Interim Evaluation

The rural micro-enterprises project (PROMER) began activities in June 1997. Its total cost is 10.94 million de USD, with 67% covered by IFAD loans (n° 402-SN and SRS-47-SN). Its initial duration of six years was extended by two years in 2002, without additional budgetary allocation. The closing date for the IFAD loans is 31 March 2005. A possible second phase is being considered by the government and IFAD following the evaluation of the IFAD programme in Senegal done in 2003 and the focal points of the intervention as set forth in the Country Strategic Opportunities Paper (COSOP). Given this outlook, the IFAD Office of Evaluation (OE), in accordance with standard procedures, conducted an interim evaluation of PROMER.

According to a joint partnership evaluation, the objectives of the interim evaluation mission were: i) to assess the suitability, effectiveness and sustainability of the actions undertaken by PROMER, ii) to understand, estimate and, if possible, measure the impacts of the project achievements and changes made, and iii) to assess the current dynamic of changes made and their projected sustainability, and iv) draw useful information and recommendations for the future.

The evaluation mission¹ stayed in Senegal from 25 January to 18 February 2004. It facilitated a self-evaluation by the PROMER team, and conducted field visits², held meetings with partners that may or may not have been involved in project implementation and held a workshop on restitution and exchanges in Kaolack based on preliminary results.

Context, design and evolution of the project

PROMER exists within a context of State withdrawal and of encouraging the formal or informal private sector to take over the productive and commercial activities. Micro-enterprise thus proves to be a resource that can make it possible to reduce poverty in a rural environment. The off-farm processing and service activities represent an alternative to the rural exodus for young people and offer women the possibility of carrying out paid activities, especially productive activities that could enhance their knowledge.

PROMER targets development of off-farm micro-enterprises in a rural environment in four regions of Senegal: Tambacounda and Kolda, at first, expanding to Kaolack and Fatick at mid-term. These four regions, affected by the groundnut crisis and displacement of the cotton-producing zone, represent approximately 51% of the national territory and a population of some two million. Although they do offer agropastoral resources, there is isolation and chronic underdevelopment, especially in Tambacounda and Kolda.

The PROMER objectives were defined as:

• To create new paid seasonal or permanent jobs, thus improving income of poor rural families;
• To increase production of quality goods and services by enabling local farm production;
• To extend the annual productive work period beyond the farm work period;
• To reduce the rural exodus using work opportunities for young people.

The target groups of the project were to be formed of individuals or of economic initiative groups. Women and young people were to be priority groups and the poorest segments of society were targeted in particular by support in forming micro-enterprises to represent 70% of the rural micro-enterprises supported. In quantitative terms, the target group was estimated to have 4 000 people, 30% of whom received project support, or 1 200 micro-enterprises held 50% by women. Approximately 1 000 of them should receive funding for a total of some 800 million CFAF and 200 just training. There were an estimated 3 000 jobs expected.

Implementation was to use a progressive approach and develop a mode of intervention that used subcontracting (outsourcing). The intervention was planned for two regions at first, Tambacounda and Kolda, with an expansion at mid-term.

To achieve its objectives, PROMER implementation relies on the joint effects of two main components: (i) support for development of rural micro-enterprises, and (ii) funding for rural micro-enterprises where implementation is done by a microfinance institution, CMS, project co-sponsor³. A third component provides project monitoring and management.

Placed under the oversight of the Ministry of Agriculture and Hydraulics, PROMER is supervised by a steering committee. The relatively light project management unit (PMU) is accompanied in each of the four intervention regions by a regional cell⁴.

As of the mid-term review, conducted by the cooperating institution, the West African Development Bank (BOAD), the project did a major reframing of interventions reflected in abandonment of support for rural micro-enterprises with predominantly trade and pasture activities, introduction of a structuring cluster approach, diversification of partnerships in the area of financing, and reframing the missions of the multipurpose economic outreach agents (AEP) into business consultants.

Implementation results

After approximately six years of activities, on 31 December 2003, a total of 3.78 trillion CFAF had been disbursed out of a projected total of 5.252 trillion CFAF, or a disbursement rate of 71.97%. It should be emphasized that he government regularly provided its counterpart funds and also doubled its contribution to project funding, especially for the training component.

PROMER has a total portfolio of 1 359 rural micro-enterprises including 683 new creations, or 50.26%, and 676 consolidation rural micro-enterprises distributed among 675 villages with significant dispersion⁵. 33% are groups with 74% women. Women are 45% of the sponsors of all rural micro-enterprises and young people are 26%.

