Final Report

MICROFINANCE AND MICROFRANCHISING:

A FEASIBILITY STUDY

CLIENT: FINCA INTERNATIONAL

By Emily Bracken, Nicole Chao, Darin Phaovisaid, and Brian Slocum MA Candidates, International Development Studies

Elliott School of International Affairs The George Washington University

May 16, 2006

Table of Contents

EXECUTIVE SUMMARY ........................................................................................................... V

I. ORIGIN OF THE STUDY ....................................................................................................... 1

II. CONCEPTUAL FRAMEWORK ............................................................................................. 1 DESCRIPTION OF FINCA INTERNATIONAL AND VILLAGE BANKING METHODOLOGY ....... 1 LIMITATIONS OF MICROFINANCE....................................................................................................... 2 CHALLENGES FACING SMALL BUSINESSES ....................................................................................... 2

III. MICROFRANCHISING ........................................................................................................ 3 DEFINITION OF MICROFRANCHISING .............................................................................................. 3 MICROFRANCHISING MODELS ............................................................................................................ 4 CHALLENGES FACED BY MICROFRANCHISES .................................................................................. 5 INTEGRATION OF MICROFINANCE AND MICROFRANCHISING ................................................... 5

IV. RESEARCH DESIGN ............................................................................................................ 5 PROBLEM STATEMENT .......................................................................................................................... 5 RESEARCH QUESTIONS.......................................................................................................................... 5 METHODOLOGY ...................................................................................................................................... 6

V. MICROFRANCHISE PARTNERS ......................................................................................... 7 SELECTION OF MICROFRANCHISE PARTNERS ................................................................................ 7 BACKGROUND INFORMATION ON STAKEHOLDERS ........................................................................ 8

MTN Grameen Village Phone (The Grameen Village Phone Program) ................. 8 Honey Care Africa .................................................................................................................... 9 KickStart .................................................................................................................................... 10

VI. STUDY AREA – UGANDA ...................................................................................................11 UGANDA - BACKGROUND .................................................................................................................... 12 PROBLEM OF YOUTH EMPLOYMENT IN UGANDA ........................................................................ 12 FINCA UGANDA ................................................................................................................................... 12

VII. EVALUATION OF INTERVIEW RESULTS ................................................................... 13 GRAMEEN VILLAGE PHONE RESULTS (STAFF AND OPERATORS)............................................. 13 HONEY CARE RESULTS ....................................................................................................................... 16 KICKSTART RESULTS ............................................................................................................................ 19 FINCA STAFF SURVEY RESULTS....................................................................................................... 22

VIII. EVALUATION SCORECARD.......................................................................................... 28 DESCRIPTION ......................................................................................................................................... 28 SCORING SYSTEM .................................................................................................................................. 28 TABULATION OF SCORES ..................................................................................................................... 30 RESULTS AND ANALYSIS ...................................................................................................................... 31

IX. RECOMMENDATIONS...................................................................................................... 33 GENERAL RECOMMENDATIONS ........................................................................................................ 33

RECOMMENDATIONS FOR FUTURE PARTNERSHIP BASED ON GRAMEEN VILLAGE PHONE

RESULTS .................................................................................................................................................. 34 HONEY CARE AFRICA .......................................................................................................................... 35

Pilot Project Design ............................................................................................................... 35 Training and Support ............................................................................................................ 38 Loan Structure ......................................................................................................................... 39 Partnership Structure............................................................................................................. 40 Potential Income for Business Owners............................................................................ 42 Costs ........................................................................................................................................... 43 Timeline for Implementation of Pilot Project with Honey Care .............................. 44 Necessary Next Steps............................................................................................................ 44

KICKSTART .............................................................................................................................................. 44 Training and Support ............................................................................................................ 44 Loan Structure ......................................................................................................................... 45 Potential Income for Business Owners............................................................................ 46 Partnership Structure............................................................................................................. 47 Cost ............................................................................................................................................. 49 Timeline for Implementation of KickStart Test Pilot Project ................................... 50 Necessary Next Steps............................................................................................................ 50

X. CONCLUSION ...................................................................................................................... 50 BIBLIOGRAPHY ................................................................................................................................ 52

APPENDIX 1 – MICROFRANCHISE PARTNERS............................................................... A-1 APPENDIX 1.1 – TABLE OF MICROFRANCHISE PARTNERS WORLDWIDE ...A-1 APPENDIX 1.2 – BACKGROUND INFORMATION ON MTN VILLAGE PHONE (THE GRAMEEN VILLAGE PHONE PROGRAM)...........................................................A-2 APPENDIX 1.3 – BACKGROUND INFORMATION ON HONEY CARE AFRICA. A-6 APPENDIX 1.4 – BACKGROUND INFORMATION ON KICKSTART ....................A-11

APPENDIX 2 – BACKGROUND ON UGANDA ..................................................................A-15

APPENDIX 3 – EVALUATION SCORECARD.....................................................................A-19 APPENDIX 3.1 – EVALUATION SCORECARD ................................................................A-19 APPENDIX 3.2 – ADJUSTING THE EVALUATION SCORECARD .........................A-21 APPENDIX 3.4 – FINAL COMPOSITE SCORES FOR KICKSTART OILSEED PRESS..................................................................................................................................................A-34 APPENDIX 3.5 – FINAL COMPOSITE SCORES FOR KICKSTART BLOCKS PRESS...............................................................................................................................................................A-42

APPENDIX 4 - TIMELINE FOR IMPLEMENTATION OF TEST PILOT PROJECT AND ACTIVITY DESCRIPTIONS..................................................................................................A-51

APPENDIX 4.1 – HONEY CARE TIMELINE AND ACTIVITY DESCRIPTION A-51 APPENDIX 4.2 – KICKSTART TIMELINE AND ACTIVITY DESCRIPTION .....A-54

APPENDIX 5 – SURVEY INSTRUMENTS ......................................................................... A-57 APPENDIX 5.1 - FINCA SURVEY INSTRUMENTS ........................................................A-57

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APPENDIX 5.1.1 - FINCA Uganda Staff Questionnaire .......................................A-57 APPENDIX 5.1.2: FINCA CLIENT QUESTIONNAIRE (FOCUS GROUP)A64

APPENDIX 5.2 – HONEY CARE SURVEY INSTRUMENT ........................................A-66 APPENDIX 5.2.1: Honey Care Africa Management Survey .................................A-66 APPENDIX 5.2.2: HONEY CARE AFRICA PROJECT OFFICER QUESTIONNAIRE..........................................................................................................A-68 APPENDIX 5.2.3: HONEY CARE AFRICA NGO SUPPORT SURVEY.......A-70

APPENDIX 5.3 – KICKSTART SURVEY INSTRUMENTS............................................A-72 APPENDIX 5.3.1: KickStart Staff Questionnaire......................................................A-72 APPENDIX 5.3.2: KICKSTART BLOCK PRESS MANUFACTURER QUESTIONNAIRE..........................................................................................................A-74 APPENDIX 5.3.2: KICKSTART BLOCK PRESS MANUFACTURER QUESTIONNAIRE..........................................................................................................A-75 APPENDIX 5.3.3: KICKSTART OILSEED AND BLOCK PRESS RETAILERS QUESTIONNAIRE..........................................................................................................A-76

APPENDIX 5.4 – GRAMEEN PHONE SURVEY INSTRUMENTS...........................A-78 APPENDIX 5.4.1: Grameen Village Phone Staff Questionnaire..........................A-78

APPENDIX 5.5: MICROFRANCHISEE QUESTIONNAIRE .......................................A-84 LIST OF CONTACTS............................................................................................................. A-89

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List of Tables

TABLE 1: FINCA UGANDA LOAN STRUCTURE ................................................................ 24

TABLE 2: FINCA CLIENT INTEREST IN MICROFRANCHISES...................................... 25

TABLE 3: YOUTH INTEREST IN MICROFRANCHISES ................................................... 27

TABLE 4: GUARANTEEING LOANS FOR YOUNG ADULTS............................................. 28

TABLE 5: FINAL EVALUATION SCORECARD .................................................................... 29

TABLE 6: POTENTIAL REVENUE FOR COMMUNITY CENTER ................................... 37

TABLE 7: POTENTIAL INCOME FOR BEEKEEPERS ....................................................... 43

TABLE 8: LOAN AMOUNTS FOR KICKSTART MICROFRANCHISE OPPORTUNITIES ..................................................................................................................... 46

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EXECUTIVE SUMMARY Origin of the Study Since 1984, FINCA International (Foundation for International Community Assistance) has provided village banking and other associated loan services to the poor in 24 countries on five continents. Although microfinance has helped to improve income and living standards for millions of families through self-employment, FINCA has found that a majority of its clients’ businesses plateau in terms of growth after taking loans. The business owner does not employ additional people beyond what she can manage on her own; therefore, no new jobs are created. Moreover, FINCA has become aware that although many clients are using income earned from their businesses to send the children to school, the children are not transferring the benefits of their additional education to better employment opportunities due to the prevalence of unemployment. Recently, FINCA has become aware of a cutting-edge microenterprise strategy called MicroFranchising that could be used to target this group. For this reason, FINCA commissioned the Capstone Team of The George Washington University’s International Development Studies Program to examine this phenomenon more closely and to determine how FINCA can harness its potential to provide new business opportunities for unemployed or underemployed FINCA clients and their families. The team was tasked with conducting a feasibility study for the creation of a test pilot project wherein FINCA would partner with an organization that has already developed and implemented a successful MicroFranchising model to provide MicroFranchising opportunities to FINCA clients. MicroFranchising MicroFranchising provides easily replicable enterprise opportunities with proven operation concepts to help alleviate poverty, enhance individual economic self-reliance, and stimulate individual, community and country economic development. Although MicroFranchising borrows the general concept of traditional franchising, an important distinction is its incorporation of models that depart from traditional franchising where there is a franchisor (parent organization) and a franchisee (child) and the franchisor provides training, marketing and branding that leads to success. The franchise relationship tends to insulate the entrepreneur from many of the shocks of the open market by providing a degree of stability, security and predictability that would be rarely achievable on their own. The MicroFranchisee has accountability to the parent organization and in return, the parent organization provides the MicroFranchisee with ownership and training to enhance business operations. Stakeholder Summary After examining all known MicroFranchising opportunities worldwide, three organizations were selected for research. The first organization, Grameen Village Phone, was selected because it currently has a partnership with FINCA Uganda. The partnership was analyzed in order to provide enhanced recommendation for future partnerships. The other two organizations, Honey Care Africa and KickStart, were examined to determine the feasibility of creating a test pilot project in partnership with either organization.

• Grameen Village Phone is an initiative of the Grameen Foundation USA, a global non-profit organization that combines microfinance, new technologies, and innovation to empower the world's poorest people to escape poverty. The Grameen Village Phone program provides cellular phones via a sustainable financing mechanism to poor entrepreneurs who use the

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phones to operate a business in rural villages. The examination of the current partnership with FINCA Uganda was used to determine some of the best practices for future partnerships.

• Honey Care Africa is a Kenyan social enterprise that trains individuals in commercial beekeeping

and then buys their honey at guaranteed, fair market prices. It purchases honey and then packages and sells the high quality African honey to local and international markets. Honey Care provides MicroFranchisees with equipment, training to operate a beekeeping business, ongoing extension support to enhance quality and production, and a guaranteed market.

• KickStart is an international non-governmental/non-profit organization that promotes

sustainable economic growth and employment creation in Kenya and other countries by developing and promoting manually operated technologies that can be used by dynamic entrepreneurs to establish and run profitable small scale enterprises. KickStart markets and promotes technologies to be produced independently by manufacturers and sold through retail stores. Two KickStart MicroFranchise opportunities were examined in this project: oil production and block manufacturing.

Elements of the Test Pilot Project A review of the MicroFranchise opportunities and an analysis of the field survey results suggested several key design elements for the test pilot project. These elements include program structure, loan structure, and partnership structure. Program Structure FINCA would provide loans to the client in order to invest in the MicroFranchise opportunity. Clients could either take the loan out individually or through a village bank. If the client takes the loan out individually, she will need to have a guarantor. If the client takes the loan through a village bank, the village bank itself will serve as a guarantor. The partner organization would provide equipment, training, and ongoing extension support depending on its capacity. Another third party, such as a donor, may enter the partnership to provide funding and other resources for implementation. Loan Structure Loans provided with the MicroFranchise opportunity would adopt many of the same characteristics as current FINCA loans. The loan interest rate would be 2.5-3% per month, and FINCA would charge a loan administration fee and require a savings deposit. Repayment period on the oilseed and block press will maintain the same FINCA repayment standard cycle, while repayment on the beekeeping business requires restructuring whereby the client pays monthly interest on the loan and then half of earnings from the honey produced in each harvest. Youths ages 18-24 are eligible to obtain a FINCA loan as long as they currently have existing businesses, while youths ages 15-17 will need adults to take out the loan on their behalf. Partnership Structure There will be a three-tiered partner participation structure in project management at the country, regional, and local level. This is to help facilitate communication and ensure the program’s success. Both FINCA and the partner organization will share responsibilities in initial research, marketing, materials, implementation, and management. They will also extend current monitoring and evaluations programs.

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Feasibility Several factors were used to assess the feasibility of combining MicroFranchising with existing microfinance programs, including: presence of demand for business opportunities in the test pilot site, cost of entry and risk to FINCA clients, the project’s poverty and human development impact on FINCA clients, the capacity of FINCA and a partner organization to take on the project, the project’s replicability within the partnership framework, impact on local youth unemployment, and the market demand for the product produced. The widespread unemployment and underemployment among both adults and youths in Uganda, combined with interest from FINCA clients and staff, indicates that demand for a program integrating microfinance with MicroFranchising exists. All studied MicroFranchise opportunities had start-up cost of less than $600, which is a feasible loan size for FINCA to offer and small enough to ensure that the poorest clients have access to these opportunities. This reinforced that the integrated program is both feasible and supports FINCA’s poverty alleviation goals. The MicroFranchise opportunities also fulfill human development goals by providing training to enhance the skills of the business owner. Additionally, the studied partners have implemented successful MicroFranchising models in Kenya and are looking to expand into Uganda where FINCA has an extensive network. The model is set up so that youth can manage and operate the business if they qualify under FINCA’s loan requirements, as well as participate in a supporting role as an employee of the business. Finally, all the products are of high quality and fill market demand. These factors strengthen the feasibility of the integrated project and help to ensure that the impact will be sustainable. Conclusion Based on the foregoing discussion and analysis, the study’s primary conclusions are: • Any one (or more) of the three technologies could provide a foundation for a test pilot project in

new, highly replicable business opportunities to be offered to FINCA clients. No clear preference emerged beyond the urban preference for the Block Press or Oilseed Press and the rural preference for the beekeeping or the Oilseed Press among FINCA clients. Among staff, there is general support for the concept of introducing a new business opportunity to FINCA clients. However, overall, Honey Care Africa provides the best combination of assets to consider as a test pilot project partner.

• Before selecting a client and a technology for the test pilot project, FINCA Uganda must select a

region for project implementation based upon local capacity, staff enthusiasm for participation, and perceived client enthusiasm for participation. It must also conduct preliminary market research to determine if there is strong local client demand for the technology, access to inputs, market demand at wholesale and retail level for final product output, and product supply chain and barriers to getting the product to market.

• FINCA should incorporate recommendations for partnership establishment and implementation

presented by the Capstone Team depending upon the partner and technology selected for implementation. FINCA must also develop a partnership agreement that clearly delineates partner responsibilities, establishes terms for partner monitoring and evaluation, and enables each partner to take predetermined protective measures if partnership responsibilities are not being fulfilled.

• Monitoring and evaluation is a crucial component to measure the success of the test pilot project.

Both FINCA and the potential partner organizations have established organization-specific monitoring and evaluation schemes that should be leveraged for the pilot project. In general however,

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FINCA and the partnership organization must set up a monitoring and evaluation system at both client and staff levels based upon responsibilities and indicators established in the partnership agreement.

• Additional funding must be made available, probably from either FINCA International or an outside

donor unless the FINCA Uganda Board approves an additional outlay. Funding is necessary to support costs associated with market research, training and/or hiring additional staff, implementation of the test pilot project, trainings and support for clients and monitoring and evaluation.

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I. ORIGIN OF THE STUDY Since its inception, FINCA International has provided village banking and other associated loan services to poor women in 24 countries on five continents. FINCA’s village banking model takes advantage of the social capital shared within communities to offer a participatory method of obtaining credit and building savings. It has targeted women because they are least able to access credit and because they provide the most direct access to health and education services for their children. FINCA has enabled hundreds of thousands of women to achieve financial self-sufficiency and to provide for their families. Recently, FINCA has become aware of a new problem for clients that its products do not currently address. As their children come of age, they are finding it increasingly difficult to obtain employment of any kind, let alone work that takes advantage of the skills they have gained through additional years of education and observation or work alongside their enterprising parents. As a result, clients are struggling to pass the gains that microfinance services have enabled them to achieve onto their children. To reverse this trend, FINCA is seeking innovative approaches to reach this new generation that leverage its existing competitive advantages. Recently, FINCA has become aware of a cutting-edge microenterprise strategy called MicroFranchising that might be used to target this group. MicroFranchising provides the tools and the idea for enterprising individuals who wish to start their own businesses but are unsure where to begin. Ideally, MicroFranchises are easily replicable and offer products that fulfill a market demand, especially for the poor. Startup costs for many MicroFranchises are well under $1,000, making microcredit an ideal tool to help MicroFranchise entrepreneurs get their start. John Hatch, founder of FINCA International, has commissioned the Capstone Team of The George Washington University’s International Development Studies Program to examine this phenomenon more closely and to determine how FINCA can harness its potential to provide new opportunities for unemployed or underemployed FINCA clients and their families. To achieve this goal, the team is tasked with creating a strategy for a test pilot project in MicroFranchising opportunities with a partner organization that has already developed and implemented a successful MicroFranchising model. The Capstone Team also seeks to determine whether such a test project can or should include young adults to specifically address this underemployment problem.

II. CONCEPTUAL FRAMEWORK Description of FINCA International and Village Banking Methodologyi Founded in Bolivia in 1984, the Foundation for International Community Assistance (FINCA) is a non-profit microfinance institution (MFI) whose purpose is to provide financial services to the world’s poorest families so that they can create employment, raise incomes, and improve living standards. FINCA was incorporated in 1985 and began its first operations in El Salvador a year later. Since then, it has expanded throughout Latin America, Africa, Central Asia, Europe, and the Middle East. FINCA’s Africa programs began in 1992 with the creation of FINCA Uganda. By July 2004, FINCA was operating in 24 countries, serving more than 20,000 active village banking groups with over 300,000 active clients. In Africa, FINCA has 134,038 clients, which comprise 39% of the total client portfolio.

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The key feature of FINCA’s operation is its village banking methodology. A village bank is an informal self-help support group comprise of 20 to 30 members, mostly female head of households. These village banks are democratic, self-governed, grassroots organizations which elect their own leaders, recruit members, create bylaws, disburse loans, manage bookkeeping operations, resolve loan delinquencies, and levy fines on members who fail to attend meetings. On average, the village bank is launched in 4 weeks, or after 4 weekly meetings in which members organize a committee, select village banking name, get training in simple accounting, and begin collection of member savings. From the time of the inauguration of the village bank, the members meet once a week in the homes of one of their members to provide working capital loans, put their savings in a safe place, and obtain skill training, mentoring, and motivation. Fifty percent of all new members entering the FINCA microfinance program are classified as severely poor, represented by families with daily per-capita expenditure (DCPE) of less than US$1. The other fifty percent of clients are moderately poor with DPCE of US$1.2 or non-poor with DPCE of more than US$2. Eighty-three percent of all FINCA members are women. In Africa, 95 percent of all clients are women. FINCA targets women because they are usually the least able to obtain credit. Loans usually start at $50-$100 and are linked to savings. Loans provided by FINCA International are disbursed through these village banks, and aimed to assist with income generation and the creation of savings. Clients are also required to put aside savings of about 20% of the loan amount through weekly savings deposits made at the same time as the loan repayment. The more the client saves, the more that she can borrow. Clients are charged market interest rates for the loans. These rates typically match the rate charged by local commercial banks but less than the usurious rates charged by local moneylenders. The average loan period is 4 months and the loan is repaid in 16 weekly installments. One of the unique features of the village banking methodology is its reliance on social capital. All the loans must be collectively guaranteed by members of the village banks—if one member fails to repay the loans, all members of the group are responsible for repayment. Weekly installments include repayment on principal loan amount, plus interest and savings. Limitations of Microfinance Although microfinance has helped many clients improve income and living standards through self-employment, FINCA has found a disconcerting trend in their clients’ businesses: self–employment businesses of nine out of every ten FINCA clients stop growing after 3-4 consecutive loans.ii The client’s business size tends to plateau when the owner reaches her maximum daily sales potential. This point is usually the total amount of sale she is able to make by herself in a work day without hiring an additional employee who might help her to further grow her business. Data on FINCA clients helps to explain this phenomenon. On average, FINCA clients are around 39-41 years old and have one or more children who have reached employment age of 15-24 years.iii Because the mother’s productive life has plateaud, and her usually better-educated children are old enough to support themselves, the client has no incentive to expand her business and assume additional responsibility to employ non-family workers.iv As a result, the size, growth, and reach of the business levels off. This results in arrested business and job growth. Challenges Facing Small Businesses In addition to problems with growth and expansion, the biggest challenge facing small businesses is survival, as the rate of failure among new small businesses is very high. According to Hollander’s 1967 study of businesses, two-thirds of all new small businesses failed within five years of operations. This

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number remains high today, with recent studies revealing that 37 percent of businesses with fewer than 20 employees survive after four years of operation and only 10 percent survive after 10 years.v Businesses operating in the informal sector typically operate with a low-level organization on a small-scale, have low and uncertain wages, and no social welfare and security. Due to their small size and illegitimate status, these informal enterprises face a number of constraints. They are not registered and cannot benefit from many support programs initiated by the government, including financial assistance, training, tax incentives, etc.vi These businesses are also restricted from setting up shops in certain areas of town and face fines for violation. In some cases, they face harassment and extortion from local officials. Businesses in the informal sector suffer from all of the obstacles faced by small and medium enterprises, as well as additional operating challenges which make them particularly vulnerable. In addition, in many developing countries, many people have no choice but to engage in self-employment activities in order to survive. However, a large number of the poor simply lack the education and or training necessary to create and develop a successful business endeavor that will enable them to escape poverty. Many small businesses lack complete and accurate financial information. They may have limited market know-how and, in some cases, no business plans. vii These small businesses do not have the time or resources to develop new markets beyond the immediate location that they serve. They may not be aware of how to obtain information about other markets or how to market their product to customers within other markets. Many have virtually no internal bookkeeping system that can provide them with vital information for effective management. Because of their limited resources, they cannot hire accountants and other consultants who are trained to identify risk and take actions to mitigate them. Furthermore, many of these individuals do not necessarily have an entrepreneurial spirit and may actually be better suited as employees. As a result of this lack of entrepreneurial vision, many times people who do not know what kind of business to start, simply copy other businesses, often leading to a crowded marketplace.viii However, there is an emerging concept that could address some of the problems experienced by microenterprises. This concept is termed “MicroFranchising”.

III. MICROFRANCHISING Definition of MicroFranchising MicroFranchising is a relatively new term currently used to describe microenterprise opportunities that can easily be replicated by following proven operational concepts. The importance for the distinction and use of the term stems from the specific necessity of providing solutions to known microenterprise development problems by creating wide-scale, replicable opportunities to help alleviate poverty, enhance individual economic self-reliance, and stimulate individual, community and country economic development. Although MicroFranchising borrows the general concept of traditional franchising, an important distinction is its incorporation of models that depart from traditional franchising where there is a franchisor (parent organization) and a franchisee (child) and the franchisor provides training, marketing and branding that leads to success.ix

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Although research in this area is still in its early stages 1 , the agreed-upon components of any MicroFranchise include: ownership; training; and accountability. In addition, some may also contain additional features such as a larger product-supply chain and uniformity in branding.x MicroFranchising specifically provides a solution to known enterprise development problems by providing knowledge such as:

• A business blueprint; • Written job descriptions; • Daily, weekly, monthly tasks lists; • A simple bookkeeping system; and • A list of suppliers.xi

The franchise relationship tends to insulate the entrepreneur from many of the shocks of the open market by providing a degree of stability, security and predictability that would be rarely achievable on their own.xii Both in developing and industrialized countries, franchises tend to be less risky and more profitable than totally independent enterprises. In the developed world, many small enterprises are no longer in operation after five years; however, a significantly higher percentage of new franchise locations are still in business after five years.xiii MicroFranchising Models Although there are a multitude of different MicroFranchising models that can be established, three general types of relationships predominate. Within these there may be differences in the particulars of what is offered by an institution and what is expected of the microenterprise owner. • Traditional Franchising Model

A “Parent” organization provides franchise (child) opportunities. Variations include the following: a manual on how to start and run the franchises; start-up and ongoing training necessary to run the franchise; quality control and ongoing monitoring; and marketing and advertisement support.

