quarterly report · private sector through integrated, value chain, top to bottom knowledge based...

QUARTERLY REPORTJanuary - March 2017

“Together Towards a Competitive Afghanistan”

Ministry of Rural Rehabilitation and Development (MRRD)Afghanistan Rural Enterprise Development Program (AREDP)

AREDP Afghanistan Rural Enterprise Development ProgramBDSO Business Development Service Officers BDSP Business Development Service Providers CDCs Community Development Councils EGs Enterprise GroupsEOI Expression of Interest ESMF Environmental and Social Management FrameworkFSG Female Saving GroupIGAs Income Generating Activities M&E Monitoring and Evaluation MAIL Ministry of Agriculture, Irrigation and Livestock MFIs Microfinance Institutions MoF Ministry of Finance MOU Memorandum of Understanding MRRD Ministry of Rural Rehabilitation and Development MTs Master Trainers NGO Non-Governmental Organization NSP National Solidarity Program PEFs Provincial Enterprise Facilitators PMO Program Management Office PO Provincial Office SGs Saving Groups SME Small and Medium Enterprise ToT Training of Trainers USD United States Dollars VFs Village Facilitators VSLA Village Savings and Loan AssociationWB World Bank

ACRONYMS

Afghanistan Rural Enterprise Development Program

Afghanistan Rural Enterprise Development Program

Afghanistan Rural Enterprise Development Program (AREDP) is a national government-led multi-donor funded program that jump-starts and facilitates private sector growth in rural Afghanistan. The program strengthens the private sector through integrated, value chain, top to bottom knowledge based intervention, bottom up community enterprise development and by addressing credit and capital needs on all levels and in all locations.

The program operates under the Ministry of Rural Rehabilitation and Development (MRRD) through the program management office (PMO) in Kabul. The key principles of the AREDP development objectives include supporting market orientation, sustainable businesses, including coordination, building partnerships, facilitating client decisions, sharing best practices and vertical integration. AREDP has two program components and one support component.

The two program components are community-based enterprise development which provides knowledge-based and financial services to community-based rural enterprises, and SME development which provides business advisory and financial services to rural SMEs.

The management component consists of program management functions, the development of two units that handle policy issues for rural enterprises, plus research and technical support services. AREDP is national in scope and operation and builds on other development initiatives of the GIRoA, donors, private sector MFIs, national and international stakeholders.

AREDP Coverage in Afghanistan

No. of provinces: 5

No. of districts: 24

No. of villages: 694

COMPONENT A: COMMUNITY-BASED ENTERPRISE DEVELOPMENT1. COMMUNITY FACILITATION a) Mentoring and Handholding b) Enhance Micro Saving c) Improve Opportunities to Access Loan

2. ENTERPRISE DEVELOPMENT a) Income and Sale of Enterprise b) Market Linkages and Product Placement c) Establishment of Producers Association d) Enterprise Development for Koochies e) One District One Product f) Persons with Disabilities (PwDs) ACCESS TO FINANCE

COMPONENT B: SMALL AND MEDIUM ENTERPRISE 1. SME FACILITATION a) Mentoring and on the job training b) Creating Linkages c) Partnership d) Exposure Visits

COMPONENT C: CROSS-CUTTING THEME a) Gender Mainstreaming b) Environmental and Social Safeguards c) Training and Capacity Building d) Research, Monitoring and Evaluation e) Management Information System (MIS)

TABLE OF CONTENTS

COMPONENT A:COMMUNITY-BASED ENTERPRISE DEVELOPMENT


AREDP Quarterly Report, January - March 2017

(a). Mentoring and handholding During the reporting period, CED Unit continued to provide mentoring and handholding support to communities for effective and efficient management of the saving groups and rural enterprises,

The unit through its provincial staff and BDSPs conducted 11,954 visits to mentor 5,066 SGs, 1,290 EGs and 514 VSLAs, 143 PwDs and 98 Koochies in Parwan, Bamyan, Nangarhar, Balkh and Heart provinces during the first quarter of 2017.

(b). Enhance Micro Saving

The Provincial BDSPs helped nurture SGs to practice core functions such as regular savings, weekly meetings, complying with group norms and regulations, attendance, maintaining proper records, and initiating internal lending.

Availability and access to micro loans within villages has enabled SG members to initiate enterprises at the micro level. The data from the field indicates that during this quarter SGs were able to save 18.6 Million Afs (10,4 Million Afs by women SGs which is 56%) and the savings cumulatively reached 304.6 Million Afs including 54% women participation.

