PSD Blog@IDRC

Pre-Announcement Call for Research Proposals

IDRC, TrustAfrica and The Foundation for Sustainable Enterprise and Development (FSED) are very pleased to pre-announce a call for research proposals.  The Investment Climate and Business Environment will make available up to US$2.8 million through various initiatives and rounds of funding for researchers in private sector development based in African universities, business schools and independent research institutions.

For detailed information please view the pre-announcement flyer in both English Download icbe_rf_preannouncement.pdf  and French Download frciea_annonce_prealable.pdf .

The case for better African business schools discussion

Critical to Africa’s economic growth problem is a lack of the managerial skills needed to grow successful firms. By providing firms with a stronger pool of trained managers, African business schools can help foster a healthy private sector. Donors must recognize that the continent’s management schools represent a key capacity-building tool that can not only help the private sector, but can also encourage entrepreneurship, streamline healthcare delivery, improve corporate governance, and increase government effectiveness. However, the quality and capacity of these schools needs to be improved, and donors must recognize that most of them are in the private sector.

Questions: What lessons can be learned from the launch of management training programs in Latin American and Asia? How can information and communication technologies be used to improve the quality of current training? How do we ensure that these schools deliver relevant skills? What should the core curriculum of these schools be: hard technical skills or fostering entrepreneurship, creativity and social responsibility? What incentives are needed to ensure that the newly trained managers (and teachers) do not simply migrate abroad with their new skills?

Please click on discussion to join in this interesting debate hosted by the World Bank!  Discussion will be open for comments until December 23, 2005.

University of Stellenbosch’s Africa Centre for Investment Analysis (ACIA)

Today I met with Prof. Nicholas Biekpe (Head of ACIA and Director of MdevF Programme, ACIA, University of Stellenbosch Business School, South Africa, along with Prof Wim Gevers, Associate Director of the Graduate School of Business – two very informed and thoughtful academics. It appears that ACIA’s area of focus has many synergies with IDRC’s proposed research fund. And in fact, Nicholas is very informed on the Investment Climate Facility, having submitted a paper to Chris Darroll. It would not surprise me if ACIA and ICF end up working together in some capacity.

The Africa Centre for Investment Analysis (ACIA) was established in October 1998 as a research, educational and service institution of the University of Stellenbosch Business School, of the University of Stellenbosch with generous support of its founding sponsor, BoE Ltd, now part of Nedcar.

The uniqueness of the centre lies in the fact that it provides a central point for education and training in African capital markets, development and advanced finance, as well as for the collection and dissemination of financial and market data for both investment and research purposes.

A few of the Centre’s objectives include:

• To work closely with the Emerging Markets Research Centre at the University of Salford in the UK;
• To create and maintain a unique African Markets Database;
• To provide training and research in emerging capital markets and development finance;
• To organize annual investment conferences and exhibitions on development and advanced finance in order to help create awareness of the need and the opportunities for investment in Africa

Some of the most recent projects that ACIA is working on according to Nicholas are:

1. South African SME Business Confidence and case studies. We are in the process of constructing unique Business Confidence Indices for the South African SME sector. We also plan to construct case studies of successful SME in the continent for educational purposes;

2. We are also looking at constructing African Equities and Bond Indices;

3. The other interesting thing we are looking at is the constructing of African Corporate Governance Indices. NEPAD is keen to support the project but currently have no budget for it. For this project I have, at the moment, a full-time PhD student at the Business School who I am still looking for funding to support; I am paying for all his cost privately;

4. Another project I am currently looking at is modelling the expected rewards of an improved investment climate in Africa using the IFC/World Bank indicators. I wrote a paper for Chris Darroll and her team along these lines;

5. We are also in the process of constructing African Commodities Indices. I also have a full-time PhD student (who I am privately sponsoring) working on this project. Again I have no funding      to support the project.

Investment Climate Facility (ICF)

This morning finally gave me the chance to meet Hugh Scott, Mohammed Jahed and Chris Daroll, the three main people spearheading the ambitious Investment Climate Facility (ICF). It was really great to meet Hugh in person, after hearing so much about him during this three week journey through Tanzania, Kenya and now South Africa. Hugh’s reputation is widely known in many circles, particularly his untiring effort to promote the ICF and get it on the ground!

What is the ICF?

The ICF is a new and unique private-public sector funded independent trust, in support of and supported by NEPAD and endorsed by African Heads of States, its mission is: to make Africa an even better place to do business by removing real and perceived obstacles to domestic and foreign investment and promoting the continent as an investment destination.

