Ethiopian Business Development Services Network (EBDSN) P.O. Box 11133, Addis Ababa, Tel. 00251-1-62.61.34, Fax 00251-1-62.01.25 website: bds-ethiopia.net email: [email protected] _______________________________________________ Ten Success Stories on Business Development Services Addis Ababa 6/2003 _______________________________________________________ EBDSN Ethiopian Business Deutsche Gesellschaft für Development Services Network Technische Zusammenarbeit Table of Contents 1. Mrs. Hanna and her partners. Tailoring and embroidery training center 1 Problems in working capital, increased competition, insufficient management and marketing capacity 2. Mrs. Tirsit Wolde. Lina Beauty Saloon 3 Narrowness of the work premises, lack of record keeping, insufficient marketing skills and lack of a steam machine 3. Awra Amba Community, Amhara Region. Weaving Cooperative 5 Lack of weaving tools and modern weaving techniques 4. Mrs. Huluageish Mamo. Bakery and Pastry 7 Tax burden and financial problems 5. Mrs. Shukrit. Petty trading shop 9 Lack of a suitable trading shop and shortage of finance for the purchase of more supplies. 6. Mrs Wagaye Mesfin. Beauty Saloon 10 Bad shop location, improper arrangement of materials and equipment and the employee’s repeated tardiness 7. Kalayou Hailu. Household and office furniture workshop 11 Lack of working space because of high rent (thus no display room), shortage of working capital, old machines/tools and high costs of rental of machines 8. Kebede Sacho. Curving activity 12 Lack of sufficient market, shortage of working capital, and no advertisement used by the operator. Lack of modern and improved machines, the working place is narrow and inconvenient. He also lacks basic business skill. 9. Sebseb Kassa. Curving activity 13 Marketing problem, shortage of working capital, lack of basic business skills, use of backward tools and lack of appropriate working place 10. Mrs. Idget Besira. Beauty saloon cooperative 14 Administrative and legal problems, financial problems, the house rent is also high. Lack of capacity to draft a memorandum of association and bylaws Propride Entoto Livelihood Program (NGO), Addis Ababa: Example of a successfully applied demand driven BDS approach 16 Federal Micro and Small Enterprises Development Agency (FeMSEDA) Mrs. Hanna and her Partners Tailoring and Embroidery Training Center, Addis Ababa 1. Situation Three young ladies, who had taken a two-year training in tailoring and embroidery works, established a tailoring and embroidery training center in the year 2000. The cost of the training was covered by the Christian Childrens Fund (CCF). Ms. Hanna (manager of the center), and her two partners, have made successful use of the training they had received in the field. The training center, with an area of 48 m2, was located at Woreda 7, Kebele 29 of the Addis Ababa City Administration, along the main road to a place called Kuwas Meda. It is rented from an individual owner at a monthly payment of Birr 700. In addition to the monthly rental fee of Birr 700, which the operators said too high to afford, the center spends about Birr 1,000 to purchase training material such as cloths and thread and Birr 200 for other running costs each month. The required materials are purchased from individual wholesalers located at the largest market center called Merkato. At the time of the establishment of the Center, there were 10 sewing machines, 10 scissors and few tables and chairs. Income from the training center as well as sale of tailoring and embroidery products was the main stay of the three operators. 2. Problems Hanna Tailoring and Training Center has been constrained by lack of sufficient working capital, exorbitant rental fee for work premises, increased competition, lack of proper business management skills such as marketing (no sign board or other forms of business advertisement and promotion methods) and absence of proper bookkeeping practice. 3. Action The BDS facilitator from FeMSEDA assisted the ladies in a thorough assessment of the root causes of the problems and has outlined an action plan in collaboration with the three operators to resolve them. The support activities identified, in particular, were to assist the operators secure good business location and diversify the business, introduce simple advertising methods such as use of business cards and photo albums, keep books of accounts and also assist them access training in basic business skills. The operators have also taken the responsibility of searching for low-priced working room, started saving and pledged to look for donor-supported business training. 4. Solution As the result of the efforts of the BDS facilitator and that of the operator, encouraging results were obtained within a period of three months of the 1st cycle of BDS implementation. The BDS facilitator assisted the operators to secure new business location at Kolfe, where there is vibrant market situation, and also to diversify/change the business. This has opened an opportunity for the operators to engage themselves in sale of wide range of items produced from embroidery, tailoring and textile works. After witnessing that the income from the shop exceeds the income from the training center, the operators have now quitted the later and building upon the former. The operators were also connected to the facilities of FeMSEDAs showroom where they could display products and distribute business cards and leaflets to the public. In order to help the operators manage their business properly, the facilitator provided simplified bookkeeping formats with sufficient briefing on how to use them. The facilitator has continued assisting the operators to access training in Basic Business Skill (BBS) from other BDS providers. 