• Business-in-a-box

An organization creates a business plan for an easily replicable small enterprise and provides all of the information necessary to start the enterprise. This model may include initial start-up technical or business skill training; however, in general no assistance is provided beyond the initial stages.

• Local Distributors

An individual buys finished products from an organization. The individual starts a small enterprise to sell the product in areas where it is not yet widely available. The MicroFranchisee may benefit from the organization’s marketing or brand recognition and in some cases initial training in the sale and use of the product.

1 The MicroFranchising concept was first introduced in 2004 at the BYU 7th Annual MicroEnterprise Conference by Stephen W. Gibson.

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Challenges Faced by MicroFranchises In order to put a dent in global poverty, thousands of MicroFranchise business opportunities need to become available so that high-potential entrepreneurs have options to choose from based on their experience, interest, skill level, culture and geographic location.xiv Large numbers of MicroFranchises are capable of dramatically improving life for those living in poverty by creating jobs and providing access to goods and services tailored to their needs. xv Challenges to achieving scale in these MicroFranchising opportunities include: product distribution, pricing, quality control and adequate business training for MicroFranchisees. Integration of Microfinance and MicroFranchising Merging both microfinance and MicroFranchising into a single coordinated strategy is beneficial to help fill gaps in services to the poor. Only microfinance has the proven service outreach capacity to reach all of the world’s poorest households, but the micro-businesses it finances generally have modest growth potential and create few additional jobs. Microfinance provides its clients with working capital loans for self-employment, but usually does not offer the business skills training or technical assistance necessary for the owner to run a successful business. MicroFranchising fills this gap by offering proven business models, technical training, supervision, and quality control or marketing expertise. Nevertheless, MicroFranchises target only a small proportion of the world’s poorest households—the 1-in-10 or 1-in-20 most entrepreneurial. The existing network capacity of microfinance institutions is still the most powerful tool for reaching a large number of the world’s poorest. Integration of these two powerful concepts is beneficial because microfinance can provide the capital needed for self-employment while MicroFranchise opportunities provide the capacity to develop businesses strong enough to generate continuous growth in sales, jobs and profits. MicroFranchising helps to address the issue experienced by FINCA when clients stop expanding their businesses after a certain period of time. Nevertheless, adding microfinance products to the business models will require innovative methods to ensure that loans are repaid.

IV. RESEARCH DESIGN Problem Statement This capstone project aims to answer three primary questions related to FINCA’s development of MicroFranchising opportunities for FINCA clients. • How could FINCA International best undertake a pilot project that integrates MicroFranchising with

its core microcredit offerings in an effort to create jobs? • Could such a program be extended to underemployed youth in the communities FINCA serves? • Which, if any, existing MicroFranchise opportunities to be studied, offers the most compelling

partnership opportunity? Research Questions The team’s research questions are aimed to address the questions laid out in the problem statement. Its research works to fully answer the four main research questions listed below:

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1. What is the ideal framework for FINCA International to combine its core competitive advantage as an MFI with MicroFranchising?

a. What responsibilities for project implementation would FINCA assume, and what responsibilities does it expect a partner to assume?

b. Is FINCA International’s current selection of loan products the most efficient way to provide credit for potential MicroFranchisees? If not, then what new products should it offer to reach this group?

c. What is the timeframe for development and implementation? d. What additional resources would FINCA International need in order to establish the

pilot project? e. Is FINCA Uganda a desirable location for project implementation? Does it possess

adequate capacity and interest in the project? How do answers to the above questions apply to FINCA Uganda?

2. How do MicroFranchise Organizations operate? What role could microfinance play in

supporting the development and growth of MicroFranchising opportunities? 3. What degree of success has each organization to be considered in the field research achieved in

creating sustainable, income-generating enterprise opportunities for its customers?

4. How compatible is each partner organization with FINCA Uganda in terms of capacity, operations and expectations for a partnership.

Methodology In order to address its research questions, the team divided its efforts into three phases of work. Phase one, Initial Research, was designed to give the team the fullest background in MicroFranchising opportunities and FINCA’s goals and processes in order to conduct effective research in the field and prepare a base plan for a proposed test pilot project. Phase two, Field Data Collection, involved personal research performed in Uganda and Kenya to gain constituent feedback on the feasibility of the planned project. Phase three, Information Analysis, brought together the work from the previous two phases and required interpretation of all information in order to prepare a recommendation on the feasibility of the plan. Phase One – Initial Research This phase included background research and the creation of a proposed plan for a test pilot project that was assessed in Phase two. The main points of the team’s research included the following:

1. Research on current MicroFranchising efforts across the world to gain knowledge about the practices of industry leaders.

2. Examination of MicroFranchising clients’ compatibility with FINCA country offices to identify potential partners to be analyzed in greater detail.

3. Preliminary evaluation of country office interest. 4. Design and preparation for field research.

Phase Two – Field Data Collection This phase involved interviews and focus groups with a variety of stakeholders to give the team insights on the interest and demand for this project in the country and region selected for study, provide feedback on the feasibility of the proposed plan examined, and confirm or revise the results of the background research performed in Phase One. The team’s goals in this phase included:

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1. Meeting with clients and staff from select MicroFranchising operations to learn about their business processes and potential for expansion.

2. Meeting with FINCA Uganda’s staff and loan recipients to assess their interest in the proposed introduction of MicroFranchising opportunities and to determine the ideal partner and method for implementation of a test pilot project.

Phase Three – Information Analysis In this final phase, the team performed an analysis of the information that was gathered in phases one and two. This step required reconciliation of the data collected before entering the countries of study with the knowledge gained working with those who could be involved in the project. It included both a quantitative and qualitative examination of all of its research, details of which are described in Sections VII and VIII. From this analysis, the team devised its final recommendations to FINCA International, which are outlined in Section IX of this report.

V. MICROFRANCHISE PARTNERS Selection of MicroFranchise Partners The Capstone Team examined the feasibility of partnering with several MicroFranchise Organizations (MFOs) (defined as organizations that provide some kind of MicroFranchising opportunity) in a country with a FINCA office presence. The Capstone Team made the following assumptions to decide on the best method for FINCA to provide business opportunities to its clients and youths: • It is preferable to partner with an established MFO to help build the test pilot project. This will

provide the advantages of: - Existing knowledge of market supply and demand - Successfully established business model and training programs

• Startup costs should be below $600. Any franchise opportunity with start-up costs above $600

would present an unfeasible loan size for most FINCA clients – especially youths without credit history.

- This project could train them as entrepreneurs for future businesses with higher start-up costs.

- These MicroFranchises need to generate immediate returns. A business with higher start-up costs may not begin to generate profits for a longer period of time.

- It is essential to minimize risk for loans given to youth with minimal business experience. • It is preferable to provide a franchise model that is a stand-alone business rather than a network of

product sales representatives. • There should be several viable MFO partners in a country or region with whom FINCA could

establish additional future partnerships • There must be an established FINCA office in the region where the MFOs operate. The team identified all known MFOs worldwide (see Appendix 1.1 for a list of the MFOs examined). It conducted a comparative review of MicroFranchising “hotspots” with clusters of FINCA offices. Four

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countries or regions have emerged as MicroFranchising hotspots: The Philippines, India, East Africa, and Mexico. Of those regions, only East Africa and Mexico feature an established presence of FINCA offices. While Mexico is an extremely fertile territory for the use of the MicroFranchising model as an economic development tool, most opportunities there required start-up investments of over $1,000. East Africa, however, boasts three highly respected organizations with established MicroFranchise models, all of which require start-up costs of $600 or less: Honey Care Africa, KickStart and Grameen Village Phone. After FINCA International confirmed that FINCA Uganda maintained a strong program, all agreed that East Africa would be the team’s region of focus. Next, the team performed a detailed analysis of these three possible MFO partners based on their adherence to the assumptions above. Preliminary research uncovered an existing relationship between Grameen Village Phone (“GVP”) and FINCA to provide cellular phone service to customers in villages served by FINCA in Uganda. As a result, GVP was not considered as a potential test pilot partner in our feasibility study; rather, the partnership was considered for lessons that can be applied to the test pilot project. The following section contains a description of each of the MFOs. Background Information on Stakeholders This section provides background information of the stakeholders examine for the project. These stakeholders are Grameen Village Phone, Honey Care Africa, and KickStart. MTN Grameen Village Phone (The Grameen Village Phone Program) The Grameen Technology Center (“GTC”) is an initiative of the Grameen Foundation USA (GF USA), a global non-profit organization that combines microfinance, new technologies, and innovation to empower the world's poorest people to escape poverty. GTC works to eliminate poverty by leveraging the power of microcredit and technology. It focuses on technology that:

• Makes the delivery of microfinance even more efficient;

• Enhances income generating opportunities for the rural poor; and

• Provides poor communities access to information for better health and educationxvi

GTC, in partnership with MTN Uganda, replicated the Grameen Village Phone (GVP) Program in Uganda and created MTN Village Phone. Four partners are required to deliver the service to rural villages: the telecommunication provider, microfinance institutions (MFIs), the Village Phone Company, and the village phone operator (VPO). Each partner must operate synergistically with one another in order to ensure systemic survival. By following a carefully designed business model, the VPO should break even on a start-up investment of US$240 after 26 weeks by selling just 17 minutes of airtime per day. The GVP model is designed to circumvent constraints of providing telecommunications service via more traditional mechanisms that are commonly found in rural areas. The model significantly increases the affordability of making and receiving calls while providing incentives and revenue opportunities designed to entice each partner to participate. As a result, it not only provides an income opportunity to VPOs, but it also provides the entire community with access to information that can potentially create or enhance income opportunities; improve access to health care and education, increase political participation, and avoid or prepare for natural disasters. Preliminary research uncovered an existing relationship between GVP and FINCA to provide cellular phone service to customers in villages served by FINCA in Uganda. As a result, setting up a test pilot

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project with GVP became redundant because the two partners have already moved well beyond this stage. Two options exist for enhancing this partnership:

1) Consider expanding into a new country together. While such a role may be feasible, the amount of preliminary research GTC needs to conduct before entering a new country takes such a plan beyond the constructs of the capstone team’s research.

2) Seek to develop new enterprise opportunities for FINCA clients using the existing technology and framework provided by GVP. Although Grameen Technology Center is currently developing new ideas, FINCA’s desire to work with a product with proven success precluded the team from considering this option

While these findings leave GVP as a highly unlikely test pilot project partner, the team analyzed the GVP program for the following reasons:

• The GVP partnership served as a baseline source for determining the attractiveness of a test pilot project with Honey Care.

• The Capstone Team applied findings from the successes and failures achieved in the current partnership between the two organizations to improve the strength of its recommendations for a new project.

For more information about MTN Village Phone and the Grameen Village Phone program, see Appendix 1.2. Honey Care Africa Honey Care Africa (“Honey Care”) is a Kenyan social enterprise that was established to increase the income of rural farmers. Honey Care trains individuals in commercial beekeeping and buys their honey at guaranteed prices. It then packages and sells the honey to a distribution partner. The company’s overall objective is to produce and market high-quality honey that will successfully compete on the world market.xvii Honey Care currently has offices in Kenya and Tanzania and is looking to expand to other countries in the region, including Uganda and Sudan. The majority of honey sales are in East Africa, but initial exportations of honey to Europe and the United States began in 2006. The company has over 50 employees who focus on extension support, Langstroth hive manufacturing, packaging and program management. Honey Care has created a system of honey production that relies on low-income subsistence farmers to produce honey in order to provide them with a supplemental source of income. The company manufactures and sells a special-design, high-yield beehive, known as the Langstroth hive, and trains new beekeepers who purchase these hives to manage their own operations. Honey Care guarantees that it will purchase all the honey a beekeeper can produce, at a fair and fixed price, and that it will pay on the day of collection. Honey Care then processes and packs this honey into a variety of honey products and sells them for a profit. It also provides the necessary and requisite training for rural communities that undertake honey production. In addition, wherever economically viable, Honey Care also provides extension support for farmers, and where it is not viable, alternative structures and models are developed and established to ensure that farmers have the required technical advisory support that they need to take care of their hives and maximize honey production. According to Honey Care, “bee keeping has proven to be an ideal enterprise for small-scale farmers in many parts of rural Kenya because it complements existing farming systems, it is simple and relatively cheap to start, and it requires a very low level of inputs (land, labor, capital, and knowledge).” xviii With

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only four bee hives and just 20 minutes of labor every day at a start-up cost of only US$65 per hive, a beekeeper can earn a reliable annual income of between US$150 and US$300, which is an amount that is often enough to make the difference between living above and below the poverty line in Kenya. xix Over the last two and half years, nearly 2,200 small-scale farmers have become involved in honey production with Honey Care, each with an average of 4 hives. This amounts to an estimated projection of US$400,000 - $450,000 per year in income that Honey Care will be helping these rural communities earn when all the hives are in full production and the farmers' loans have been paid off. xx Honey Care regularly works with development sector organizations that take on various roles working with and organizing the communities of producers. In some instances, the development sector organizations also act as microcredit providers to finance the purchase of beehives and beekeeping equipment. In this type of relationship, the loans are then recoverable at the time when the honey is ready for sale to Honey Care. For more information about Honey Care Africa, see Appendix 1.3. KickStart KickStart is an international non-governmental/non-profit organization founded in Kenya in 1991. The organization’s mission is to help millions of people out of poverty. It promotes sustainable economic growth and employment creation in Kenya and other countries by developing and promoting technologies that can be used by dynamic entrepreneurs to establish and run profitable small-scale enterprises. KickStart currently has 200 employees and five offices in three countries.xxi The organization’s goal is to expand its program throughout East Africa and open new programs in Southern and Western Africa in order to help millions escape poverty. The organization plans to open an office in Uganda towards the end of 2006. Businesses in over 20 countries currently use KickStart technologies. Most of these countries are in Africa – Kenya, Tanzania, Mali, Uganda, Malawi, and South Africa – although they range from the Philippines to Haiti.xxii In order to raise funds for the expansion of its operations to other African countries, it opened a new development and collaboration office in San Francisco, where it is established as a 501 (c) (3) non-profit organization. KickStart offers a number of technologies that are designed to be profitable to use, affordable to buy (under US$1,000), durable and easy to operate and maintain with minimal training for entrepreneurs in developing countries. Technologies developed to date include:

• Cooking Oil technologies- “Mafuta Mali” Oilseed Press • Building Technologies- “Actionpac” The Action Pack Block Press • Micro-Irrigation Technologies- “MoneyMaker” Pumps • Sanitation Technologies- Domed Concrete Pit latrine Slabs • Hay Baling Technologies- High-Pressure hay baler • Transport Technologies- Split rim wheels for animal carts

KickStart’s East Africa offices are currently concentrating their efforts on marketing and selling the MoneyMaker Pumps (“Irrigation Pumps”) due to their great success and the support provided by donor organizations in promoting this particular technology. Because the Irrigation Pumps are simply

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tools designed to increase agricultural crop production and therefore do not necessarily result in the creation of a new business, the team eliminated it from consideration and chose to focus on the Mafuta Mali (meaning “oil wealth” in Kiswahili) Oilseed Press (“Oilseed Press”) and the Action Pack Block Press (“Block Press”). Both the Oilseed Press and the Block Press appear to have the highest potential for easy and large scale replicability and thus function as potential MicroFranchise opportunities for FINCA clients. Each of these technologies is designed to produce a high-demand product at a significantly lower cost to the poor in developing countries than was previously available. KickStart’s past support in the development and promotion of the Oilseed Press and the Block Press has enabled four private manufacturers in Kenya (two producing each) to profitably produce and market the technologies. In addition, KickStart products are available for purchase through over 180 retail stores around the country. KickStart remains in contact with each manufacturer. It has strong relations with the retail stores, and continues to promote these technologies through local shows and exhibitions. It also provides support and training on how to use and maintain them. The Oilseed Press The Oilseed Press was developed to address the need for affordable cooking oil in Kenya. In 1992 when the Kenyan government removed price controls on essential commodities and the price of cooking oil almost tripled, KickStart decided to develop a technology for the small-scale production and sale of cooking oil by small businesses.xxiii In addition, it designed a Gravity Bucket Filter to go with the press. The Oilseed Press extracts oil from sunflowers, sesame and other oil seeds and the filter produces clear, cold-pressed, nutritious oil ready for sale or consumption. In addition, the seedcake by-product is valued as a high-protein animal feed supplement. xxiv There are currently two private manufacturers producing the Oilseed Press in Kenya. The Block Press KickStart developed the Block Press in order to address the demand for affordable shelter. The Block Press is used to make strong building blocks from soil and cement. There are currently two private manufacturers producing and marketing the technologies in Kenya. Four workers using the manual Block Press can produce 350 rock hard building blocks a day by compacting a soil/cement mixture under high mechanical pressure. The technology can be used to start low cost construction businesses. In addition, the blocks can be sold profitably to build walls at half the cost of the concrete blocks or stone walls.xxv For more information about KickStart’s strategy and organization structure, see Appendix 1.4.

VI. STUDY AREA – UGANDA The team considered the following criteria for selecting a FINCA country office with which to work:

• Initial or presumed (based upon feedback from FINCA International staff) country office receptiveness to the project.

• Country office capacity to host the team, facilitate interviews during the field research phase.

• Country office capacity to launch a test pilot project based upon current operational challenges and FINCA International staff feedback.

• Honey Care Africa and KickStart both expressed expansion interests.

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FINCA Uganda expressed immediate receptiveness to our arrival and indicated that they would arrange interviews, provide translators and accompany the team during its fieldwork. The health of its core operations also made it likely that FINCA Uganda would possess strong current and future capacity to launch a test pilot project if its appeal could be communicated to key decision makers. Honey Care Africa was eager to launch a new program in Uganda because few trade, transportation or cultural obstacles existed to set up operations there. As a result, the team concluded that Uganda provided an attractive location to conduct its feasibility study. Uganda - Background Uganda is a diverse country with over 20 different African tribal groups making up most of its 27 million citizens. Bantu groups are nearly two-thirds of the population and live primarily in the south of the country. Nilotic groups populate the north and remain very ethnically divided from the Bantu. Only 16% of the population lives in urban areas.xxvi Uganda has had a troubled path since independence and still faces great challenges to development, but also has many reasons to be optimistic for the future. Uganda has been considered by many in politics and development to be one of Africa’s success stories. The country has had an annual real GDP growth rate of 5.8% since 2000 and is expected to grow by over 6% in coming years. More importantly, the country’s quick acknowledgement of the HIV/AIDS problem and thorough prevention campaign, have dropped infection rates by more than half in the last ten years.xxvii Problem of Youth Employment in Uganda Youth unemployment is 7 percent in East Africa. Moreover, many youth are working in the informal economy and may not earn enough to live. Thus, underemployment is also a big problem. Underemployment is described as widespread because people are forced to earn a living in some way, but “would like to augment their current incomes with some extra wage-earning opportunities in their locality”. Youth have the worst statistics in the country. The Ugandan Bureau of Statistics (UBOS) states that youth unemployment and underemployment are both higher than the national average. xxviii The German Government’s development agency, a major donor to Uganda, is placing a special emphasis on youth employment and has termed the problem “rampant”.xxix FINCA Uganda FINCA Uganda is a licensed, regulated financial institution with 2,053 village banking groups and over 42,000 clients. In October 2005, FINCA Uganda had an active loan portfolio of US$6.1 million, client savings of US$2.8 million, an average disbursed loan size of US$242 per client, and a starting loan amount averaging US$130.xxx Ninety-nine percent of FINCA’s clients in Uganda are women. FINCA currently reaches 35 out of the 56 districts in Uganda. Seventy-two percent of FINCA’s clients are located in rural areas with population of 10,000 people or less. Ninety percent of FINCA Uganda clients live on less than $1 per day.xxxi

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VII. EVALUATION OF INTERVIEW RESULTS The Capstone Team conducted field research in Uganda and Kenya to examine the current partnership between FINCA and GVP, the capacity and level of interest from Honey Care and KickStart and FINCA Uganda to implement the pilot project, and FINCA clients’ level of interest in the opportunity that would be offered in the partnership. The following section outlines the team’s findings. Grameen Village Phone Results (Staff and Operators) The Capstone Team’s approach to its examination of FINCA’s partnership with Grameen Village Phone was different than for its examination of the other two MicroFranchising organizations. Rather than seeking to address the problem statement and the research questions directly, the team’s goal was to interview GVP program participants to address questions as they relate to the other MicroFranchising opportunities. As a result, the following considerations were paramount as we assessed the feedback we received from GVP participants:

How did FINCA integrate the GVP program with its core microcredit offerings, and to what extent is this model adaptable to a future test pilot project?

•

•

•

•

•

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Which among the other MicroFranchise opportunities looks most promising in light of what the GVP partnership can tell us? To what extent have youth participated in the GVP program, and what does their participation (or lack thereof) tell us about prospects for integrating youth into a future test pilot project? How were responsibilities divided between partners, has this division of responsibilities been successful, and to what extent would it have to be adapted for a future project? What challenges has the program experienced, how have the partners worked to overcome them, and how can these lessons be applied to a future project and partnership? What does the program tell us about FINCA Uganda’s capacity to implement a new test pilot project using MicroFranchising?

The Capstone Team interviewed three different constituencies: FINCA staff responsible for implementing the GVP program, MTN Village Phone staff (the partner organization), and VPOs. Due to time and availability limitations, only two FINCA staff members, one MTN Village Phone employee, and two VPOs were interviewed. However, these included FINCA’s partnerships supervisor, an Account Relationship Officer who markets the GVP program to FINCA clients and supports VPOs in a district in Kampala, Uganda’s capital, and an MTN employee who manages the relationship with FINCA (and was a former FINCA employee). Because the team was able to meet with key players in the partnership, the primary limitation of its findings was its inability to interview any staff members or clients from rural areas who participated in the program. This is significant because our findings indicate that conditions vary between rural and urban areas. However, a few of the FINCA staff members the team spoke with in Eastern Uganda provided some feedback on the local office’s experiences with the program. Following is a summary of results derived from speaking with each group.

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Summary Results from FINCA GVP Staff and MTN GVP Staff Conditions for Success Market conditions appear to be a more important determinant of success for operators than their particular skill set, which suggests that market conditions for a new product must be clearly understood before implementation begins. xxxii Nevertheless, basic business instincts and drive are essential determinants of the success of VPOs and will likely be similar for the other opportunities offered.xxxiii Competition All interviewed GVP constituents indicated that competition has changed the performance picture for both partners and clients. In the program’s early stages, competition was minimal, but landlines have been extended into peri-urban areas and competition from other cellular providers has intensified. MTN appears now to retain a competitive advantage only in rural areas where it enjoys incomparable network coverage. As a result, income per phone has dropped for most operators. While this competition is boosting community human development by improving access to information, VPOs are facing new constraints to improving their incomes. The potential level and effects of competition for the products of the MicroFranchising opportunities will need to be assessed in order to monitor their effect on the business owner’s incomes. Preventing Market Saturation Limiting the number of operators per area was unsuccessful for two reasons:

1) It enabled a VPO to simply hold a monopoly, purchase additional phones in a given market where no outside competition existed, and price gouge customers. This concentrated the program benefits in one person’s hands rather than allowing the market to determine who benefits.