The ICF has three broad objectives:

1. Build the environment for investment climate reform
2. Get the investment climate right
3. Ensure business responds

Some interesting points regarding the ICF’s position, structure and operation are:

• Its objectives are closely aligned with the priorities of the AU, NEPAD and the APRM
• It has the high level support of, and engagement with, Africa’s leaders, the donor agencies and the private sector
• It is governed and operated by private sector principles
• It is a facility with a limited life not seeking its own sustainability
• Its major focus is on improving the environment for domestic and small firms
• Its activities will be guided by the latest research and experience of investment climate reform

The identified priority areas include

1. Corruption & Crime
2. Property rights & contract enforcement
3. Business registration and licensing
4. Taxation and customs
5. Financial markets
6. Infrastructure facilitation
7. Labour markets
8. Competition

Cross-cutting strategic themes will include: Information and services, institutional capacity and capability, policy, legislation and regulation, platform for dialogue and Africa’s image.

Who are the targeted members?

The ICF hopes to attract large private sector companies and the donor community. From the donor community their first tier of targeted agencies are from the G8, at an estimated buy-in of USD $10 million per year for a first phase of three years. The ICF hopes to have a 7 year lifespan, and Hugh stresses that they are not looking to create yet another new institution. The corporate rate of participation is USD $2.5 million. It was made crystal clear to me that under no circumstances will both donors and Corporate members be able to earmark the funds for a specific activity, but instead the funds will be pooled collectively and administered according to the direction set forth my the governance structure. Although, they are sticking to their guns as much as possible with the USD $10 million donor funding, they recognize that this is rather steep, and might dissuade some very good partners outside of the G8 members i.e. the Irish. Therefore, they are keeping a level of flexibility to accommodate such partners.

The involvement of Canada and France are seen as somewhat critical for the ICF in its success in Francophone Africa. Many of the proposed countries of operation include Francophone spots. ICF would like to see each country come on board as a package or consortium. For example, Canada might be comprised of CIDA, IDRC and one large Multinational corporation i.e. Alcan.

At this time ICF has commitment from the UK and one private sector company. They believe that they now have (or are very close) enough funds to begin operating the ICF. It is intended to be a lean operational structure with a very low overhead cost, but the lowest predictions, being less than 10%, are calculated with the full USD $550 million hoped to raise over the 7 years.

How does IDRC fit into the picture?

As Hugh said so eloquently, “IDRC is an oddball and exception to the case”. Hugh and Chris have been giving some serious thought to how IDRC funds would be allocated within the ICF. It is obvious that IDRC can not afford the USD $10 million membership fee, but with IDRC’s niche in the research for development field, they believe that our involvement would be very useful. The research would help identify gaps and be linked to the program development for the ICF.

ICF is going to have three major boxes in its structure, these being: Financial, Programs and finally a Strategic Knowledge and Research unit. It is in this last box where they see IDRC funds being best housed. There has been some talk of the strategic knowledge and research unit being sub-contracted out to SBP (Chris Daroll’s consulting firm), therefore in this case a relationship between IDRC and SBP would need to be agreed upon. SBP doe not have any desire to manage the entire facility, only the last box.

The governance structure of the ICF has been designed, but the individuals have not been selected at the moment. It is worth noting that the AU and NEPAD will have observer status in the governance structure, a position of influence vs. accountability. Hugh suggested that there could be a sub-governance structure designed for the strategic knowledge and research unit, but it would ultimately answer to the super-arching governance structure at the top level. Hugh and his colleagues seem to be open to engaging very seriously with IDRC in designing a research program, methodology, and sub-governance structure that would be suitable to our needs.

In my opinion, Hugh and his team seemed to be extremely sincere in a willingness to arrive at an arrangement that would be suitable and appropriate for an IDRC modus operandi. Hugh mentioned to me that he sees the ICF actively seeking out partnerships along the lines of a “venture capital” firm, looking to find good people – being a partnership broker. He was also quick to point out that the ICF would also be open to receiving good proposals. I believe that this latter method of attracting research proposals is better suited to IDRC’s core values, rather than seeking out the “best” candidates.

Along my journey I have encountered various concerns or criticisms regarding the ICF being too UK driven and not Africa driven. I have come to understand that in Africa there are a lot of ideological differences, particularly among the middle classes and academics. There is no question that the seed capital for this initiative derived from the north, particularly from DfID. But, today the ICF has critical buy-in from all the key African players i.e. NEPAD, AU, and African Heads of States and their respective ministers. So, perhaps how this initiative originated is less important than the fact that it is now well endorsed and looking to tackle a very serious problem. I am no expert in these matters, so I believe that I will end this discussion, which is political in nature and leave it for others to carry on as they wish.

