How can we strengthen collaboration in support of micro-enterprises in value chains?

Enterprise
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Gerry Boyle: Senior Policy Adviser on Private Sector Engagement, CARE International
Catalina Garcia Gomez: Communications & Sustainable Development Director, SABMiller Latin America
Autumn Gorman: Enterprise Development and Finance Specialist, USAID
Alison Griffith: Senior Private Sector Adviser, Practical Action
Elaine McCrimmon: Head of Public Affairs, Europe, SABMiller
Jane Nelson: Director, Corporate Responsibility Initiative, Harvard Kennedy School
Andres Peñate: Senior Vice-President, Corporate Affairs, SABMiller Latin America
Juan Carlos Thomas: Global Entrepreneurship Director, TechnoServe
Jolene Dawson: Partnership Services and Financial Inclusion Lead, Africa, Accenture Development Partnerships
Darian Stibbe: Executive Director, The Partnering Initiative

Micro-enterprises are the lifeblood of many communities and a critical source of employment and livelihoods. Larger companies rely on the effective operation and growth of micro-enterprises in their value chains, often as suppliers, distributors, retailers and customers. However, many micro-enterprises today are struggling just to survive. Research points to five areas of need (business and technical skills, access to fair and well-functioning markets, access to affordable, appropriate financial services, infrastructure and services and enabling policy and regulatory environment) that limit the ability of micro-enterprises to thrive, of companies to realise the commercial value of their relationship with micro-enterprises, and of the full potential of micro-enterprises’ social impact in communities.

These needs are also highly interconnected and cannot be tackled in siloes, which is why there is growing appreciation amongst stakeholders that interventions that do not address the full range of micro-enterprise needs can reduce the potential for achieving greater sustained impact – both for micro-enterprises and the companies supporting them. In recognition of this, a new report by SABMiller, CARE International UK, Business Fights Poverty and the Harvard Kennedy School Corporate Responsibility Initiative highlights the need to move towards a more holistic form of collaboration with the aim of strengthening the broader “market system” in which their value chain and micro-enterprises operate. The report also identifies five critical success factors which are essential for designing and implementing market systems approaches.

To mark the launch of the new report, Business Fights Poverty is hosting an online discussion to explore the following questions:

  • The report highlights five key interconnected needs of micro-enterprises that would enable them to thrive – how do these needs exist for the micro-enterprises you engage with and support? Are some more important to address than others?

  • What are some of the limitations of current approaches to supporting micro-enterprises in value chains? How can taking a more “market systems” approach deliver greater commercial and social value?

  • What are the key challenges that limit collaboration across companies, governments, civil society organisations and donors? What are examples of effective collaboration and what has made them successful?
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We are looking forward to today’s live online discussion. Before we get started at 3.00pm UK time / 10.00am EST, we wanted to share some of the key points from the report we are launching today:

Our start point in the report is to emphasise that micro-enterprises are a critical source of employment and livelihoods in communities and many companies rely on the effective operation and growth of micro-enterprises in their value chains, as suppliers, distributors, retailers and customers.

However, many micro-enterprises today are struggling to survive. Our research points to five categories of interconnected needs:

1. Business and technical skills

2. Access to fair and well-functioning markets

3. Access to affordable, appropriate financial services

4. Infrastructure and services

5. Enabling policy and regulatory environment

There is growing recognition that interventions that do not address the full range of micro-enterprise needs can reduce the potential for achieving greater sustained impact – both for micro-enterprises and the companies supporting them.

Therefore, companies and other stakeholders need to move towards a more holistic form of collaboration with the aim of strengthening the broader “market system” in their value chains and micro-enterprises operate.

To support companies in achieving this, our research has identified five critical success factors which are essential for designing and implementing market systems approaches:

  1. Understand micro-enterprise needs to gather insights on what constrains and motivates them
  2. Identify market system roles, capabilities and incentives to determine who should be part of a collaborative approach
  3. Establish the value proposition to outline how addressing micro-enterprise needs can achieve greater commercial value and social impact
  4. Coordinate effectively to ensure all stakeholders are committed and aligned to create value for all
  5. Measure results to demonstrate the impact achieved
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Hello everyone !