2) It enabled competitors to enter the market and establish a stronger position. Therefore, it is preferable to let the market determine supply and demand while simultaneously refining loan requirements to ensure that MicroFranchisees are adequately prepared for the prospect of additional competition and know from where their market will come. Ongoing Support MTN provides significant support to both FINCA staff and clients. They guarantee equipment supply and continually develop innovations to try to improve equipment quality and reduce cost, provide customer support and troubleshooting (a shared responsibility), and conduct product marketing and performance monitoring.xxxiv The partnership is a collaboration in which, for the most part, each partner is responsible for oversight of its core competency areas. The primary exception is that at the customer level, FINCA Account Relationship Officers are often asked to provide customer support when MTN’s hotline is not adequate. This relationship most closely mimics the type of relationship expected with Honey Care Africa, and one-to-one customer support appears to be the most problematic component in both cases. Loan Repayment Issues Although loan repayment performance suffered in the program’s first year, FINCA and MTN have taken several steps to reverse this trend. First, FINCA suspended loan dispersals for GVP equipment while it revamped the program.xxxv Then it restructured the terms of loans dispersed to VPOs to be consistent with the traditional village banking model, as opposed to offering separate loans with separate loan terms and repayment structures.xxxvi It required all borrowers to pay off preexisting loans before taking out new loans to purchase GVP equipment, and it forbade GVP loan recipients from carrying loans for other purposes simultaneously. Additionally, MTN has significantly reduced

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equipment costs and broken up equipment packages so all VPOs do not have to buy the full package if they do not need it.xxxvii The combination of changes has made loan repayments more manageable while enabling FINCA to more carefully monitor repayment. Repayment rates are now on par with FINCA averages. Two points are worth noting. First, both partners made adjustments to their operational models in order to solve problems. Second, product innovation reduced costs and was necessary for the program to remain competitive in the industry. Staffing and Providing Incentives Staff members at both a local and national level have been able to integrate their GVP responsibilities into their overall jobs and seem poised to take on new challenges. However, local staff members are not pleased with the suspension of the 2% commission earned by Account Relationship Officers on the sale of airtime. They argue that this helped ensure that staff felt invested in the program. MTN indicated that this was one component of an overall effort by both FINCA and MTN to combat the initial perception among staff that this program was designed to benefit MTN alone and that FINCA was primary working on MTN’s behalf to sell their products.xxxviii Although MTN agreed that the incentive should be reinstated, FINCA indicated that new taxes on cell phone sales required them to suspend the program for cost reasons.xxxix One important takeaway from this feedback is the power that a proper incentive program can bring to a new partnership given that it will add responsibilities to existing staff workloads. A second is that existing staff appear capable of taking on additional responsibilities to develop a new test pilot project. Monitoring and Evaluation MTN conducts regular monitoring of the number of phones distributed and minutes used per client. FINCA generates monthly qualitative and financial reports that share successes, challenges, areas to improve, and areas where MTN can help.xl This monitoring of both partner performance and client performance holds all parties accountable and enables each party to identify and address problems as they emerge. One staff member suggested that FINCA should conduct an in-depth assessment of competition to avoid market saturation.xli MicroFranchising as a Supplemental Income Source to Reduce Poverty Most VPOs own other businesses that are complementary to their phone businesses. This suggests that an effective way to reduce poverty is to integrate new income-generating activities into existing lifestyles, much like what honey production offers, which will be discussed later in this section. Youth Participation Youth are already participating as operators in the GVP program, although the team did not obtain feedback on their success rate as compared with older operators. The country-level supervisor indicated that they are not treated any differently from other clients.xlii However, youth 15-17 are not eligible to take out loans. Summary Results from FINCA GVP Clients MicroFranchising as a Supplemental Income Source to Reduce Poverty Integrating their operator businesses with other sources of income was not only a way to enhance income and reduce vulnerability to changing market conditions, but it also helped to improve each business, especially for retail owners.xliii

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Risks to Franchisees There are external risks beyond FINCA’s control that must consider when implementing the test pilot project. For example, problems with competition and intermittent electricity availability have hampered sales of the village phones.xliv This is the same type of uncontrollable risk – input availability, weather problems, etc.—that the team observed with the other products. Market Price Sensitivity Customers are very price sensitive with their phone service.xlv It is important to learn about price elasticity of demand for any product considered for a test pilot project to determine the extent to which the market will support higher prices for better quality, especially in the case of the two presses. Ongoing Training and Support Both clients indicated a desire to obtain additional training. The importance of making ongoing support available so that business owners can continue to refine and improve their businesses cannot be underestimated. Equipment Innovations Clients indicated that prices change of equipment was confusing, but acknowledged that declining prices have helped with more recent purchases of phones. They are not confident that the new equipment is of higher quality and have encountered functioning problems. This should serve as a reminder that perhaps product quality should not be sacrificed even if it makes the product more affordable in the short run. Honey Care Results With proper guidance and dedication, beekeepers have strong chance of achieving successful results. Beekeepers who had disappointing outcomes generally did so because they did not get the help they needed to solve problems, became discouraged, or did not follow training instructions, such as harvesting at the wrong time. Although this increases the criticality of quality training and reliable support, prospective beekeepers and loan officers alike can be assured of a high chance of financial success with the proper level of commitment. Honey Care and its partners have consistently found a high demand among rural farmers to start new beekeeping enterprises. Most beekeepers reported being motivated to begin because of the prospect of earning additional income with limited time commitment. Additionally, the low start-up costs for beekeeping made the opportunity attractive to farmers. There are other hive producers in Kenya and likely Uganda, as well as existing knowledge of traditional beekeeping methods according to both Honey Care and FINCA staff. However, the FINCA clients we interviewed were not aware of existing beekeeping knowledge in their localities. Although traditional beekeeping exists in Uganda, the Langstroth hives used by Honey Care are of a superior quality and return more honey with each harvest than traditional hives. As a result, FINCA and Honey Care can exploit this product advantage to work with both existing and new beekeepers, enabling greater knowledge sharing between them. Beekeeping Operations-Costs and Revenues Each hive costs approximately US$65 and can be paid off within two to three years. Repayment time will depend on factors such as surrounding vegetation, bee colony quality, and weather conditions. A beekeeper can expect to harvest an average of 10 kilograms of honey per hive which, if sold to Honey

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Care, would bring revenue of approximately $14 per harvest. Current farmers have an average of 4 hives each and harvest between 2 – 6 times each year depending on the climate. This means that a farmer has the potential to earn a gross income of $112 - $336 each year. A beekeeper will not incur many outside costs beyond the original price of the beehive. Training and some necessary equipment are included, but beekeepers are still responsible for building their own apiaries and will need to use shared equipment for harvesting. Some beekeepers voiced a desire to purchase harvesting equipment with a group. This could potentially improve the care given to bee suits. It will also allow beekeepers to harvest honey at the critical moment when yields would be highest, since they do not have to wait for their turn to use the suit, especially during crucial harvest periods. A number of beekeepers reported that local market prices were higher than what Honey Care offered, despite the fact that Honey Care’s price is above the international market rate. As a result, some indicated that they sold some of their honey locally or expressed an interest in doing so. This can increase income for beekeepers, but may create some challenges with loan repayment that will be addressed in Section IX (Recommendations). Important Characteristics of Beekeepers The most important characteristic for beekeepers is dedication. Complications can come up in beekeeping and farmers must have the determination to seek help to resolve problems. Women have been found to be more dedicated to long-term care of the hive. Interviewees felts that youth are more prone to losing interest in beekeeping and are more likely to move from the farm or search for sources of income that produce more rapid returns. As a result, they may be more successfully employed to care for the hives by other family members or owners who lack available time or are fearful of bees. Beekeepers will benefit if they are able to work in groups. It is more time-effective to keep the hives of several farmers clustered together because all hives can then be easily inspected together. In addition, keeping the hives together can also help in the colonization process. The groups of farmers who cluster their hives will assist each other with monitoring and harvesting. Groups might also choose to invest jointly in harvesting equipment. Basic math skills and literacy have been identified as useful skills to successful beekeeping. They are useful for note taking during trainings and accurate record keeping. Successful beekeepers must also have sufficient land and the right mixture of vegetation around the apiary. Certain vegetation, such as banana trees, mango trees, and bottlebrush and caliendra are particularly helpful in promoting honey production. Beekeepers must be able to construct the apiary far enough from animals, children, and other disturbances. If a beekeeper does not have these resources, then he or she must be able to partner with another beekeeper who doesxlvi. Partnering With Honey Care In many ways, Honey Care is an ideal partner. Although it is a for-profit enterprise, it has chosen a business model that takes advantage of the capacity of small landholders to provide its honey rather than choosing an industrialized farming process. While this may be less efficient, Honey Care is committed to this model in order to provide opportunities to low-income farmers. Moreover, the quality of its honey bears this choice out. While there are certain gaps in its business model, the organization has created a seamless production and distribution process – selling the inputs, providing training to producers, purchasing the raw material, processing the honey, and distributing it throughout Kenya and now internationally. Honey Care estimates that it could triple production before satisfying

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current demand, and this does not account for as yet untapped markets and existing or upcoming product extensions. Honey Care has experience working with microfinance partners. Interviews conducted with one such partner – K-Rep Bank (“K-Rep”) – suggest that the relationship has been positive even through the largely experimental project they have implemented. Problems that have arisen in that partnership have either been overcome or have implementable solutions that will be addressed in Section IX These include division of responsibilities, loan structure, group organization, equipment ownership, and ongoing extension support. Challenges and Opportunities Partnership Both beekeepers and staff members reported that extension support was inconsistent. Beekeepers indicated that they might see a project officer from Honey Care or one of its partners every several months. Often beekeepers did not receive troubleshooting assistance because project officers were not available or it did not occur to beekeepers to seek their council. Much of this negative feedback was based on the decreasing level of support that Honey Care and K-Rep have worked into their extension support process in order to increase efficiency. Original high levels of support to individuals were found to be simply unsustainable on a large scale. Still, partner staff suggested that Honey Care officers cover too wide a geographic range to adequately support their beekeepers. One suggested that extension officers should be more closely tied to the communities they serve. Possible solutions to this challenge are addressed in greater depth in the recommendations section. Beekeeping Most issues related to the productivity of the hive are simple to resolve with proper instruction. Apiary construction and location were named as a problem by some beekeepers, but can be properly constructed if lessons from training are applied. Other farmers reported poor colonization due to pest problems. These issues can be resolved with the help of extension support workers. A third common issue - beekeepers harvesting too soon or too late – can be resolved with adherence to scheduling, more consistent hive inspection, and improved access to beekeeping equipment. As indicated, coordination and problems with equipment sharing were also reported. Many farmers said they would prefer to purchase their own harvesting equipment rather than wait for their turn for shared items. This waiting period can be crucial to extracting the maximum amount of honey. Beekeepers also reported difficulty actually reaching a harvesting center for extraction. Some centers were located two or more bus rides away from the farms and therefore farmers had difficultly finding the time and money to get there. Recommending that all farmers who take out loans are within a 20 km range of the extraction center can solve this. If a farmer is outside of this range and still wishes to become a beekeeper, then he or she must be aware of the additional challenge and should be advised to cluster his or her hives with someone who lives within this range. A common frustration for beekeepers is the long waiting period between the time of purchase and the first harvest. Interviews have shown that the more farmers fully understand the waiting process before starting, the more likely they are to keep up their dedication through the colonization period. Many potential beekeepers voiced concern over working with bees. In particular, many women were scared by the prospect of being stung. Some current beekeepers were scared away from their hives after being stung. However, beekeepers can reduce their chances of being stung by using protective gear and

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following proper safety steps that are shown during training, or alternatively, may hire others to care for the hives or perform harvesting tasks. Most experienced beekeepers grew accustomed to working with bees over time and simply became accustomed to an occasional bee-sting. Interest in Microcredit Loans Beekeepers interviewed were generally satisfied with their relationship with loan providers and the structure of their loans. Most of these beekeepers stated that they were interested in taking out additional loans to purchase hives in the future. It was commonly felt that the loans were beneficial because they created a continuing relationship with Honey Care and partners that ensured ongoing support. KickStart Results The Oilseed Press The Oilseed Press was developed to address the need for affordable cooking oil in Kenya. However, demand for this product is low in Kenya, due to the lack of active marketing of the technology and the availability of good oil seeds, two issues which will be addressed in section IX in relations to our test project in Uganda. The Oilseed Press Business Package includes a press, bucket filter, a detailed manual, spare parts and a tool kit. In addition, the buyers receive technical training on how to use the Oilseed Press. Oilseed Press Enterprises-Costs and Revenues KickStart estimates that 67% of the buyers of the Oilseed Press use it to start a new cooking oil production business, while the other sales are to existing businesses or organizations.xlvii Our research identified the current start-up costs for a new oilseed press enterprise as US$420 for the oilseed press and a monthly operating expense of US$370 for hiring labor (US$3/day for crushing 60kg) plus the cost of sunflower seeds. Depending on whether sunflower seeds are cultivated or bought, the amount of oil that is produced a day and the cost of laborers, it is estimated that at an average monthly profit of US$370, owners could potentially recoup their initial investment within two months. Important Characteristics of Business Owners and Market Conditions Basic math and literacy were identified as important skills needed to successfully operate an Oilseed Press business. Advanced social skills, the ability to manage others, and access to capital were also considered helpful.xlviii The essential factors identified as necessary to ensure the success of a new Oilseed Press enterprise are that the business owners have access to good oil seeds and that the cooking oil has wide demand, is affordable and of good quality.xlix The Block Press The Block Press is currently being used to address the demand for affordable shelter. This technology can be used to sell blocks or start low-cost construction businesses. According to KickStart, the building block created with the block press is competing against all the ways that people currently build their homes; from mud to concrete. Rich people can generally afford concrete homes or will buy from a known company, while the poor build their homes out of mud, so the Block Press has enabled entrepreneurs to start small enterprises that fill a niche. They provide affordable building blocks to the poor who have the capacity to invest in improving their homes.l The Block Press Business Package includes the press, a kit to determine the right mix of cement and soil, which helps to determine what percent of cement (usually around 5%) should be used based on

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the content of the soil, and a detailed manual. In addition, as will be discussed in more detail later on, the buyer receives technical training on how to use and maintain the Block Press. The Capstone Team did not encounter reports of any problems with the quality of the technology. Block Press Enterprises-Costs and Revenues KickStart estimates that 50% of the buyers of the Block Press technology use them to start new enterprises, while the remainder of sales is to other organizations such as NGOs that use them in their programs.li Our research identified the current start-up costs for a new block press enterprise as US$560 for the block press and a monthly production expense of US$345 (based on producing 350 blocks per day using cement and free soil and including the employment of four laborers (US$3/day each)). It is estimated that at an average of US$230 in profit a month (depending on how many blocks are produced and the price of the building bocks), owners could potentially recoup their initial investment within three months. Important Characteristics of Business Owners and Market Conditions Basic math skills and literacy were identified as essential to successfully operating a construction block manufacturing businesses.lii In addition, advanced social skills, the ability to manage others and follow directions, negotiating skills, and access to capital were considered important. Having at least a primary education, specialized technical knowledge or skills, basic physical fitness/good health and a well-developed professional and/or personal network were also considered helpful.liii Perhaps most notably, already having some construction or building skills were identified by several different respondents as necessary to successfully operate a construction block manufacturing business.liv Respondents identified the following factors as essential to promoting the success of a new Block Press enterprise: consistent access to necessary inputs; proximity to locations with an active construction market in the niche that the blocks fill; high product quality standards; and the ability of the business owner to skillfully market and sell their product.lv It is preferable for businesses to be located in areas or close to areas with immediate access to good soil. If they are not able to be located in such areas, then business owners may need to factor in the cost of transporting soil or blocks when considering investing in a construction block manufacturing business. Partnering with KickStart Interviews with KickStart revealed and reinforced a number of important benefits in partnering with the organization. KickStart is a market-orientated social enterprise organization with an internal monitoring and evaluation system that helps to improve its efficiency and to lower product costs. It maintains strong relationships with private sector players such as manufacturers and hundreds of retail stores that have helped it to promote the development of sustainable production and distribution channels. KickStart develops high quality products and has a highly developed marketing system in place to raise awareness of its products among the poor. Partnering with KickStart would not only enable microfinance clients to gain access to these great technologies, but could also help to promote the use of the technologies throughout FINCA networks. Challenges and Opportunities Partnership Interview respondents cited a number of current challenges that would impact the formation of a partnership between FINCA and KickStart. Principal among them is KickStart’s termination of support for the two presses. Several circumstances produced this outcome, but basically, this is due to the lack of donor support for their further involvement. Each press earns an unusually low margin on sales due

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to high production costs. This prevents manufacturers from generating enough income to reinvest in advertising and marketing to generate additional demand. Because the irrigation pumps are earning much higher returns, donors prefer to support them, instead of the presses. Sales are therefore generated almost entirely through word of mouth. In addition, as KickStart does not have funding to work with the presses, support to business owners is limited to start-up training, input preparation, press operation, and basic bookkeeping, which are provided through participating retailers and have only been conducted by KickStart in small number of cases. In order to maximize the income potential of press owners, it will be important to enhance the existing training offered and help owners establish linkages in the production and distribution chain that are currently lacking. A partnership with FINCA and a guaranteed market in Uganda may enable KickStart to set aside additional resources to contribute to this process. Existing expertise at KickStart and among its partners will also be essential. General Business Operations Some of the specific challenges facing some Oilseed Press and Block Press business owners that were reported are: a lack of skills in bookkeeping; the inability to identify markets for the products and to create market networks; a lack of credit and difficulty in accessing inputs (good soil or sunflower seeds).lvi Oilseed Press Unfortunately, Oilseed Press businesses in Kenya have encountered some difficulties, as the availability of good sunflower seeds is very low. The government is controlling what seeds can be used and there is poor germination of seeds that are bought from the government. In addition, the government has allowed cheaper imports of cooking oil that has favored some companies. As a result, some cooking oil producers using the Oilseed Press have found it difficult to compete with the cooking oil which is now available in supermarkets. However, our field research found that many cooking oil producers feel that there is a market for their sunflower oil, but they are simply unable to secure a constant supply of sunflower seeds. Therefore for the test pilot project it will be essential for individuals interested in starting an Oilseed Press business to ensure that they will have access to oil seeds before they decide to invest in this type of business. FINCA staff and clients indicated that a number of regions in Uganda grow either sunflower or sesame seeds. One possible sourcing strategy would be to target one of those regions for a test pilot project. Another would be to link FINCA clients who are seed growers with clients in the test pilot project region. A third approach would be to work with the Ministry of Agriculture to identify another consistent source of seeds if it does not already exist in the pilot project area. A second challenge that respondents in both Kenya and Uganda cited is competition from cheaper foreign imports and substitutes. In some cases, although the quality and nutritional value of oil produced from the Oilseed press are clearly superior, it is not visible to buyers who may be mistrustful of the product they are buying. Additional efforts must be made by press owners to differentiate their product, perhaps by offering taste tests, conducting demonstrations, or seeking some form of certification from the Ministry of Agriculture. Block Press The primary challenges cited by respondents included creating a proper soil/cement mix to maximize block quality and possessing adequate construction experience to sell the product successfully to the

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anticipated market. Although creating a proper soil/cement mix is addressed in training, the mix can vary depending upon soil quality, and may require some degree of trial and error before a successful mix is achieved. As a result, business owners may have to take this learning curve into account as they project their costs. As mentioned before, staff that the team interviewed also recommended that press owners possess previous construction experience. This could potentially limit FINCA client demand for the business. Further research should be conducted to determine the importance of following this recommendation. An additional challenge several respondents cited is that market demand will remain limited even if additional marketing is undertaken in an attempt to boost demand. The blocks fill a niche construction market that limits demand. Additionally, owners must also demonstrate to potential clients why these blocks are superior to existing local construction materials. Interest in Microcredit Loans Our field research found that because of the cost of the Block Press and Oilseed Press is relatively high, individuals may form groups to buy the technology and operate the business collectively. Groups have used savings, donor funding or loans from NGOs to purchase the technologies. In addition, some of the retail stores have a layaway system in place that allows people to leave a deposit and then pay for the technology in installments. Once payment is completed, they can take the technology. KickStart staff, retail store owners and the groups we interviewed felt that both groups and individuals would be interested in microcredit in order to purchase the technologies to start a business. FINCA Staff Survey Results Demographics Nine FINCA field staff members were interviewed, including the Country Director, a Public Relations Officer, a Business Development Officer, a Supervisor of Regional Operations in Kampala, an Account Relationship Supervisor in Busia town, a Social Performance Monitor Officer in Jinja District, a Regional Manager in Jinja District, a Supervisor Jinja District, and an Account Relationship Officer in Jinja District. Respondents had varying responsibilities, ranging from senior oversight of country operations to working one-on-one with clients in loan appraisal. The purpose of these interviews was to determine the extent of the youth unemployment problem in the areas that FINCA serves, gauge the level of interest for each of the MicroFranchise opportunities considered, and assess the capacity for FINCA Uganda to implement a test pilot project that would integrate MicroFranchising with its microfinance operations. Findings Youth Unemployment and Underemployment When staff members were asked if they believe unemployment is a problem for young adults in the regions that FINCA Uganda serves, all nine respondents said yes. lvii According to one person, unemployment is prevalent in Uganda and it is getting worse for both youth and adults. The opportunities for employment are limited for both men and women. An employee in Eastern Uganda said that young men provide hired bicycle (boda boda) service and earn up to 2,000 Ugandan shillings per day (US$1.15), while women usually drop out of school and get married.lviii Another staff member working in Busia, a town on the border of Uganda and Kenya, said that the main income generating activity for young adults is to smuggle goods from Kenya.lix He added that youth engage in this type of illegal activity for a lack of other employment opportunities and quick money.

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Demand for Business Opportunities Demand for small business opportunities exists within Uganda because of widespread unemployment and underemployment. However, many staff members stated that one of the main challenges for enterprising individuals is obtaining the capital necessary to fund their businesses. According to one FINCA employee, the “demand [for a small business opportunities is] there but most people lack capital.” Microfinance could be used to fill in this gap by providing the capital necessary for people to invest in a business. Through proven operation concepts provided by the MicroFranchise business, the risk of failure declines. Eligibility for Loans Although anyone 18 years old and above is eligible to take out a FINCA loan, these loans are limited to individuals who already operate a business. Because many youth have not had the opportunity to own and operate a business at such a young age, this could render them ineligible to obtain a FINCA loan. One way to address this challenge is to have a parent guarantee the loan for her children. The parent must already have an existing business, as this is the requirement for all FINCA clients. For youth 15-17, the parent will need to take out the loan because this age group is not legally eligible to take loans. Many of the staff said the parents would cosign the loans for the 18-24 age group because the “parents want their kids to do something [that would generate income]”lx For youths 15-17, the staff believed that most of the children are still in school therefore they would not be able to operate a business. Overall, FINCA staff expressed hesitancy to provide loans to youth. Some of the staff believed that younger clients are riskier, as “they can be distracted by a lot of things” and “they are irresponsible.”lxi Loan Size The team found that the start-up costs for the three MicroFranchise opportunities were reasonable for FINCA to offer, even for loans that were $600. This is a significant amount, considering the average month salary for a Ugandan teacher is US$80-$100 per month.lxii FINCA staff indicated that the start-up costs of all the proposed MicroFranchise opportunities were affordable to the clients, and some even believed that the demand for loans would decrease at the $100 rate, citing that clients would not need to go through FINCA as they could get it from their relatives instead. When asked why respondents would be interested in bearing such a high burden for a loan as high as $500, one employee said “because of the potential for greater return.” For instance, investment in the block press could break even within three month of operation if the machine is operated at full capacity and all the blocks are sold. Loan Structure Loans provided with the MicroFranchise opportunity would adopt many of the same characteristics as current FINCA loans. (Table 1) The interest rate would be 2.5% per month for a village bank loan and 3.0% per month for individual loans. In addition, a one time 1% administration fee would be charged at the start. All loan recipients would be required to have a savings of 10% of the total loan amount deposited in their account at the beginning. Furthermore, monthly payments toward savings are also required. Repayment of the loans can be done either monthly or bi-weekly. Repayment period is 4-6 months. FINCA staff provided useful feedback on the structure of the loans for the MicroFranchising opportunities. They provided suggestions with regard to deposits, savings and loan periods. Nevertheless, one of the main concerns of FINCA Uganda staff was the length of time required to harvest honey. Many staff members believed that it would not be feasible for FINCA to wait one year

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Table 1: FINCA Uganda Loan Structure Guarantor Required for individual loan Savings Requirement 10% of total loan in savings at start;

monthly savings deposits Interest Rate 2.5% village bank

3.0% Individual loan Administration Fee 1% one time at start Repayment Monthly or Bi-weekly Period 4-6 months

for repayment on the loan. As a result the team came up with the recommendation of requiring at least monthly interest payments. One staff member also recommended setting up a separate investment fund with a longer-term repayment period for FINCA that will prevent existing resources from being tied up in these long-term loans. The staffs’ suggestions were incorporated into our recommendations. Capacity to Implement Pilot Project FINCA Uganda staff members were receptive to a test pilot project that would integrate microfinance with MicroFranchising. Some criteria considered essential or very important in ensuring the feasibility of the project included: project capacity to generate a new revenue stream for client, project capacity to maximize loan repayment rates on loans provided for the MicroFranchise opportunities, the partner’s interest in working with FINCA Uganda, and the partner’s interest in leveraging FINCA network capacity. Other concerns expressed by FINCA staff included the suitability of the products for the market. The success of the MicroFranchise opportunities in generating income and jobs for the clients depends on product demand within the community or access to external markets. One staff stated, “At the end of the day, the product has to be affordable and there has to be a need for it.”lxiii Overall, FINCA Uganda has the capacity and interest to implement the project, but it will need additional funding from an outside source, either from FINCA International or from another donor. One staff said, “We have been stretched [thin] on certain targets, especially in our profitability. Most of the funding [for the project] will have to come from somewhere else. The concept is good for FINCA Uganda, but the issue is resources.”lxiv Another staff member indicated that additional staff will be needed to market the opportunities to the clients. All FINCA staff members involved in the test pilot project will need to receive training on the MicroFranchising opportunities. FINCA Client Results Demographics The team conducted 11 focus group interviews in eastern Uganda. These interviews took place in Jinja, Bugiri, and Busia Districts where the pilot project could be implemented. Two focus group interviews were conducted in Jinja with 17 participants, three focus group interviews were conducted in Bugiri with 29 participants, and six focus group interviews were conducted in the FINCA satellite office with 78 participants. A total of 124 FINCA clients were interviewed, 81% of whom were women, 13% of whom were men, and 6% whose gender was not accounted for because they joined the focus group after the count had been recorded. These eleven focus groups had been members of FINCA village banks for as little as over 3 years to nearly 10 years. The focus groups were conducted using an English speaking member of the group or through translators provided by FINCA Uganda. The team conducted focus groups in the FINCA Busia office and in clients’ homes. Interviews lasted 60-120 minutes because the team needed to answer a series of questions about the business opportunities

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before the clients could assess their investment interest. The team used visual aids depicting pictures of the modern beehives, oilseed press, and block press to help the participants understand the MicroFranchise opportunities. It should be noted that due to time limitations most interviewees were from urban or peri-urban areas and therefore had a bias against beekeeping, because they would not have adequate space for the hives. Interest in MicroFranchise Opportunities Individual To determine the feasibility of introducing MicroFranchising opportunities to FINCA clients, the participants were first asked of their level of interest in investing in each of three business opportunities if they were made available in their community: honey production, cooking oil production, and construction block manufacturing. (Table 2) More than half of all participants said that they were interested in investing in the three proposed MicroFranchise opportunities if these opportunities were made available with a FINCA loan. Individual interest was highest for the oilseed press at 66%. Interest in the block press followed closely behind at 65% while interest in beekeeping was indicated by a little over half of the respondents. Table 2: FINCA Client Interest in MicroFranchises If an opportunity became available through FINCA to invest in the following business in combination with a loan to assist in paying for the start-up cost, would you be interested in investing in this opportunity? Honey Production Oil Production Block Manufacturing # of People Percent # of People Percent # of People Percent Yes 63 51% 82 66% 81 65% No 38 31% 38 31% 38 31% No Response 18 18% 4 3% 5 4%

Clients who indicated that they were not interested in investing in any of the three MicroFranchise opportunities comprised 31% of all the respondents across all opportunities. These clients may have their own business already and would not be interested in taking on new responsibilities. Beekeeping Fifty one percent of surveyed FINCA clients expressed interest in investing in the beekeeping business, while 31% said no and 18% did not respond or were undecided. Clients liked beekeeping because it requires very little time commitment to manage. Individuals involved in beekeeping could continue working other jobs and receive supplemental income from the beekeeping operation. Clients also pointed out that the initial start-up cost for this MicroFranchise opportunity is more affordable in comparison to the oilseed press and block press. The idea of having repayment for loan principal start after harvest, as well as the guaranteed market, was also benefits that appealed to the surveyed clients. Clients who would not invest in this opportunity stated that the waiting period prior to the first harvest is too long. Other clients, particularly women, mentioned that they did not want to invest in this business because they are afraid of bees. This could be a challenge for FINCA, as the majority of its client base is women.

