Ethiopian Business Development Services (BDS) Network
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BDS - Newsletter

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No. 17  -  September 2006

 Dr. Andreas Springer-Heinze

 

 Mr. German Mueller, VC Coordinator of the ECBP-PSD

 Some of the participants of
the Value Link Training

Value Chain Link Training:

The Private Sector Development (PSD) component of the GTZ-Engineering Capacity Building Programme (ECBP) in Ethiopia adapts a Value Chain (VC) promotion approach to business development. To this effect, GTZ has launched early this month a TOT in value link. A VC Promotion approach of business development is a comprehensive programme which addresses both the upward-downward and horizontal linkages along the value chain of selected business sectors and sub-sectors. In the case of the Ethiopian ECBP programmes the leather & leather goods, textile & garment, chemical & pharmaceuticals, construction, and agri-business sectors are considered for the pilot phase of VC promotion. Within these selected sectors, sub-sectors will be identified and selected furthermore. The VC approach aims at upgrading the enterprises along the value chain with various interventions for improving the internal (at operational level) and external (at meso and macro levels) situations that directly and indirectly affect the efficiency and effectiveness of the key actors.

This approach starts with defining visions and identifying problems & opportunities in light of the effort for attaining desired objectives. Accordingly, activities are listed in priority order for reversing the problems and utilizing opportunities. The various actors at all levels would be given respective responsibilities for implementing the activities. A core group will be formed to be in charge of steering the whole process and   further down the line there will be a working group which is headed by a champion or change agent for a particular VC. Within this approach, it is expected that certain conditions of entry are fulfilled which are listed down under information, commitment and quick action. Quick wins are supposed to be short term goals that need to be addressed so as to motivate the actors to show commitments.

The value link training had twofold objectives of training trainers from among private BDS providers and specialists on the one hand and VC facilitators on the other hand. This training which is the first of its kind in Ethiopia and also in Africa is developed by the GTZ head quarters with a team of experts headed by Dr. Andreas Springer-Heinze.  Dr. Andreas and Mr. German Mueller were the trainers. The training has about 11 modules and addresses most important factors for the success of business.

Some of the participants

CEFE Training for the Disabled

Misirach Handicraft Training and Rehabilitation Centre (MHTRC) is a humanitarian development organisation which is financed by Swiss Evangelical Nile Mission (SENM) to deliver skills training to the disabled in Ethiopia and market the products of the same group. The centre’s strategy used to be to train and either employ them or sell the products they produced after training which didn’t have a wider coverage and didn’t help the beneficiaries to become independent. However, the organisation has changed its strategy since four years and started to widely train their target groups in any of the skills training centres which are competent in certain fields based on the choice of the beneficiaries. After they completed the training they would be given entrepreneurship development training based on Competency Based Economies through Formation of Entrepreneurs (CEFE) approach. The centre further assists the disabled with necessary equipment and seed capital to start their own enterprises be it in group or individually.  Of course, the centre monitors the success or failure of the beneficiaries even after this comprehensive intervention package to make sure that they succeed in business. With this effort many success stories have been recorded some of which will be published in one of the future newsletters. For the time being the picture of the CEFE participants during the last August 14-18, 2006 training are posted here. Most of the participants were deaf.

 

Public Private Partnership

Public Private Partnership (PPP) is one of the contemporary measures taken by progressive governments which promote private sector development and good governance. Sometimes PPP is mistaken for Public Private Dialogue (PPD) which is a forum where the public and private sector actors sit to discuss on certain policy reforms. PPP is a rather different issue related to the procurement mechanism of the public sector. The traditional procurement mechanism of the government is that the government owns certain asset which is necessary to give public service and delivers service with its own human resources and budget. Differently PPP emphasises that the government isn’t efficient and skilled in delivering certain services and so has to partner with the private sector with the objective of better discharging its services. The private sector is believed to be technically advanced, have better management experience and cost efficient in delivering services and could replicate its experience in the public sector if given the chance.

Major Principles of PPP  :

  • Public sector purchases services not assets,

  • Public sector specifies service outputs required,

  • Private sector commonly provides the design, build, operation and possibly finance,

  • Risks are identified and placed with party best able to manage them,

  • Private sector is paid according to performance,

  • Objective is to achieve value for money.

Benefits of PPP:

  • Acceleration of infrastructure provision through mobilisation of private sector capital;

  • Faster implementation because government doesn’t have to wait until it can afford to address the matter;

  • Reduced whole life costs, because of private sector efficiencies;

  • Better allocation of risk, because private sector has experience in handling commercial risks, while government typically does not;

  • Better incentives to perform, because a failure to perform means that payment isn’t issued;

  • Improved quality of service, again because quality of service is a key performance indicator (KPI) upon which payment is based;

  • Generation of additional revenues as the result of the technical expertise possessed by the private sector and the efficiencies that result;

  • Strengthened accountability, due to contractual provisions that link the private operator’s remuneration with performance; and

  • Enhanced public management, because government now has the time to manage, rather than be distracted by operational and service provision requirements.

Though there are some initiatives which resemble PPP in Ethiopia, the practices are neither backed by proclamation nor do the contractual arrangements ascertain PPP as such. The collection of income tax through banks is one example of such initiatives by the Addis Ababa City Government Revenue Agency, but the contract isn’t PPP at all.

Sources: The principles and benefits of PPP are obtained from Institute for Public-Private Partnerships (IP3) ‘PPP Skills and Competency Development Training Manual’.

 

Previous BDS Newsletters please visit www.bds-ethiopia.net/news.htm.

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