a cost-effective approach to mi proving youth employment ... · 10/5/2016 global youth economic...

10/5/2016 Global Youth Economic Opportunities Conference 1

A Cost-Effective Approach to Improving Youth Employment Outcomes

USAID Asia and Middle East Economic Growth Best Practices Program (AMEG)

• Does the approach work?

• What is the approach about?

• How is the approach different?

2

THREE QUESTIONS

Global Youth Economic Opportunities Summit

Does the approach work?

Global Youth Economic Opportunities Summit 3

QUESTION 1

• Reducing poverty depends on creating jobs.

• Creating jobs depends on expanding business activity.

Therefore:

• Expand sales, which will lead to . . .

• More jobs, which will lead to . . .

• Poor people becoming better off.

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Logic of the Approach


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DO SALES REALLY TRANSLATE INTO JOBS?


PRA Cumulative Net Sales Through September 2008 (in Millions US$)

0,4 5,5

34,9

63,7

99,3

148,4

17,2

212,2

307,3

0

30

60

90

120

150

180

210

240

270

300

330

2000 2001 2002 2003 2004 2005 2006 2007 2008

Mill

ions

US$

6

YES!


PRA Cumulative Net Permanent Employment Through September 2008 (in Thousands)

0,22,3

16,7

28,0

7,8

65,9

81,9

52,9

39,8

05

10152025303540455055606570758085

2000 2001 2002 2003 2004 2005 2006 2007 2008

Thou

sand

s

YES!

Applying the approach with discipline

leads to . . .

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AND IS THE APPROACH COST-EFFECTIVE?


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COST-EFFECTIVENESS IN GENERATING SALES


Programs Years of

Operation

Incremental Client Sales ($ million)

Associated Program Costs

($ million)

Incremental Client Sales / Associated

Program Costs

Main Factors Affecting Results

KCBS, Kosovo

4 165.5 20.2 8.18 Good management,

relatively small country

Paraguay Vende

3.5 35.8 4.8 7.45 Rapid start-up,

learning from PRA

PRA, Peru

9 307.3 42.3 7.26 Large scale, learning

by doing

MARKETS, Nigeria 3.5 69.5 13.0 5.34 Large domestic market, large

dynamic client

ABAD, Azerbaijan 2.33 8.8 2.8 3.14 Slow start-up, early

close-out

MEDI, Armenia 1.25 0.675 0.275 2.45 Pilot program, little

time

RCA, Bolivia

2 12.0 9.0 1.34 Predominance of permanent crops,

little time

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. . . AND JOBS


Programs Net Employment (FTEs, thousands)

Associated Program Costs ($, millions)

Net Employment (person-days)/

Associated Program Costs

Associated Program Costs/Net

Employment (FTEs)

Main Factors Affecting Results

Paraguay Vende 21.5 4.8 0.894 $224 Predominance of agricultural activities, low wage rates

MARKETS, Nigeria 25.2 13 0.388 $515 Predominance of agricultural activities

PRA, Peru 81.9 42.3 0.387 $516 Predominance of agricultural activities

ABAD, Azerbaijan 4.7 2.8 0.339 $590 Predominance of agricultural activities

BRCP, Tunisia 3.7 4.5 $1,207 Follow-on, jobs focus, discipline

RCA, Bolivia 3.2 9 0.071 $2,799 Predominance of permanent crops

KCBS, Kosovo 6.7 20.2 0.066 $3,026 Predominance of non-agricultural activities

MEDI, Armenia 0.1 0.275 0.063 $3,161 Predominance of non-agricultural activities

• Estimated IRR for PRA = 27%.

• Estimated benefits consist of the value added derived only from direct sales of PRA clients only within economic corridors only during the project’s life.

• Estimated benefits do take into account counter-factual likelihoods, i.e., opportunity cost.

• Estimated benefits do not take into account copycatting or income multiplier effects.

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. . . AND A HIGH RETURN ON INVESTMENT


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FIRM-LEVEL RESULTS FROM BRCP IN TUNISIA


Client name GECOTRAP IBL MAG-TEX MSPE PLAST-TECH

Location Tunis Bizerte Gafsa Moknine Zaghouan Type of business Agribusiness,

specializing in food flavorings & additives

Electronics for automobiles

Textile & garment manufacturing & finishing

Manufacturing of wiring harnesses for automobiles

Technical plastics manufacturing

Binding constraint

CARREFOUR & other foreign buyers would buy from GECOTRAP, but only if it improved its food quality standards & obtained food quality & safety certifications.

New customers in Germany, France, & Switzerland would buy from IBL, but only if it complied with stringent requirements, including for enameled electric wire welding.

BENETTON committed to increasing orders by 55%. But MAG-TEX could not sell that much unless it improved production management & quality control.

Main customer would buy more from MSPE, but only if it reduced response time from 72 to 48 hours & improved delivery time performance from 90 to 98%.