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Generally, the team found that more rural clients were interested in beekeeping than urban clients. Urban clients said that they didn’t have the land to set up the apiary and did not feel comfortable setting it up in their backyard in close proximity to where their children would play. Oilseed press The oilseed press was the most popular investment choice (65%) among the three MicroFranchise opportunities for individual investors. Clients liked the machine because it is easy to operate and uses no electricity. They also believed that cooking oil is needed in every home and that the household also benefits from the seedcake by-product, which could be used to feed farm animals. The oilseed press is a more versatile business opportunity that could be adapted to both rural and urban areas. Thirty one percent of clients said that they would not invest in this opportunity, citing difficulty in getting seed inputs in their area. The oilseed press requires sunflower or sesame seeds, which are not grown in large quantities in the Eastern Uganda region. Also, the oil market in this region faces high competition from cheaper Kenyan oil. Clients also mentioned that the initial start-up cost for this business opportunity and the cost to procure seeds are high. Block press Interest in the block press was also high at 65%. Clients saw a high demand for building blocks because construction is ongoing in their area. They also indicated that input procurement costs would be lower than for the oilseed press because soil is readily available in the community. Generally, urban clients were more interested in investing in the block press, although rural clients also saw a need because many people are moving from mud houses to more permanent structures. Clients said that more men would be interested in the block press because of the strength required to operate the machine. At first, the surveyed clients were hesitant about the success of the block press. Many clients cited that they would prefer to use traditional bricks that have undergone the firing process. The firing process was believed to make the bricks more durable. In contrast, the blocks produced by this press require a mixture of cement and soil, and has to be dried in the shade for 21 days. With a proper soil-cement mixture, these blocks do not crack, whereas the traditional blocks have been know to do so. The team found that the clients have preconceived notions about the brick making process, which affected their willingness to invest in this MicroFranchise opportunity, although some became more receptive after the distinction was explained. In addition to concerns about the quality of the blocks, clients were concerned about the cost of producing the blocks. Generally, we found that traditional bricks are cheaper to produce than the block press blocks because it did not require cement as an input. Traditional bricks retail for 40% less than the block press blocks. However, the traditional bricks require cement in the building process, which means that ultimately the builder uses more cement with traditional blocks than with the block press blocks. In addition, the size of the blocks from the block press is larger than the traditional blocks. Therefore, block press blocks are actually competitively priced with traditional bricks, but because they are more expensive per block, clients believed that they would have difficulty selling the blocks. Group Finally, clients were asked as a group which of the three business opportunities they preferred. An overwhelming majority of six groups preferred the block press. One focus group preferred the oilseed press, one preferred beekeeping, one preferred beekeeping and the block press, and two preferred both the oilseed press and the block press.

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Interest from Youth Among all the three MicroFranchise opportunities, more clients believed that youth ages 15-17 would not be interested in the business opportunity in comparison to youth ages 18-24. With the introduction of free secondary education in Uganda, youth ages 15-17 are still in school and cannot commit a significant amount of time to the business. Therefore, client perceptions of youths’ interest in the business opportunities are generally higher for the 18-24 age group than the 15-17 age group. Also, they believed that youth ages 18-24 would be more mature and responsible to manage the business, although one group did mention that youth 15-17 would still be easier for the parents to control.lxv Beekeeping When FINCA clients were asked about youths’ interest in any of the three MicroFranchise opportunities, they had varying opinions. (Table 3) For beekeeping, 53% of clients said that the 15-17 age group would be interested in the business. The clients mentioned that it was important to provide training to the younger youth groups to engage them in the process. These clients believed that the young adults would become interested after seeing their older peers manage the beehives. A significant 42% proportion of clients believed that youth would not be interested in beekeeping because this group would still be in school. As for the 18-24 age group, perceptions about their level of interest rose significant for males to 82%, but declined for females to 49%. Older male youth were believed to be less fearful of the bees in comparison to the older female youth. Furthermore, clients cited that the older female youth would have childbearing responsibilities and could not attend to this business. Table 3: Youth Interest in MicroFranchises Would young adults be interested in these opportunities?

Honey Production Oil Production Block Manufacturing Yes No No

ResponseYes No No

ResponseYes No No

Response Ages 15-17 Male Female

53% 53%

42% 42%

5% 5%

51% 51%

47% 47%

2% 2%

47% 44%

35% 39%

17% 17%

Ages 18-24 Male Female

82% 49%

13% 37%

5% 14%

69% 69%

29% 29%

2% 2%

63% 58%

24% 28%

13% 14%

Oil Production Client perception of the level of interest in oil production among youth ages 15-17 declined slightly to 51% in comparison to the beekeeping operation. This is because the oilseed press must be operated manually for eight hours per day to achieve maximum production. This would not be possible for youth 15-17 because they are still in school. Among youth ages 18-24, perceived interest among female and male youth were equal. The clients stated that the preference for the oilseed press would increase among the women because “the women fear bees but they don’t fear the machine!”lxvi One group mentioned that in addition to oil production, the 18-24 age group could also be involved in finding markets for the oil.lxvii

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Block Manufacturing For the block press, less than half of the respondents believe that youth 15-17 could be involved in the business. This is explained by their belief that the block press requires strength to press and lift the blocks, and youth 15-17 would not be suitable for such activities. Among the 18-24 age group, 63% of respondents believed that men would be interested in this MicroFranchise opportunity, which is slightly higher than for women at 58%. One group cited that men would be more interested because they are used to doing manual work. Loan Guarantee Over half of the respondents were willing to guarantee the loans for young adults in both categories, although slightly more at 57% were willing to do it for young adults age 18-24 than for young adults ages 15-17. (Table 4) Many of the groups felt that youth 18-24 were more mature, responsible, and eager to find employment, while youth 15-17 would be preoccupied with secondary education. Because the 18-24 age group was considered more responsible, FINCA clients believed that they would not default on their loans. Eight percent of respondents who voted “no” to guaranteeing loans for young adults ages 18-24 said that this age group would legally have access to FINCA loans and did not need to be guaranteed. Table 4: Guaranteeing Loans for Young Adults If you were the parent of a young adult, would you guarantee his or her loan to start one of these businesses? Yes No No Response Men Ages 15-17 54% 19% 26% Women Ages 15-17 54% 19% 26% Men Ages 18-24 57% 8% 35% Women Ages 18-24 57% 8% 35%

VIII. EVALUATION SCORECARD Description FINCA international asked the Capstone Team to develop an evaluation matrix to compare the three MicroFranchise opportunities that it tested in the field and to help determine which product and what type of partnership would be most feasible and most likely to succeed in a test pilot phase and beyond. In response, the team put together an evaluation scorecard that consists of 17 criteria identified by the team following extensive consultation with FINCA International to compare the three MicroFranchise opportunities. Scoring System Each criterion can earn a score between zero and five. The team weighted the 17 criteria selected according to their relative importance to FINCA, with the most important criterion earning a weight of 1.65, bringing its perfect weighted score to 8.25, and the least important criterion earning a weight of 0.6, lowering its perfect weighted score to 3.0. A perfect total raw score is 85, and a perfect weighted score is 100.

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After devising the preliminary weighting system, the team then sought input from FINCA Uganda staff members on much of the scorecard by incorporating a condensed list of related criteria that could be applied to the evaluation scorecard into question #3 of section 2 of their interview questionnaires. (See Appendix 5.1.1: FINCA Uganda Staff) For example, the questionnaire asked the FINCA Uganda staff to rate the importance of generating high loan repayment rates among project participants. Answers to this question were used to reassess the weight assigned to “Financial Risk to Franchisees.” While some questions, such as “Model Replicability” were addressed word-for-word in the staff questionnaire, others such as “FINCA Client Demand for Each Enterprise Opportunity” were not because the team remained highly confident of the appropriateness of the weight or because the criteria were addressed in other sections of the questionnaire. After analyzing the results of the FINCA Uganda staff questionnaire, the team adjusted weights that were originally assigned to some of the criteria. Three factors influenced the adjustments. First, the team weighed the collective responses of the nine staff members questioned against the weight each criterion had originally earned. Second, it considered the relative importance of each staff member in its assessment, elevating the weight of responses from senior country staff and employees most likely to participate directly in a test project. Third, it made adjustments based upon comments made alongside each response. The team also added new criteria that were important to the FINCA Uganda staff and had not been capture originally. Input from FINCA Uganda staff did not supersede, but rather complemented existing feedback from FINCA International. Appendix 3.2 lists the criteria, the original weights assigned to them, questions asked relating to each criterion, responses to those questions, and the final weights assigned to them. Table 5 lists the final list of criteria, the weight assigned to each and the research questions identified in Section IV that are addressed by each criterion: Table 5: Final Evaluation Scorecard

EVALUATION CRITERIA WEIGHTED SCORE KEY QUESTIONS ADDRESSED*

1) FINCA Client Demand for Each Enterprise Opportunity

1.65 3. MFO Results

2) Financial Risk to Franchisees 1.65 1. FINCA MicroFranchising Framework 2. MFO Operations

3) Model Replicability 1.6 2. MFO Operations 3. MFO Results 4. MFO Compatibility with FINCA

4) Poverty/Human Development Impact on Franchisees

1.5 3. MFO Results 4. MFO Compatibility with FINCA

5) Project Vision and Design Synergy with Partner

1.5 1. FINCA MicroFranchising Framework 4. MFO Compatibility with FINCA

6) Market Demand for Product 1.4 3. MFO Results 7) Partner Business Plan Design 1.3 2. MFO Operations

3. MFO Results 4. MFO Compatibility with FINCA

8) Projected Impact on Local Youth Unemployment

1.2 2. MFO Operations 3. MFO Results

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9) Additional FINCA Staff Resources Required

1.1 1. FINCA MicroFranchising Framework 4. MFO Compatibility with FINCA

10) Project Startup Cost for FINCA 1.1 1. FINCA MicroFranchising Framework 4. MFO Compatibility with FINCA

11) Cost of Entry for Franchisees 1.1 1. FINCA MicroFranchising Framework 2. MFO Operations 4. MFO Compatibility with FINCA

12) Current Partner Financial Performance

1.0 3. MFO Results

13) Community Poverty/Human Development Impact

1.0 3. MFO Results 4. MFO Compatibility with FINCA

14) FINCA Avoids Participant Selection Responsibility

0.85 1. FINCA MicroFranchising Framework 4. MFO Compatibility with FINCA

15) Geographic Range/ Flexibility of Business

0.8 1. FINCA MicroFranchising Framework 3. MFO Results 4. MFO Compatibility with FINCA

16) Minimize "Apple of Discord"** 0.65 1. FINCA MicroFranchising Framework 4. MFO Compatibility with FINCA

17) FINCA Exclusive Regional Partner 0.6 2. MFO Operations 4. MFO Compatibility with FINCA

Totals 20.0 *Note: Key Questions Addressed – Each number/short summary listed under this column in the table refers to one of the four research questions the team identified in Section IV. **Note: Apple of Discord is a reference to jealousy that may arise among clients if some clients are excluded from eligibility to invest in a MicroFranchise enterprise. Tabulation of Scores The team began by tabulating raw scores in each category for each product. This required calculating all the quantitative results and compiling all survey responses in every category into a single summary of interview responses. For example, responses from nine FINCA staff members about FINCA Uganda’s prospects and interest in taking on a test pilot project in MicroFranchising were collapsed into a single survey featuring every interview response. As indicated, raw scores could range from zero to five, with zero representing complete failure to meet the criterion, 2.5 representing a balance of strengths and weaknesses, and five representing a complete fulfillment of the criterion. A 2.5 therefore could represent a balance between great strengths and weaknesses or no strengths or weaknesses. Scores between zero and one and four and five were quite difficult to achieve. In fact, no question merited a score below one based on the team’s assessment. Next, each interview question and response was examined to determine to what evaluation scorecard criteria, if any, might apply to the answers and what score should be attributed to each response. After scores had been derived from questions that applied to one or more categories, the team compiled scores for each criterion in specific interview groups and wrote brief summaries explaining the scores. After averaging scores within individual interview groups, final results for every interview group were gathered in a single document for the MicroFranchise opportunities (See appendix 3.3-3.5). The document identifies the score each product earned from every interview group in each category and includes a summary explanation of the positive, neutral and negative comments that contribute to the score. These comments will help to provide readers with a context for the score attributions.

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Finally, the team took an average of the results from all interview groups to obtain a final raw score in each category. Once all final raw scores had been derived, they were plugged into the Evaluation Scorecard. Each score was weighted and summarized into one final score for each product. Results and Analysis Honey Care Africa’s honey production program earned the highest score among the three products. It earned a total weighted score of 69.33, giving it an average raw score of just over 3.45 out of 5. The KickStart block press earned a total score of 62.75, with an average raw score of nearly 3.13, and the KickStart Oil Press earned a total score of 61.40, with an average raw score of 3.07. Honey Care’s raw scores were, with a few exceptions, consistently higher than each of the other two products. Honey Care earned standout scores in “Market Demand for Product,” due to its guaranteed market, “Additional FINCA Staff Resources Required,” because its business model and the synergy between the two organizations would require significantly fewer staff disruptions than is likely with the other products, “Cost of Entry for Franchisees,” due to its low start-up cost per hive, “Current Financial Performance,” due to Honey Care’s rapidly expanding market as compared with the suspension of support for the other two products, and “Minimize Apple of Discord,” because anyone who can meet credit guidelines is eligible to become a beekeeper. The only area in which it scored significantly below its KickStart counterparts was in its “Projected Impact on Local Youth Unemployment,” because it may not employ additional people, it serves as a supplemental income for farmers, and it is less likely than the other products to attract youth. Other constraints that lowered Honey Care’s scores included the delayed return on investment and risks to beekeepers such as fear of bees, exposure to pests, droughts, extraction problems, and hive location (Financial Risk to Franchisees), the cost of setting up extraction centers (Startup Cost to FINCA), and its geographic limitation to rural areas (Geographic Range/Flexibility of Business). KickStart’s products earned particularly high scores in their “Projected Impact on Youth Unemployment,” due to the block press’s need for 4-6 operators and the oil press’s geographic flexibility and employment of 1-2 additional people, and in “FINCA Exclusive Regional Partner,” due to KickStart’s limited presence in Uganda and its disengagement from the process of marketing, selling, and supporting the presses. This weak support for the presses is largely responsible for many of their low scores. Additional resources beyond FINCA’s capacity for a test pilot project is necessary to source inputs, enhance training and ongoing troubleshooting, guarantee adequate staffing for training and support, and assess market demand to ensure that products reach desired markets. These limitations lowered each of the technology’s scores in “Risk to Franchisees,” “Model Replicability,” “Project Vision and Design Synergy with Partner,” Partner Business Plan Design,” and “Additional FINCA Staff Resources Required.” Although “Cost of Entry for Franchisees” took a comparative hit against the beehives, this was partially mitigated by the much higher potential returns and their immediate impact. Overall, the Evaluation Scorecard results are largely consistent with the team’s qualitative assessment of the three partnership options. While all three MicroFranchise opportunities offer significant potential benefits and partnerships with either MicroFranchise organization is viable, Honey Care offers the most compelling partnership opportunity because its current model allows for a division of responsibilities that maintain each partner’s core competencies. Additionally, although returns are less immediate, financial risk to clients is otherwise significantly less pronounced. The greatest caveat to this general

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conclusion is that the two presses – and the Block Press in particular – are likely to make a larger impact on youth unemployment than honey production. Additionally, if FINCA chooses Honey Care as a partner, then it will have to implement the project in a rural area with adequate fruit trees and flowering vegetation. MicroFranchise expansion into urban areas beyond a pilot phase would require partnering with KickStart or finding another viable partner. Limitations to “Accurate” Scoring No scoring system can be perfectly accurate to quantify qualitative data. The primary limitations are likely to occur in the data itself. The team’s sample sizes are too small to be scientifically valid. Recording errors and omissions are likely to be present in at least some of the surveys. Additionally, errors of interpretation are almost impossible to avoid. Scores attributed to each response balance existing conditions observed in Kenya around each product with the problems that a test pilot project could create for FINCA, as well as the solutions the team proposes to issues that have emerged within each product’s business model. As a result, a score could be slightly higher than a response might indicate because a potential solution has emerged. However, it does not eliminate the problem, because that solution has yet to be tested or even agreed upon by FINCA, and scoring attempted to reflect this dichotomy. A score could also be slightly lower than the response might merit if the team’s observation of a given condition indicated that it was worse than the respondent indicated. This does not mean that the tone or content of responses were disregarded; rather, each response was examined against the collective perspective the team gained after completing its field research. After averages were taken in each category for each individual interview group, some minor adjustments were made if the averages appeared to skew toward specific answers that praised or criticized a minor component of the criterion in question due to a limited number of responses relevant to that criterion. After each score from the individual interview groups was combined into a final raw score for each category, several final raw scores were adjusted or established if the summary results provided an inadequate picture because information was missing or incomplete based upon interview results alone. For example, none of the interview responses addressed the issue of minimizing jealousy among clients who will not be eligible to participate in the project. Therefore, the team had to consider each project’s potential in this area and assign a score with limited direct empirical basis. Additionally, only one comment was relevant to the category of impacting community poverty and human development levels, and scoring based on that comment alone would have overstated the project’s potential impact. Final scores may be higher or lower than the products merit, but the most important component of the final score is that each one was derived in a consistent manner for fair comparison. The team acknowledges the possibility that some scoring drift in one direction or another may have occurred during the scoring process. It is for this reason that summary explanations of each score are included in the appendices so that any such errors are observable if they exist.

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IX. RECOMMENDATIONS General Recommendations Based on the results discussed in the previous section, several general conclusions emerge. Findings obtained from FINCA staff and clients suggest that any one (or more) of the three technologies could provide a foundation for a test pilot project in new, highly replicable business opportunities to be offered to FINCA clients. No clear preference emerged beyond the urban preference for the Block Press or Oilseed Press and the rural preference for the beekeeping or the Oilseed Press among FINCA clients. Among staff, there is general support for the concept of introducing a new business opportunity to FINCA clients, although no clear preference emerged for one particular opportunity. Overall, Honey Care Africa provides the best combination of assets to consider as a test pilot project partner. However, we have concluded that there is general support for conducting a test pilot using any of the three technologies under the following conditions: Funding Additional funding must be made available, probably from either FINCA International or an outside donor, unless the FINCA Uganda Board approves an additional outlay. Funding is necessary to support cost associated with market research, training and or hiring additional staff, implementing the test pilot project, training and supporting clients and monitoring and evaluation. Selection of Partner and Site Before selecting a client and a technology for the test pilot project, FINCA Uganda must select a region for project implementation based upon local capacity, staff enthusiasm for participation, and perceived client enthusiasm for participation. It must also conduct preliminary market research to determine if there is strong local client demand for the technology, access to inputs, market demand at wholesale and retail level for final product output, and product supply chain and barriers to getting the product to market. Market demand assessment may not be necessary in partnering with Honey Care since the market is guaranteed, although it will determine the extent to which local markets may provide higher returns than what Honey Care offers. To ensure the success of the pilot project, FINCA must ensure that adequate inputs are available to FINCA clients once the project is implemented or that clients have the capacity to grow or obtain inputs on their own. Partnership Agreement FINCA should incorporate recommendations for partnership establishment and implementation described in the following sections depending upon the partner and technology selected for implementation. Because a test pilot project has many elements, FINCA must also develop a partnership agreement that clearly delineates partner responsibilities, establishes terms for partner monitoring and evaluation, and enables each partner to take predetermined protective measures in the event that partnership responsibilities are not being fulfilled. Monitoring and Evaluation Monitoring and evaluation is a crucial component to measure the success of the test pilot project. Both FINCA and the potential partner organizations have established organization-specific monitoring and evaluation schemes that should be leveraged for the test pilot project. In general however, FINCA and the chosen partnership organization must set up a monitoring and evaluation system at both client and staff levels based upon responsibilities and indicators established in the partnership agreement. Details

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of the recommended partnership specific to the partner organizations are provided in the following sections. Recommendations for Future Partnership based on Grameen Village Phone Results Costs FINCA staff indicated that donor funding for the Village Phone Program expired after one year although the costs of program management have risen because of growth in the size of the program. As a result, the Capstone Team recommends that FINCA consider the impact of program expansion on those costs that are not inherently sustainable and may require ongoing funding support. Loan Structure FINCA should limit changes it makes to the basic village banking loan system to those that are essential to making successful loan repayment feasible given the type of product offering. Understanding Markets Market conditions have changed dramatically through much of Uganda since the Village Phone program was introduced. When FINCA conducts its preliminary market research to determine initial market demand, it should also consider how existing and future competition are likely to change the market once FINCA clients enter the market with their new product. This research should also help FINCA to set realistic income goals for clients who participate in a test pilot project at the outset and as local markets evolve. Additionally, FINCA’s level of involvement in market assessment may vary depending upon the role that the partner plays in marketing. For example, MTN is responsible for marketing MTN service to the Ugandan market, which will presumably enhance demand for the purchase of airtime from VPOs. Similarly, Honey Care is responsible for marketing the honey products at both the wholesale and retail level. In contrast, KickStart does not provide any marketing support for either the blocks produced by the block press or the oil produced by the oil press. As a result, more careful market assessment by FINCA will be necessary with these products to ensure that an adequate retail market exists or can be created before FINCA begins to sell the presses to its clients. Additional support of clients after presses are sold may also be recommended to help clients establish and maintain their markets. (Note: Market evaluation should also include both the evolution of the market for the technology that FINCA is offering to clients in the program and the retail market for the product that FINCA clients are producing with that technology.) Setting Limits on Client Entry into a Market Both FINCA staff and MTN staff agreed that trying to limit the number of VPOs within a certain geographic area was a failure. Both existing and new operators benefited when FINCA suspended this program. As a result, FINCA should tread carefully when considering this option for any of the business opportunities that the Capstone Team has analyzed or any other opportunities. However, conditions are likely to be different for these products, so some measures to discourage FINCA clients from saturating local markets should be considered. Most importantly, the Capstone Team recommends that FINCA build into the assessment of each prospective client’s creditworthiness an assessment of the client’s preparedness for current and future market conditions, especially in the event that it conducts a test pilot project with one or both of the presses. This could include asking questions about the size of the market, where it exists and how the client plans to distribute its products, what