In this last paragraph I wish to share a few interesting exchanges that we had in the meeting, but due to time constraints we were unable to delve into in any great depth. But I believe they are intriguing and worth looking into in greater detail soon.

• The chosen priority themes are informed by research which already exists
• Capacity building is certainly a part of the ICF, but it will be VERY targeted
• The ICF claims to fill a very specific and important niche – changing mindsets
• The ICF will focus on the domestic market, but as Hugh said, what is good for the domestic market is also good for MNCs
• A big emphasis will be dedicated on the informal to formal sector (something that has emerged as an important priority at IDRC stakeholder meetings)
• The co-chair of the ICF will be a Francophone

Gordon Institute of Business Science - University of Pretoria

Today I had the distinct pleasure of meeting Greg Fisher and Anthony Prangley of the Gordon Institute of Business Science (GIBS), University of Pretoria. Both of these gentlemen impressed upon me the sophistication of their business school, which is a young institution, full of energy, innovation and is administratively at arms length from the University of Pretoria. I have noticed a trend of business schools that govern themselves for the most part from the mother university seem to be more dynamic and less bogged down by bureaucracy. Of course to achieve such a position it seems that a prerequisite is a strong leader, willing to push for such an arrangement. The current Dean of GIBS, Nick Binedell, was recruited from Wits, one of South Africa’s most prestigious business schools, and he only accepted this post on the condition that GIBS operates as autonomously as possible. Prof. Binedell is very involved in the GBSN and is helping to head up the Association of African Business Schools (AABS). Apparently he has observed a real thirst from East African business schools to link in with South African schools. Wim Gevers of the University of Stellenbosch also corroborated this observation.

Greg Fisher’s area of interest is the study of entrepreneurs, specifically in South Africa. In his opinion, few of the business schools in South Africa are doing much research in this area in the rest of Africa, although I later came to understand that University of Stellenbosch’s Africa Centre for Investment Analysis (ACIA) is most definitely doing research in private sector development across the continent. But I will get to that in another post. The three greatest challenges facing South Africa at the moment, according to Greg are the staggering unemployment rates (as high as 40%, depending on the definition), HIV/Aids, and finally crime and violence. These three issues all must be taken into mind when discussing any PSD strategy in South Africa.

Thus, bearing in mind the three above-mentioned challenges, Greg listed the following three areas of entrepreneurship studies that are most pertinent to him.

1. The human capacity/human capital needs to be seriously addressed among the vast numbers that are unemployed in South Africa
2. How to get both formal and informal SMEs in the “second economy” to flourish
3. How to create more local large businesses in the “first economy” that can create more jobs and gainful employment

A major impediment to human capacity building is overcoming the distinct lack of confidence found in many individuals. According to Greg and Anthony, this lacking quality of confidence is a result of the apartheid regime. Obviously changing mindsets is not an easy task with easy solutions. We talked a little about the types of strategies that can boost human capacity development, which included mentorship programs and various skill-building training in order to create a “first wave”. And typical of so many conversations during this mission, the question of scaling-up of such activities arose. But, it was refreshing to hear of some innovative businesses that have found solutions on a small scale. A particularly attention grabbing model was CIDA City Campus, a virtually free University, that is a private-public enterprise that uses a new and relevant pedagogical approach to teaching business skills to underprivileged individuals, and has an unique “pay it forward” strategy sending graduates back into their community to teach. By coincidence I happened to be at a conference at which CIDA City Campus’ sister school, TSIBA, made a presentation while in Cape Town. I will cover highlights of the presentation in a later post. But it is clear to me that there is vast experience in South Africa on the human capital side of the private sector development equation.

A question that I enjoy discussing with business schools is the state of their relationship with the business community. How reactive is their pedagogical approach to the needs of the business community and its needs? Is it researching and teaching about the most current and pressing issues relevant to business today? Most schools are quick to say that they are indeed very attuned to the needs of business and are graduating individuals with the appropriate skill-sets. Yet, many say there is a growing trend for businesses to bring educators into their sphere and develop curriculum that is most relevant to their needs.

GIBS has a unique approach to engaging the business community and other stakeholders. Anthony Prangley works in the Policy Leadership and Gender Studies unit, which in 2005 launched the “Dialogue Circle”, based on the assumption that leaders in South Africa need to be well informed and involved in the broader issues to effectively run organizations. A network of relationships of trust across sectors and industries is also vital in addressing the important problems South Africa faces. The circles have a corporate bias, with about 30% being from outside the corporate sectors. GIBS runs the Dialogue Circle on a five-year cycle, and approximately one thousand people are part of the Circle as a whole per annum.