COMPONENT A: COMMUNITY BASED ENTERPRISE DEVELOPMENT

The Community-Based Enterprise Development Unit (CED) supports community-based rural enterprise development by organizing rural men and women to come together to establish Saving Groups (SG) to save and capitalize resources and gradually establish community- based Enterprise Groups (EG). CED also mobilizing SGs to integrate themselves into village level organizations called Village Savings and Loans Associations (VSLA) that combine savings of SGs to provide- larger and adorable loan for the community member.

A: COMMUNITY FACILITATION

Community-based Enterprise Development 2

Parwan, 2,209,350

Nangarhar, 6,816,406

Herat, 2,762,261

Bamyan, 3,234,342

Balkh, 3,647,810

Total Savings mobilized during this quarter (Afs)

Parwan Nangarhar Herat Bamyan Balkh GrandTotal

34,024,178

122,949,064

50,141,368 52,777,111 44,807,047

304,698,768

Total Savings Mobilized as of March 2017 (Afs)

1,049,000

8,326,196

2,326,176 2,645,400 4,951,002

19,297,774

Parwan Nangarhar Herat Bamyan Balkh Grand Total

Amount of Loans Issued During This Quarter

AREDP encourages rural micro entrepreneurs who are members of different saving groups however, engaged in similar activities to organize themselves into an Enterprise Group (EG). Since its inception in 2010, AREDP created 1,290 EGs and facilitated employment and economic opportunities for

thousands of rural men and women in different sectors.

(c). Improved opportunities to access micro loan

The SGs and VSLAs across provinces have made loans easier to access within the villages. Loans enabled members to either start a new or improve an existing small business. Each loan creates a job opportunity for the rural people to start a small business and obtain income. Data collected from the field shows that women SGs are issuing more number of loans than the male counterparts.

86394

212 136

540

1,368

Parwan Nangarhar Herat Bamyan Balkh Grand Total

Number of Loans Issued During This Quarter

Community-based Enterprise Development 3

5,191,789

17,568,819 5,223,494

6,146,889

7,810,870

Total EG Sales in the first quarter of 2017

Parwan Nangarhar Herat Bamyan Balkh

B: ENTERPRISE DEVELOPMENT (EG)

Recent assessments conducted by the program indicate creation of 8,635 new jobs and an income of nearly 42 Million Afs through sales of enterprise groups including 17 Million Afs by female enterprise groups during this period which shows an increase in motivation and preference of people in business activities.

(a) Income and sale of enterprises

Regular mentoring and handholding visits are one of the main activities of the program’s BDSPs in order to observe the income and sales progress of beneficiaries. A total of 1,934 visits were conducted by the 57 BDSPs in the targeted provinces, during which on the job trainings on bookkeeping and selling techniques were also provided to 1,040 Enterprise Groups.

(b) Increase in Employment of Enterprises

As a result of the program’s regular support to community groups including SGs, EGs and VSLAs in rural areas, employment opportunities have increased through nurturing and mentoring of SGs and VSLAs and the development and promotion of EGs.

Enterprise Development 4

Parwan, 3,017,104

Nangarhar, 5,990,636

Herat, 1,127,401

Bamyan, 2,256,362

Balkh, 4,716,352

TOTAL FEMALE EG SALES IN THE FIRST QUARTER


AREDP linked Alghochak chips production enterprise with 11 schools in Bamyan. Now the enterprise supplies 70Kgs of potato

chips on daily basis.

With AREDP support Roh Afza pickle production enterprise now sales 200 bottles of pickles in Kabul and Nangarhar a day.

During a training program in Balkh province

Enterprise Development 5

(c) Urban Rural Market Linkages

Market linkages and product placement is an important part of the AREDP’s support, and has been under constant focus and insistence of the program to develop new linkages and increase the growth and profitability of rural enterprises. In the first quarter of 2017, total 75 local and national market linkages have been created for 225 entrepreneurs in the targeted provinces.

(d) Formation and Strengthening of Producer Associations

AREDP initiated the federation of its Enterprise Groups (EGs) to Producers Associations (PAs) which are self-managing groups of business entrepreneurs united voluntarily to achieve their common entrepreneurial goals. During the reporting period, 346 EGs have been identified and assessed, out of which 1,290 EGs in the 5 covered provinces and 58 Producer Associations have been formed in the sectors of Livestock, Poultry, Handicraft, Agricultural Gardening, Dairy and Food Processing. The PAs are being supported through regular mentoring and monitoring, on the job trainings, market linkages, participation in exhibitions and exposures. So far, 198 EGs members of the PAs have received technical trainings and market linkages along with simple tools and technologies in the sectors of Carpet, Dairy, Food processing, Saffron and Handicraft.