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barriers exist to entering the market and how the client plans to overcome them, and how he or she expects the market to shift over time. Additionally, preliminary and ongoing market research by FINCA might help educate prospective buyers about market conditions to prepare them better before they consider becoming MicroFranchisees. In the long term, FINCA could also choose to support clients in their efforts to remove barriers to market. For example, it could help clients establish a distribution chain to help locally produced oil reach urban markets by developing communication networks among clients. Or, it could encourage successful clients to establish an oil packaging business and develop a brand for FINCA oil producers. Staffing It appears from questioning of FINCA staff, who do and do not have GVP responsibilities that existing employees can potentially absorb the additional responsibilities of a new program. However, some additional training and new staff hiring may be necessary if the partnership requires FINCA staff to take on more responsibilities beyond what they currently possess in the GVP program. Creating Incentives to Maximize Potential Given the importance of ensuring that Account Relationship Officers were invested in the GVP Program and the success of the incentive program for Officers who sold airtime to VPOs, the Capstone Team believes it is essential to institute an incentive program for Account Relationship Officers in the event that it sets up a test pilot project using any of the opportunities under consideration. Such an incentive program should balance FINCA’s desire to maximize client participation in the program with efforts to ensure that clients can achieve income benchmarks established at the program’s outset. In other words, an incentive system based solely on product sales will be inadequate, since it is likely to result in market saturation. A second incentive based upon repayment rates on loans obtained for the product or even income earned by clients would be an important addition. Monitoring and Evaluation Both the quantitative data that MTN and FINCA collect from VPOs to measure performance and the qualitative data FINCA obtains to measure client satisfaction with the program and social impact appeared to provide FINCA staff with a solid picture of the program’s impact. Similar quantitative and qualitative indicators should be established for a prospective test pilot project, with regular monitoring of adequate samples provided to ensure that FINCA staff at all levels have an accurate picture of client satisfaction and impact. Similar monitoring should be undertaken at the local staff level to obtain information about staff successes and challenges so that improvements can be made to the program. It will also be important to the development of a future test pilot project to determine how each partner’s monitoring and evaluation program should be integrated, streamlined and upgraded to maximize its usefulness to the project. Honey Care Africa Pilot Project Design The proposed test pilot project is recommended to begin with at least 200 hives and therefore between 50 - 100 farmers based in at least one community. Honey Care recommends that a pilot project feature at least two communities to provide a source of comparison between different geographic locations, but all projections below are based on a single-community project. This beekeeping community should be centered around a community extraction center and managed by a community extension officer who

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is responsible for a locality. All farmers in the project should live within a 20 km radius of the community center and work in groups of 2 to 6 farmers in order to physically cluster their hives and assist each other with extraction and monitoring. Beekeepers will be required to come to the community center when they want to extract and sell their honey. This will enable extension officers to keep track of each beekeeper’s production, pay for the honey bought by Honey Care, and provide a consistent contact point between officer and beekeeper. When beekeepers extract honey at the community center, the community extension worker will pay the beekeeper for half of the honey sold and directly deposit the other half to pay off the loan. The payment will be done through either the disbursement of cash or, preferably, through an electronic transfer to the individual’s account. Honey Care has recently developed an electronic payment system with other partners in order to decrease the risk of workers traveling with large amount of money. This could be extended to a partnership with FINCA. A Honey Care extension worker will visit the community center at regular intervals to pick up the honey and pay the community extension worker. The entire project should be expected to take at least two years and more reasonably three years including set-up time and the colonization period before the first harvest. Extraction Center Honey Care has recently changed their recommended structure for beekeeper organization to a formation around a permanent community extraction center. Previously, mobile extraction units had been set up at various locations, but this strategy was found to be less useful to beekeepers due to the time sensitive nature of harvesting and extraction. Having a center that is available on a consistent basis increases the income potential of farmers by allowing them to harvest when the hive is ready, instead of waiting for extraction units to come by. Waiting too long for an organized collection of honey could result in the bees consuming the honey they produced and therefore a reduction in profits. The center will not only serve as a permanent site for harvesting, but also a place where beekeepers can exchange ideas, share equipment, and, hence, strengthen community networks. Ideally, the center should contain a community information posting area so that beekeepers can share their experiences and even a reference area for beekeepers who want to review training materials or troubleshoot problems independently. The center should also be used for initial and follow-up trainings. Preparation. Creation of the center should be in an existing structure and in an easily accessible location. Upgrading of a building to a useful community center is expected to take between 12 -18 weeks and can cost from $2,000 to $10,000 depending on the quality and level of modification required. The costs of setting up a center that will support up to 1,000 hives will include:

• Physical Improvements – Repainting the center, Bee-proofing the walls to keep out bees; • Security Improvements to protect the stored equipment and possibly money; • Centrifuge, or extraction machine, that can cost between US$700 - $1,000. This machine

can be shared between communities if there is reliable transportation available. • Equipment such as storage buckets, swapping frames, beekeepers suits, communal

harvesting equipment (boots, gloves, smokers), quality testing equipment, and demo hiveslxviii.

Hours. This center will be managed by a community extension officer and maintain regular hours. The officer must be at the center collecting honey for extended hours during harvest season. Hours of operation will depend on community demand. Typically it will be necessary to keep the center open

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once or twice per week, with hours extending to daily during peak harvesting season. This will both maximize community output and enable the community extension office to focus on providing field support to beekeepers. Ownership. The cost of the center can be covered in several ways. The simplest way is for FINCA to cover the cost of upgrading and then transfer management to the community. Small monthly fees collected from beekeepers would support rent and maintenance. Alternatively, either the community or community extension worker could own the center. The community could purchase shares in the center as a form of investment and then benefit from a profit sharing system. The community extension worker could also take out a loan for the center and therefore invest in the center and the job as his own enterprise. The latter two options would be new arrangements and therefore contain higher risk of encountering problems. Community Extension Worker A key to ensuring success in any beekeeping initiative is reliable extension support and ample harvesting opportunities. Therefore, the pilot project should involve a community-based extension worker who will support beekeepers and manage the community center as a full-time responsibility and source of income. This will ensure that there is consistent knowledge within the community to support beekeepers and reinforce the community support structure of the beekeepers. The community extension worker will be selected from within the community and trained by Honey Care to manage the extraction center and regularly visit beekeepers within the community to advise them on ways to improve harvests and assist with problem solving. The community supported by each community extension worker will have a maximum of:

• 1000 hives • Geographic range of 20 km • One extraction center.

The community extension worker will be primarily accountable to the community and will accordingly receive income from fees paid by each farmer at harvest. Part of this income will go towards covering the cost of the center. Because the pilot project could start with fewer farmers than the center can support at capacity, the initial revenues could be less, but will correspond with a lower workload. The exact income of the worker will depend on the frequency of harvests and the number of hives in the community. Table 6 provides sample calculations of potential revenues for the community center, assuming four harvests per year. Table 6: Potential Revenue for Community Center

Number of Beekeepers

Average hives per beekeeper

Payment per hive

Income each Harvest Annual Income

50 4 $0.50 $100 $400 100 4 $0.50 $200 $800 200 5 $0.50 $500 $2,000

To supplement this income and provide additional incentives for the community worker, both FINCA and Honey Care will pay bonuses to the community extension worker. The bonus from FINCA will be

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based on achieving a targeted percentage increase of honey harvested per hive. This will encourage the worker to help existing beekeepers become more successful. The bonus paid by Honey Care will be based on achieving annual production targets, which will alternately promote reaching new beekeepers in addition to expanding existing hive production. This payment system will make the extension officer accountable to all parties and strengthen collaborative ties among them. The extension worker will also be responsible for collecting payment from Honey Care when honey is purchased from the community center. Therefore, they will also be responsible for securing payments to the farmers when they harvest honey at the center and also for transferring to FINCA half of the income that is paid towards the farmers’ loan. The individual should manage the automatic transfer of payments to the beekeepers’ village bank accounts or, if this is not possible, direct cash payments. The bulk of the community extension worker’s time will be spent visiting local beekeepers and providing on site support, most of which must occur at night. The officer will be available to inspect the hives and offer suggestions about improving apiary setup, help beekeepers solve problems, answer questions, and offer insights about the colonization and harvesting processes. As a result, the community extension worker will need some form of transportation to be effective. A major part of the job will require this individual to travel to farms that are difficult or time-consuming to reach by public transportation. Necessary vehicles will depend on the geography of the area, location of farms, and the effectiveness of public transportation. Training and Support It would be highly advantageous to implement a test pilot project in a community where there is existing beekeeping knowledge so that farmers can support each other. However, if the community does not have any beekeeping knowledge, the project is still feasible. Honey Care will provide the initial training for new beekeepers in the test pilot project. The training recommended for the farmers who partake in the project should not deviate from the current training provided to other Honey Care beekeepers and should still be included in the price of the hive. Training for the farmers will be provided locally, last three days, and cover the following topics:

• Bee behavior and biology; • Apiary site selection and construction; • Langstroth hive introduction; • Hive inspection; • Honey harvesting and storage; • Strategies for increasing production; • Troubleshooting of common problems and • Record keepinglxix.

As previously indicated, consideration should also be given to the provision of ongoing training or “refresher courses”. This was requested by beekeepers in Kenya and would be beneficial to help experienced beekeepers share issues and gain more detailed knowledge on advanced beekeeping and problem solving. Ongoing training will also decrease the time required by the community extension worker to support individual beekeepers with similar problems and allow for more efficient support of a greater number of beekeepers. It is recommended that the test pilot project continue to pursue a strategy of training each beekeeper individually. “Train-the-trainer” approaches have been less successful because of the large amount of

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information required for successful beekeeping and the long-term disadvantages of incorrect or insufficient information. Honey Care will also provide training and ongoing support as needed to the community extension worker. This worker will likely need to reference Honey Care staff to solve more difficult problems and will need updates in new technologies or methodologies. Loan Structure The loan for each hive will be approximately US$65, which will include the cost of the hive, initial training and the guaranteed purchase all honey by Honey Care at a fair price. Startup loans can range in price depending on the number of hives purchased by the individual. Farmers could begin operations with one hive, but are not recommended to start with more than five. There are two ways that loans could be structured – a standard loan or a microlease. Both types of loans would have similar terms, but would be different in ownership and responsibility. These structures have been developed based on the input of FINCA Uganda staff and clients, as well as K-Rep, Honey Care’s microfinance partner in Kisumu and surrounding areas. The Capstone Team recommends that FINCA implement the microleasing scheme over the traditional structure in order to retain physical collateral for each loan. Traditional Loan The traditional loan will mirror FINCA’s tradition loan as discussed in Section VII with the following adjustments. Repayments will be based on the harvest schedule along with monthly interest payments. At each harvest, half of the revenue will automatically be deducted and applied towards the loan. However, the time prior to first harvest payment could be as long as 12 to 15 months. Throughout the life of the loan, clients will also pay the equivalent of the initial interest on their loan on a monthly basis. For example, if the initial monthly interest rate on a $65 loan is $1.65, this amount will be paid every month until the loan is completely paid off, even after the interest incurred decreases due to a declining principle. This will keep the beekeepers accustomed to a regular payment schedule in the waiting period before their first harvest and will also help to pay off part of the principle after harvesting begins. Beekeepers interviewed in Kenya expressed support for this regular payment to help them work off the loan. K-Rep loan officers similarly found it useful to keep a regular schedule with clients. Due to the extended period before the initial harvest and potential wait times between subsequent harvests, the loan period for beekeepers could last up to three years. Loans for beekeeping should therefore come from a separate fund due to this slow return on the investment. Microleasing Scheme The loans for beekeeping could also be administered in the form of a microleasing scheme. This is the current format used by K-Rep and Honey Care in Kenya. While loan terms would be as described above, ownership transfer would differ. In the case of microleasing, FINCA Uganda would accept of ownership of the hive at the time of lease initiation with the transfer of ownership to the client once the loan on the asset is completely paid off. This would be advantageous to FINCA Uganda because it would allow them to repossess the assets and resell them to other beekeepers in the case of loan defaults. This situation would also present less risk for the client because they would be able to return the beehive if they are not able to pay. However, this method would require FINCA Uganda to take on the ownership of assets of up to $13,000 in value assuming 200 hives are sold.

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Partnership Structure Initial Market Research FINCA should begin the process by selecting potential site locations for a test pilot project. FINCA’s initial research for potential sites must consider several factors: FINCA Initial Research

• Rural location. The beekeeping pilot project must take place in a rural location with sufficient vegetation, preferably including the plant life recommended above.

• Existence of beekeeping activity. It is also recommended that FINCA select a location where some

beekeeping activity already takes place. Local beekeeping knowledge is not necessary and does not have to be among FINCA clients, but would be helpful to increase self-reliance within the community. Moreover, a location that does not have any existing beekeeping expertise can be more useful than an area with many existing bad habits and misconceptions about beekeeping.

• Convenience for Honey Care. The potential locations selected by FINCA must be geographically

feasible to be supported by Honey Care. If the proposed site is too far from current Honey Care operations or inconveniently located, it will not be cost-effective to collect the honey and properly support beekeepers.

• Capability of staff and interest of clients. Finally, it is essential to have a willing and capable local staff

to administer the new project and strong client interest to make the investment. The local FINCA office must have sufficient staff resources or the means to bring on additional staff as required. FINCA clients must be educated on the details of the project and show interest in becoming beekeepers.

Based on the above criteria, FINCA should conduct an assessment of six different communities and then chose two locations in which to implement a pilot project. Information on the chosen locations should then be provided to Honey Care for a more detailed assessment. Based upon Honey Care’s analysis, a final project location will be selected jointly. Honey Care Research After FINCA’s selection of potential sites, Honey Care will perform a detailed assessment of the feasibility of beekeeping in two chosen locations. This is a customary step performed by Honey Care before any expansion to ensure the location’s viability. Included in this detailed research should be:

• Complete fact-finding and information gathering about the region • Profiling of existing beekeepers in the target district and assessment of the quality of their

production • Identification of candidates to train • Identification of gaps in knowledge and capacity within the community • Assessment of potential community extraction centers

Staff Responsibilities Staff members who are responsible for administering and managing the project should be integrated within both organizations and be represented at country, regional and local levels. It is likely that project oversight can be performed as a part of current staff responsibilities, therefore eliminating the need for additional hiring. The possible exception is with local staff due to the high potential workload in project administration.

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The Honey Care staff involved in the partnership for the test pilot project would include:

1) Country-level Project Coordinator. This individual would manage the relationship with FINCA and monitor overall project performance.

2) Regional/District-level Supervisor. A regional administrator would manage the training of

FINCA officers and support the local extension officer on the project.

3) Local Extension Officer. The local Honey Care representative would provide the initial training to beekeepers, provide initial and ongoing training to community extension workers and collect honey at the community center at harvest times. This will be a time-intensive role during the initial stages of the test pilot project but a critical part of the success of the project. It will be primarily time-intensive during the period of initial training and again after the farmers begin to harvest. This could be up to one year until the hives mature. At this time, the extension support role will diminish and will be directed primarily to extraction and training of new beekeepers if FINCA and Honey Care agree to expand their partnership.

The FINCA staff required for this project will include:

1) Country-level Project Coordinator. This officer will manage the relationship with Honey Care and monitor performance of both loan provision and beekeeper support. He or she will also oversee project and systems design.

2) Regional/District-level Supervisor. The regional supervisor will oversee loan provision and

project implementation on a local level and communicate back to the country level staff. This individual could play a key role in the future expansion of the pilot project to other areas within the region. He or she will also work closely with both country and local level staff on project and systems design.

3) Account Relationship Officer. The local administrator will take on several tasks in the

implementation of the pilot project and also dedicate a significant number of hours to ensure its success. The officer will be responsible to perform the following: oversee loan provision and risk minimization, confirm the deposit of funds from sales of honey into village bank accounts, create product awareness and disseminate marketing materials to village banks, and publicize information about loan structure. He or she will also be available as a resource during project and systems design. To ensure buy-in from these local officers on the project, the team recommends implementing an incentive program for them as outlined in the Grameen Village Phone section above.

For a more detailed description of Honey Care’s current organizational structure see appendix 1.2. Marketing Honey Care and FINCA will share the initial marketing efforts of the pilot project. Once the project is more established, the community extension officer will assume a greater role in attracting new beekeepers. However in the initiation stages of the project, Honey Care will be responsible for conducting awareness demonstrations on the benefits of beekeeping in order to attract farmers to the project. It is beneficial to have Honey Care involved in the initial marketing of the project to promote the role of their organization. This will avoid the appearance of a project entirely administered by FINCA. Honey Care will also be responsible for designing and printing marketing materials used to

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inform and attract farmers and will additionally continue to be responsible for marketing and selling honey both nationally and internationally. In terms of marketing, FINCA will be responsible for marketing the new opportunity to village banks and encouraging them to attend awareness demonstrations put on by Honey Care. Monitoring and Evaluation Monitoring and evaluation will be critical to the test pilot project and to the successful expansion of this initiative. Work in this area will be shared by both partners. Honey Care will collect information through sales of equipment and collection of honey. It will also continue the standard four-part monitoring techniques that it currently employs. The monitoring system will select a sample of people from the group and take measurements of demographics, information beekeepers have gained, strengths and weaknesses of extension services, and the socioeconomic impact on families. Some assessment and revisions of Honey Care’s current monitoring system may be necessary to ensure that it meets FINCA’s requirements. FINCA should assist with a baseline study for the impact assessment and then allow Honey Care project officers to perform follow-up work. FINCA will also be responsible for conducting standard loan repayment monitoring. Potential Income for Business Owners Income Scenarios Harvest Frequency. Beekeepers have had initial harvests as early as just 2-3 months from the time the hive was setup to as long as 15 months. Honey Care advises beekeepers that they should plan for this initial colonization period to last 12 months. The regularity of harvests will depend on the location and should be similar for all beekeepers in a similar geographic range. Typically, harvests generally occur every 3 to 4 months, however some farmers in northern Kenya are able to harvest eight times each year. Others at a higher altitude are able to harvest only twice. Amount of Honey. Beekeepers should expect to harvest an average of 10 kilograms of honey with each harvest. However, timing and colony strength complications can decrease honey output temporarily. Such problems can typically be resolved in a reasonable period of time. More successful beekeepers reported harvesting up to 12 to 14 kilograms of honey in one harvest. Sales of Honey. Honey Care will pay a pre-established, fair price for the honey they purchase. Currently in Kenya, this price is approximately $1.40 per kilogram. This amount is not expected to vary significantly in the near future. Costs. A hive will cost approximately US$65 and will come with a 1% administration fee of $0.65. In addition, each farmer will incur a monthly interest rate of between 2.5 – 3%. There should be no other significant costs for inputs for beekeeping. Table 7 provides income projections for beekeepers based upon the above assumptions.

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Table 7: Potential Income for Beekeepers

Scenarios Kilos

Harvested Income Per

Harvest* Harvests Per

Year Annual Gross

Income Annual Loan

Payment Typical 10 $ 13.50 4 $ 54.00 $ 27.00 More Successful 12 $ 16.30 6 $ 97.80 $ 48.90 Less Successful 10 $ 13.50 2 $ 27.00 $ 13.50

* Income per harvest assumes $1.40 paid per kilo minus $0.50 fee to the community center per hive. ** Annual loan payment is figured as exactly half of the annual gross income. Local Market Sales The above calculations are based on the assumption that the beekeepers are selling back to Honey Care for the predetermined price. However, all beekeepers are also free to sell honey on the local market where they get a better price. Beekeepers will not be encouraged to sell locally during the test pilot project. Some beekeepers will be able to find higher prices on the local market, sometimes up to five times more than the price offered by Honey Care. However, they will incur additional costs associated with the packaging of honey, as well as spend additional hours to sell the honey. It must be noted that selling honey locally may turn out to be less profitable because the amount of honey demanded on the local market is drastically smaller than what is produced by the hundreds of hives in the area. Moreover, additional entrants to the local market will bring down the market price of honey. Beyond the pilot project period, the Capstone Team recommends that FINCA clients be permitted to sell up to 50% of their harvests locally. This will enable them to get a better price if available, while also encouraging Honey Care to stay involved with all beekeepers and pay out bonuses to local extension officers. Since extraction will take place at extraction centers, local extension officers will be able to keep track of all honey harvested and collect loan repayments on all honey harvested regardless of where it is sold. Costs Local administrators will determine a majority of the costs incurred in a beekeeping pilot project. The team felt it would be inaccurate to estimate exact costs because of the various local factors that will determine the final project cost. However, to assist in the planning and budgeting of the project, listed below are items FINCA should consider in its budget when preparing for a pilot project with Honey Care.

Staff Preliminary market assessment (FINCA) Loan provision and administration (FINCA) Monitoring and evaluation of both loan repayment and client satisfaction (FINCA) Training of staff for loan administration (FINCA) Incentive program for Account Relationship Officers (FINCA) Community Extraction Center* Upgrading the physical structure (FINCA or private investment) Provision of equipment (FINCA or private investment) Community Extension Worker Bonus payments (FINCA)

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*The costs of the community extraction center can be covered in several ways as explained in the Pilot Project Design section above. However, one option is to have this cost fully covered by FINCA and therefore it is listed as a possible expense.

Timeline for Implementation of Pilot Project with Honey Care A general timeline for the implementation of a pilot project is expected to be at least three years when accounting for the time to arrange the project and see consistent results from the honey harvests. As previously noted, there will be approximately a 12 month waiting period between the time that the beehives are set up and when they begin to produce honey. A project plan and a detailed listing of the activities required in the setup of the project are shown in Appendix 4.1. Necessary Next Steps A dialog has already been initiated between Honey Care and FINCA International. This relationship should be continued to arrange a timeline and approval of the pilot project. If it is agreed to implement the pilot project together, the next step will be to begin preliminary research on project location. Honey Care and FINCA may refer to Appendix 4.2 for the Capstone Team’s recommended Timeline and Activity Description as a starting point for moving forward together. KickStart Although KickStart is currently not actively marketing and supporting the oilseed press and block press technologies, it has expressed interest in establishing a partnership with FINCA in order to provide these opportunities to FINCA clients. While KickStart’s plan to expand to Uganda can facilitate a partnership with FINCA, the organization only has plans to promote the irrigation pump. As a result, in designing a test pilot project, FINCA will need to support KickStart in reviving its program in marketing and supporting the technologies. In addition, KickStart will need to revise the training provided in order to address some of the challenges that our field research found. The following section presents some recommendations in establishing a partnership with KickStart in order to provide opportunities in cooking oil production and/or construction block manufacturing through a test pilot project. Training and Support KickStart provides or arranges training for individuals and groups that purchase their technologies. Sales representatives provide training to retail storeowners and attendants on how to use, maintain and fix the oilseed and block presses and techniques on how to produce good quality products. When individuals purchase the technologies they are given training by the retail storeowners. Clients who have purchased the technologies can go to any retail store that sells the technologies to receive support. In addition, clients can be referred to KickStart staff to receive further training. KickStart sales representatives have also provided 1-2 hour trainings to groups who have purchased the technologies. Furthermore, detailed manuals are provided to all the buyers. The Block Press manual currently addresses the following topics: What are stabilized soil blocks; Tools and Equipment; Soil Selection and Testing; The Action Block Press; Making Blocks; Basic Building Guidelines; Basic Costing Guide; and Problems and Solutions.