There is a rather broad diversity of activities, with some dominant ones, which are bakeries, 12% of rural micro-enterprises, soap production, 11% of rural micro-enterprises, miscellaneous trade (11%). The mechanical metal products group represents only 10% of the portfolio.

Also, 1 039 rural micro-enterprises, or 76%, are now considered as operational. 65% of these operational rural micro-enterprises, or 672, are currently monitored by the outreach agents.

The jobs created and consolidated total 3 630, with 1 888 creations and 1 742 consolidations, or an average of 1.4 jobs in the individual rural micro-enterprises created and 1.6 jobs in the rural micro-enterprises consolidated. The rural micro-enterprises with group status total 2 514 jobs, or 69% of all jobs considered and 83% of jobs created. In these groups, there is a distinction between jobs corresponding to the participation of members in the collective activities⁶ that the mission called "job equivalents" and those corresponding to paid salaried jobs. According to these characteristics, the mission estimates that jobs created and consolidated to date would be approximately 1 500⁷.

The sectors with the most jobs (except for job equivalents) seem to be according to the number of jobs per unit: processing of cereals and transport (2.1), restoration (2.3), valves and woodwork (2.6), metal construction (2.7), fishing (3.1), tourism (3.3).

Training is the main tool for reinforcing capacities and skills used by PROMER. Thus, 943 rural micro-enterprises received at least some training, or 69% of all rural micro-enterprises for 2 213 participants, not including literacy. 64% of participants received technical training, some of which was provided by artisan trainers, and 36% received cross training (entrepreneurship, business management, etc.). Women are 55% of those receiving training. The functional literacy training was given to a total of 2 226 people, 82% of them women. Less than one person out of two trained (47%) implemented the training. Access to funding to buy equipment seems to have been a significant constraint in applying the technical training.

The other non-financial support mainly involved

• advisory support provided by the outreach agent. Over the past three years, they conducted 13 076 visits to the rural enterprise economic interest groups, or a monthly average of 16 visits per agent⁸ for an average active portfolio of 28 rural micro-enterprises. The intensity of monitoring is not the same for all rural micro-enterprises, but about fifteen per agent receive more regular monitoring, about two visits per month. These are rural micro-enterprises that are easily accessible and close to the agent's work site.

• commercial support addressed, among other things, market research, visibility of the rural micro-enterprises and product packaging. The exact, cumulative quantification of this support is not known, nor are its results. The project also supported participation of some rural micro-enterprises in trade fairs and, in February 2003, organized its introduction of the Initiatives Mobile Unit, which recorded the permanent participation of 12 rural micro-enterprises and 5 000 visitors. In 2003, the actions focused on creation of two rural micro-enterprise boutiques. These boutiques are promoted from the perspective of project withdrawal and the necessary sustainability of the rural micro-enterprises.

• the technical support targeted improving the traditional production processes and support for installation of production units, especially for the rural micro-enterprises involving processing of agricultural and forestry products. Seven clusters were involved with adapting equipment, several clusters also received improvement in routing. A centre for information on documentation and demonstration (CIDD) was created in 2002. The project also introduced two tools in 2003 to allow the project to take over some of the risk for the technological innovations (for equipment or packaging): the technical support fund (FAT) and the commercial support agreement (CAC). Socioprofessional associations (seven have been identified) were encouraged or promoted under the project as of 2000, although the level of autonomy of these organizations is still far from satisfactory.

Regarding financial support, the project contributed to reinforcing capacities of partner institutions and also coaches the micro-entrepreneurs to obtain a loan or to set up self-financing.

Although the onlending agreement for the line of credit and the memorandum of agreement were signed with CMS, the line of credit never received a call for funds from that institution. However, the risk funds that were to cover some of the losses to loans⁹ were mobilized in two parts and CMS received some equipment. CMS did not open the 10 new funds projected but rather during the course of the project closed some funds or transformed some into points of service. This situation led PROMER to seek new partners. Two new subsidiary agreements and memoranda of agreement were thus signed in 2003 with l'Alliance pour le crédit et l'épargne pour la production (ACEP – production savings and loan alliance) and l' Union des mutuelles d'épargne et de crédit de Sédhiou (UMEC – Sédhiou union of mutual savings and loans) which received a contribution of equipment. Distribution of the line of credit should be reassigned, in the amount of the mobilization, and is now as follows: CMS (60% of 520 000 SDRs, or 312 000 SDRs), ACEP (30%, or 156 000 SDRs) and UMEC (10%, or 52 000 SDRs). At the end of 2003, the two latter institutions made a first call for funds and mobilized the risk funds. The project also signed memoranda of agreement with four local microfinance institutions and made some equipment (motorcycles or computer equipment) available to them.