5. Impact The BDS intervention has resulted into the improvement of the business situation of the operators. It has been possible to witness that the operators have shown qualitative and quantitative improvements. Cost-effectiveness (as a result of change of location and improved bookkeeping practice) and level of business awareness of the operators have been improved. Progress has been obtained in terms of increased income, reduced expenditure as well as increased number of clients and sales volume as a result of opening the new shop at Kolfe. Hanna and her partners are now concentrated in running this shop for the simple reason that they are benefiting much from selling various cloths and garments at Kolfe market center than that of the training center. They said it was timely to change the type of business and location since hundreds of similar training centres were established and competition has got much more stiffer and trainees do not find job or increase congestion in the textile sector. Teklu Kidane GTZ-MSE Development Programme Federal Micro and Small Enterprises Development Agency (FeMSEDA) Ms. Tirsit Wolde Lina Beauty Saloon, Addis Ababa 1. Situation The enterprise was established at the beginning of the current Ethiopian calendar year with a start-up capital of Birr 6,000. It is located in front of the Pasteur institute in the Addis Ababa City Administration. This area is mainly occupied by residential quarters with some metal and woodwork enterprises. Ms. Tirsit used to work for an individual hairdresser for about three years prior to opening Lina beauty saloon. She was earning a monthly salary of Birr 200 while working for the individual. It was through apprenticeship that she initially learned the skill. At the end of the second year of her employment she came with the idea of having her own beauty saloon and decided to save money to attend skill up-grading course in the field. She, therefore, managed to attend training in hairdressing and related skills for eight months at a training center known as Orion. She paid a total of Birr 2,000 for the training. The next challenge, however, was to secure sufficient start-up capital. Her brother, who was living abroad, appreciated the effort she made to improve her living conditions and granted her with the fund required to purchase tools and equipment needed for the business. On the other hand, she leased a small working room, very close to a main road, and paid rental fee of Birr 7,200 in advance for two years. At present, she is using two casks, five hair strainers (one is electrical) and other complementary equipment. The monthly cost situation of Lina beauty saloon is as follows: Birr 430 for salary, Birr 50 for electricity, Birr 10 for water and Birr 30 for various runing costs. The number of employees, including the owner and the guard, is four. 2. Problems As per the problems identified by the operator, Lina beauty saloon is constrained by insufficient space due to narrowness of the work premises, lack of record keeping and marketing skill and lack of a steam machine. 3. Action As per the action plan outlined by the operator and the BDS facilitator from FeMSEDA, the following actions were undertaken to solve the problems: • The operator started searching for work premises. • Bookkeeping format prepared by the facilitator and provided to the operator. • A local business company known as ‘Zenit Gebs Eshet’ was contacted to access training of the South African company of Dark & Lovely. • Information on a forum to discuss the functioning of Value Added Tax (VAT) was solicited. 4. Solution • The operator has continued looking for appropriate work premises, with due emphasis to getting customers. The operator is also conscious of the new premises to accommodate more clients than the existing one, especially during holydays where number of clients increases. • The facilitator gave on-the-spot advice to the operator on marketing strategies and record keeping methods. He provided a simplified record-keeping format and showed the operator how to use it. The operator was found committed in using the format effectively and observed to have been motivated of making more copies of the format by her own. • The operator was able to make use of a 5-day training opportunity in beauty saloon skills and management, offered by Dark & Lovely. The role of the facilitator in this regard was to provide information to the operator on that opportunity. • The operator has participated at a forum organised to brief the business community on the newly promulgated Value Added Tax (VAT) at the Sheraton Addis. The operator has got chance of representation on the forum as the result of the invitation she received from FeMSEDA through the assistance of the facilitator. 5. Impact • The bookkeeping format helped the operator know actual profit on monthly basis and make records systematised. • The operator has started selling beauty-related items such as cosmetics, which she has not tried before. This has improved her monthly income. • The operator appreciated her participation at the training offered by Dark & Lovely because she said she was able to upgrade her skill on hair dressing or beautification; and also started selling cosmetics as additional business activity. • The taxation forum helped her get sufficient information on the need to abide to general tax regulations, as a citizen. She also noticed that knowing about taxation would help her identify items subject to taxation and not to incur additional cost as VAT upon purchasing inputs from VAT exempted enterprises. • Lina beauty saloon has created employment opportunity for the owner, 2 hairdressers and a guard. With the income from the business, the operator is managing a family of 5 members. • The taxation forum helped her to decrease expenses • As Lina beauty saloon is a very young business, the three-month BDS intervention motivated the owner to become foreword looking and take further initiatives to improve the business. Teklu Kidane GTZ-MSE Development Programme Amhara Regional Micro and Small Enterprises Development Agency Awra Amba Community Weaving Cooperative, Amhara Region 1. Situation Awra Amba community comprises of over 340 people residing together 62 kilometres away from Bahir Dar on the way to Debretabor. When they started as a small cooperative more than 20 years back, they were only 19 people. The communitys leader is Ato Zumra. The community is distinct in that its members work together, are diligent, disciplined and self-confident. Children get access to primary education in a school run by members of the community itself. The main means of livelihood for the community is weaving. Women have equal rights as men and there is no distinction in divisions of labor between male and their female counterparts. All people in the community have no religion as distinct from most communities in Ethiopia. They believe in hard work and being good to people. They keep their houses and their surrounding unbelievably clean. Theft is seen as very obscene. What ever money or property found by a member of the community is handed over to the responsible committee that in turn hands over the item to the owner or if not claimed to the Finance Department of the Woreda. 