(e) Technical Know-how Trainings and Market Exposure to EGs/PAs

The program continued the provision of its regular support to the rural men and women under the program coverage. The beneficiaries were provided technical trainings, were linked with the market, visited workplaces of other beneficiaries through exposure visits, and received simple toolkits relevant to their sector. In addition, 203 Entrepreneurs (84 female) of 48 EGs including 9 PAs were provided ‘technical know-how’ trainings in the covered provinces in the sectors of Dairy, Handicraft and carpet.

75

225

Market Linkages Created During 1st Quarter

Number of Market Linkages Created Number of Entrepreneurs Benefited


6Enterprise Development

(e) Enterprise Development for Koochies and PwDs

In 2014, AREDP began working with Koochies and PwDs who have been deprived of many social development opportunities and have limited exposure to economic and income generating activities. AREDP carried out a number of studies to understand the culture of Koochies particularly their entrepreneurship nature. It was found that there is a great potential within Koochies that need to be harnessed. AREDP adopted an approach of business incubation that helps grow through the difficult and vulnerable early stages of business establishment and to institute a person (Roving Facilitator) within the Koochi’s who provides Business Development Services wherever Koochies entrepreneurs migrate.

During the reporting period, 98 (44 male and 54 Female) Koochies have been supported in Parwan, Nangarhar and Bamyan with constant and regular mentoring & monitoring, capacity building and market linkages. Besides the direct beneficiaries of this initiative, 1,258 other people including value chain actors, family members and other indirect beneficiaries have also benefited.

(f) Persons with Disabilities (PwDs)

To facilitate and provide sustainable employment and income generation opportunities for PwDs through Enterprise Development, 143 (87 male and 56 Female) PwDs in Parwan and Balkh provinces have been supported with constant and regular mentoring & monitoring, capacity building and market linkages activities. Similar to Koochies, besides the 143 direct beneficiaries of the PwD initiative, several others have also benefited from the services of the program including 17 indirect employment opportunities, involvement of 286 value chain actors and 858 family members. Through AREDP’s support, 44% income has increased in PwD business averaging 14,920 AFs income per month including 4,300 AFs profit.

(g) One District One Product (ODOP)

ODOP is an economic development model that focuses on one valuable local resource that has potential market in order to develop it further. AREDP piloted this concept on selected beneficiaries of Herat and Parwan provinces which are still under the program’s support through this project. During the first quarter of 2016, regular mentoring and handholding visits were conducted by the BDSPs for 222 (75 Male and 147 Female) direct beneficiaries of this concept, also benefiting 1,332 of their family members along with 444 involved value chain actors and as well as 42 people indirectly employed through the project’s support.


Koochies recieved support from AREDP

AREDP believes in social inclusion and gives hope for People with Disabilities

Famous Kandahar pomegranates on display

C: ACCESS TO FINANCE

AREDP federates mature Saving Groups (SGs) into groups of 8-10 to form Village Saving and Loan Associations (VSLAs) that provide simple savings and loan facilities in communities that do not have access to formal financial services and record keeping.

During the reporting period, Access to Finance unit processed documentation for providing seed capital worth 21 million Afs to 72 eligible VSLAs in the targeted provinces. In addition, the unit facilitated registration of five VSLAs with MRRD and number of registered VSLAs reached to 520 cumulatively.

Moreover, 192 VSLAs were provided 85 million Afs as part of the seed capital distribution process; and in terms of capacity building, the key VSLA members of Bamyan, Nangarhar, Parwan, Herat and Balkh provinces were provided mentoring and on the job trainings in the areas of Islamic Banking, Loan Ledger and Loan Account.

Access to Finance 7


8,445,795

14,326,601

20,567,04023,353,753

51,014,814

amount of VSLAs saving

Total Saving Amounts of VSLAs (Afs)

60 62

104116

178

Balkh Parwan Bamyan Herat Nangarhar

No of VSLAs Established

5,798,050

35,483,700

17,637,37019,113,850

7,784,000

Seed Capital Disbursed in Five Provinces

1014

14

16

18

No of Seed Capital Under Process

Balkh Parwan Bamyan Nangarhar Herat

COMPONENT B:SMALL AND MEDIUM ENTERPRISE DEVELOPMENT


This component facilitates and supports the SME sector in the rural Afghanistan by addressing business needs and creating access to business development services and access to financial services. The SME Development covers SME facilitation, Business Development Support for SMEs and providing appropriate technology for effective enterprise development.

