Promoting sustainable rural growth : matching grant FAO-0158-A-00-6045-00 between TechnoServe, Inc. and USAID/PVC

MG objectives changed dramatically over the course of the grant. TNS implemented a new strategy in 1999 and used the majority of MG resources to introduce a new organizational model and strategy that resulted in major changes in the MG in terms of client selection, assistance methodology, staffing composition, and partner relationships. When the original detailed implementation plan (DIP) was prepared, TNS still operated under its old community-based enterprise (CBE) model, and the projected project targets reflected this, as did the MG performance data up to 12/98, which showed significant early progress towards those targets. In reference, for example, to the first objective, to assist CBEs, by 12/98 TNS and its partners were providing assistance to 346 CBEs (46 more than contemplated) with 176,028 direct beneficiaries. The second objective was to improve the capacity of local NGOs and other private/public institutions that support rural growth by developing the capacity of 50 clients by the end of the MG. By 12/98, TNS was already working with 28 institutions, up from 12 at the beginning of the grant, and had reached 85% of the objective set for institution building that year. By the end of the MG (8/31/01), however, the combined number of client businesses and CBEs had declined to 164 (with 113 of these in Ghana) and the number of beneficiaries was only 11,928. Also, by this date TNS was no longer providing NGO and institutional capacity building services. Several factors help explain the decline in these statistics. Most of the enterprises visited by the evaluation team in Nicaragua and Kenya were developed under the new strategy and were not yet operational or were in their early start-up phase. Many of the enterprises are, or will soon be, substantially larger than the CBEs TNS had traditionally assisted. In Nicaragua (and perhaps elsewhere), enterprises currently assisted by TNS are made up of smaller CBEs, thereby accounting for some in the decline in enterprises being served. Some of the sharp decline in beneficiaries can be explained by the change in the revised definition of direct beneficiary, which no longer includes farm families or part-time and seasonal workers and their families. Under the old definition, the number of direct beneficiaries would currently range between 80,000 and 100,000. Regarding the third MG objective, TNS is, and will likely remain, largely dependent on public and private grant funding. Over the MG period, TNS's dependence on US Government funding has increased from 48% to 70%, although concurrent major investments in private fundraising appear starting to pay off. Furthermore, only 1% of TNS's budget is derived from fees paid by clients for the TA they receive -- and it seems unlikely that user fees will account for an appreciable part of the budget at least in the medium term. TNS's new strategy is the product of a strategic planning process driven by TNS's frustration with the stagnant growth of the world's poorest countries over the past 30 years. Recognizing limitations of its previous approach, TNS came to embrace a strategy that can be summarized as: supporting marketing and production channels for high quality, value-added (niche) products that link small and medium farmers to regional, national, and international markets. This strategy, it was reasoned, would bring substantial new income to poor communities and develop local capacity or, in TNS's terms, eradicate poverty instead of merely alleviating it. The task TNS has set for itself under this new model is not easy. The high value market niches that TNS identifies are also being identified by large-scale producers who are unconcerned with TNS's smallholder agenda. Further, the market for fair traded and organic products that make up much of TNS's portfolio, while growing quickly, is small compared to mass traded commodities and can easily be oversubscribed. Securing contracts for these products requires a high level of skills, a tough negotiating stance, and good connections. How successful TNS will be in this effort will become clearer over the next several years. If any organization can carry out this demanding undertaking, it is probably TNS, which has accomplished much over this 5-year period. It developed a new strategy that could represent an important breakthrough for rural development. This required retraining its current staff and hiring new staff; decentralizing planning and decisionmaking to the country projects; developing many new enterprises whose potential is just now beginning to be realized; and adopting a set of core indicators that measure the progress of these enterprises in business terms.