2. Problems The community is ostracized, as it does not fall into one of the religious categories: Islam or Christianity. Members of the Awra Amba community therefore could not be given agricultural land to cultivate. They are rather pushed into the most infertile and malaria infested corner called Awra Amba. As they cannot live on farm activities, they have opted to operate as a micro enterprise in the weaving business. They also provide grain-milling service to the neighbouring farmers, as they own one small grain mill donated by the Amhara Development Association. Their main problems are backward weaving tools, lack of production premise, market problem and lack of skills in modern weaving. 3. Actions The Amhara ReMSEDA, after assessing the problems and identifying the needs of the community, looked for some support from other NGOs who can sponsor the construction of a small production hall for weaving. For this the ReMSEDA used its regional network and got a financing institution called ESRDF. The ESRDF constructed the production hall and the ReMSEDA bought 4 modern weaving machines from FeMSEDA using the fund it has got from SIDA. The ReMSEDA also arranged skill training to the weavers by bringing trainers from FeMSEDA for two months. 4. Solutions The Amhara ReMSEDA in its 1st BDS cycle fully solved the problems of Awra Amba weavers by facilitating the construction of a production hall; buying modern weaving machines and organizing skill improvement training that helped the weavers produce quality products. 5. Impact The BDS intervention has helped the weavers in Awra Amba community to make their products in a conducive environment. The construction of the hall has helped them have better space for production and store for raw materials and finished products. The acquisition of new and modern machines has enabled the operators to produce quality outputs in larger quantities. The skill training has increased the weavers productivity and product design. All the interventions have in effect improved the market performance of the weavers and the welfare of the community at large. These days many visitors go to Awra Amba community to hear about their stories and their interesting ways of communal life. The community leader says that their product market is increasing due to better qualities and frequent visitors. They attribute their success to the support of the ReMSEDA along with their own relentless effort. Fantahun Melles GTZ-MSE Development Program Bahir Dar Chamber of Commerce Mrs. Huluagerish Mamo - Bakery & Pastry, Bahir Dar 1. Situation Mrs. Huluagerish Mamo is the owner of a small bakery and pastry business in Bahir Dar town in the Amhara region. The enterprise is located at the heart of the town near the main square in Kebelle 4. The bakery and pastry business gets its main raw material (flour) from the Ambessa flour agent in Bahir Dar. The main customers of the enterprise are tearooms, hotels and households. The owner of the enterprise is a lady employing 14 workers of whom 8 are female. The marketing strategy of the bakery/pastry is using the strategic location it enjoys by being placed on the main road of the city center. The monthly spending for rent, wages, utility and materials is estimated at Birr 10,500. Since the owner of the enterprise is a member of the Bahir Dar Chamber of Commerce, the latter tried to assist the enterprise in the 1st BDS cycle. 2. Problems Through in-depth discussion with the enterprise owner, the following problems were identified as impeding the smooth performance of the business. Tax burden and financial problems are the main limitations identified by the owner. The owner was particularly worrying by an incident of penalty due to not paying taxes in time. The accumulated penalty fee that the entrepreneur was pressed to pay was as high as Birr 48,000. Though the owner wanted to pay the annual tax amount expected of it, the Finance Department would not accept it unless the penalty fee which is several fold higher is not paid simultaneously. 3. Actions The Bahir Dar Chambers facilitator, Ato Abebaw brought together some other entrepreneurs who have tax penalty problems and discussed the best option to handle the case. He found out that there were over 100 entrepreneurs in Bahir Dar town who were being forced to pay tax penalties along with the yearly tax fee that the Finance Department decided. The accumulated tax penalty of these entrepreneurs ranged from birr 4,000-98,000 per enterprise. These entrepreneurs were unable to get loans from the banks nor were they given the access to bid for tenders as papers for tax clearance are always asked for. Worst of all, a business that does not comply to tax regulations cannot by law renew its license and will be closed by the responsible government authority, i.e. the Trade and Industry Department. Ato Abebaw contacted the Finance Department under the Chambers name and tried to convince the office that these entrepreneurs are going to close their businesses due to high tax burden. This implied that the Finance Department would loose all its money if the businesses were closed. Ato Abebaw suggested that the Finance Department ought to discuss a better win-win alternative for both parties. 