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The Oilseed Press manual details the following: Seed Varieties; Drying and Storage; Seed Preparation; Oil Seed Press Operation; Maintenance; Bookkeeping; and Sales and Marketing. KickStart has the capacity and knowledge to provide or arrange for training that would be needed for the test pilot project. Depending on the terms of the partnership, arrangements could be made for current KickStart sales representatives to provide training to groups of people that purchase the technologies or they could refer consultants to provide trainings. In the event that relationships are established in Uganda with retail stores, training could also be provided to retail attendants and then through them to clients. However, the Capstone Team recommends providing two training sessions for the participants in the test pilot project that will thoroughly cover essential topics to increase success in operating the businesses. The first session, which could take place after individuals have applied for a loan but before the loan is approved, would provide training in: 1) bookkeeping and basic business procedures; 2) sourcing inputs (knowledge on types of good quality soil or seeds); and 3) marketing and sales. The second session, which would take place after the technology has been delivered, would cover the following: Block Press -1) Soil selection and testing; 2) Mixing soil and cement; 3) Press operation; 4) Labor; 5) Curing, storing and testing blocks; 6) Press maintenance and repair; and 7) Potential problems and solutions. Oilseed Press-1) Seed selection and drying; 2) Press and filter operation; 3) Labor; 4) Packaging and storing oil and seedcake; 5) Press and filter maintenance and repair; and 6) Potential problems and solutions. The manuals that are provided with each of the technologies should be revised to cover all of these subjects and thus will also be able to serve as guides for individuals to refer to. The team also recommends institutionalizing ongoing operations support to enable owners to refine techniques, enhance marketing efforts, identify new markets, and other offerings as owners show interest in them. Loan Structure The following are recommendations for the loan structure for individuals or groups who want to start a construction block manufacturing business or a cooking oil production business. They are primarily based on input from KickStart staff and FINCA Uganda staff and clients. While there are few minor differences based on the nature of the business, the structure is generally the same for both technologies. We recommend that FINCA Uganda incorporate a microleasing scheme wherein it would retain ownership of the technology until the loan is completely paid off, after which ownership would be transferred to the client. If clients defaulted on the loan and the guarantors are not able to cover the payments, then FINCA Uganda could repossess the equipment and lease it to another interested client. Borrower Requirements In order to qualify for a loan, individuals would have to be current or former members of a village banking group. In addition, when taking an individual loan, the client would be required to have a guarantor and pay a deposit upfront. This initial deposit would be a percentage of the total loan and could range from 10-15%. Anything higher than this amount may be inhibiting to clients and thus discourage individuals from taking out a loan. In addition, in order to ensure the success of these businesses and to avoid market saturation, individuals should also be required to present information to

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FINCA about their input sourcing and customer base before they are granted the loan. This could include asking questions about the size of the market, where it exists and how the client plans to distribute its products, what barriers exist to entering the market and how the client plans to overcome them, and how he or she expects the market to shift over time. This will help to make sure that there is still a sufficient market for each new entrant. Loan Amount FINCA Uganda would provide a loan to cover the entire cost of the technology (Oilseed Press $420, Block Press $570) to the individual or group. This could either be done by providing cash or, as will be expanded on later, by establishing a relationship with retail stores whereby FINCA Uganda would transfer the amount directly and provide the loan recipient with a receipt to exchange for the technology. Because of the size of the loan amounts and in the interest of security, we strongly recommend taking the latter approach. In addition, FINCA Uganda could also buy the technologies directly from KickStart. FINCA Uganda should also consider offering a loan that would include all or part of the start-up costs for the first month of operations (estimate Oilseed Press Business $790, Block Press $805) 2. Table 8 summarizes loan options for each press. Table 8: Loan Amounts for KickStart MicroFranchise Opportunities

Loan Amount Oilseed Press $420 Oilseed Pres and first month’s costs $790 Block Press $570 Block Press and first month’s costs $805

Loan Terms Terms of the loan would be identical to FINCA’s current structure as described in Section VII, with the following exceptions. Like the standard loan, for individuals or groups taking out a loan to purchase an Oilseed Press, the loan period would be four to six months. However, the loan period for those taking out a loan for the Block Press would be five to seven months. The loan payment period could be extended by 1 to 3 months for clients who borrow the first month’s operating expenses as well. Block press purchasers would receive a grace period of one month during which they would only be required to pay interest. This takes into consideration the fact that the curing process for the bricks can take up to 28 days and thus during the first months there may not be any sales. Additionally, a 10% deposit of the total loan amount would be required for borrowers. Potential Income for Business Owners The following calculations on the income generating potential from cooking oil production and construction block manufacturing businesses are based on estimates and averages provided by KickStart staff and current business owners in Kenya. As a result, these numbers will differ for new businesses started in Uganda depending on the cost of inputs (for example, using free soil; business owner growing the oil seeds), labor and product sale price. Business owners will need to determine the cost of production and the sale price depending on their location. As the cost of marketing the 2 These costs only include the cost of the press and an estimated cost for inputs and labor. Other start-up costs may include: for block manufacturing-bucket, oil can, watering can, sieve, shovels, trowels, and broom; for oil production- seed screen, storage containers, and packaging materials.

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products and transportation can vary significantly, they have not been included in these calculations. In addition, the cost of packaging the oil has not been included as the costs can vary greatly depending on the business and choice of packaging materials. For example, cooking oil production businesses could encourage clients to bring their own containers to refill, which would keep the cost of packaging down. Therefore, the numbers provided should only be used as a general representation of the potential incomes these businesses can generate. Cooking Oil Production Businesses Based on information provided by KickStart staff, cooking oil production businesses, on average, can produce 15 liters of oil a day, using two individuals to operate the technology. According to KickStart, the cost of sunflower seeds in Kenya is $0.22 per kilogram. It takes four kilograms to produce one liter of oil and, three kilograms of seedcake. Labor for this production would cost a total of $3. Labor for crushing the maximum input capacity of 60 kilograms a day could be divided between individuals to enhance efficiency, resulting in a cost of $0.05 per crushed kilogram of seeds. On average, one liter of oil can be sold for $1.71 and the three kilograms of seedcake for $0.43. Thus, by producing and selling 15 liters of oil a day, a business owner could make a profit of about $16 a day equaling to $368 a month and about $4,400 a year. If the owner were to solely operate the machine or to rely only on the help of family members the business income for the family could be as much as $442 a month. In addition, these businesses could also encourage service processing, especially for farmers who grow and store their own seeds. When the farmer wants oil to use or sell, he or she brings it to the press owner for processing. As payment for processing, the press owner can keep a portion (maybe half) of the processed oil and seedcake to sell and give the rest back to the farmer. In this way, the press owner is not required to have a lot of working capital to buy seeds or a big storage area to keep them. Also the farmer would get more money by selling oil instead of unprocessed seeds. Construction Block Manufacturing Businesses According to KickStart staff, construction block manufacturing businesses, on average, can make 350 blocks a day by hiring four laborers to operate the technology. Using Kenyan prices, the cost of each block is estimated at $0.04, when taking into account labor expense of $12.00 ($3.00 for each worker), and the cost of cement and other equipment. Therefore, the total cost of producing 350 a blocks a day is $14. On average blocks can be sold for $0.07 each and thus at the estimated sale of 350 block a day, a business owner could make $25 a day. This would result in a profit of $11 a day equaling to $253 a month and just over $3,000 a year. On the other hand, if the business owner were to operate the machine and only employ three laborers, the owner could actually earn $322 a month. If the business were to solely rely on the labor of family member, the monthly business income for the family could be as much as $529. Partnership Structure Preliminary Research As mentioned previously, FINCA Uganda should conduct further market research in order to determine a target region for a test pilot project. The region must have favorable conditions such as demand for the technologies among FINCA clients; raw material availability (soil and oil seeds); and a market demand for cooking oil and construction blocks. In addition, it would be useful to assess product supply chains and barriers to getting the products to market.

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Adapting the Current Business Model The Capstone Team recommends that FINCA and KickStart collaborate to make certain adjustments to KickStart’s existing business model. In addition to the marketing component described below, the training program should be enhanced to incorporate additional information on how to source inputs, find a market, and package and sell the product. Ongoing support beyond additional training should also be built into the model. To the extent that input sourcing and access to markets remain problematic even in the best of locations, the Team recommends that FINCA work with KickStart to help clients create the linkages necessary to maximize their chances for success. This effort may require some additional staffing resources beyond those that are described below in the event that this is necessary. Establishing Relationships with Retail Stores As mentioned before, KickStart is planning to expand to Uganda towards 2006 and will be establishing a local office. (See appendix 1.3 for KickStart’s current organizational structure). However, as the organization is currently not actively promoting the Oilseed Press and Block Press, they will need to specifically establish relationships with retail stores in Uganda to make these technologies available for the test pilot project. This would consist of KickStart supplying the technologies to the retail stores or establishing direct contacts between the manufactures and the retail stores. In addition, they would provide guarantees for the technologies, and would design, print and provide training manuals that accompany the technologies. FINCA could either establish relationships with the retail outlets in the chosen region for the test pilot project in order to set up a system to transfer the loan amount for the purchase of the technology. FINCA could also purchase the technologies from KickStart and provide them directly to the clients who have taken out loans. Staff Responsibilities Our recommendation for the staff involved in the test pilot project does not depart from the current administrative structure of the partner organizations (See appendix 1.3 for KickStart’s current organizational structure). Instead, we believe that current staff at different levels within both organizations can take on the recommended responsibilities within the partnership. The KickStart staff involved in the partnership for the test pilot project would include:

1) Country-level Project Coordinator, who will manage the relationship with FINCA and will monitor performance;

2) Regional-level Sales Manager, who will provide or arrange for the training of retail store attendants, FINCA staff and clients, who purchase the technologies, and will oversee the work of the sales representative; and

3) Sales Representative, who will manage the relationships with retail stores, will market the technologies and provide troubleshooting assistance when and if needed.

The FINCA staff required for this project will include:

1) Country-level Project Coordinator, who will manage the relationship with KickStart and will monitor performance;

2) Regional/District-level Supervisor, who will oversee the loan provision and project implementation; and

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3) Account Relationship Officer, who will conduct the implementation and oversight of the loan provisions and risk minimization and will create product awareness and disseminate marketing materials to village banks. Account Relationship Officers may also obtain additional training to provide ongoing business support to clients in the event that KickStart does not take on this responsibility.

Marketing KickStart would be responsible for conducting technology awareness demonstrations at retail stores, market places and in village banking areas in the region of the test pilot project. This would consist of mounting the technologies on trucks and conducting demonstrations using the technologies. In addition, they would be responsible for designing and printing marketing materials. FINCA would be responsible for covering the cost of the technology awareness demonstrations and would share the cost of the marketing materials. In addition, as mentioned previously, FINCA Account Relationship Officers would also assist in disseminating marketing materials to village banks. Monitoring and Evaluation KickStart currently has a monitoring and evaluation (M&E) system in place. However, KickStart has not conducted any monitoring or evaluation of these technologies over the last couple of years because the organization does not have the funding or resources to focus on the Oilseed Press and the Block Press, Nevertheless, they are willing and able to do so for the test pilot project if funding is provided. This would consist of collecting information on the sales of the technologies through the guarantee form that the buyer fills out when he or she purchases the technologies. Immediately after the technology is sold, KickStart would conduct a baseline assessment and random sample follow-up impact assessments. KickStart’s assessments evaluate the following indicators: income; health; education; and food security. For the purpose of this test pilot project FINCA would conduct standard loan repayment monitoring and perform an impact assessment of the program. Cost Due to the nature of this feasibility study and the preliminary level of commitment of each organization at this stage, the costs involved of designing and implementing this test pilot project have not been determined. As mentioned in the previous section, each organization will be responsible for certain activities, and in some cases, costs will be shared. The following is a general list of budget items and activities that will require funding in whole or in part by FINCA.

Staff Preliminary Market Assessment (FINCA) Develop data collection and management system (FINCA) Monitoring and Evaluation (Shared)

Training FINCA Staff (FINCA) Clients (Shared) Retail store attendants (Shared)

Marketing materials and Advertising Brochures (Shared) Manuals (Shared) Demonstrations (Shared) Billboards (Shared)

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Timeline for Implementation of KickStart Test Pilot Project The implementation of a test pilot project with KickStart is delineated by specific activities that will be carried out by either FINCA Uganda and KickStart, or both organizations. The chart in Appendix 4.1 illustrates the activities and the estimated timing for each of the activities. Due to the research, planning and training involved in this test pilot project, we estimate that it will take at least 7 months before the first loan should be provided and the technologies are delivered to the loan recipients. A project plan and a detailed listing of the activities required in the setup of the project are shown in Appendix 4.1. Necessary Next Steps FINCA International should start communication with KickStart to confirm their interest in a partnership. Even if FINCA decides to begin the test pilot project with Honey Care, upon the successful implementation of a pilot project with Honey Care, FINCA could then start the process of establishing a formal partnership with KickStart in order to make one or both of their MicroFranchising opportunities available to FINCA clients. Additionally, the Capstone Team recommends that preliminary research be done for KickStart products during the initial assessment and location evaluation even if KickStart is not the chosen partner. Again, this will be beneficial information later if FINCA want to add KickStart as a MicroFranchise opportunity provider in the future and will also serve as a backup in the case that a relationship with Honey Care does not come to fruition. KickStart and FINCA may refer to Appendix 4.2 for the Capstone Team’s recommended Timeline and Activity Description as a starting point for moving forward together.

X. CONCLUSION The Capstone Team’s primary objective was to provide a framework under which FINCA International could undertake a test pilot project to integrate MicroFranchising with microfinance in Uganda, assuming that at least one of the three enterprises studied offered a viable opportunity for FINCA clients. However, a larger agenda simultaneously propelled this project forward from the time of the team’s initial conversation with John Hatch. This agenda was to help FINCA enter a new movement that will be every bit as earthshaking in its impact on global poverty and human underdevelopment as microfinance and village banking were when they emerged. Microfinance and MicroFranchising have the capacity to provide development professionals with a powerful integrative tool to combat poverty because they address the multidimensional problems that the world’s poorest people face in a symbiotic way. Poor people need access to credit and other basic financial services to enable them to invest in their own future. Additionally, most also need access to the kind of dynamic income-generating business ideas and models that will enable them to expand their businesses beyond subsistence enterprises. Joining these two concepts together enables FINCA and the partner organization to leverage its core competencies to maximize its impact potential.

The research the Capstone Team conducted and the results it obtained indicate that a viable opportunity exists for FINCA to test this integration in a country with a strong program and with partners that have proven records of success. The team has designed a partnership framework for both potential options with recommendations for key considerations in a test project location and for developing and implementing the

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project. It also developed a division of responsibilities between partners, expectations for staffing and resources required, loan structures that compliment each product, and proposed timelines for project implementation and completion. It has considered the contribution that underemployed youth can make to the project and their likelihood of participating. It has highlighted the challenges FINCA is likely to face and offered potential solutions to these challenges. While consideration of such a project is an important next step for FINCA International and FINCA Uganda, the team is optimistic that it is just a small step toward a long future in which MicroFranchising plays a prominent role alongside microfinance in the lives of FINCA clients. As with any new projects, challenges will arise that FINCA will have to address to successfully navigate a new partnership and help a small subsection of FINCA clients become successful business owners. The team’s long-term vision is that these challenges and the successes that come with them will refine and improve this combined microfinance-MicroFranchising model. This will enable FINCA to form dozens of additional partnerships with MicroFranchise organizations around the world. With a menu of MicroFranchising opportunities available to every FINCA client – current and future – mere subsistence will no longer be acceptable because along with their own drive and determination, all will be empowered with the tools to escape poverty by forming an enterprise that best fits market conditions and their individual capabilities.

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BIBLIOGRAPHY Al-Shaikh, Fuad. “Factors for Small Business Failure in Developing Countries.” Advances in

Competitive Research. 1998, p. 30. CIA. The World Factbook: Uganda. Accessed February 17, 2006. <http://www.cia.gov/cia/publications/factbook/geos/ug.html> KickStart Staff. KickStart Questionnaire. 19 Dec. 2005. Copson, Raymond W., 2004. AIDS in Africa. CRS Issue Brief for Congress, May 28, 2004. EIU. “Country Report Uganda”. Economist Intelligence Unit Limited. 2006. Fairbourne, Jason. “BYU MicroFranchise Development Initiative (BYU- MFDI).” MicroFranchise Learning Lab. Washington, DC. 6 January 2006. FINCA website. www.villagebanking.org. Gibson, Steven W. and Jason Fairbourne. Where There Are No Jobs: The MicroFranchise Handbook. Volume 4 MicroFranchise Case Studies. Provo: The Academy for Creating Enterprise, 2005. GF USA, “Grameen Technology Center.” Accessed on 19 Feb. 2006. <www.gfusa.org/technology_center/> GF USA, “Grameen Technology Center-Village Phone.” Accessed on 19 Feb. 2006 <www.gfusa.org/technology_center/village_phone/> “Global Employment Trends for Youth, 2004.” International Labor Organization. 12 Aug 2004. Gordon, Raymond G., Ethnologue: Languages of the World, Fifteenth edition. Dallas, Tex.: SIL International. 2005 Hatch, John. “Brief Primer on FINCA.” 21 Jul 2004. Internal document. Hatch, John. “Practitioner Presentation: FINCA International.” MicroFranchise Learning Lab. Washington, DC. 6 January 2006. Hatch, John. “Slogging Toward a Poverty-Free World: The Need for Microfinance-MicroFranchise Partnership.” January 2006. Internal document. Holland, Rob. “Planning against a business failure.” Agricultural Development Center. October 1998.

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Honey Care Africa “About Us” Accessed on 19 Feb. 2005. <www.honeycareafrica.com/files/about.php> Honey Care Africa “How we Work.” Accessed on 19 Feb 2005. <www.honeycareafrica.com/files/work.php> Honey Care Africa “Mission.” Accessed 19 Feb. 2006. <www.honeycareafrica.com/files/mission.php> Honey Care Africa “Site Evaluation.” Accessed 19 Feb. 2006. <www.honeycareafrica.com/files/evaluation.php> Institute for Security Studies. “Uganda”. Accessed February 17, 2006.

<http://www.issafrica.org/AF/profiles/uganda/uganda1.htm>. Kasi, Fabian. “Gender Targeting of Rural Financial Services: Is this Appropriate? Case Study of FINCA Uganda.” Paper presented at Paving the Way Forward for Rural Finance, An International Conference on Best Practices. 2003 Keogh, Matt and Tim Wood. “Village Phone Replication Manual: Creating Sustainable Access to Affordable Telecommunications for the Rural Poor.” Seattle: Grameen Technology Center, 2005 KickStart “About Us.” Accessed on 19 Feb. 2006 <www.kickstart.org/home> KickStart “Building Technologies.” Accessed on 18 Nov. 2005. <www.kickstart.org/tech/build> KickStart “Oil Technologies.” Accessed on 18 Nov. 2005. <www.kickstart.org/tech/oilpress> KickStart “Our Approach.” Accessed on 19 Feb. 2006. <www.kickstart.org/approach> KickStart “Technologies.” Accessed on 19 Feb. 2006. <www.kickstart.org/tech/> Kirubi, Charles. “Fighting Poverty with Micro-Finance: Experience from Uganda.” Berkeley, CA: University of Berkeley, 2005.3. Kumar, Vipul. Questionnaire. 14 Dec. 2005. Lund, Francie and Caroline Skinner. “The Investment Climate for the Informal Economy: A Case of Durban, South Africa.” 15 Sept 2003. Macbeth, James. “Professionalism and Positioning”. Accessed February 22, 2006.

<http://www2.gtz.de/dokumente/AKZ/eng/AKZ_2004_Youth/interview.pdf> Magleby, Kirk. “MicroFranchising as a Solution to Global Poverty.” Omidyar Network. September, 2005. 19. Accessed on 2 November 2005. <www.omidyar.net/group/poverty/file/7.35.11055472357/>

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Ministry of Finance, Planning and Economic Development, Republic of Uganda. Poverty Eradication Action Plan (2004/5 – 2007/8). 2004. O’ Higgins, Niall. “Trends in the Youth Labour Market in Developing and Transition Countries.” World Bank. Oct 2003. Pech, R. J. & Mathew, A. ”Critical factors for consulting to small business”, Journal of Management Consulting, Vol. 7, Iss. 3, 1993. p 61-63 “Uganda Summary.” FINCA International. 2004. Internal Document. Ugandan Bureau Of Statistics. “Labor Force Survey”. Accessed February 22, 2006. <http://www.ubos.org> UN-HABITAT. “Human Settlements Conditions and Trends. Country Profile: Uganda.” . Accessed February 22, 2006. <http://www.unhabitat.org/habrdd/conditions/eafrica/uganda.htm> U. S. Department of State. 2006. Background Note: Kenya. Accessed February 22, 2006.

<http://www.state.gov/r/pa/ei/bgn/2963.htm > The World Bank Group. 2005. “Country Brief: Uganda”. Accessed February 15, 2006.

http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/UGANDAEXTN/0,,menuPK:374947~pagePK:141132~piPK:141107~theSitePK:374864,00.html

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APPENDICES

APPENDIX 1 – MICROFRANCHISE PARTNERS APPENDIX 1.1 – TABLE OF MICROFRANCHISE PARTNERS WORLDWIDE Potential MFO Partners This listing includes all known MFOs in Africa and Latin America. MFOs were selected from this list for further analysis if they had a start-up cost of less than $600 and were close in proximity to FINCA offices. Name Location Expansion Start-up costs KickStart Kenya, Tanzania, Mali

People using products:: Uganda, Sudan, Rwanda, Mozambique, Malawi, Zambia, Senegal

Want to expand throughout Africa

Water Pump $75 Block Press $560 Oil Press $420

Honey Care Africa Kenya, Tanzania Uganda $65 per hive Grameen Village Phone Uganda, Rwanda, $100-200 per kit Scojo Foundation El Salvador, Guatemala Honduras,

Mexico, Nicaragua

$130

Micro-Sun-Bakery Program

Honduras $25,000

Holcim, Cessa El Salvador $1,000 Shell breathing cooking Stove

Guatemala $1,000

Amanco (Grupo Nueva) Chile, Guatemala $5,000 E-Bridge International, Ltd.

Mexico N/A

Casa por Casa Mexico $3,000 min Paleteria La Michoacana Mexico $2,000 min Holanda (Unilever de México, S.A. de C.V. )

Mexico $5,000

Hawaiian Paradise Mexico $5,000 Patrimonio Hoy Mexico Commission Ingles Individual Mexico $4,000 Farmacias Similares Mexico $4,000 Sleep Centers Mexico $10,000 min Afribike South Africa $15,000 Coca-Cola Entrepreneur Development Program

South Africa $700

Collect-A-Can South Africa N/A Vodacom Phone Kiosk South Africa $3,700 -7,400 Play Pumps South Africa $5,000-10,000 SC Johnson Kenya $55 Sustainable Healthcare Enterprise Foundation

Kenya $1,200

Coconut Oil Production Kenya $1,000 Procter & Gamble PuR Water Purification

World Wide N/A

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APPENDIX 1.2 – BACKGROUND INFORMATION ON MTN VILLAGE PHONE (THE GRAMEEN VILLAGE PHONE PROGRAM)

Mission The Grameen Technology Center (“GTC”) is an initiative of the Grameen Foundation USA (GF USA), a global non-profit organization that combines microfinance, new technologies, and innovation to empower the world's poorest people to escape poverty. GTC is working to eliminate poverty by leveraging the power of microcredit and technology. It focuses on technology that:

• makes the delivery of microfinance even more efficient;

• enhances income generating opportunities for the rural poor; and

• provides poor communities access to information for better health and education3 GTC, in partnership with MTN Uganda, replicated the Grameen Village Phone (GVP) Program in Uganda and created MTN villagePhone. The program provides cellular phones via a sustainable financing mechanism to poor entrepreneurs who use the phones to operate a business in rural villages where no telecommunication services have previously existed.4 Organization The GVP model is designed to circumvent the constraints to providing telecommunications service via more traditional mechanisms that are commonly found in rural areas. The model significantly increases the affordability of making and receiving calls while providing incentives and revenue opportunities designed to entice each partner to participate. Four partners are required to deliver the service to rural villages. Perhaps the most important precondition to ensuring the program’s feasibility is enlisting a willing telecommunications provider. This company will provide the necessary communications infrastructure; guarantee and maintain communications coverage to the targeted rural areas; supply airtime that will be sold by the Village Phone Operator (VPO); act as a liaison with government to ensure that all appropriate licenses are completed, regulations followed, and taxes paid; provide customer support to the VPO; source equipment from suppliers; and engage in strategic planning with other partners.5

The second essential participant is a network of microfinance institutions (MFIs) that will act as a “channel to market” for the service, facilitating service delivery to difficult-to-reach users that lacked previous access.6 The MFIs identify and train VPOs; distribute equipment, marketing materials, and prepaid airtime to VPOs; provide financing to VPOs; provide on-site customer support when phones are inoperable; and monitor use of phones and phone cards. Grameen uses MFIs as a distribution channel because they have an existing network that maintains direct contact with poor

3 GF USA, “Grameen Technology Center.” Accessed on 19 Feb. 2006. <www.gfusa.org/technology_center/> 4 GF USA, “Grameen Technology Center-Village Phone.” Accessed on 19 Feb. 2006 <www.gfusa.org/technology_center/village_phone/> 5 Keogh, Matt and Tim Wood. “Village Phone Replication Manual: Creating Sustainable Access to Affordable

Telecommunications for the Rural Poor.” Seattle: Grameen Technology Center, 2005. 6. 6 Ibid, p. 5.

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villagers. This network can be used to identify potential VPOs, provide them with a source of credit, and market Village Phones to an MFI’s entire client base.

The third partner, the Village Phone Company (VPC), acts as the catalyst necessary to initiate the program. It establishes relationships with the other partners to bring the product to rural customers; negotiates airtime rates with the Telecom Provider; trains MFI staff in program implementation; oversees program expansion; oversees financial management to ensure that the program is meeting targets, maximizing efficiency, and moving toward sustainability; conducts program evaluations; and consolidates and disseminates knowledge gained as the program evolves.7 In the case of Uganda, the VPC, though legally and operationally independent, comprises an equal partnership between GF USA and MTN Uganda, the Telecom Provider.8 GF USA encourages other ownership models, including an ownership structure that includes VPOs, as long as the company can successfully serve the operation’s mission.