A: SME FACILITATION:

The SME section facilitates AREDP’s support to rural enterprises that are selected on the basis of their potential and ability to contribute to SME sector growth and backward/forward linkages with rural economy.

a) Mentoring and on the job training

The transformation of BDSOs to BDSP has had an increasing effect and efficiency in terms of delivering capacity building support services to AREDP clients. The Enterprise Development Unit (EDU) has provided on the job trainings on various topics such as Accounting, Marketing, Business Management, Bookkeeping and Enterprise Development. In this quarter, the total number of mentoring and or on the job training conducted are 91 out of which 36 in Nangarhar, 27 in Parwan, 28 in Balkh, 11 in Bamyan and 10 in Herat province.

COMPONENT B: Small and Medium Enterprise Development

Small and Medium Enterprise Development 9

34

110

160

13

91

No. SME Registeration with FACT

No. Market Linkages Created

No. of SMEs Participated in Nantional Exhibitions

No. of SMEs Participated in International Exhibition

No. of Mentoring & On the Job Trainings Conducted


With AREDP support Season honey production enterprise supplies 200 - 300 kgs of honey a day.

During food items production and processing in Herat province

Enterprise Development Support Provided to SMEs During 1st Quarter 2017

1 1 1 2 2 2 3 3 5 5 5 5

14 14 14 17

30 33

64 71 74

106 11

5

177

NUMBER OF SECTORS

b) Registration of SMEs with FACT

The Federation of Afghanistan Craftsmen and Traders (FACT) works to promote and protect the interests of more than 60,000 members belonging to the Federation in a market where there are now over 500 000 registered, active, entrepreneurs.

Within this quarter, EDU was able to register 34 SMEs with FACT. The SMEs received certificates in a formal distribution ceremony held at provincial level in all five provinces. It is worth mentioning that AREDP has signed a Memorandum of Understanding (MoU) with FACT and based on that each registered SME is required to pay subsidized fee for acquiring that certificate.

c) Market Linkages

The linkage of rural SMEs to urban markets was included in the ToR of BDSPs as per the instructions of president, and was made a priority by AREDP. The process includes establishing the forward and backward linkages between SMEs, suppliers and distributors within and outside each province, including Kabul.

During the reporting period, the BDSPs were able to establish 110 forward linkages with inclusion of contracts between rural producers, urban sellers, distributors and governmental institutions. The intervention had significant impact on the sales in the short run and on employment and income generation in the long run.



Famous silk carpet on display

Afghan saffron finds its place in international market

d) Exhibitions

Exhibitions and trade fairs have always been a medium of representation of products for the rural SMEs whether on national or international level. It also serves as a chance for the SMEs to come in contact with the final customers on both level/markets. In this quarter, the unit organized six exhibitions in Kabul, and targeted provinces as well as facilitated participation of rural SMEs in South Asia Bazaar Exhibition.

In these exhibitions 160 SMEs from Balkh, Parwan, Nangarhar, Bamyan and Kandahar provinces attended and showcased variety of their handmade products of which 80% were female owned SMEs.

Exhibitions are perfect platforms for rural SMEs to display their products, create business to business linkages, share knowledge and skills and ultimately upgrade quality of their products.



COMPONENT C:CROSS-CUTTNG THEME


a) Gender Mainstreaming

During this quarter, significant progress was made to mainstream gender into programing. SME unit facilitated participation of 13 Afghan SMEs in South Asia Bazaar Exhibition where 100% of SME were women owned. In addition, the unit provided opportunity for 160 SMEs to attend Village Bazaar Exhibitions in Kabul, Parwan, Nangarhar, Bamyan, Herat and Balkh provinces of which 80% were female SMEs. These women have been brought from remote villages of the targeted provinces to exhibit their handmade products such as carpets, handicrafts, jewelary and textile and etc. The exhibitions have been helping these women to get connected with market at the local, national, and international levels.

The CED unit encourages women participation in the Saving Groups (SGs). During the reporting period, total number of SGs reached 5,066 and out which (54%) were female SGs. In this quarter, SG members have managed to mobilize 18.6 million Afs from their own savings of which 10.4 million Afs (56%) mobilized by female SGs. Furthermore, 19.2 million Afs have been disbursed to SG members and out of total amount, 55% of which were disbursed to female borrowers for business purposes.

b) Environmental and Social Safeguards

The Environmental and Social Safeguards Unit (SIU) of AREDP ensures that environmental, social and health safeguards are met for SMEs, EGs and VSLAs. The Unit also ensures that labor standards are maintained, environmentally friendly and comply with the requirements of Afghan laws and regulations as well as International law.

During the reporting period, the unit carried out 196 Environmental and Social Safeguard assessment visits to the workplaces of program beneficiaries which included 68 SMEs (15 female), 107 EGs (86 female) and 21 female SGs and VSLAs in all the AREDP covered provinces. The team also conducted 98 on the job trainings on ESS issues for 1,129 beneficiaries (60% female) in five provinces.