At the moment there are nine Dialogue circle programmes with a wide range of targeted audience. For example the Nexus Circle is a network for emerging leaders (28-35 years) across institutions, which creates a peer mentoring environment to address leadership challenges, as well as developing a deeper understanding of socio-economic issues affecting South Africa. The Chairperson’s Forum Circle brings together former and current chairpersons of large corporations with the objective of learning from their experiences. The Colloquium for Social Entrepreneurs Circle aims to build a network of Social Entrepreneurs in the region, create a body of knowledge, and support the effectiveness of Social Entrepreneurs in the NGO sector. These are just a few of the circles found in this program.

IFC’s Private Enterprise Partnership for Africa

Today I was fortunate enough to meet briefly with Bernard Chidzero, the General Manager for Private Enterprise Partnership for Africa (PEP-Africa).  Some background to this initiative is as follows.  For more detailed information please see An Introduction to IFC’s Private Enterprise Partnership for Africa Brochure.

In April 2005, the International Finance Corporation (IFC) teamed up with donor partners to launch a far-reaching new initiative: the Private Enterprise Partnership for Africa (PEP-Africa). The objective is to help Africa meet its need for a stronger private sector that can raise local incomes and hold its own in the global marketplace. Based in Johannesburg, PEP-Africa is replacing and expanding on the work of the Africa Project Development Facility (AFDF), IFC’s initial program for developing small and medium enterprises (SMEs).  For some of Bernard’s thoughts on this initiative and improving business in Africa, check out the article titled, Corporate Solutions to Rural Problems.

The AFDF on average had an annual budget of USD $5-7 million, which supported SME development.  It apparently was able to target anywhere from 300-400 SMEs per year, offering a wide range of technical support.  Bernard noted that although some of these SMEs flourished, some even being listed, IFC quickly realized that the impact on the economy at large was insignificant.  Clearly this program was not achieving the level of overall development desired, and it was an expensive program with 18 years of history.  However many good lessons have emerged and in the later stages of APDF’s life, they began to  shift the focus to the meso level, for example supporting business associations, with the intention of impacting sectors, instead of individual SMEs.  It is out of this trend that PEP-Africa has evolved.  PEP-Africa is taking a sector approach, focusing on infrastructure, financial markets, Oil, gas and mining, agribusiness, tourism and health and education.  However, cross-cutting themes include creating an enabling environment for SME development and access to finance to promoting supply chain linkages between SMEs and large corporations.

Under PEP-Africa, work has begun on:

Entrepreneurship: With approximately USD $1.4 million in support from the Netherlands, a new SME Entrepreneurship Development Initiative is underway. This will continue and expand on the key projects of the existing facility, which has strengthened Africa’s small and midsize businesses and their support institutions for more than 15 years.

Leasing: A grant of more than USD $900,000 from Switzerland is helping IFC adapt its successful efforts in other regions to expand Tanzania’s access to leasing, an effective financing option for smaller businesses that can neither afford to purchase needed new equipment outright nor qualify for bank loans to finance them. A similar Swiss-funded IFC project in Uzbekistan has helped the country’s number of leases increase dramatically in the past year, and there are indications that similar results can be achieved in Tanzania and other East African countries.

PEP-Africa joins a family of regional technical assistance facilities managed by IFC that together have more than 600 full-time staff in the field. PEP-Africa is also a key part of IFC’s new strategy in Africa; other initiatives include the USD $225 million, 10-country, IDA-IFC Africa Micro, Small, and Medium Enterprise initiative with the World Bank, as well as the creation of integrated SME Solution Centers in Madagascar and Kenya.  PEP-Africa’s indirect costs are covered by IFC profits, but funds for program implementation consist of donor support.  To date, they have managed to raise approximately USD $30 million form the likes of SDC, AfDB, Sida, NORAD and the Japanese.  Presently, CIDA and DFID are considering investing in PEP-Africa.

So what about collaboration between PEP-Africa and IDRC?

Bernard made it clear that PEP-Africa is an implementation vehicle for private sector development.  He sees the research of the ICBE fund connected to their ability to implement appropriate programs in Africa i.e. their actions being guided by our research.  He also suggested that PEP-Africa could easily create a research program around IDRC’s wishes, and manage the fund.  However, I pointed out that we wish to have the research proposals emerge from African stakeholders on the issues that they believe to be most pertinent.  In this case, PEP-Africa would not be the appropriate institution for managing such a process.  They are not in the business of vetting proposals and managing that process.  But it is apparent to me that there is plenty of reason for our institutions to collaborate.