4. Solutions Ato Abebaw, the facilitator in Bahir Dar Chamber, organized a dialogue forum where the entrepreneurs and the Finance Department discussed the existing tax problem. Focus was made on postponing the penalty fee and letting the entrepreneurs pay only normal tax expected of them for the fiscal year. After a lot of discourse both parties reached an agreement. It was thus decided that the Finance Department would postpone the collection of penalty fees to unlimited time while the entrepreneurs were asked to comply to tax payment requirements of the current fiscal year. 5. Impact The impact of lifting of the tax penalties to the 100 entrepreneurs and particularly to Huluagerish bakery/pastry was tremendous. Huluagerish is now able to avoid her fear of closing down her business due to inability of renewing her license. She is now allowed to renew her license and escaped the closing of her business by the Trade & Industry Department. Besides, she can participate in tenders, can access loan from the banks as she could present her tax clearance paper. Huluagerish is now concentrating on expanding her market and is no longer worrying on financial matters. She proudly speaks of the contribution of the Bahir Dar Chamber in saving her enterprise and other businesses from closing down due to tax backlogs. Fantahun Melles GTZ-MSE Development Program Addis Trade, Industry and Tourism Bureau Mrs. Shukrit Petty trading shop of vegetables, fire coal and biscuits, Addis Ababa 1. Situation W/ro Shukrit Reshid is a micro business owner operating in Addis Ababa, Zone 3, Wereda 19, Kebele 57. Her business is petty trading of vegetables such as potatoes, tomatoes and onions. In addition to these, she presents for sale some small quantities of fire coal and different kinds of candies and biscuits. Shukrit buys the commodities from suppliers in Saris and Merkato markets. Her clients are individuals living around her business area; she usually makes sales on cash. At the beginning, Shukrit had been running the business in the open air under plastic shading. Her monthly expense at that time was mainly for the purchase of commodities that amounted up to Birr 100. The operator still works by her own. She was not used to recording her accounts. Shukrit was one of the micro operators selected by the Addis ReMSEDA to be assisted in the 1st BDS cycle. 2. Problems As any of the micro business owners/operators, Shukrit was facing several constraints that limited her to toil for mere survival. In discussions held with Ato Asrat, a facilitator of Addis ReMSEDA, this micro business operator had described among others two priority problems impeding her business. The identified problems were lack of a suitable trading shop and shortage of finance for the purchase of more supplies. 3. Actions Both Ato Asrat and W/ro Shukrit had to meet repeatedly and discuss as to how to overcome the stated problems. Finding it that it was unrealistic and beyond capability, they discontinued the search for a rental room from the local Kebele office or individual landlords. It was not also possible for the operator to get credit from the indigenous financing institution, WISE, because of failure to fulfil necessary conditions at that time though she had previously been a client of the organisation. However, with the support of the facilitator, the lady took some earnest self-help initiatives and applied to WISE in order to obtain a shop from among those constructed earlier by the said NGO for rental to its beneficiaries. Besides this initiative, Shukrit was dealing with some entrepreneurs to organize an ‘iqub’ (traditional saving and credit service) and collect the first round money for commodity purchases. In case she failed in the latter effort, the operator was side-by-side trying to persuade her suppliers for more commodities on credit hoping her application might be responded positively by WISE. 4. Solutions Having a high school educational background and assisted by the facilitator’s on-the-spot service, Shukrit has now started using a cashbook for her daily business activities. The attainment of a room for trading has built in the lady a strong enthusiasm and enabled her to expand her business to some extent. 5. Impact With the support of the facilitator, Shukrit succeeded in securing a rental shop from WISE in the same locality. Her success in this regard helped Shukrit to win the fervour of her suppliers that she obtained on credit more commodities enough for her to re-start business in a new and much better condition. Biruk Sileshi TZ-MSE Development Programme Addis Trade, Industry & Tourism Bureau Mrs. Wagaye Mesfin - Beauty Saloon, Addis Ababa 1. Situation W/ro Wagaye Mesfin owns a beauty salon in Addis Ababa, Wereda 19, Kebele 55. She runs the business in a small room at the rear of her residence. In addition to other working materials, the beauty salon is equipped with two casks. The owner has employed a lady worker for the business. Wagaye buys consumable materials from Piazza shops for her business. Among the regular clients of the beauty salon are found ladies and female students of the neighbourhood and employees of nearby bars and hotels. The demand for the service of the enterprise is so seasonal that the beauty salon makes more sales during holidays, weddings and graduation of students. Ato Asrat, the facilitator of Addis ReMSEDA, has selected this enterprise to participate in the 1st BDS cycle. 2. Problems The enterprise is located at the back of a line of several houses making it difficult for passers-by to perceive the presence of the salon there. When discussing with Ato Asrat, W/ro Wagaye identified this as one of the core problems of her business. The improper arrangement of the materials and equipment in the room and the employee’s repeated tardiness was underlined by the owner as additional problems of the business. 3. Actions Ato Asrat made repeated visits to the beauty salon and shared his opinions to the owner as to how the identified problems could be resolved. He explained to Wagaye that fixing a signboard at a suitable place would be very important to attract the attention of passers-by and more specifically would let potential clients locate the enterprise easily. The facilitator’s advice on the re-arrangement of the materials and equipment in the salon got the owner’s acceptance for the latter was previously wondering how to handle this problem. Because Wagaye had already exhausted tolerance with regard to the reluctance of the employee, she decided to replace the latter by an efficient and competent one for better performances. 