Input to e+i Newsletter June 2017
During 2016 and early 2017 five SDC Market System Development (MSD) projects in Albania, Bosnia and Herzegovina, Kosovo and Serbia were externally reviewed. All these MSD projects have the overall goal to create jobs that is addressed through Private Sector Development (PSD), Value Chain Analysis (VCA) and Vocational Skills Development (VSD) interventions. Overall all projects made good progress and based on these external reviews have planned second or exit phases. Some conclusions and recommendations that are common in many projects are:
Stefan Butscher, May 2017
Approach: It is learned that the MSD approach – after sometimes difficult and slow starting periods – made good progress laying the foundation for a successive project phase. Interventions are addressing important constraints on job and income growth. Pro-activeness, flexibility, risk taking and opportunity grabbing are important features of MSD projects..jpg)
Research: MSD interventions are based on solid research of the markets and sectors and therefore interventions are driven by development in markets and opportunities arising from. It has been highlighted that high quality research and its analysis are the basis for good intervention designs. It was widely recommended that the quality – not only data collection but also its analysis - and involvement of the project teams could be improved.
Interventions: Clear design of interventions incl. corresponding business models, assumptions made and systemic objectives are crucial. It is common that interventions are reviewed at least on a half yearly basis. Sometimes intervention redesign or dropping interventions that did not work were lacking. Finally it is worthwhile to note that some interventions have already transformed the market system (systemic change that is the core of the MSD approach).
Sectors: It appears that all projects work in the right sectors and therefore continue to do so. In all WBA projects, food processing, tourism and Information Technology (IT)/ Information and Communications Technology (ICT)/ Business Processes (BPO) seems to be the most promising ones. In MSD projects with a focus on VSD, naturally specific sectors may not need to be defined.
Scale: Since all projects are now maturing, scaling up strategies is a must. This is achieved through spreading regional approaches to the national level or through more partners among other measures. It is recommended that some projects efforts are still required and copying and crowding-in does not happen just by itself. There are good examples in the labour market mediation sector where the private sector and market is growing without project interventions, e.g. through job portals, recruitment and labour market media services.
Partners: In all projects it took some time to find the right partners until they were accustomed to the MSD approach. It has been recommended that it is not important to make all partners MSD experts, but rather to base the work on research to come up with viable and promising business models attractive to the private sector players. Most projects work with more than one partner in a given sector. This allows more flexibility and is less risk taking than to work only with one partner, though the MSD guidelines also consider a one partner approach feasible.
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Transversal Themes and Inclusion: Women's Economic Empowerment (WEE) is addressed in all projects and women participation on average stands at 40%. In line with the Bill to the Swiss Parliament (2017 – 2020) Social Inclusion (SI) needs to be addressed more while reaching out to minorities and excluded groups. In general it is recommended to strengthen the research and analysis of underlying constraints of the participation of women, minorities and excluded groups in selected market systems and consequently to be addressed in the interventions thereafter. It is also recommended to envision subsidized elements within interventions (or called targeted activities) to reach out to disadvantaged groups, since they are not always fully considered and integrated in the value chains (mainstreaming). As a final consequence gender but also excluded group segregation needs to be included in the MRM systems.
Alignment with Policies and Structures and Coordination: Alignment with existing government policies and where required trying to influence them though the MSD approach was also recommended. Setting-up and supporting parallel structures is not recommended. Sector coordination with all stakeholders incl. the relevant government structures and projects is also important, especially with the latter that may not embrace the MSD approach and are likely to distort the market.
MRM: All projects have a robust Monitoring and Result Measurement (MRM) system in place. Most projects underwent a mock audit or a peer review based on which the MRM system could be improved. Gender segregation is applied consistently in all projects. Due to the size of the MSD projects and the high costs involved, no full audits according to the DCED Standard are planned. Right sizing of the MRM system and using the MRM information not only for proofing (reporting etc.) but also for improving (decision making process etc.) was recommended. Attribution and capturing system-wide changes remain a challenge that will have to be addressed further but with a pragmatic approach. Meanwhile all projects employ a full-time MRM manager to oversee the MRM system but it is clearly stated that MRM is part of all intervention managers' job.
Cost Benefit: In all projects inputs are considered reasonable in relation to results achieved. Due to the different calculation methods it is impossible to make a comparison across the projects. This would be an issue SDC and its implementing partners could look into.
Partnership: In cases where an international implementing partner is working in a consortium with a local partner, it took some time and efforts to make the partnership work. In all cases it is recommended that the local partner plays a stronger and more substantial role in the project. In cases with only one local partner it has been beneficial to have an international backstopper on board.
Remark: All these external reviews are internal documents. The Swiss Coordination Offices/Embassies are open to any specific questions the readers may have.
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Project example from Kosovo: Baruti
Baruti was established in 2012, specialized in providing outsource solutions for the Swiss, German and the UK market. Baruti strategically chose location (Kosovo) in order for the operative subsidiary to reduce their labor costs (40 – 60 %) without having to lower the quality expectations. Baruti offers the following services for outsourcing IT-, Call Center-, Administration- and Finance-Department. From a business-perspective a company has the advantage that these are the services where the companies are able to cut most of their labor expenses and with a specialized Partner in outsourcing, the quality expectations do not have to be lowered. The company started as a micro company while today employees more than 200 persons.
Pictures from projects: Honey production, Serbia/ Women at work, Serbia