We briefly discussed the upcoming Investment Climate Facility (ICF), which I will discuss in more detail, following a meeting tomorrow with its lead Hugh Scott.  Bernard pointed out that this ambitious initiative is yet another vehicle to raise funds for private sector development, and they welcome such efforts, as his program is well placed to implement programs on the ICF’s behalf.  To date they have already submitted five proposals for programs worth approximately USD $30 million.  It is envisaged that these programs would help the ICF get on the ground as quickly as possible.  He sees linkages between IDRC and the ICF as a very useful contribution to guiding its programming efforts.  He hopes to see this initiative fly, which is obvious given PEP-Africa’s position, but he recognizes that the ICF is being viewed by some as too UK driven, or seen as part of the Blair Commission, and therefore making some donors cautious.

We chatted a little about the scope of IDRC’s research fund, being African-wide.  He suggested that IDRC should consider limiting its scope to a cluster of countries which are struggling with similar issues i.e. tax regulation or licensing issues.  In his opinion, IDRC’s CAD $1.6 million is not sufficient to cover a large geographical scope.

Finally, with regards to a governance structure for IDRC’s fund, I queried Bernard if somebody from PEP-Africa would consider being a member.  He is open to such possibilities, but warns that IFC has a very strict set of ethics and conflicts of interest policies which could prevent an appointment.  If he had to choose a staff member for such a role, he quickly nominated Jim Emery, PEP-Africa’s specialist for Investment Climate.

This was a short but useful meeting.  Bernard is possibly slated to visit Ottawain November, and I suggested that he meet with IDRC’s Vice President Rohinton Medhora and the PSD Chair, Alain Berranger.  This will be confirmed at a later date.

Nairobi Stakeholders' Meeting - September 20th

The following post discusses some of the outcomes and reflections from a meeting in Nairobi where we convened approximately 15 individuals to discuss the IDRC research fund from three angles – research themes, peer review process and administrative mechanisms.  Representation at the meeting included Kenya, Tanzania and Uganda, and included academics, donors, investment promotion centre's, and the commission for higher education.

Scene Setting – Hindustan-Lever BOP Video Presentation

After short introductory remarks by both David Wheeler and myself, the workshop began with a 13  minute video of a C.K Prahalad’s well celebrated BOP case study – Hindustan-Lever’s drive to provide Life-Buoy soap to both urban and rural Indians in a private-public campaign to eradicate diarrhea, eye infections and other diseases, while penetrating the market for soap - Unilever.  The point of the video was to provoke the audience into thinking about PSD and different models of engagement.  It provided the participants a frame of reference for the wide-ranging subject of PSD.  We had a short discussion following the video, which moved seamlessly into the research themes plenary.

Research Themes Plenary

• Different models of entrepreneurship such as collective entrepreneurship or entrepreneurial teams
• PPPs pushing the business model to increase the level of linkages at all levels i.e. at the community
• Private and Public sector co-ordination – quality from competition
• Research by academics in isolation of the demand of industry creates a vacuum
• Link of PSD to social outcomes
• Broader CSR issues involving many actors, the policy environment and the dissemination of research
• Long-term social/economic/political impacts of PSD
• Local business promotion/SME linkage
• Social context/cultural
• What are the best models for replication – social benefits
• Involving the private sector in research

The group at large was given the set of Research Questions from the Unleashing Entrepreneurship conference in the beginning of this workshop.  We asked the participants to form groups of two to three and review the questions, focusing on the two most important clusters in their opinion.  They were also asked to include any relevant questions that might be missing from the conference output.  Due to a tight schedule and a determination to arrive at a consensus on priorities, we asked each person to rank the two most important clusters by show of hands.  Two areas emerged as clear priorities:

Overarching Issues: Strategy and Evaluation      1
Mindset/Cultural Cluster                                        5
Role Cluster                                                             2
Human Capital Cluster                                         8
Financial Capital Cluster                                       4
Enablement Cluster                                             9

Peer Review Plenary Discussion

To set the stage we asked the audience two questions to provoke a conversation around the process of peer review.

1.  Who is in the mix?
Academics          XXXXX
Business             XX
Policy Makers    X

2.  The role and level of filters
A relevance step
Who qualifies
How is it categorized
Pool of reviewers

**When asked what an appropriate mix of peer reviewers might look like, the participants agreed that the mix of Xs indicated above seemed appropriate.

Comments included:

Be conscientious of the time horizon for peer review process
What is the role for private sector involvement
What is the overall criteria for the reviewers and/or IDRC
Multi-stakeholder review panels might lend a level of complexity which could slow down the process

Just prior to the lunch break we asked the participants to self-select into three groups on research  themes, peer review process, and finally the administrative mechanisms.  The first two groups were asked to take the morning sessions already covered into greater detail, while the third group, administrative mechanisms, was asked to begin the discussion on how such a fund would be set up.  After all three groups reported back the whole group would discuss administrative mechanisms in plenary.