4. Solutions W/ro Wagaye didn’t want to waste much time before taking measures according to the result of her discussion with Ato Asrat. The name and type of service of the enterprise is written colourfully on a piece of cloth and displayed at a visible place. Internally, the beauty salon has been renovated and the materials and the equipment placed in proper order making the inside lively. In a similar development, the owner has employed an experienced lady worker who is said to be more dedicated and responsible to discharge her tasks. 5. Impact Because the mentioned actions were undertaken in the 1st BDS cycle, the service and location of Wagaye Beauty Salon is now known by potential clients locally. By employing a well skilled lady, the enterprise has improved the quality of its service and attracted more clients. Satisfied with the improved market for her business, Wagaye is further encouraged to enhance the activities of her enterprise. Biruk Sileshi GTZ-MSE Development Programme Tigray Regional Micro and Small Enterprise Agency Kalayou Hailu - Household and office furniture workshop, Mekelle 1. Situation Mr. Kalayou Hailu, an entrepreneur residing in Mekelle town, is engaged in production of household and office furniture. The different inputs required for production are purchased from local market. His customers are individuals and offices residing in Mekelle as well as those coming from the out skirt of the town. He produces tables and chairs. He attended grade 8 before starting the business. As per the analysis of the BDS facilitator, the monthly estimated costs are Birr 20 for electricity, Birr 800 for salary, Birr 150 for telephone and Birr 500 for workshop rent. Management wise, the facilitator observed no record keeping and business planning practices but a signboard. Concerning personnel the business has employed six people, all with educational background of above grade 4. 2. Problems Problems identified by the operator and the BDS facilitator were lack of working space because of high rent (thus no display room), shortage of working capital, old machines/tools and rental of machines from others was also reported expensive. 3. Actions A joint action plan was outlined by the operator and the BDS facilitator from Tigray ReMSEDA to resolve the problems. The operator has agreed with the facilitator to look for a display room and solicit credit fund by himself. The facilitator, on the other hand, identified support activities that would help the operator access proper work premises through leasing, assist him to prepare business plan to solicit credit fund from financial institutions and get business management training. 4. Solution Based on the priority needs of the operator, the facilitator has assisted the operator to write an application letter to the lease office to get working space, provided training in CEFE business training and also gave him simple business planning format with sufficient advice on how to use it. The operator has started savings to curb the problem of working capital and showed interest to participate in CEFE training. 5. Impact With the consorted effort of the operator as well as the facilitator, the operator has leased one display room at the center of the city. As a result, the sales condition of the operator is improved and he is now producing sofa as an additional product. The business management training provided to the operator has also helped him to record costs and sales and calculate profit periodically. It is believed that the operator shall build upon this short-term result and make his business grow and profitable. Teklu Kidane GTZ-MSE Development Program Propride Kebede Sacho Curving activities, Merkato area of Addis 1. Situation The operator resides in Woreda 5 Kebele 16 in Merkato area. He is engaged in curving activity. The operator curves country designs, animal pictures, historical and cultural products. The working place is attached with residential house and he is paying 40 Birr monthly. For electricity he pays 10 Birr per month. He has got diploma in welding. There are 4 paid workers engaged in the activity. The operator uses equipment like scissors, saw and other tools. but he lacks other improved machines to use. The main clients are souvenir shops. 2. Problems Main problem of the operator was lack of sufficient market. The operator is also faced with shortage of working capital to produce more. There was no advertisement used by the operator. The operator lacks modern and improved machines to use. The working place is narrow and inconvenient to work in addition to being attached with a residential house. He also lacks basic business skill. 3. Action/Solution • To solve the marketing problems of the operator and increase sales, Propride’s facilitator has made the operator to participate and market his products in NGO Bazaar day and also distribute business cards for visiting customers. • For alleviating the working capital problem, he was linked to Gasha Micro-Finance and the Merkato branch manager of Gasha has already visited the operator to observe the situation of the business and facilitate credit provision. The operator was advised to start savings in case he requires credit. • For improving the business skill of the operator he was made to attend Basic Business Skill Training (BBS) for 10 half days so as to improve his business know how. • Besides he has got the chance to attend SNV Netherlands handcraft designing improvement workshop. The operator was also advised to buy some improved working machines and look for a better working place. • The facilitator has designed and provided the operator record keeping formats and oriented to record his income and expenses in accordance. • The operator has become the member of the artisan cooperative and he contributes 5 Birr per two weeks, which they are planning to spend for the common advantage of the members. 