinds of exclusions. Donors should care about the inclusion of most marginalized people (market standards must be achieved by the poorest producers).
3) Improved market access. All production (excluding subsistence farming) is directed to markets. Different markets have different needs; VC actors must be prepared to meet these demands.
4) Pro-poor donor interventions. Donor interventions in VCs should enhance a pro-poor focus in market oriented businesses. A real cooperation with the private sector seems to be most promising for this aim.
5) Leverage. Donors should concentrate on projects with biggest leverage effects based on cost / benefit analyses, ‘likelihood of success’ and sustainability of the effort.
6) VC Governance. Vertical cooperation along VCs highly depends on trust among VC operators, common visions and information sharing as key success factors for efficient formal / informal VC relationships.
7) Information. (a) Access to relevant information and (b) functioning two-way (up-stream / downstream) information flows are main factors for functioning VCs.
8) VCRD and project cycles. Project periods are often too short for effective VC support. Donors should change their result-based project-cycle-thinking and search for more adequate investment mechanisms .
Resuming in a few words the main insights: the importance of local markets; donors do not (know how to) react like entrepreneurs; real collaboration with the private sector is needed; transparency, access to information, trust andleverage effects are important for VC development; and projects should start with the ‘winning horse’.
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