Research Themes Report Back

Building on the morning session, this group focused in on the two clusters identified as the highest priority and delved into more detail as to what they felt were some specific research areas within the clusters.

Enablement Cluster - Financial cluster cuts across the enablement cluster
Barriers to growth for Small Medium and Micro (SMM) or SME
Inclusive or flexible model for entrepreneurship (social)
Peacebuilding and the socio-economic development

Human Capital Cluster – Cultural cluster cuts across human capital
Role models that are local/indigenous to Africa – local case studies celebrating African entrepreneurs and business people
Women and disabled foci, traditionally disadvantaged
Role of business associations
Research and teaching capacity of schools themselves
Knowledge capture of already existing East and South African relevant research

Recommendation for a Needs Analysis
Gemini and Gem Reports/Methodology
Looking at other successful emerging markets i.e. Mexico; China (only had 8% FDI) for a cross comparative analysis

Peer Review Report Back:

1.      Develop Criteria
2.      Call for Reviewers – pool
3.      Steering Committee

Comments Included:
What represents the region?
Who should be a reviewer was hotly debated
Internal mechanism to build capacity so that proposals that are rejected can be improved and re-submit at a later time
Small vs. Large proposals - Separate large multi-country proposals from the country based, small-based research
Technical committees should be 2-3 people at most to increase turnaround times
This should be a virtual process with the exception of the regional level committee meeting on occasion
Consider video teleconferencing
Questions around incentives for reviewers to improve efficiency of the system?

Administrative and Governance Arrangements:

The process used to develop proposals for administrative and governance arrangements for the ICBE Research Fund was similar to that used for other elements of the strategy.  A group of five participants volunteered to develop some ideas and then these ideas were debated by the participants in plenary.

Similar to the Peer Review process group, the Administrative and Governance Arrangements group envisaged the need for a super-arching governing board for East and South Africa, and possibly also a policy committee that might comprise many of the workshop participants, at least on an interim basis.  In addition, there would be a secretariat charged with implementation of decisions taken by the Governing Board/Policy Committee.  It was noted that the secretariat would need to have legal status in order to ensure full accountability, but that this could be secured within an existing legal entity e.g. a University.

A number of models emerged in the plenary discussion of the group’s proposals.  These all envisaged an appointed or elected chair of the governing board/policy committee and either the appointment of a secretariat or its emergence through a process of competitive tender.  Some thought that it might make administrative sense to co-locate the chair and secretariat roles.  Others thought it would give greater accountability if these functions were separated, with a more independent chair.  Some thought that the secretariat could be provided by an academic institution, others that an external national or international organization e.g. the Association of African Business Schools or the IFC, or a credible independent body e.g. a Commission for Higher Education, might provide the optimum home for a secretariat.

In order to identify the preferred model from the group, five alternatives were arrived at and each participant was requested to rate each on a scale of 1-5, where 1 = unhappy and 5 = very happy with the idea.  The models that received most support were those that separated the roles of chair and secretariat and either appointed a non-university secretariat or allowed a non-university secretariat to bid competitively for the contract (3.4 approval rating on a scale of 1-5).  The next most popular option was again to separate the role of chair and secretariat but allow universities to bid competitively for the contract (3.1).  Less popular was to separate the chair and secretariat roles and appoint a university-based secretariat (2.2 approval rating) or to keep the two roles combined and appoint both the chair and secretariat from the same institution (1.6 approval rating).

On this basis it would seem that there is strong merit in considering a competitive bid process for the housing of the secretariat but retain the right to appoint or elect an independent chair of the governing body/policy committee.

University of Dar es Salaam (UDSM)

On Friday September 16^th David, Alice and I traveled to the University of Dar es Salaam (UDSM) to visit the Faculty of Commerce and Management. We had the privilege to meet with Dr. Marcellina Chijoriga, Head and Senior Lecturer, Department of Finance. Dr. Chijoriga is a dynamic individual brimming with good ideas, common sense and a lot of energy. At the moment she is the acting Principal in the absence of Dr. Erasmus Kaijage, who will be attending the September 20^th meeting in Nairobi. We were clearly in very good hands.