4. Impact The participation of the operator in NGO Bazaar day enabled him to sell more of his products and helped to contact new customers. Since the operator was allowed to exhibit and market his products in FeMSEDA’s sales shop/emporium that has also helped to increase sales. The operator has witnessed that after attending BBS training, he started to make plans for his business. Recording of income and expenses helped the operator to reduce unnecessary expenditures and for knowing his proper income. The BDS support has helped to broaden the business scope of the operator. The operator has expressed that he wants to diversify his business, and is planning to start metal work activity for he has got diploma in welding. He has created employment opportunity for other family members. Jira Jebessa GTZ-MSE Development Programme. Propride Sebseb Kassa - Curving activities, Merkato area of Addis 1. Situation Mr. Sebseb Kassa is a 42-year-old married man with 11 family members. He resides in Woreda 5 Kebele 16 in the crowded Merkato area. He has attended 6th grade. He is engaged in curving activities. He curves animal pictures, religious and cultural products, etc. from wood. He learned the skill from his father. When he became matured he started his own business. He uses equipment like axes, saw, etc., which are in poor condition. His clients are souvenir shops from Axum, Mekelle, and Addis. He has three paid workers and he will pay them 15 Birr each per day. 2. Problems Whatever he produces, it was difficult to get market for his products. Sometimes he sells on credit but it will not be repaid on time and in some cases he is obliged to close the business for one or two weeks due to shortage of working capital. He lacks basic business skills and hence he does not value his skill as such. Use of backward tools and lack of appropriate working place are also among the problems facing the operator. 3. Action Propride’s facilitator has assisted him to participate and exhibit his products in a monthly bazaar of NGOs, which gave him the opportunity to present and market his products. The facilitator has also supported him in designing a business card, which contained his name, address, and major product designs, which he used to distribute for the visiting customers for market promotion. He was made to attend basic business skill training for 10 half days. He was also assisted to record his income and expenses by providing him record keeping formats and orienting him on how to use. 4. Solutions In the first BDS cycle, Propride’s facilitator has assisted the operator to solve his marketing problems and increase his sales by enabling him to use different market promotion mechanisms. For improving his business skill, BBS training has been arranged for him. To enable him record his income and expenses properly, record keeping formats were designed and provided to him and also oriented him on how to use. 5. Impact From the day the operator started attending BBS training, he began respecting and valuing his skill. Participating in a bazaar enabled him to sell more of his products in a good price and also helped him to contact some international diplomat customers, who could offer better price for his products. His income has increased and enabled him to teach two of his children in private school paying 186 Birr per month, and the other children are also made to attend their education in government schools covering their uniform and other school fees. He is able to cover all the house rent, water and electricity expenses due to the improvement of his income, which is attributed mainly to the BDS support services he obtained. He is able to create job opportunities even for others. Now he is a member of the executive committee of the artisan cooperative, and he has already paid the registration fee and bought the share. Jira Jebessa GTZ-MSE Development Programme Agency for Cooperation in Research and Development (ACORD) Mrs. Idget-Besira Beauty Saloon Cooperative, nearby Addis 1. Situation Idget-Besira Beauty Salon Cooperative is located in Akaki supermarket, about 25 kilometers away from Addis on the way to Debre-Zeit. The cooperative has comprised of five women business operators. Their main business is ladies hairdressing. They have rented the house for 300 Birr per month. Their monthly expenditure for inputs is 150 Birr, for machine rent 120 Birr, and for transport about 30 Birr. Some of the equipment used by them includes baytra, trolley, casks, chairs and other minor beauty salon equipment. Their major clients were local ladies and local supermarkets. 2. Problems There was delay in getting legal certificate or license from the concerned government authority. In the absence of legal license, the Commercial Bank is not willing to open them savings account. They also have financial problems to own some working machines like steam machine cask, chairs, and recording materials like receipt and ledgers. The house rent is also expensive. Due to their limited education, they lack the capacity to draft a memorandum of association and bylaws. 3. Actions In the 1st BDS cycle, ACORD’s facilitator assessed the situation of the business cooperative and helped to identify the major problems facing the business together with the operators themselves. After repeated contacts and discussions with the operators, a 3-month action plan was prepared and agreed upon to implement with the active participation of the operators. The facilitator has assisted the cooperative by contacting them with the Cooperative Office in order to fulfill some prerequisites for obtaining the legal license. It has been negotiated with the bank officials to open them a savings account. For alleviating the financial constraint of the business cooperative, a grant provision of 6,000 Birr has been secured from ACORD. Discussion was made with the operators on the outline of the group’s working guideline or bylaw. 4. Solutions For solving the identified problems of the business, ACORD’s facilitator, Ato Fikre Estifanos, has made the cooperative to contact the cooperative office for facilitating the acquisition of legal license. The facilitator has also linked the operators with the Commercial Bank to let them open saving accounts. For solving the financial constraint of the cooperative, the facilitator has helped the operators to contact ACORD for securing the financial grant. The facilitator has assisted the cooperative to develop a working guideline, which would enable them to run their business smoothly. 