In addition, SIU coordinated and facilitated the implementation of ESS mitigation measures by 101 rural enterprises; this includes plantation of trees, use of safety tools, environmental hygiene and safety compliance and application of AREDP child labor strategy. Also 50 rural enterprises were provided specific sessions on ESMPs and child labor strategy.

COMPONENT C: Cross Cutting Theme

Cross-Cutting Theme 13


Afghan SMEs showcased variety of hand made products in exhibitions

AREDP facilitated participation of local SMEs in South Asia Bazaar Exhibition, New Delhi, India.

54% of rural women mobilize community savings for children’s education

It is also worth mentioning that during this period 57 SMEs have been registered with National Environment Protection Agency (NEPA) for further coordination on ESS issues.

c) Training and Capacity Building

During this quarter, 229 trainings were carried out for 2,747 beneficiaries including 1,663 female participants in the targeted provinces. The trainings were in the areas of Islamic micro finance, initial VSLA, loan portfolio management, sustainable organization and one TOT which 10 people participated including provincial master trainers and MIS officers/BDSPS at Kabul. One training conducted on Women in Islam to AREDP BDSPs at Parwan province which 22 people participated including 9 females. Furthermore, 861 SGs and EGs and 70 VSLAs monitored during field visits at the workplaces of beneficiaries, and the discovered issues were tackled through on the job coaching.

Islamic Micro-Finance (IMF) Trainings:In order to build the capacity of VSLA members on topics such as Islamic Law Principals of Mudarebah, Istisna and Qarzul Hassana, 11 Islamic Micro-Financing (IMF) trainings were conducted to VSLAs and SMEs (5 training to VSLAs and 6 training to SMEs) in which 160 VSLA members and 148 SME members participated during the reporting period. The IMF training conducted to SMEs for the first time and well appreciated by participants. In addition, 394 IMF transactions at SGs and VSLAs were audited and checked, all of transactions were found as per the IMF guidelines.

d) Research, Monitoring and Evaluation

The Monitoring, Evaluation and Research Unit has been working very closely with core program and MIS Unit to identify and keep track of program outcome as well as identify bottlenecks that can potentially affect project implementation. The team has been carrying out extensive field visits to monitor and evaluate field interventions and provide recommendations to senior management for further improvement of AREDP. During the reporting period, the unit 1,578 field visits monitoring 578 SGs, 562 EGs, 222 VLSAs and 216 SMEs in all provinces under program coverage, in addition the team monitored nearly all trainings provided to the beneficiaries by AREDP’s training unit at the provincial level. Also the M&E unit within the reporting period started the process of data collection from the specific beneficiaries who have received support from consultancies hired by AREDP in different areas.



AREDP’s beneficiaries strictly maintain environmental and social safeguard in all aspects of their lives

During Islamic Micro-Finance training in Bamyan Herat province

During information and data collection

e) Management Information System (MIS)

MIS is one of the key units at AREDP that regularly collects data from the field, transforms them into reliable information and ultimately disseminates the data via thematic reports within AREDP and to key relevant stakeholders, in order to support knowledge-based decision making and program efficiency.

During the reporting period, the unit carried out baseline survey on Returnees and IDPs aimed at collecting necessary data and information on the current status of Returnees for proper planning and implementation of the Returnees Project in the targeted provinces. In addition, the unit carried out data collection for Kabul Grand Village Bazaar Exhibition with main focus on sales, market demand and potential sectors and presented the findings and analysis to AREDP management.

Moreover, the unit developed a new concept for creating Information System for Enterprise Development Component called ‘Enterprise Resource Planning’ (ERP) a centralized information center for the program as well as developed and implemented data collection tools in the targeted provinces.

During this quarter, the unit conducted field visit to Parwan province and monitored the processes of MIS data collection, validation and verification at field level, and applied required corrective actions; while another training in Kabul for provincial MIS BDSPs was conducted in order to enhance their technical capacity on MIS issues.



During information and data collection

Rana enterprise group in Nangarhar created employment opportunities for rural women

60% of the program beneficiaries are rural women

Afghanistan Rural Enterprise Development Program (AREDP)Ministry of Rural Rehabilitation and Development (MRRD)

Add: Darulaman Road, Nila Bagh Street, MRRD Compound, Kabul, Afghanistan

Website: www.aredp-mrrd.gov.afEmail: [email protected]

Facebook: www.facebook.com/aredpofficialFlickr: www.flickr.com/photos/aredpofficial

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