In our discussion with Dr. Chijoriga a number of areas emerged where research in Tanzania would be useful to enhance the business climate. There has been quite a bit of privatization of utilities and other businesses in the country and a review of the process would be practical. Public private partnerships (PPPs) are another area that warrants close examination, such as in the water sector or railroads. Countries’ experiences in PPPs across the region could be examined in a multi-country comparison. There has been Foreign Direct Investment (FDI) in Tanzania, particularly around the mining and tourism sectors, and the link to the investment climate’s ability to attract or detract FDI is crucial and should be examined. However, it should be noted that the BEST program mentioned in a previous blog is focusing on this issue, with a lot of donor support.

As I mentioned in my entry on the visit to CIDA at the High Commission, Microfinance is massive in Tanzania, and Dr. Chijoriga, an expert in this field sees a number of areas that should be researched. According to her, the actual demand for such services is only anecdotal at this time, although she suspects demand is certainly greater than the supply. She thinks that there is a need to connect the smaller microfinance providers that aren’t full-fledged Microfinance Institutions (MFIs). The Savings and Credit Co-Operatives (SACCOs) and MFIs are not the only institutions that should be supported. I ask the question again, how do we link SME development, the human capital skill-set to the availability of credit and other supply services?

 

We asked Dr. Chijoriga to comment on the culture of research at her faculty. We were probing into the motivation of researchers at UDSM, for example what incentives or pressures does the staff have to publish and how is the state of their methodological skills. She described an environment which pits the motivations against one another. Staff live with a typical university publish or perish culture, but at the same time teaching can interfere with their ability to do the research. Methodologically speaking, the faculty has had workshops on a regular basis, providing the space for faculty and graduate students to convene to workshop their proposals, thus building methodological capacity and improving proposals. However, a problem arises in that very good proposals are frequently not funded, thereby leading to frustration and consequently decreasing motivation. In turn this sense of frustration leads many to not involve themselves in such workshops, which then contributes to diminished methodological skills.  Clearly a downward spiral of capacity!

Next we probed Dr. Chijoriga on what institution could fairly administer IDRC funds in a good manner. She suggests that if we carefully create the “rules of the game” in advance, hire a good manager and financial officer, create solid financial systems, then it really shouldn’t matter which institution houses the funds, and it would then act impartially and responsibly.

In our last 15 minutes together we brainstormed a peer review process and how it might look. Intelligibly, it is understood that this fund needs a robust African peer review process with some teeth. Dr. Chijoriga suggested it would be useful to create an overarching level of research directors, who in turn would appoint thematic panels and would invite individuals to serve as the panelists, bearing in mind any conflicts of interest. It is thought that for the most part, such panels could operate in a virtual environment. Although I suspect that there would be important points in time that physical meetings must take place.

It was a pleasure to meet with Dr. Chijoriga who so graciously gave us over two hours of her time, and a productive two hours no less!

CARE Tanzania

After our meeting with CIDA on September 15^th, I decided to tag along with David and one of his grad students Alice to their meeting with CARE International in Tanzania. I was aware that CARE Canada and CARE Tanzania have been working together to move forward an agenda on private sector, and I was very interested to hear how their plans were coming. We were received by Chris Sykes, director of programmes and Nick Southern, Country Director in their very comfortable and centrally located offices in Dar.

Nick very briefly gave us an overview of CARE in Tanzania, where they are working and the areas of focus where it is concentrating its efforts. Currently CARE works in the Education, Health, livelihoods and Natural Resources sectors in 40 districts/Municipalities across 11 regions on mainland Tanzania and on both Unguja and Pemba Islands of Zanzibar. Their program is actively engaged at the community, village, district and national levels in all sectors.

CARE is beginning to flirt with the idea of Private Sector and it is emerging somewhat organically through its Livelihoods and Natural Resource Sector of work. This area includes projects around common property resource management, livelihoods of households and next to protected areas, on-farm income generation, off-farm income generation, food security and HIV/AIDS. However at the moment CARE does not know exactly where to house a private sector initiative, and consequently they are being very thoughtful and patient in exploring this work. There are three areas CARE Tanzania could have natural links to piloting some work in private sector. These include their activities in agriculture, ecotourism and finally the potential around Artemisia, a hardy species of herbs and sub-shrubs known for their volatile oils and medicinal properties.

In the agricultural sector, CARE has had tremendous success with small-holder farmers and small-scale savings and loans. Many of these groups of farmers have formed associations that have an apex structure. Recently in an ad-hoc manner, some of these associations have begun to engage with agribusiness on their own accord. This is a very interesting development that might warrant some research into potential business models, market analysis, and the development of a tools kit to measure impacts. What might be the proper structure for these associations that can best represent their collective interests? In the meeting, the idea was raised that governance issues for these associations is also key, since only some of the members are literate or innumerate. Thus, how do they make sure that the collective interest is being best served?

The idea was raised that a mentoring system that links the business community in Dar es Salaam to these associations, providing advisory services could be an avenue to build business capacity.