The final partner is the legion of VPOs who operate the phones and sell airtime. These are the people whom the program is designed to impact most directly, and through whom communities at large will be reached. The VPO purchases the startup kit from the MFI at a cost of approximately US$200 to $250. The VPO undergoes the training provided by the MFI and operates his or her own GVP business, which includes equipment maintenance, management of user billing and payment collection, and direct marketing to existing and potential customers. Each partner must operate synergistically with one another in order to ensure systemic survival. Any breakdowns occurring among the partners can critically upset the balance of the system. However, if the system works as designed, then all parties stand to benefit. The Telecom Provider earns revenue in a previously untapped market and a return on existing infrastructure investments.9 It extends its brand recognition to a new class of customers who may at some point “graduate” to personal phone ownership. Public relations efforts around the program should also boost the company image, increase market exposure, and fulfill its social responsibility mandate. The VPC earns enough revenue to promote, expand, and sustain the program. MFIs receive a new product to market to customers while earning revenue from the sale of airtime and from interest on loans to VPOs. The VPO earns money to repay the loan and purchase additional airtime, a steady income that generates immediate liquidity, and the potential to create or improve the productivity of adjunct businesses, especially among VPOs who sell retail goods.10

7 Ibid, p. 6. 8 Ibid, p. 27. 9 Ibid, p. 19. 10 Ibid, p. 6.

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INTERACTIONS AMONG GRAMEEN VILLAGE PHONE CONSTITUENTS (Uganda Partners)

Phone User Make & Receive Calls Credit Operator Agreement Training

Support Support conduit Service through to Equipment Telecommunications Supply Company Microfinance Solar Equip, Service & Support Monitoring & Evaluation Telecom Coverage Infrastructure & Mobile Phones Coverage Support/Requests Service & & Responses Support Admin. Support Services (HR, Strategic/ Licensing & Finance, Operational Regulation Reporting, etc.) Planning Financial & Taxation Technical Support

Source: Keogh, Wood 33

Village Phone

Institution

munications Company

‘Other’ Equipment

Cell Phone Wholesaler

National Government

Village Phone

Company

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Impact Although GF USA has carefully defined the framework and criteria for measuring impact, it has not yet conducted an impact assessment in Uganda (It plans to do so in early 2006). The only known assessment conducted is a small quantitative and qualitative field study by Charles Kirubi, a Berkeley PhD candidate, on twelve VPOs operating within FINCA Uganda’s MFI network in the Eastern Region Branch of Jinja. Kirubi concluded that operating the Village Phone is a loss-making business for the duration of the loan repayment cycle, becoming profitable only once the loan is repaid.11 Respondents cited the benefit of the immediate cash flow generated by the product in supporting other business operations as the primary value of GVP.12 Kirubi also noted that profitability increased with distance from urban areas because competition diminished and the distances traveled to reach a VPO created additional service opportunities.13 His comparison of daily per capita expenditure by VPOs as compared with other FINCA clients suggested that GVP can provide a measurable expenditure boost to very poor clients when operated in conjunction with other businesses.14 This conclusion supports GF USA’s recommendation that VPOs operate established businesses prior to becoming VPOs. However, the study’s small sample size and absence of baseline information or a control group limits the conclusions that can be drawn from it. Expansion According to GF USA, following the initial success of the Uganda Project, the Grameen Technology Center is now shifting its primary efforts to launching a replication project in Rwanda. A pilot program is currently underway in collaboration with MTN Rwandacell and three leading Rwandan microfinance institutions, creating fifty new phone businesses in rural villages.15

11Kirubi, Charles. “Fighting Poverty with Micro-Finance: Experience from Uganda.” Berkeley, CA: University of Berkeley, 2005. p. 3.

12 Ibid. 13 Ibid. p. 4, 7. 14 Ibid. p. 7 15 GF USA, “Grameen Technology Center-Village Phone”

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APPENDIX 1.3 – BACKGROUND INFORMATION ON HONEY CARE AFRICA Mission Honey Care Africa (“Honey Care”) is a Kenyan social enterprise, which was established to increase the income of rural farmers. Honey Care trains individuals in commercial beekeeping and then buys their honey at guaranteed, fair prices. It then packages and sells the high quality African honey. The overall objective of the company is to produce and market high quality honey that will successfully compete on the world market.16 Organization Honey Care currently has offices in Kenya and Tanzania and a total of 53 employees (45 in Kenya and 8 in Tanzania).17 In addition to selling hives and other related beekeeping equipment, Honey Care provides basic training in beekeeping using the Langstroth Hives and assists communities and individuals in developing better organization and management skills, basic record-keeping and farm economics. Tripartite Model Honey Care’s operations are primarily developed on a “Tripartite Model-a synergistic partnership between Honey Care (private sector organization), development sector organizations (NGOs and donor agencies), and rural communities.18

16 Honey Care Africa “About Us” Accessed on 19 Feb. 2005. <www.honeycareafrica.com/files/about.php> 17 Kumar, Vipul. Questionnaire. 14 Dec. 2005. 18 Honey Care Africa “How we Work.” Accessed on 19 Feb 2005. < ww.honeycareafrica.com/files/work.php>

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19 Honey Care’s network of community-based organization and self-help groups, with which it has developed working relationships, has reduced its need to employ a large number of field staff and has allowed it to expand rapidly across Kenya.20 The Tripartite model arose from its recognition of the need for a more pro-active engagement of the private sector in Kenya’s development. Honey Care recognized that the set of knowledge and skills of the private sector was nicely complemented by the skill set of development sector organizations. Because of their different virtues, Honey Care believes that each party has a specific and complementary role to play.21

19 Ibid. 20 Ibid. 21 Ibid.

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“The private sector organization injects a degree of economic reality into the project and ensures that the project operates within realistic market conditions at all times and is sensitive to supply-demand dynamics.” 22 Honey Care guarantees to purchase all the honey a beekeeper can produce, at a fair and fixed price, and to pay on the day of collection. Honey Care then processes and packs this honey and sells it for a profit. It also provides the necessary and requisite training for the rural communities. In addition, wherever economically viable, Honey Care also provides extension support for the farmers, and where it is not viable, alternative structures and models are developed and established to ensure that the farmers have the required technical advisory support that they need to take care of their hives and maximize honey production.23 “The development sector organization (NGO, donor agency, or international development organization) should have the experience in working with rural communities and should have an extensive outreach into the rural areas thereby making them the ideal conduit through which individuals in community groups and the private sector organization can communicate with each other initially.” 24 The development sector organization may also play an important role as arbitrator and mediator in the system; thereby helping to resolve any misunderstandings between Honey Care and the rural communities or any complaint for either of the parties. In some instances, the development sector organization also may act as the initial financier of the project, providing loans to individuals who want to buy beehives, beekeeping equipment, and receive training. The loans are then recoverable at the time when the honey is ready for sale to Honey Care, who makes agreed upon deductions from the honey as loan repayment for the hives and makes the agreed upon remittances to the development sector organization.25 The third set of partners comprises the individuals from rural communities who are the honey producers. These individuals are able to start beekeeping businesses through loans to buy beehives and other equipment, adequate training, extension and advisory support, a guaranteed market for their honey at mutually acceptable prices and cash-on-the-spot payments. Training Honey Care undertakes the responsibility of training people selected to be beekeepers, to ensure that the hives are properly maintained and to ensure maximum honey production. The training has the following key components26:

• Basic Introduction to Ecology and the Biology of Bees

• The Social Organization and Hierarchy of the Colony

• Importance of Bee Keeping to the Environment

• Pre-harvesting and Harvesting of Honey

• Storage of Honey • Bee Products and their Uses • Absconding and Swarming of Bees • Merging Weak Colonies

22 Ibid. 23 Ibid. 24 Ibid. 25 Ibid. 26 Interview. Honey Care staff. March 6, 2006; Africa NOW staff. March 8, 2006.

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• Importance of Bee Keeping to the Farmer • Bee Keeping Equipment and Tools • How Bees Communicate • Introduction to the Langstroth Hive • Choosing a Site • Hive Inspection and Supering the Hive

• Feeding Bees • Bee Foraging Plants / Crops • First Aid • Introduction to Apiculture Economics

/ Record Keeping

Collection Honey Care does not have any field offices, but rather, project officers are supplied with mobile phones, which they use to communicate with the offices. Honey Care has historically collected honey from mobile extraction units, but is changing their structure to organize communities of beekeepers around community extraction centers. The community extraction centers provide a more reliable location for community member to harvest and additionally builds social capital among farmers. Impact According to Honey Care, “bee keeping has proven to be an ideal enterprise for small-scale farmers in many parts of rural Kenya because it complements existing farming systems, it is simple and relatively cheap to start, and it requires a very low level of inputs of land, labor, capital, and knowledge.” 27 With only four bee hives and just 20 minutes of labor every two weeks, a beekeeper can earn a reliable annual income between US$150 and 300, which is an amount that is often enough to make the difference between living above or below the poverty line in Kenya. Furthermore, often times the revenue from beekeeping is supplementary income, as beekeeping still gives small-scale farmers plenty of time to tend to other responsibilities such as farming and other small enterprises that they may operate. Over the last two and half years, close to 2,200 small-scale farmers have become involved in beekeeping, each with an average of 4 hives, which amounts to an estimated projection of US$400,000 - US$450,000 per year in income that Honey Care will be helping these rural communities earn when all the hives are in full production and the farmers' loans have been paid off.28 Expansion Site Evaluation “Prior to commencement of any beekeeping project, Honey Care conducts a preliminary site evaluation of the proposed project site to assess the viability of financing each venture. Particular attention is paid to the geographical, climatic and agro-ecological conditions of the proposed areas, as well as other logistical considerations and local conditions. Suitable sites for placing the hives are also selected once it has been verified that the initiative will be viable in that particular area. These assessments primarily focus on whether the proposed area will be suitable for beekeeping using

27 Ibid. 28 Ibid.

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Langstroth hives, and whether the project will be economically, environmentally and socially sustainable in the long term. Honey Care Africa then issues its recommendations to the financier or development partner based on its findings and propose whether the project will be adopted or not.”29 Honey Care is currently working to expand their input sourcing to other countries in the region, including Uganda and Sudan. Moreover, international sales are also increasing beyond East Africa. The first exportations to Europe and the United States just began in 2006. Products Honey Care conducts research on developing better beekeeping technology as well as finding methods to extract other high quality products like pollen, beeswax, propolis, royal jelly, and bee venom. According to Honey Care, these improved methods will eventually be introduced through strategically selected beekeepers and community groups across the country.30 Honey Care has also been exploring other types of agri-based products such as dried fruits. The production of these goods has already begun in certain areas and could be more widespread in the near future31.

29 Honey Care Africa “Site Evaluation.” Accessed 19 Feb. 2006. <www.honeycareafrica.com/files/evaluation.php> 30 Honey Care “Mission” 31 Personal Interview. Vipul Kumar. March 6, 2006.

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APPENDIX 1.4 – BACKGROUND INFORMATION ON KICKSTART

Mission KickStart is an international non-governmental/non-profit organization founded in Kenya in 1991 by Nick Moon and Martin Fisher. The organization’s mission is to help millions of people out of poverty. It promotes sustainable economic growth and employment creation in Kenya and other countries by developing and promoting technologies that can be used by dynamic entrepreneurs to establish and run profitable small scale enterprises. KickStart believes that “self-motivated private entrepreneurs managing small-scale enterprises are the most effective agents for developing emergent economies.32 However, although these entrepreneurs can raise small amounts of capital (US$100-$1,000) to start a new small enterprise and can manage the day-to-day affairs of such a business, it is difficult for them to identify viable business opportunities, access the technologies required to launch the new enterprises, and widely market new products. Therefore, KickStart is dedicated to providing assistance in these areas. In addition to promoting small enterprise development, KickStart’s technologies, expertise and methods are widely applied throughout Africa to support programs in agriculture, shelter, water, sanitation, health, and relief.33 Organization KickStart currently has 200 employees and five offices.34 Furthermore, in order to raise funds for the expansion of its operations to other African countries, it opened a new development and collaboration office in San Francisco, where it is established as a 501 (c)(3) non-profit organization. KickStart has a single board of directors based in Kenya that oversees the entire organization and approves its strategy. The country offices are responsible for marketing the technologies and overseeing the regional offices within the country. The country directors report to the Africa Director, who is based in Kenya. The Africa Director reports to the CEO. The Africa office is in charge of developing the technologies and of testing ideas. Regional offices have sales representatives who are responsible for overseeing retail outlets and marketing the products. KickStart has contracts with retail outlets stores that sell their products. Sales representatives train retail attendants on how to use the technologies and provide them with information to provide to clients. They also provide demonstrations on how to use the technologies in front of the retail stores. Currently 300 retail stores in Kenya are selling the irrigation pumps, but only a small fraction are selling the Oilseed Press and the Block press. Furthermore, many of these retail stores do not generally stock the two technologies due to their cost. Instead, they keep one or two on hand for demonstration purposes. They take orders and either go to KickStart or contact the manufacturer directly to source the technologies. Most of the retail stores also use KickStart materials to market the technologies. There are also 120 retail outlets in Tanzania, but most only sell irrigation pumps. Individuals who purchase the technologies are able to get assistance through any retail store that sells the technologies. .

32 KickStart “About Us.” Accessed on 19 Feb. 2006 <www.kickstart.org/home> 33 Ibid. 34 Chan-Lazardo, Edward. Questionnaire. 19 Dec. 2005.

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KickStart has a market and private-sector oriented approach to ensure that the impacts of its programs become fully self-sustainable in local economies. It installs locally appropriate technologies in the private sector. These technologies continue to be produced, marketed and used by entrepreneurs to create thousands of vibrant new businesses and jobs, long after KickStart’s interventions have ceased.35

36 Operations (1) Research Markets KickStart conducts market research in order to identify high potential small scale business opportunities. Their market and subsector studies identify profitable small enterprises that can be established by local entrepreneurs with limited capital investments. In addition, they specifically examine raw materials, competing products, potential market demands and constraints, and opportunities for small enterprises.37 (2) Design New Technologies KickStart designs and develops the tools, equipment, manuals and business plans required for establishing the identified small enterprises. In addition, they also design and produce the tooling and quality control procedures required for manufacturing the new equipment.38 (3) Train Manufacturers KickStart then trains private manufacturers to mass-produce the new machines and tools. They also train them to set-up production and assembly lines using the tooling they designed and training them how to do quality control.39 (4) Promote the Technologies KickStart markets the new technologies to local small-scale entrepreneurs. It takes responsibility for promoting the new technologies to the private sector, which helps to ensure that these technologies are well known, easily available, and purchased by thousands of small-scale investors. To achieve this goal, KickStart recruits and trains a network of local retail shops (over 120 shops in Kenya alone)

35 KickStart “Our Approach.” Accessed on 19 Feb. 2006 <www.kickstart.org/approach> 36 Ibid. 37 Ibid. 38 Ibid. 39 Ibid.

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in cities, towns, and small market centers around the country. KickStart buys the technologies from the manufacturers and sells them with a mark-up to the retailers.40 Furthermore, KickStart develops and uses cost-effective marketing tools to promote and market the new equipment to local entrepreneurs. These marketing activities include:

• Live demonstrations at retail shops • Radio and newspaper advertisements • Mobile truck-mounted demonstration in local villages • Demonstrations at local shows and exhibitions • Commissioned staff sales • Discounts and sales41

Local entrepreneurs simply buy the technologies from the retailers, and then receive training and a manual on how to use them. These entrepreneurs then use the technologies to establish new businesses or improve their current ones. (5) Monitors its Impact KickStart also monitors the cost-effectiveness and impacts of its program. It measures the number of new businesses and jobs created, as well as the amount of new profits and new wages earned by the new entrepreneurs and their employees.42 KickStart’s Impact Monitoring and Reporting Unit tracks and records key indicators. The new machines are sold with a one-year guarantee and the guarantee forms are used to track the number of technologies sold and the names and locations of the buyers. The purchasers’ details are recorded in a computerized database and the monitoring staff selects visits a random purchasers to interview.43 KickStart estimates that there are currently over 40,000 businesses that use their technologies in their main business operations and that these businesses are generating net profits of over US$34 million per year.44 Expansion KickStart is now replicating its unique model in other African countries. The organization’s goal is to expand throughout East Africa and open new programs in southern and western Africa in order to help millions out of poverty. KickStart plans to open an office in Uganda towards the end of 2006. Businesses in over 20 countries are currently using KickStart technologies. Most of these countries are in Africa, such as Kenya, Tanzania, Mali, Uganda, Malawi, and South Africa and in some countries outside of Africa such as the Philippines and Haiti.45 The organization aims to sell 40,000 products annually and create 32,000 new businesses by 2009.46 40 Ibid. 41 Ibid. 42 According to the organization, this monitoring is mostly done for the Money Saving Water Pumps, and is not done regularly for other technologies. 43 Ibid. 44 Chan-Lazardo, Ed. 45 Ibid. 46 Ibid.

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Technologies All of KickStart’s technologies are designed to be profitable to use, affordable to buy (under US$1,000), durable and easy to operate and maintain with minimum training. In addition, they are also designed so that they can be locally mass-produced in Africa. Considering that electricity and fuel are generally expensive and that labor is relatively plentiful in developing countries, most of the technologies are specifically designed to be operated manually.47 The technologies developed to date include:

• Cooking Oil technologies- “Mafuta Mali” Oilseed Press • Building Technologies- “Actionpac” The Action Pack Block Press • Micro-Irrigation Technologies- “MoneyMaker” Pumps • Sanitation Technologies- Domed Concrete Pit latrine Slabs • Hay Baling Technologies- High-Pressure hay baler • Transport Technologies- Split rim wheels for animal carts

Other New Technologies KickStart is constantly searching for new profitable small business models for Africa. As KickStart identifies more profitable models, it will develop and promote new technologies. Decisions to invest in creating new technologies is based on market research. The potential for new small business models that have been identified include low-cost well drilling, generation and sale of electricity, or the low-cost provision of communication and business services in small towns.48 The Capstone Team chose to focus only on the viability of starting new microenterprises using the Oilseed Press and the Block Press, because through our preliminary research these technologies appear to have the highest potential for easy and large scale replicability and thus function as potential MicroFranchise opportunities for FINCA clients.

47 KickStart “Technologies.” Accessed on 19 Feb. <www.kickstart.org/tech/> 48 Ibid.

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APPENDIX 2 – BACKGROUND ON UGANDA

Uganda - Background Uganda has had a troubled path since independence and still faces great challenges to development, but also has many reasons to be optimistic for the future. Uganda has been considered by many in politics and development to be one of Africa’s success stories. The country has had an annual real GDP growth rate of 5.8% since 2000 and is expected to grow by over 6% in coming years.49 This has been consistently above the average of sub-Saharan Africa. The World Bank recently commended Uganda’s developmental record noting that there have been significant increases in enrollment rates for primary school, adult and youth literacy and access to safe water in both rural and urban areas.50 More importantly, the country’s quick acknowledgement of the HIV/AIDS problem and thorough prevention campaign, have dropped infection rates by more than half in the last ten years.51 History Before the arrival of the British in the 19th century, there were four main kingdoms and many tribes in the region that is now Uganda. This tribal history is still very alive in the culture and politics of Uganda today. Buganda, the largest of these kingdoms, is still a distinct region today with its people accounting for 17% of the population.52 Uganda became a British protectorate in 1896, achieved independence in October of 1962, but still faced a long road to stability. Milton Obote became the first Prime Minister of Uganda and by 1967 had implemented a new constitution, abolished traditional kingdoms and make himself leader of a new republic. In 1971, Idi Amin led a coup that overthrew Obote and took on absolute power. Amin’s rule is known for massive human rights violations and a reign of terror that took many lives. He was overthrown in 1979 and soon after replaced by Obote who carried out another murderous reign against his opponents. The current president, Yoweri Museveni, took power in 1986 after brief military control, and has largely ended human rights abuses and instituted economic reforms through his one-party democracy. 53 Relative stability has returned to the country with the exception of the insurgency of the Lord’s Resistance Army (LRA) which has been fighting the Ugandan Army and terrorizing communities in primarily northern regions. In over 19 years of conflict, LRA violence has led to thousands of murders and kidnappings and has displaced up to 1.4 million people. The LRA has been based in southern Sudan, but has recently begun operating in the Democratic Republic of Congo where the military has less advantage.54

49 EIU Country Report 2006-07, p.5 50 World Bank Brief 51 Copson, p. 5. 52 C.I.A., The World Factbook. http://www.cia.gov/cia/publications/factbook/geos/ug.html 53 U.S. Department of State. “Background Note: Uganda”. http://www.state.gov/r/pa/ei/bgn/2963.htm 54 Institute for Security Studies. http://www.issafrica.org/AF/profiles/uganda/uganda1.htm

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A July 2005 national referendum set Uganda on the path to multi-party politics for the first time in 25 years. Elections were peacefully held on February 23, 2006 and have led to a contentious third term for Museveni. Economy The Ugandan economy has been growing steadily each year, yet GDP per capita is still at a low $1,700 (purchasing power parity) or $270 at the official exchange rate.55 This economic growth has been fueled by expansion in manufacturing and communications and augmentation of non-traditional exports including horticulture and fish products. Growth has also been hurt by below-average rainfall and disease in banana production.56 The most important sector of the Ugandan economy is agriculture, employing more than 80% of the workforce. A remaining 5% of the workforce is in industry and 13% in services. In spite of this, Uganda’s GDP is 31% agriculture, 22% industry and 47% services. The major food crops are roots, tubers, plantains, pulses, maize, millet, sorghum. Coffee is the country’s biggest export and has greatly helped the country’s finances due to increasing world prices. Traditional agricultural exports of cotton, tea and tobacco have remained slow. The country’s main export partners are Kenya, Rwanda and several EU countries.57 The implementation of economic liberalization policies are seen as a main source of the country’s continued growth. The country has been a model aid donor because of its success in trade openness. However, in recent years multilateral and bilateral donors have become discouraged with Uganda’s high levels of corruption, slow path to multi-party democracy, and overspending on public administration and defense. Many donors have cut aid or redirected aid for only humanitarian assistance purposes. Even AIDS funding has been cut in recent years, although much has been recently restored.58 Even so, the Ugandan government is moving away from loaned financial assistance and improving its international standing. It has recently reached a point of graduating from IMF financing and will now work under a Policy Support Instrument of the Fund which will provide financial advice and monitoring, but no financial support. Uganda has also benefited from debt relief of close to $1.5 billion under the Heavily Indebted Poor Country (HIPC) initiative and Paris Club debt relief.59 Due to this debt relief, debt service as a percentage of exports of goods and services was 47% in 1990 and only 5% in 2003.60 Population and Demographics Uganda is a diverse country with over 20 different African tribal groups making up most of its 27 million citizens. Bantu groups are nearly two-thirds of the population and live primarily in the south

55 CIA 56 EIU Country Report 2006-07 p.8 57 C.I.A., The World Factbook. Accessed 28 Feb 2006. <http://www.cia.gov/cia/publications/factbook/geos/ug.html> 58 EIU p.4 59 World Bank Brief. 60 EIU.

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of the country. Nilotic groups populate the north and remain very ethnically divided from the Bantu. Only 16% of the population lives in urban areas.61 The languages spoken and religions followed in Uganda are nearly as diverse as the people. Although English is the official language of the country, most people natively speak one of a variety of Niger-Congo languages including Ganda and Luganda, Nilo-Saharan languages, Swahili or Arabic. In total, there are 43 living languages in Uganda.62 Christians count for 66% of the population, half of which are Roman Catholics and the other half Protestant. Muslims make up 16% while indigenous beliefs are the faith of the final 18%.63 Current health statistics for Uganda are poor due to high HIV/AIDS infection rates and continued instability, but are at least improving. Life expectancy has increased 10% in the last decade, yet is still only 51.6 years. This is largely due to the 1990s 18% rate of AIDS infection dropping to between 6 - 4%. The mark of this disease is still easy to see. Only 2.2% of the population is over 64 years of age and 51% of the population is under 14 years.64 Food security and malnutrition are continuing issues for Ugandans. It is estimated that more than 1 million people are displaced due to food insecurity, war or abduction. The northern areas are most affected by malnutrition and communicable diseases. Problem of Youth Employment in Uganda Eighty-five percent of the world’s youth live in developing countries. According to the World Bank, the proportion of young people in the total population is falling in Europe, Latin America and the Caribbean, North America, and Oceania since 1980, and in Asia since 1990. On the other hand, Africa is experiencing the fastest increase in the proportion of youth of the total population.65 Unfortunately, the rapid increase has not been accompanied by more employment opportunities. The ILO reports66 that unemployment world-wide is now estimated at almost 200 million jobless, and that of this amount a disproportionate 47% represents young adults (ages 15-24). According to the ILO, there is an estimated 88 million unemployed youth worldwide. Today, youth in developing countries are 3.8 times more likely to be unemployed when compared to older workers. In East Africa, youth unemployment is 7 percent. Moreover, many youth are working in the informal economy and may not earn enough to live. Thus, underemployment is also a big problem. Employment statistics reported by the Ugandan government and presented to the World Bank emphasize underemployment levels in Uganda, instead of unemployment rates. In their Poverty Reduction Strategy Plan, the Ugandan government states that in their country open unemployment

61 UN-HABITAT. Accessed 26 Feb 2006. <http://www.unhabitat.org/habrdd/conditions/eafrica/uganda.htm> 62 Gordon, Raymond G., 2005. Ethnologue: Languages of the World, Fifteenth edition. Dallas, Tex.: SIL International 63 C.I.A., The World Factbook. Accessed 28 Feb 2006. <http://www.cia.gov/cia/publications/factbook/geos/ug.html> 64 World Bank Brief, C.I.A. The World Factbook 65 O’ Higgins, Niall. “Trends in the Youth Labour Market in Developing and Transition Countries.” World Bank. Oct 2003, p. 3. 66 “Global Employment Trends for Youth, 2004.” International Labor Organization. 12 August 2004, p. 14.