Based on these various partnerships, 770 rural micro-enterprises obtained at least one loan, or 57% of rural micro-enterprises in the total portfolio, for a total of 265.3 million CFAF corresponding to 983 loans. Also, 1 422 accounts were opened at the partner decentralized financial services and 1 011 savings plans were formed. Women (individual rural micro-enterprises and groups) received 37% of the total allocated and 46% of the number of loans granted. The "processing of agricultural and forestry products" and "service and other" clusters received most of the funding, 35.1% and 42.6%, respectively.

Despite the absence of mobilization of the line of credit, CMS granted 84% of loans in volume and 88% in number, ACEP granted 9% in volume of loans and 4% of the total number. Approximately 129 rural micro-enterprises, some of which received a loan, also participated in self-financing of their equipment (space planning, miscellaneous equipment with extremely variable costs, etc.)

It should also be noted that PROMER furthered emergence of a new trade through 24 advisors who could privately and/or under a second phase of PROMER participate actively in coaching the rural micro-enterprises and the project management.

Effectiveness of implementation and suitability of methods

The quantitative objectives projected regarding the number of rural micro-enterprises in the portfolio were achieved. Those related to training were partially achieved. On the other hand, considering the financial tools available, the objectives regarding job creation, especially for young people, do not appear to have been achieved, and the same is true for access to funding for the rural micro-enterprises. Introduction of new equipment and innovative processes is positive and is one of the major PROMER accomplishments.

Generally speaking, the project team was enthusiastic and engaged in its mission. The project group worked satisfactorily overall and there were significant results in defining a strategy for intervention and for testing various tools. However, some of these tools pertain more to promotion than to sustainability (mobile unit, CIDD). Others such as CAC, FAT and the reference rural micro-enterprises are in the current stage of tools for research/action, technical suitability and demonstration in some promising clusters. It seems relevant that these are medium-term routes to sustainability but this approach currently reaches only a limited number of rural micro-enterprises, which will restrict interpretation.

The project is sometimes a replacement for the rural micro-enterprises in some functions by insufficiently associating and empowering the rural micro-enterprises or their organizations: procurement and sales market research and contracting, and cash flow management.

Regarding financial support for funding equipment over the medium term, the project faced the absence of suitable financial products at the level of CMS. This lack made it impossible to achieve some of its targeted objectives. The initial financial tools strategy seemed inadequate: the conditions for entry and access to credit, including the distance of the services from the main partner institution, immediately eliminate part of the target public, particularly jobless young people and the disadvantaged women. These tools sought to reassure the partner institutions and above all to make resources available to them to grant loans but they do not affect the capacities of the target public to meet the conditions imposed by these institutions. Additionally, if management of the financing was effectively externalized to the decentralized financial systems, most of the other functions (information, assembly of files, even monitoring of retrieval) were taken over by the outreach agents to the detriment of the essentially advisory functions.

The approach of measuring efficiency, as a pilot project, should be taken cautiously, and some ratios show very unequal results but for rural micro-enterprises the return on investment is quite rapid; they can generate a supplementary operating result that is two times as high as the average coaching costs (direct and indirect).

Impacts

The mission showed diversified impacts localized at various levels of observation (rural micro-enterprises, household, village rural community) and involving different domains (economic, social, etc.).

Overall, positive impacts, even quite impressive ones, are shown for some micro-enterprises that received consistent support. The effects are seen at the level of goods and services as well as in sales. There are cases in which the volume of activities doubled (sometimes tripled) within one year of activities. The impacts are strongly tied to the intensity and duration of coaching for these rural micro-enterprises. Nonetheless, the impacts remain modest at the scale of the local economy. Supplementary income disbursed, especially by female entrepreneurs, is allocated on a priority basis to improving the food situation for the family, with approximately 1 350 households having been affected by this impact. When the surplus is significant, it is invested into growing the productive capital of the family farm, especially for agricultural production and diversification of off-farm activities. This thus allows for better security for the households involved, better access to primary health care, and, to a lesser extent, higher school enrollment for children and improved living conditions. Potentially, 860 households showed changes at this level. There is a reduction in the difficulty of work for women because of the processing equipment introduced, and it can be estimated that about 2 000 people in all categories benefited from this impact in the project zone. The skills acquired at the professional level also made it possible to have an impact on human resources. The financial success of some sponsors led them to play a more significant social role in the village and, in some rare cases for those with the greatest success, they are involved in local development of the rural community by putting their reinforced capacities and their resources to use in the community (funding school meals, furnishing schools, etc.). The impacts in terms of environment can be classified as minor and indirect in most types of rural micro-enterprises.