5. Impact As a result of the BDS supports provided, most of the identified problems of the cooperative were solved. The business has shown progress, and they were able to expand and diversify their activities. The cooperative has obtained its legal license, which enabled it to run the business without any fear and also get recognized among the customers and other institutions like Banks, Micro-Finances, etc. Their income has increased, and they have opened their own savings account and already started saving. The cooperative has fulfilled its equipment needs which enabled them to do more. They succeeded in diversifying their business and started renting of cloths for wedding ceremonies and decorating cars for similar purposes. They were thinking of opening branches in other areas of Akaki town by assessing the market. Jira Jebessa GTZ-MSE Development Programme PROPRIDE - Entoto Livelihood Program Performance report on the implementation of Business Development Services (BDS) 1. Introduction Propride-Entoto program is currently undertaking various development activities in Gulele sub city Kebeles 03, 04, 19, 20, 21 and 22. The livelihood promotion activity is one of the intervention areas that Propride Entoto Program has been implementing. The objectives of the program are to increase income level of poor households, to enhance their institutional capacity, create favorable environment for business owners, to grow, enhance the capacity of youth volunteers and service providing institutions to promote the micro enterprise sector. To meet its objectives, the program has outlined different strategies and activities. Providing BDS services to business owners, networking with other institutions, focusing on household livelihood capacity, advocating the livelihood right of poor micro enterprise operators and mainstreaming gender issue in all activities are the major strategies envisaged. As it has been mentioned above, one of the services that the livelihood program extends to its target beneficiaries is BDS. Thus it has been planned to provide BDS to 40 business owners in the second cycle and 75 in the third using four facilitators. The second BDS cycle is now under progress. Each facilitator is working with 10 business owners selected from their respective Kebeles. This report highlights the overall performance of the livelihood program on the areas of BDS provision, profile of business owners, types of services provided and plans for months to come. Major challenges encountered during implementation of the 2nd BDS cycle and recommendations for future interventions are also captured in this brief profile. 2. Profile of the business owners Under this 2nd BDS-cycle, 40 business owners with 20 reserves, who are involved in different business activities were identified. These business owners were selected from five Kebeles of Gulele Sub City. Gender wise, of the total number of business owners screened, 85% (34) of them are female while the remaining 15% (6) are male. Details are shown in the table next page. Table 1: Business owners by Kebele and Gender Kebele Number of business owners per Kebele Female Male Total Kebele -03 3 - 3 Kebele -04 15 3 18 Kebele –19 2 - 2 Kebele – 20 6 1 7 Kebele - 21 8 2 10 Total 34 6 40 Regarding business composition, the 40 operators are engaged in 10 types of business activities that include weaving, home economies, vegetable vending, small shops, injera, local food and drinks preparation, charcoal production, souvenir gift articles, clothes and fuel saving stove. Table 2: Operators number and type of business Business type Numbers of business owners per business type Weavers 5 Food/Spice Processing 6 Vegetables trading 5 Small shop trading 8 Injera and bread trading 10 Local drinks trading 2 Charcoal trading 1 Souvenir gift articles trading 1 Clothes trading 1 Wood fuel saving stove producer 1 Total 40 3. Problems of the business owners As per the situation analyses done by the four facilitators with participation of the business owners, eight major common problems are identified as follows: 1. All of them lack secured and proper market place/premises 2. All of them lack record keeping skill 3. They have no business plan 4. Insufficient market outlet for their products and services 5. They failed to distinguish between the expenses they incur for household and business activities (fungability) 6. Some of them face financial constraints 7. Limited or no regular savings 8. Lack of market promotion strategies After completing the situation analysis of the 40 business owners, the facilitators together with the business owners were able to draw joint action plans to solve the identified problems. To this effect the facilitators and operators entered into an agreement on the joint implementation of the action plan. Based on the five-month action plan, delivering services to the business owners started. However, some of the business owners felt discomfort with the program and showed resistance, some of them changed their business type; some of them ceased their business operation while some of them changed their residential and working areas/places. Due to these reasons, 14 business owners have quitted from the program and 14 new business owners from the reserve lists have been recruited instead. 4. Services delivered by the facilitators Based on the-five-month action plan, the facilitators started delivering the required services to their respective business owners. Thus, the following services were delivered to the operators: Problems identified Services delivered by the facilitators and coordinator Lack of secured market places/premises • Based on operators proposed solutions, it was able to organize different solidarity groups with the objective to tackle the identified problems around their business areas. • A weavers group called Tesfa (Hope) weaver professional association that consists of 8 members (4 female and 4 male) was formed. • Similarly food/spice processors organized themselves under the name “Tiret (effort) Baltina traders association’’ which consists of 17 members. All of them are women. • Injera bakers, souvenir article producers, vegetable traders and other small retail traders have also organized themselves under the name “Ediget Behiberet micro business owners