Value Chain Program Design: Promoting Market-Based Solutions for MSMEs*
(*Micro, small, and medium scale enterprise)



AFE has pioneered the design and delivery of tools and methodologies that combine the strengths of value chain analysis with methods for identifying commercially viable, market-based solutions that promote MSME and industry competitiveness. The AFE training is based on a five-step approach (described earlier). During the workshop there are distinct presentations and sessions for each step. A brief description of each of these sessions along with accompanying training objectives is presented below.

Opening and Introduction Session: During this opening session, participants are introduced to one another and review the overall goals and expected results from the training program. Participants also explore some of the latest terms and concepts used in enterprise development.

It is anticipated that by the end of this session, participants will be able to:

  • Describe general terms and concepts related to:
    • value chain development
    • advantages and disadvantages of a value chain approach
    • the rationale for a shift to more sustainable, market-based solutions to MSME constraints
    • the distinction between a provider and facilitator
  • List the key steps in the design of a value chain development program

Session 1: Value Chain Selection (Step 1):

During this session, participants review techniques for identifying promising value chains. Illustrative selection criteria are reviewed including:

  • Unmet demand in the market for particular products
  • Potential for increase in household incomes
  • Number of MSMEs in the value chain
  • Potential for employment generation
  • Existence of linkages conducive to inter-firm collaboration
  • Potential for positive coordination and synergy with donors and government
  • Representation of women in the value chain

Once criteria are established they can be used to compare different value chains. Those that rank the highest can then be chosen for more detailed analysis.

It is anticipated that by the end of this session, participants will be able to:

  • List examples of value chain selection criteria
  • Describe tools to narrow down and prioritize value chain candidates
  • List sources of information to identify value chain candidates

Session 2: Value Chain Analysis (Step 2):

During this session, participants gain a greater understanding of how to analyze market trends and industry dynamics including the roles of value chain participants and their inter-relationships. The goal of this step in the approach is to determine key issues hindering MSME growth and competitiveness.

Participants discuss how a value chain map can graphically present all the relevant private sector actors and their relationships with one another. Following this, interviews with market participants and "key informants" are conducted to identify major constraints and opportunities in the areas of market access, input supply, technology/product development, management and organization, policy, finance, and infrastructure. Interviews also ascertain the inter-firm cooperation in the value chain, the governance structures and the business enabling environment.

It is anticipated that by the end of this session, participants will be able to:

  • Describe the objectives of carrying out value chain analysis.
  • Describe different elements of value chain analysis:
    • value chain mapping
    • inter-firm relationships
    • governance structures
    • categories of value chain constraints
    • market trends and competitiveness
  • Describe how value chain analysis fits into the larger framework of program design

Session 3: Identification and Selection of Market-based Solutions (Step 3):

During this session, participants learn to identify sustainable, market-based solutions (potential at this point) that can contribute to competitiveness of the targeted value chain and address the constraints and opportunities identified in Step 2. Techniques for identifying and prioritizing these market solutions are also presented.

It is anticipated that by the end of this session, participants will be able to:

  • Identify sustainable market-based solutions that can help promote the competitiveness of targeted value chains
  • Use a “Short-Listing Matrix" to narrow down selected market solutions for further assessment

Session 4: Assessment of Market-based Solutions (Step 4):

During this session, participants learn to assess the market-based solutions identified in Step 3. Areas of assessment include:

  • identification of existing/potential providers (Lead Firms) of targeted market-based solutions
  • challenges to the commercial viability of the targeted solutions
  • satisfaction with and awareness of market-based solutions currently provided
  • the number of MSMEs/small farmers that could benefit from the market-based solution

Participants learn how to identify providers (Lead Firms) of market-based solutions as well as how to determine whether those providers can provide needed products and support services to MSMEs/small farmers in a market-based/sustainable manner. Discussions include the provision of "embedded" services by lead firms to MSMEs/small farmers that take place as part of their commercial transactions. Participants also learn how to choose Lead Firms to target for program assistance.

It is anticipated that by the end of this session, participants will be able to:

  • Describe the importance of assessing market-based solutions to value chain constraints
  • Describe the basic elements that comprise the assessment of a market-based solution
  • Describe the importance of assessing the commercial viability of a market-based solution
  • Describe different techniques to collect information for solution assessments

Session 5: Identification of Facilitation Activities (Step 5):

During this session, participants are exposed to different kinds of Lead Firm interventions and project facilitation activities that can support MSME/small farmer and value chain development. Examples are given on how programs can build the capacity of lead firms and others (market-based solution providers) to better address the constraints of their industry and the upgrading needs of MSMEs/small farmers. Participants learn techniques for identifying Lead Firm interventions and program facilitation activities through focus group discussions with representatives from various actors in the targeted value chain. Techniques include how value chain actors can validate information from the program design exercise and propose interventions based on the realities in their industry. Participants then learn to identify and select appropriate Lead Firm interventions and program facilitation activities which will promote sustainable solutions to value chain constraints and enhance the overall competitiveness of participating MSMEs/small farmers.

It is anticipated that by the end of this session, participants will be able to:

  • Describe the importance of facilitation
  • Describe factors to consider in evaluating proposed Lead Firm interventions as well as components of Lead Firm applications
  • Describe importance of focus group discussions in identifying program facilitation activities
  • Describe facilitation strategies to support Lead Firm interventions and develop value chain competitiveness

Session 6: Structuring Collaboration and Monitoring Performance:

This session presents examples of documents to structure program collaboration with Lead Firms, and a framework for designing performance measurement systems for value chain enterprise development programs. Participants discuss current issues in monitoring and impact evaluation.

It is anticipated that by the end of this session, participants will be able to:

  • Describe documents to structure DO collaboration with Lead Firms
  • List components of successful MOUs with Lead Firms
  • Describe and list elements of Addendums to MOUs with Lead Firms (specific technical and cost-share agreements)
  • Describe tools for monitoring Lead Firm agreements
  • Describe guiding principles in design and implementation of value chain development programs

Training Evaluation Methodology:

AFE utilizes participatory tools to assess training participant satisfaction and knowledge acquisition after each session of the training program. A formal questionnaire to evaluate the overall content, delivery, and logistics of the entire program is also completed by participants at the end of the training. Specific findings and recommendations from these evaluations are then used to refine the future delivery of the training program.

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