The appropriation and dissemination of certain technological innovations, such as an improved oven for bakeries, seem to have been achieved. On the other hand, other innovations are still under experimentation (shea butter press, improved press for groundnut extraction, etc.). For the latter, it is not currently possible to say whether they will eventually be adopted.

From now until the end of the project, it cannot be said that all of the currently operational rural micro-enterprises are on the path to sustainability, due mainly to insufficient coaching in terms of duration and coaching that is insufficiently empowering and participatory. Thus the impacts and overall effects are limited. Although the impacts shown are quite significant for some of the rural micro-enterprises but overall relatively limited, within the framework of a pilot phase, they make it possible to assess the impact of the methodology and the interest of an approach that associates training with advisory support and access to credit.

Main lessons to learn

The reorganization done with the mid-term review made it possible to take into account sectors of activity that had been insufficiently supported until then. However, the systematic abandonment of trade and pasture activities was not appropriate given the objective of reaching a disadvantaged public for whom these activities generate income and could be a spark to activate more structuring activities. The trade activities could also accompany development if production activities by furthering marketing. Thus, the types of activity targeted, the conditions for access to credit and the insufficient proximity of financial services, in some zones, are discriminant factors for the target priority public, women and young people not involved in off-farm activities.

The private and associative partnership was active, dense and diversified, which made it possible to execute an ambitious programme of work within a relatively short time that was wide geographically and sectorally, even if there is a regrettable content of overly uniform memoranda of cooperation that did not always make it possible to make best use of each partner.

The choice of an intervention over all four regions was of some interest due to the pilot nature of the operation and the diversity of the potentialities and types of activities but cold have been limited in each region to concentrations of economic activity without this affecting the choice of the priority target of the project. This would have made it possible to avoid the scatter effect noted by the mission and thus to reduce operating costs.

The experimentation under way since 2002 on the so-called structuring clusters has interesting lessons that can be capitalized for the future. However, the proximal procurement and sales markets were exploited very little although they involved nearly all of the rural micro-enterprises from the portfolio and had constraints to be lifted. In its apprehension of the rural micro-enterprises, PROMER seems to be adopting a sectoral rather than a cluster approach. Support is focused on rural micro-enterprises that, alone or nearly so, carry out almost all of the functions (procurement, production and sales). They more or less involve the micro-enterprises upstream and/or downstream of the rural micro-enterprises supported. This strategy, which seems to fall within a vision of evolution of the affected rural micro-enterprises towards formal small and consequential enterprises seeking to cover the high value added markets and modern distribution, contributes to limiting the impact of the project and the driving role of some rural micro-enterprises.

Although the sustainability tools chosen by the project (CAC, FAT, rural micro-enterprise boutique) seem relevant, their experience in the allotted time (from now until the end of this phase of PROMER) and at the rate of introduction noted cannot, however, allow for assessment of their suitability to the targeted sustainability objective. It would thus be desirable in the future to be able to test and build on the bases for sustainability of these tools in a real situation with a completely participatory, empowering approach.

The mission shows that the strategy for project withdrawal and for sustainability of the advisory support functions for the rural micro-enterprises was not in-depth enough at the time of project design and was not considered thoroughly enough during the course of the project, which would have made it possible to test one or more of the options within the framework of an experimental operation.

The mistakes and insufficiencies in design of the monitoring and evaluation system throughout the entire period of the project, added to the instability of staffing for this service, made it impossible to optimize the guidance of project interventions. These insufficiencies do not currently allow for optimal capitalization on experiences and for a good measurement of impacts.

Main recommendations

The mission confirms the relevance of pursuing the experience under a second phase of PROMER, especially in the current project zone, which is justified with regard to: i) the relevance of the overall objective of the intervention, ii) the first positive impacts, iii) the overly limited duration of the current experiment, the achievements of which are still to be consolidated; the core current activities of PROMER are still in the field, iv) the need to define and put in place a sustainable coaching service for rural micro-enterprises, and v) the unsuitability of the financial tools, which excluded a number of potentially viable parties.