associations’’, which consists of 15 micro business operators. • Of the above-mentioned solidarity groups, two of them were able to develop their own governing by-laws and set their meeting schedule. • All the business owners under their respective solidarity group submitted their petition letter to the joint livelihood committee of the five Kebele administrations to facilitate acquisition of land for construction of market shelter. • Based on the request of the business owners, the joint livelihood committee started facilitating the process of securing the land. They submitted their petition for three Kebele administrations for a support letter for Gulele Sub city administration office. • For the market premises construction, Propride-Entoto program has allocated Birr 70,000.00. Besides, all the business owners involved are interested to contribute their share for the purpose. • Members of each solidarity group have started their weekly contribution on regular basis. Lack of record keeping • Skill training on how to make business records and using formats was availed to 36 business owners and they have already started using the skills acquired. Absence of Business Plan for their business • The facilitators, together with the identified business owners, were able to develop business plans for 24 business owners. • As the result of the business plan, 19 business owners have been able to : o know the profitability of their businesses o identify which types of businesses have quick return o calculate the profit margins of each business activity. Financial constraints • For the problem of financial constraints, the facilitators have linked the operators to Gasha Micro-Finance Institution Limited or no regular savings • Regarding savings, of the total number of business operators under this cycle, more than 55% have started to save on regular basis. • For the remaining business operators, advice was given to start regular savings Incapability to distinguish household and business expenses (fungability) • Advice on recording with formats was given to 25 business operators that could help them distinguish and keep separate records of their household and business expenses. Insufficient market out let for their products • The office promotes the products of the business operators through different means such as: o organizing bazaar o assisting to participate on other bazaars o distributing business cards o assisting to contact potential customers • Local bazaar organizing 1. The office organized a three-day bazaar (April 22-24, 2003) with the objectives of: o promoting operators products and get customers and constant market outlet/opportunities for their products and o creating awareness on the problem of market place for the concerned government officials More than 90 business owners have participated on the event. 2. Before they came with their products on the bazaar, the facilitators extended their advice on how to: o pack products o set and write price, name of the product, producers name and address o communicate with potential buyers o compete with their competitors o use business cards o keep the quality of their products. 3. Facilitators checked the quality of products; they provided operators with packing materials 4. The bazaar, enabled the operators to: o promote their products and some of them were able to get good market outlet for their products and services and more customers. o express their problems to the honourable guest through their representative o create awareness on problems of their business to the concerned government officials • Participation on other bazaars in Addis: 1. Currently, the weavers group is participating on the monthly bazaar of NGOs organized by the Evangelical church 2. Banquet- monthly bazaar at Hilton hotel organized by wives of the Ambassadors working in Ethiopia. They promised to give one table for the weavers to display their products 3. The weavers group also has got one regular customer who buys their products and exports to America. 5. Plan for the remaining months of the cycle The facilitators together with the coordinator of the office will give due attention to: • constructing of market premises on the identified market places • improving recording system of operators • initiating operators to save money • providing capacity building support to the established associations/solidarity groups • providing capacity building for established institutions such as livelihood committees • encourage operators expand their market outlet by organizing different local bazaars, promoting through media and use different posters, brochures, leaflets and business cards • encourage operators to look for different potential buyers • encourage operators to conduct experience sharing visits • encourage operators to develop and strengthen urban-rural market networking 6. Problems encountered While implementing the Business Development Services cycle, the livelihood promotion office of Propride-Entoto program has encountered the following problems: 6.1 Challenges faced with respect to the business owners • Failed to get business owners on the appointed time and date • Unwillingness of the business owners to share the required information with facilitators due to fear of taxation and some other reasons • Changing of their business type • Dependency syndrome • High expectations and need for swift/immediate solutions for their problems • Ceasing business operations • Change of business and residential locations • Negligence. 6.2 Challenges faced with respect to the facilitators • Capacity limitations • Time constraint, work load • Transport problems. 6.3 Challenges faced by the office • Lack of independent budget for the program • Lack of computer facility and stationery materials • Workload / time constraint. 7. Recommendations • Capacity building training to facilitators and the coordinator. • Material support such as computer and stationery supply. • Experience sharing visit with other partner organisations. • Creating networking among partners for the successful implementation of the program. Ayalew Ejigu Propride - Entoto Program
Posted on: Tue, 04 Mar 2014 21:06:51 +0000
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