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Good morning/afternoon!

My name is Autumn Gorman. I work in the Office of Private Capital and Microenterprise in the Bureau of Economic Growth, Education and Environment at USAID.

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Hello everyone, first time here. Looking forward to connecting with each and everyone here.

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Welcome to this online discussion – can I ask the panellists to introduce themselves

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I’m Elaine McCrimmon, Head of Public Affairs in SABMiller’s European Business. As part of my role, I guide our European businesses on how they can transform ‘Prosper’ our global sustainability strategy into locally relevant sustainable development actions that are linked to core business. This includes leading our retailer development strategy to support very small retailers in our distribution chain to develop and grow their business.

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Richard Hi - Gerry Boyle of CARE International, working mainly on women's economic empowerment and a co-authro of the report

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Thanks everyone - Let’s kick off with the first question:

Q1. Our new report highlights five key interconnected needs of micro-enterprises that would enable them to thrive – how do these needs exist for the micro-enterprises you engage with and support? Are some more important to address than others?

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Hi all, Jolene Dawson, Global Agriculture Lead from Accenture Development Partnerships

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Hi, I am Andrés Peñate, VP of CA for SABMiller´s Latin America. My role is to ensure that our social value proposition, what we call Prosper, is executed in the local operations and embedded in the business in this region.

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I am Catalina Garcia, Head of Communications and Sustainability of SABMiller Latam. I led the small-scale microentreprises program in 6 countries of Latin America, to support more than 150,000 retailers by 2020 from our value chaing. Improving livelihoods and their business skills.

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  • Many of the micro-enterprises we have worked with feel misunderstood. There seem to be largely due to misunderstandings of deep cultural norms (e.g. some farmers feel spoken at, and cultural norms prevent them from interrupting or correcting the person speaking).

  • In this context, both the corporates or donor organisations as well as the beneficiaries or micro-enterprises make faux-pas – and things get lost in translation.

  • By focussing on human-centred design, Accenture Development Partnership have made huge in-roads into setting up healthy partnerships between corporates, donors and micro-enterprises in health, agriculture and finance. This concept ensures that the very human beneficiary is front and centre to the design of all elements of the programme or products in question.



Richard Gilbert said:

Thanks everyone - Let’s kick off with the first question:

Q1. Our new report highlights five key interconnected needs of micro-enterprises that would enable them to thrive – how do these needs exist for the micro-enterprises you engage with and support? Are some more important to address than others?

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USAID works in all of these areas as microenterprises face many challenges. The needs can be somewhat varied—at least in order of importance, i.e. which are the most binding constraints in these market systems. And they can be different based on value chain/type of product or service, geography, societal norms, and even dynamics within individual households.

In understanding needs, you also have to understand risks and risk mitigation strategies, which may seem somewhat counterintuitive to some. For example, purchasing improved seed, although it may have a much higher yield with a slightly increased price, in rain fed areas, should there be a drought during growing season, farmers may actually be worse off at the end. The difference in the amount of the loss may be small, but for the most vulnerable, there any loss is significant.

Land tenure is certainly an important issue for many. Farmers or other entrepreneurs are less likely to make improvements in the land or property if there are little guarantees that they will be able to reap the benefits of those investments.

Access to affordable and relatively quick transportation can be especially important for women, who may face challenges around being away from the home as long to go to a distant, but more lucrative, market.

Richard Gilbert said:

Thanks everyone - Let’s kick off with the first question:

Q1. Our new report highlights five key interconnected needs of micro-enterprises that would enable them to thrive – how do these needs exist for the micro-enterprises you engage with and support? Are some more important to address than others?

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  1. Indentify ‘ Market-system’ roles, capabilities and incentives :

    • From the corporate poitn of view, with the best of intensions, base assumptions are made in terms of available infrastrucuture, existance of relevant high-quality role models and basic education. Investments in program pilot are made, often without conducting an initial base-line assessment before diving into the plot itself. Understanding our landscape, he players and theri relality is key.