Pursuing this experience should maintain an overall developed strategy that targets the training/coaching (advisory support)/credit model at the location of the rural micro-enterprises and with externalization of the financing function. The approach to be used with the existing groups or enterprises should not be exclusive regarding the various types of enterprises to be supported whether in terms of sectors of activity or of size. It should be differentiated according to the type of enterprise: single-person micro-enterprise, artisanal enterprise or enterprise with a vocation and a potential to evolve towards the small and medium-sized enterprise. The mission estimates that the second phase interventions should not be aimed exclusively at the small- and medium-sized enterprises at the risk of directly or indirectly excluding, the poor categories from the communities involved. The actions to be put in place should, in parallel with the targeted support for the rural micro-enterprises involved at a given level of a cluster, further the extension of the clusters involved, particularly in number and diversity of players involved in the cluster or contiguous interdependent clusters.

On the matter of location of the interventions, the achievements of the project and other interventions in Senegal tended to give priority to a pragmatic approach that should not oppose a village and département seat location. The geographic positioning of the intervention in a region should be decided on the basis of the combination of a certain number of minimum criteria: availability of raw materials, accessibility, actual or potential presence of financial services and outlook for a cost-effective advisory support service due to the existence of a potential for developing economic activities.

During a second phase, the extension zones for PROMER activities should correspond to the intervention zones of other projects funded by IFAD in view of maximizing complementarities and synergies requiring effective coordination of the interventions. However, the PROMER experience is still new, the various methodological tools still need to be validated, and so extension of the project intervention zone should be done cautiously. An extension of the project to the entire national territory would seem premature.

The question of financing is central in the problem of emergence and consolidation of the rural micro-enterprises, so it seems appropriate and important that PROMER be able to integrate a specific component for questions related to access to financing for the target public. Nonetheless, although the vocation of the second phase of PROMER is to intervene in zones covered by the other projects funded by IFAD, the mission recommends that the second phase of PROMER be able to integrate a technical assistance service for the projects on the issue of financing. This service could be offered by an internal cell with the required competencies but the option of contracting with a specialized outside organization should be given priority. The intervention of international technical assistance could complete the scheme.

Creation of a sustainable advisory service for the rural micro-enterprise should be one of the objectives of the second phase. The process of withdrawal and empowerment of this service should be provided for from the beginning of project design and planned for in the time allotted. Right from the start, the principle of progress billing for services, particularly for the commercial and training functions, which the entrepreneurs seem to be ready to take over when the services are quality and the positive impacts are clear, should be adopted in a modular manner. Then the question of takeover of all costs for these coaching services cannot be exclusively borne by the beneficiaries but must also be considered from the perspective of subsidy and duration, especially considering the contributions from the State and the local collectives.

Lastly, from the start it would be appropriate to build a relevant monitoring and evaluation and indicators system taking into consideration all of the characteristics of the rural micro-enterprise. The annual audits on accounting, financial and procedural should also be able to intervene in the internal information system.

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1/ The interim evaluation mission members were Ms Corinne Riquet, economist, mission leader, Mr. Bertrand Guibert, agronomist, and Mr. Nguala Luzietoso, economist. Messrs. Bakhayokho and Kane, technical advisors to the Minister of Agriculture and Hydraulics, also participated in this mission and represented the Minister therein. Mr. Bakhayokho also accompanied the mission as Chair of the PROMER steering committee. The PROMER managers also accompanied the mission and enriched the discussions and many exchanges on an ongoing basis.

2/ 78 rural micro-enterprises were visited in a total of 52 villages.

3/ Crédit mutuel du Sénégal (CMS) was to cofinance 50% of the line of credit used to finance the rural micro-enterprises.

4/ Regional cells intervene in geographic units called ZAEPs (multipurpose economic outreach zones) covering five to six rural communities. Each ZAEP is advised by an AEP in direct contact with the micro-entrepreneurs.

5/ 64% of affected villages have one single rural micro-enterprise.

6/ The group members in most cases carry out an off-farm activity individually and devote a limited amount of time to the collective group activities.

7/ This estimate does not include the "job equivalents" for those clusters in which the groups are mainly women.

8/ The distinction between the visits to the rural micro-enterprises in the portfolio and those to the economic initiative groups being selected is not known.

9/ These risk funds fed by a project allocation, with lost equity, cover 4.5% of the credit put in place (or 30% of the risk, estimated at 15% of the total credit actually granted) (70% are chargeable to the institution), or projected a reimbursement rate of 85%).