PLAST-TECH could become regular supplier of new significant buyer only if it implemented world-class automotive quality standards.

Solution BRCP helped GECOTRAP establish certified quality management system ISO-9001 & ISO-22000.

BRCP helped IBL meet Integrated Printed Circuit global standards.

BRCP helped MAG-TEX implement MIS system & develop & use improved quality standards, work procedures, & dashboard system.

BRCP helped MSPE develop & use new Enterprise Resources Planning module (Electronic Data Interchange).

BRCP helped PLAST-TECH implement ISO/TS 16949 v 2009 standards.

New jobs created 25 70 40 58 25

What is the approach about?


QUESTION 2

1. Demand-driven

2. Trust-intensive

3. Results-oriented

4. Accountable

5. Disciplined

6. Transactional

7. Problem-solving

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SOME OPERATIONAL DIFFERENCES


How is the approach different?


QUESTION 3

• Buyer-led. Support starts with the buyer, not the supplier. It makes no sense to help poor people produce more unless they produce for a known market.

• Transactional. Support is action-oriented, focusing on making transactions happen. Working backwards, we help businesses solve whatever problems get in the way.

• Results-oriented. Our measure of success is jobs created. We keep our eye on the prize — what we achieve, not what we do.

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• Disciplined. We apply a quantitative rule of thumb to each transaction before moving forward. We do not only good things, but cost-effective things

• Problem-solving. We do not come with predetermined solutions looking for problems. With our clients, we diagnose their binding problems and solve them.

• Serious monitoring and evaluation. With target setting and performance bonuses, people care about numbers. M&E is autonomous, verifying veracity, attribution, and additionality.

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10/5/2016 17

For more information, contact Isaiah Oliver, AMEG DCOP at [email protected]

IS THIS APPROACH “DEMAND-DRIVEN”?

“In the highlands there are a number of market ‘niche’ opportunities. . . . Among the specific niche products are fruits and vegetables, traditional cereals (quinoa and kañihua), tubers (maca), condiments (oregano and anis), fish products and handicrafts (ceramics and weavings). Developing markets for these products can have a big impact on the local economy.”

Draft donor rural development strategy for the highlands of Peru,

2002

IS THIS APPROACH “DEMAND-DRIVEN”?

“A few private companies in Madagascar offer a range of business services but they appear expensive, and as such are rarely used by small and medium sized agribusinesses. In identifying commercial solutions . . . , the contractor will develop private-sector suppliers. . . . This can be done in building local capacity for commercial service provision to ensure sustainable impacts.”

Draft donor scope of work for program in Madagascar 2003

Piscifactoría Los Andes

USA, Europe

VERTICAL INTEGRATION

Sales: $24 million

Huancavelica Junín Puno

PRA: Organize supply

Improve processing techniques

PRA: Identify producers to supply Piscifactoría Los Andes

Consultancy to install cages

Legal information

INPUTS

Jobs: 1700

MEDUIM/LARGE BUSINESSES/

BUYERS

FINAL MARKET

VERTICAL INTEGRATION

SMALL PRODUCERS

EXAMPLE: TRANSACTIONAL SUPPORT OF TROUT OPERATION IN PERU

Presenter

Presentation Notes

Corn and beans in Pucallpa; artichokes in Huancayo; flowers in Huaraz; jewelry in Cajamarca; bixina in Quiilabamba; potatoes in Huanuco for Frito Lay.

EXAMPLE: SHIPIBO-CONIBO CERAMICS

American Trading

200 Small Shipibo- Conibo artisans

Pier One ( USA )

VERTICAL COORDINATION

25,000 pieces

PRA: Provide technology

package

Organize supply

Sales: $170,000

$85,000 / $425 per artisan in 4 months

MEDUIM/LARGE BUSINESSES/

BUYERS

FINAL MARKET

VERTICAL COORDINATION

SMALL PRODUCERS

INPUTS

ECP M&E: SOME DISTINGUISHING FEATURES

• Autonomy • Conservatism in estimation • Staffing – number & qualifications • Assessing each support activity’s theory of change &

cost-effectivenss BEFOREHAND • Focusing not just on veracity but also on:

• Causality/attributability • Additionality

• Real-time management tool

DISTINGUISHING FEATURES OF APPROACH

• Responds to real market demand – buyers

• Elicits intelligence to shape policy and institutional reform priorities

• Focuses on quantitative results

• Manages with discipline

• Sets real targets – instills accountability

• Incentivizes personnel with performance bonuses

• Takes M&E very seriously

• Gives USAID a good return on its investment

• Recognizes heterogeneity of businesses’ problems

• Lets businesses’ binding constraints dictate solutions

• Refrains from pre-picking winners

• Nurtures trust

• Focuses on sustainability of buyer-seller relationships, not program

• Supports organizations only if they solve clients’ problems

• Builds capacity through transactional learning by doing

• Lets success breed success – copycatting

a cost-effective approach to mi proving youth employment ... · 10/5/2016 global youth economic...

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