    • Another key assumption Accenture often sees made in terms of capabilities stems from the donor space where an omission of previous lessons learnt or challenges uncovered are glossed over in funding and pilot/programme design workshops – in an effort to seem more ‘attractive’ to funders

    • In terms of incentives, very often few organisations, commercial, public sector or donor, ask the questions of what the micro-enterprises really want. This for me has been a great differentiator in the report where it was clearly shown what different micro-enterprises actually want in their form of assistance – training vs. Finance vs. market access etc.

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Exploring the real needs of micro-enterprises upfront is hugely insightful and can be a much more impactful and resource efficient way to develop effective interventions in support of micro-enterprises.

In SABMiller Europe, we undertook research in 4 of our key markets (Italy, Poland, Romania and Czech Republic) to understand the challenges faced by small retailers in our distribution chain. While the terminology used to describe the challenges differs slightly from what is used in the report, our findings reflected many of the five needs identified.

For example, retailers said they lacked understanding of store and stock management, lacked funding to invest in their business and, had concerns about bureacracy and red tape.

So I think the five needs identified in the report offer a useful structure that can act as a starting point for an organisation to then drill deeper into understanding how these needs manifest themselves for specific micro-enterprises.

Jolene Dawson said:



Richard Gilbert said:

Thanks everyone - Let’s kick off with the first question:

Q1. Our new report highlights five key interconnected needs of micro-enterprises that would enable them to thrive – how do these needs exist for the micro-enterprises you engage with and support? Are some more important to address than others?

    1. Understanding Micro-Enterprise Needs :

  • Many of the micro-enterprises we have worked with feel misunderstood. There seem to be largely due to misunderstandings of deep cultural norms (e.g. some farmers feel spoken at, and cultural norms prevent them from interrupting or correcting the person speaking).

  • In this context, both the corporates or donor organisations as well as the beneficiaries or micro-enterprises make faux-pas – and things get lost in translation.

  • By focussing on human-centred design, Accenture Development Partnership have made huge in-roads into setting up healthy partnerships between corporates, donors and micro-enterprises in health, agriculture and finance. This concept ensures that the very human beneficiary is front and centre to the design of all elements of the programme or products in question.

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I would say the most important is probably not in the list. The most important need in my opinion is not economic, financial or technical, although all of them are critical. In my opinion the most important need is psychological. Small businesses owners need first of all more self esteem to be able to cope with the challenges they confront.

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Hello everyone, I am Juan Carlos Thomas, Global Entrepreneurship Director at www.technoserve.org. We partner with public and private institutions to work with enterprising people in the developing world to build competitive farms, businesses and industries.

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  1. Establish the value proposition :

    • When working both with commercial organisations as Accenture Strategy or with development sector agents as Accenture Development Partnerships we come across the same challenge, but from opposite sides.

    • Commercial ventures tend to want to see returns on their investment (whether CSI funded or from core business) within a very short space of time, usually in line with their annual financial statements.

    • Development agents approach some programmes with a deep systemic outlook and are not concerned if they see very slim or no positive results for the first few years.

    • I believe a balance of these views needs to be reached, especially when addressing thing from a market-system view. Commercial agents should understand from the outset, that systemic change (and in turn real impact) take time to cultivate, but development agents must be clear that progress, however small it seems must be able to be demonstrated (and in some cases audited)

    • The value proposition needs to clearly provide value to all parties, wherever they hail from, and be measureable in increments and holistically. It’s about articulating it in a way that makes sense for all parties involved.



Richard Gilbert said:

Thanks everyone - Let’s kick off with the first question:

Q1. Our new report highlights five key interconnected needs of micro-enterprises that would enable them to thrive – how do these needs exist for the micro-enterprises you engage with and support? Are some more important to address than others?

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Hi everyone, I'm Alison Griffith, the senior policy and practice advisor on market systems and private sector at Practical Action. Looking forward to a rich discussion on how we can support a better enabling environment for millions of MSEs!