This was a good brainstorming session for all meeting participants and we left with a positive vibe. It will be a slow process for CARE to begin exploring private sector in more detail for a number of reasons, but I have confidence that they will be moving forward and doing so in a very intelligent manner.

CIDA in Tanzania

Today we had the good fortune of getting a meeting with CIDA’s Tanzania representative, Ken Neufeld and his colleague Gerald Chauvet, who has responsibility over the PSD agenda. 

Canada's current bilateral program in Tanzania focuses on four main areas, with private sector development being one of the four. The other three are primary education, HIV/AIDS and finally Good governance.  Canada has renewed its 2002 commitment towards Tanzania as a country of focus in its policy, Canada's International Statement — A Role of Pride and Influence in the World. This framework, announced in April 2005, confirms Tanzania as one of the 25 development partners in which CIDA will concentrate the bulk of its country-to-country assistance. As a result, CIDA's assistance to Tanzania has grown substantially, and it should continue to grow. In line with this statement, CIDA is giving priority in its support for country-led programs that are consistent with Tanzania's Poverty Reduction Strategy. Ken confirmed that Tanzania’s bilateral program is indeed growing at a very quick rate, perhaps over $60 million this year. A huge percentage of CIDA’s funds are earmarked for budgetary support - Tanzania being such a donor’s darling. Tanzania is now into its second PSRP, which both Ken and Gerald support, although like any PRSP, there is still room for improvement and prioritization.

Under the objective to improve the Business Environment for Small Enterprises., CIDA, in conjunction with the Government of Tanzania and other donors, is providing financial assistance and technical expertise to create an environment more conducive to small enterprise development, and to establish or expand micro and small-scale credit to those financially viable proposals designed to generate employment. 

Gerald told us of a new $35 million Trust Fund which has been created to enhance and build capacity of the meso and macro levels for microfinance institutions – it is appropriately titled the Financial Sector Deepening Trust (FSDT). From numerous meetings it appears that Tanzania is in the midst of a full scale microfinance revolution and there is a mad scramble to provide services into the rural areas. This autonomous fund is being created by a consortium of donors and the Bank of Tanzania. Members include Danida, the Dutch, Sida, Dfid and CIDA. It will officially launch October 11 this year, and Canada’s own, Desjardin  will be involved in this Trust. The Trust will support the three pillars of financial sector development: (i) government policy and the legal and regulatory framework; (ii) financial and real sector infrastructure; and (iii) financial institutions and related transactions.

The general feeling of Ken, Gerald and many others is that the demand for more services, particularly credit services is largely unmet and far outstrips the available supply. However it should be noted that the evidence of this is largely anecdotal — albeit quite likely accurate. Nevertheless, there is little quantitative data available on the actual demand. Gerald informed us that a South Africa consulting firm has been hired to carry out a very large half million dollar survey of the financial demand. We raised the point that while deepening financial services available in Tanzania, shouldn’t attention be simultaneously focused on the human capital side i.e. the ability to run a proper micro or small business. The development and success of SMEs is not just the availability of credit. As Acting Dean of the Faculty of Commerce and Management of University of Dar es Salaam, Dr. Marcellina Chijoriga so eloquently put, there is a missing link to the development of SMEs, while the provision of credit is about the ability to repay. I worry that such a Fund at the FSDT will overlook this important part of the equation and will only get caught up in supply-driven activities such as developing microfinance regulatory and supervisory frameworks or supporting efforts by banks and MFIs to develop new SME microfinance products. Can we really unleash entrepreneurship or support business development without addressing the human capital side of the equation at the same time? Should we wait to address human capital until financial deepening across Tanzania is achieved and the masses have access to credit and other financial products before addressing harnessing the demand side?

CIDA continues to support the Business Environment for Strengthening for Tanzania programme (BEST). BEST is another initiative supported by a consortium of donors, which include DANIDA, Sida, DFID, the Royal Netherlands Embassy, and the World Bank, which is very focused on the regulatory environment. It looks at causes that might be hampering business, appropriate types of laws, and licensing issues to name a few. The BEST Programme identifies 5 priority areas: Regulation, Commercial Dispute Resolution, Tanzania Investment Centre, Government Culture, and Private Sector Advocacy.

Finally, CIDA is an active member of the Legal Sector Donors Group, which looks has many investment climate direct links.

Overall this was a very informative session in which we all had the opportunity to share our respective agendas on PSD. I was pleased to hear that Christine Johnson of CIDA’s policy division is traveling to Tanzania sometime soon and will have a chance to engage with Ken and Gerald on their PSD agenda.