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is “relatively rare and is found mainly in urban areas, particularly among the most highly educated and amongst women”. Alternatively, underemployment is described as widespread because people are forced to earn a living in some way, but “would like to augment their current incomes with some extra wage-earning opportunities in their locality”. Underemployment affects 65% of all Ugandan adults, 75% of women and 55% of men. To reduce poverty and increase economic opportunities, the government states that a main goal is to create “an increase in locally targeted employment opportunities”.67 Youth have the worst statistics in the country. The Ugandan Bureau of Statistics (UBOS) states that youth unemployment and underemployment are both higher than the national average. 68 The German Government’s development agency, a major donor to Uganda, is placing a special emphasis on youth employment and has termed the problem “rampant”.69

67 Ministry of Finance, P.35 68 Ugandan Bureau Of Statistics. Labor Force Survey. http://www.ubos.org 69 Macbeth, James. “Professionalism and Positioning” p.2

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APPENDIX 3 – EVALUATION SCORECARD

APPENDIX 3.1 – EVALUATION SCORECARD

Scorecard Design: Each potential partner will receive a score between one and five for each indicator identified. That score will then be multiplied by the weight given to the indicator to obtain the weighted score. The weighted score for each indicator will then be added to obtain each partner's total score. As the bottom column indicates, a perfect score is 100.

FINCA Client Demand for Each Enterprise Opportunity

Weighted Score (1.65)

Financial Risk to Franchisees

Weighted Score (1.65)

Model Replicability

Weighted Score (1.6)

Poverty/ Human Development Impact on Franchisees

Weighted Score (1.5)

Honey Care Africa 3.45 5.69 3.50 5.78 3.20 5.12 4.25 6.38 KickStart Block Press 3.25 5.36 3.20 5.28 3.00 4.80 3.60 5.40 KickStart Oilseed Press 3.10 5.12 2.60 4.29 3.00 4.80 3.50 5.25 Perfect Score 5.00 8.25 5.00 8.25 5.00 8.00 5.00 7.50

Project Vision and Design Synergy with Partner

Weighted Score (1.5)

Market Demand for Product

Weighted Score (1.4)

Partner Business Plan Design

Weighted Score (1.3)

Projected Impact on Local Youth Unemployment

Weighted Score (1.2)

Honey Care Africa 3.85 5.78 4.75 6.65 3.45 4.49 2.25 2.70 KickStart Block Press 3.25 4.88 3.35 4.69 2.70 3.51 4.15 4.98 KickStart Oilseed Press 3.20 4.80 3.00 4.20 2.60 3.38 4.00 4.80 Perfect Score 5.00 7.50 5.00 7.00 5.00 6.50 5.00 6.00

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Additional FINCA Staff Resources Required

Project Startup Cost for FINCA

Current Partner Financial Performance

Weighted Score (1.1)

Weighted Score (1.1)

Cost of Entry for Franchisees

Weighted Score (1.1)

Weighted Score (1.0)

Honey Care Africa 3.15 3.47 1.90 2.09 3.75 4.13 4.25 4.25 KickStart Block Press 1.90 2.09 2.40 2.64 2.75 3.03 3.00 3.00 KickStart Oilseed Press 1.70 1.87 2.50 2.75 3.20 3.52 3.00 3.00 Perfect Score 5.00 5.50 5.00 5.50 5.00 5.50 5.00 5.00

Community Poverty/ Human Development Impact

Weighted Score (1.0)

FINCA Avoids Participant Selection Responsibility

Weighted Score (0.85)

Geographic Range/ Flexibility of Business

Weighted Score (0.8)

Honey Care Africa 3.50 3.50 2.50 2.13 2.75 2.20 KickStart Block Press 3.75 2.50 2.13 3.15 2.52 KickStart Oilseed Press 3.75 3.75 2.51 2.13 3.40 2.72 Perfect Score 5.00 5.00 5.00 4.25 5.00 4.00

3.75

Minimize "Apple of Discord"

Weighted Score (0.65)

FINCA Exclusive Regional Partner

Weighted Score (0.6)

TOTAL SCORE

Honey Care Africa 4.00 2.60 4.00 2.40 69.33 KickStart Block Press 2.75 1.79 4.85 2.91 62.75 KickStart Oilseed Press 3.25 2.11 4.85 2.91 61.40 Perfect Score 5.00 3.25 5.00 3.00 100

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APPENDIX 3.2 – ADJUSTING THE EVALUATION SCORECARD

EVALUATION CRITERIA

ORIGINAL WEIGHTED SCORE

QUESTIONS DIRECTED TO FINCA STAFF ABOUT EACH CRITERION (How Important would the following be to ensuring the project’s feasibility?)

FINCA STAFF RESPONSES *# of staff members who selected this response to the adjacent question in the column to the left

FINAL WEIGHTED SCORE/ COMMENTS

1) FINCA Client Demand for Each Enterprise Opportunity

1.75 1) Is there demand for small business opportunities in the region? 2) Would there be demand for a small enterprise creation opportunity provided by FINCA at $100? $150? $300? $350? $500? 3) Would demand increase if… the $100 opportunity were beekeeping? the $350 opportunity were oil production? the $500 opportunity were construction block production? 4) Marketing potential for new service to attract new clients

High demand: 3* Solid demand: 1 High: 3, Solid: 2, Weak: 1 High: 3, Solid: 1 High: 2, Solid: 1, Weak: 1 High: 4, Solid: 2 High: 3, Solid: 2, Weak: 2 Increase: 3 (2 high, 1 solid), Remain the same: 1 (1 high), Decrease: 2 (1 weak, 1 solid) Increase: 2 (2 high) Remain the same: 2 (2 solid) Increase: 5 (3 high, 1 solid, 1 weak) Essential: 1 Very Important: 2 Somewhat Important: 2

1.65Although their was not a complete consensus on perceived demand for the particular opportunities tested, responses to other questions indicated that perceived client demand would be a major factor in determining whether to launch a test pilot project. More importantly, without client demand for the opportunity offered in a test pilot phase, the pilot could not be successful. It is quite simply the most basic requirement for a project to move forward.

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2) Financial Risk to Franchisees

1.75 Project capacity to maximize loan repayment rates on loans provided for this business

Essential: 3 Very Important: 2

1.65Although this question points directly to the organization’s bottom line, responses did not suggest that it should be elevated well beyond other categories.

3) Model Replicability 1.6 Replicability of business model Essential: 3 Very Important: 2 Somewhat Important: 1

1.6Responses indicated that this was positioned properly.

4) Poverty/Human Development Impact on Franchisees

1.5 None – This is FINCA’s mission 1.5

5) Project Vision and Design Synergy with Partner

1.5 1) Desire of partner to leverage FINCA network 2) Partner interest in working with FINCA Uganda

Very Important: 4 Essential: 4 Very Important: 2

1.5A difficult category to capture, but the importance of having partners in synch can’t be underestimated. Note: Original title was Vision of Project Design Synergy with Partner

6) Projected Impact on Local Youth Unemployment

1.3 1) Potential employment opportunity for youth 15-18 2) Potential employment opportunity for youth 18-21 3) Potential employment opportunity for youth 21-24

Note: Staff defined youth as 18-24 4) Potential to positively impact youth unemployment in the regions FINCA serves

Essential: 1 Very important: 1 Somewhat important: 3 Not important: 1 Essential: 1 Very important: 3 Somewhat important: 1 Essential: 2 Very important: 2 Somewhat important: 1 Essential: 2 Very important: 3 Somewhat important: 1

1.2The weight given to this response was lower than for some other questions. FINCA International has also acknowledged that this category is not paramount to the project, although it remains an important factor. Clearly, survey results indicate that youth unemployment is a significant problem in Uganda, and impacting youth unemployment would improve the prospects of a test pilot project.

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7) Market Demand for Product

1.3 1) Marketing potential for new service to attract new clients

Essential: 2 Very important: 2

1.4Although no specific question was asked about the importance of market demand, each respondent repeatedly alluded to the importance of ensuring market demand for the product. One respondent mentioned that this should be a category.

8) Partner Business Plan Design

1.2 Well-designed and implemented business model

Essential: 4 Very important: 1 Somewhat important: 1 Not important: 1

1.3It is unclear whether staffers were thinking about how the partner organization operates or the model for the potential franchisees/FINCA clients, but this seemed to be of greater importance than anticipated to all but the respondent who was most consistently negative.

9) Current Partner Financial Performance

1.1 None

1.0This is only important so long as the partner remains solvent and an active participant in the project

10) Additional FINCA Staff Resources Required

1.1 Minimal additional time, effort required by existing staff

Essential: 3 Very important: 1 Somewhat important: 1 Not important: 1

1.1Although the staff members questioned on this seemed to elevate its importance, other staff members whose time would likely be impacted by the project indicated that taking on a new project would not be problematic.

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11) Project Startup Cost for FINCA

1.1 Low cost to FINCA Uganda (or support from FINCA Int’l)

Essential: 4 Very Important: 2

1.1Minimizing the cost to FINCA Uganda was of great importance to respondents, but the larger question of cost to FINCA International was not relevant.

12) Community Poverty/Human Development Impact

1.0 None 1.0Although it is the FINCA mission to reduce poverty and promote human development, and although employees indicate a desire to impact the wider community, this focus is secondary to reaching FINCA clients.

13) Cost of Entry for Franchisees

1.0 Low cost of entries for MicroFranchises

Essential: 3 Very Important: 1 Not Important: 1 No opinion: 1

1.1This proved to be of greater significance than anticipated, although staff members indicated that a startup cost of $500 was not beyond the reach of most clients.

14) FINCA Avoids Participant Selection Responsibility

0.9 Need to place final decision-making power in partner’s hands

Very Important: 2 Not important: 3

.85Responses mostly consistent with the weight already established.

15) Minimize "Apple of Discord"*

0.7 Minimize competitiveness or jealousy among clients who do not fit selection criteria for starting the business

Essential: 1 Very important: 2 Not important: 3

.65Responses mostly consistent with the weight already established.

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16) Geographic Range/ Flexibility of Business

0.7 None .8Perhaps this is a category the team should have asked about given the breadth of geographic considerations just within Uganda regarding each option surveyed.

17) FINCA Exclusive Regional Partner

0.5 Project Exclusivity to FINCA Essential: 3 Very important: 1 Not important: 2

.6This category seemed more important than anticipated, although it’s difficult to guarantee with almost any product if FINCA does not develop it internally.

Totals 20.0 20.0

*Apple of Discord is a reference to jealousy that may arise among clients if some clients are excluded from eligibility to invest in a MicroFranchise enterprise.

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APPENDIX 3.3 – FINAL COMPOSITE SCORES FOR HONEY CARE AFRICA

Description: Below is a composite of all the scores derived from each relevant interview for every criterion in the Evaluation Scorecard for Honey Care Africa’s honey production business. Under each criterion, the final score attributed to responses from each interview group who commented on a given criterion are listed individually. The overall score at the top was derived from these individual scores, taking their average and making any minor adjustments in the event of limited data availability under the guidelines described in Section IX. of the text. Additionally, brief summaries of positive, negative and neutral feedback from each interview group are included as a way of providing a written explanation for the final score assigned to it. Note: Some descriptions below are not summaries of comments made by respondents. Rather they are either explanations or comments on how scores were obtained or they are author comments on the responses or scoring. For example, some scores from FINCA clients were derived from individual comments rather than from collective responses to quantitative focus group questions. These explanations are indicated with a * next to the interview group from which they come.

CRITERION #1: FINCA CLIENT DEMAND FOR EACH BUSINESS OPPORTUNITY HONEY CARE OVERALL SCORE: 3.45 3.75 (K-REP) + 5 (Management) + 2 (NGO Partner) + 3.75 (FINCA Uganda Staff) + 2.75 (FINCA Clients) Positive: K-REP: The limited amount of time required to care for the hives, instituting a 50/50 policy that enables beekeepers to sell ½ their harvest locally, and creating a community extension officer position will all increase FINCA client demand. Management: Clients are more likely to get involved if they do not have to travel to train. FINCA Uganda Staff*: Quantitative results quite strong. Neutral: FINCA Uganda Staff: Mixed perception about the opportunity and client interest expressed in comments. Belief that it will take hold more in the north and southwest. FINCA Clients*: This was determined by combining the percentage of actual respondents who expressed interest in the product (alone or as compared with the others) with individual comments indicating enthusiasm or skepticism about it. Negative: K-REP: The long delays before and between harvests will scare off some clients. NGO Partner: Africa Now has seen a preference among men. Nearly all FINCA clients are women; however, women can hire men to care for hives or share responsibility with other family members, but this would be an added expense. FINCA Uganda Staff: One staff member expressed the perception that in Busia people are not patient enough for the business. CRITERION #2: FINANCIAL RISK TO FRANCHISEES HONEY CARE OVERALL SCORE: 3.5 3.75 (K-REP) + 4 (Beekeepers) + 3.75 (Management) + 3 (NGO Partner) + 2 (FINCA Uganda Staff) + 2 (FINCA Clients)

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Positive: K-REP: Existing training, adding business and entrepreneurship training, adding a community extension officer incentivized to help all producers, charting annual production among producers, limiting the geographic range of support among Honey Care project officers, and encouraging clients to mix beekeeping with more consistent income sources will all mitigate financial risks. Beekeepers: Most beekeepers talked about the ease of the process, which made the financial risk low. Management: No specialized skills required to manage business, guaranteed market, refinements to and shift to localized training, and loan repayment structure all mitigate risk. Neutral: FINCA Uganda Staff*: This is based on just a few comments. FINCA Clients*: Based on just one comment. Negative: K-REP: Overextended Honey Care field staff and the delay prior to and between harvests increase financial risk. Plus, the low repayment rates this project experienced in its early stages speak to the potential risks if the project is not executed properly Beekeepers: Beekeepers mentioned problems such as drought, pestilence, and problems with extraction timing that increase risk of harvesting successfully and regularly. Management: Indication of a low but present failure rate. NGO Partner: Although clients benefit from a guaranteed market, there are other significant obstacles beekeepers face to earn income from their hives. Much of this is fixable, but some is cultural and will be more difficult to overcome. CRITERION #3: MODEL REPLICABILITY HONEY CARE OVERALL SCORE: 3.2 3.25 (K-REP) + 3.5 (Beekeepers) + 4 (Management) + 1.75 (NGO Partner) + 2 (FINCA Uganda Staff) Positive: K-REP: The changes K-REP has adopted have brought the model closer to the point where it can be replicated as is. Additionally, we recommend a series of adaptations based largely on our interviews with K-REP that we anticipate will further enhance its replicability. Beekeepers: In its early stages, relationships with aid organizations made Honey Care’s expansion model less sustainable. Training was also provided remotely and extraction centers had not been created yet. Now the model, especially as applied by K-REP, is much more structurally sound and sustainable. Management: Existing business plan, operations, partnership arrangements appear to be replicable with moderate changes to improve efficiency, and client performance. Negative: K-REP*: This number would be higher except that the model cannot be replicated in urban places or in regions with limited vegetation that appeals to bees. Beekeepers: The beekeepers have encountered a number of problems that must be addressed for the model to be successfully replicated and maximize success for the beekeeper. These pitfalls include limited ongoing training and support and long distance to extraction centers.

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Management: Areas hampering replication include geographic limitations, the need to keep beekeepers clustered within range of an extraction center, the cost of extraction centers, and the expectation of relying on external funding. NGO Partner: The third partner takes on many responsibilities even though the relationship is temporary. However, FINCA would be unlikely to involve a third partner on the ground. FINCA Uganda Staff: Concern that a separate investment fund would need to be set up given the delay in ROI. CRITERION #4: POVERTY/HUMAN DEVELOPMENT IMPACT ON FRANCHISEES HONEY CARE OVERALL SCORE 4.25 3.75 (K-REP) + 4.75 (Beekeepers) + 4.25 (Management) Positive: K-REP: The use of the hives as a secondary source of income is likely to provide an important income-enhancing tool to reduce poverty levels and enhance development indicators. Additionally, building centers and hiring a local extension officer will not only enhance poverty-reduction efforts, but it will also strengthen community ties and provide a forum for boosting social capital. Beekeepers: Respondents indicated that honey production improved their income, some by a lot. When asked about other human development indicators, some reported that health and education outcomes had improved for their families. Nearly everyone indicated that they plan to purchase more hives, suggesting higher future returns for farmers as they become more accustomed to caring for their hives. Management: Projected annual income per hive would lift most clients out of poverty, although the figure used is in dispute and unresolved. Monitoring and evaluation will assist FINCA and Honey Care in making any necessary adjustments if they aren’t reaching benchmarks. Negative: K-REP: Harvest delays will negatively impact poverty reduction. Beekeepers: Although a few mentioned that they had had problems paying off loans or had encountered family health problems, rendering them unable to attend to the beekeeping business. CRITERION #5: PROJECT VISION AND DESIGN SYNERGY WITH PARTNER HONEY CARE OVERALL SCORE: 3.85 4 (K-REP) + 3.75 (Management) + 3.75 (FINCA Uganda Staff) Positive: K-REP: Honey Care already has extensive experience integrating its model with a microfinance partner. FINCA can benefit from the experience gained along the way, thereby deepening the level of collaboration between partners. K-REP practices a variation on the village banking model, and has already set up a loan structure that can be adapted to meet FINCA’s needs. The business is easy to learn, and Honey Care has targeted people who fit FINCA’s client profile. Management: Proposed division of labor seems appealing to FINCA, Honey Care client targets are consistent with FINCA’s except for the urban limitations, partnering with MFIs is an integral part of Honey Care’s business model, and requiring clients to purchase the hives all align the two potential partners closely in terms of project vision.

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Neutral: FINCA Uganda Staff*: This score was taken from responses to questions about FINCA Uganda’s capacity and interest in launching a project with this partner. Negative: K-REP: K-REP took on some responsibilities – especially extension support – that extended beyond its responsibilities. Limitation in expanding to urban areas means a portion of FINCA’s clientele cannot benefit from the project. Although the loan structure is adaptable, it still must account for the delay before harvest, which means FINCA’s money will be tied up in loans with a delay on returns. Management: Honey Care’s proposed financial arrangement is problematic for FINCA, and the time required to reach first harvest means the test pilot project will have to extend over a year just to obtain initial results. CRITERION #6: MARKET DEMAND FOR PRODUCT HONEY CARE OVERALL SCORE: 4.75 4.75 (Beekeepers) + 5 (Management) + 4.3 (FINCA Uganda Staff) + 5 (FINCA Clients) Positive: Beekeepers: Honey Care provides a guaranteed market and gives beekeeper the option of selling it on the local market or to Honey Care. In both cases, the beekeeper benefits from having a market. Management: Projected annual income for beekeepers and the continuing expansion of Honey Care’s distribution suggests a vast growth potential. FINCA Uganda Staff: Market is guaranteed. FINCA Uganda Clients: Based on guaranteed market Neutral: FINCA Uganda Staff*: This score was taken from a composite of responses to questions about staff perceptions of client demand for each opportunity, for each opportunity among youth, and for staff interest and capacity to launch the project as well as some general comments. CRITERION #7: PARTNER BUSINESS PLAN DESIGN HONEY CARE OVERALL SCORE: 3.45 3.75 (K-REP) + 2.75 (Beekeepers) + 4 (Management) + 3.25 (NGO Partner) Positive: K-REP: Despite problems encountered, Honey Care, Africa Now and K-REP learned many lessons in the early phases. They have taken these learnings to revise their partnership model, which we have incorporated into our recommendations. These learnings include: require clients to buy the hives to increase ownership and accountability to the business, make farmers cluster their hives, set up realistic expectations for when harvest might begin, make sure that adequate beekeeping equipment is available to ensure that proper care/ harvesting is done, make sure that small, regular payments are made even when not harvesting, make training local, make sure hives are sold to individuals even if people organize into groups, set up extraction centers, build a local extension officer into the model, track annual production person-by-person, and enable beekeepers to sell up to 50% of honey to local markets. As a result, the model is significantly stronger. Beekeepers: Honey Care has also made some significant improvements – relying much more heavily on partnerships that enable clients to purchase hives with loans rather than having them

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donated, on-site training instead of remote training centers, and setting up extraction centers to make that process easier. Management: Tripartite model engages the community to collaborate with a for-profit venture. New systems in place based upon previous experience have strengthened the model. Partnership formation, division of labor between organizations, expansion plans and site evaluation prior to launch all appear to be carefully planned. Launch timing for expansion after funding is approved seems reasonable. NGO Partner: New systems are in place for cash transactions that limit risk for both partners and for the initial training period, which is now localized and provided in stages. Negative: K-REP: Indicated that Honey Care’s current system of spreading project officers too thin, which will hopefully be overcome by limiting their range. Beekeepers: Honey Care clients have obviously encountered a number of problems as a result of Honey Care’s business strategy. The most obvious problem is that there are not enough project officers available to provide ongoing support and to extract the honey when it is ready for harvesting. Management: FINCA’s role in the expansion is not as clearly outlined as is Honey Care’s, although the team has a much better sense of its role after meeting with K-REP. Model assumes that funding for centers and equipment will come from a third party. NGO Partner: Better extension support is necessary. This is feasible by limiting the geographic range of Honey Care project officers and adding the independent local extension officer. CRITERION #8: PROJECTED IMPACT ON LOCAL YOUTH UNEMPLOYMENT HONEY CARE OVERALL SCORE: 2.25 2 (K-REP) + 1.5 (Management) +1.5 (NGO Partner) + 4 (FINCA Uganda Staff) + 3.75 (FINCA Clients) Neutral: FINCA Uganda Staff*: This result is based on the staff’s assessment of youth demand for each type of business and parental willingness to cosign for a loan. FINCA Clients*: This score was derived from the collective results of three questions – perceived youth interest in each opportunity, perception of local youth unemployment issue, and willingness to guarantee a loan on behalf of one’s child (asked of all, not just those who had young adult children). Negative: K-REP: Not likely to attract a lot of youth to become clients and own their own hives, but rural children might become involved in caring for hives on behalf of parents. Management: Focusing on youth is a challenge. It’s better to integrate some youth into a larger project, which may work only for certain young people who are mature and willing to learn from others. NGO Partner: Attracting youth to participate in either owning or managing hives will be a challenge. CRITERION #9: ADDITIONAL FINCA STAFF RESOURCES REQUIRED HONEY CARE OVERALL SCORE: 3.15 2.5 (K-REP) + 3.75 (Management)

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Positive: Management: Localized training reduces FINCA staff and resource commitments. Although it isn’t clear from management’s list of FINCA responsibilities what additional resources are required, the team has gathered this information from other interviews. Neutral: K-REP: Although only one person from K-REP has managed this project locally, he works full time on it in addition to providing extension support. Our proposed recommendation alleviates the problem of staff overextension, which would make it more acceptable to FINCA. CRITERION #10: PROJECT STARTUP COST FOR FINCA HONEY CARE OVERALL SCORE: 1.9 1.5 (K-REP) + 2 (Management) + 2 (NGO Partner) + 2 (FINCA Uganda Staff) Negative: K-REP: Extraction center construction/improvement is not a cost that FINCA necessarily wants to support, although it is much more reasonable than the figure provided by Honey Care. Management: FINCA is expected to fund the cost of the centers. Management indicated a higher cost for this than K-REP. It is unclear whether additional capital investment is required. NGO Partner: An additional vehicle for each pilot location may be helpful. FINCA Uganda Staff*: This is based on just a few comments. CRITERION #11: COST OF ENTRY FOR FRANCHISEES HONEY CARE OVERALL SCORE: 3.75 3.5 (K-REP) + 4.25 (Beekeepers) + 3 (FINCA Clients) Positive: K-REP: Removing price subsidies for the hives did not appear to cause problems, and in fact, repayment rates improved. Although using an extraction center and a local extension officer increases costs to franchisees at startup and beyond, this should be more than offset by improved yields. Beekeepers: Comments mostly indicated that startup cost was low and easy to manage. Loan structure also made owning the hives very financially manageable. One person said that the startup cost was difficult, but that a loan would make it manageable. Neutral: FINCA Clients*: Based on select clients. CRITERION #12: CURRENT PARTNER FINANCIAL PERFORMANCE HONEY CARE OVERALL SCORE: 4.25 4.5 (Management) Positive: Management: Shift toward honey and honey products will boost the long-term financial outlook for the company. Diversity of revenue sources is also valuable. Volume has more than doubled and HC is expanding into higher profit sales of pollen and propilis.

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Authors’ Note*: The score was reduced because if management is stretching project officers too thin. Because project officers are essential to business model, overextension can weaken financial performance. CRITERION #13: COMMUNITY POVERTY/HUMAN DEVELOPMENT IMPACT HONEY CARE OVERALL SCORE: 3.5 4 (K-REP) Positive: K-REP: A center operated by a community member with a stake in the community outcome will reduce poverty and provide a forum for collective human development improvement by facilitating the sharing knowledge to improve production. Authors’ Note*: The score was reduced because overall community poverty/human development impact can only extend as widely as the project does. It does not have secondary and tertiary impacts in the same way that the Grameen Village Phone program does. CRITERION #14: FINCA AVOIDS PARTICIPANT SELECTION RESPONSIBILITY HONEY CARE OVERALL SCORE: 2.5 2.5 (K-REP) + 2.0 (Beekeepers) + 2.25 (NGO Partner) Neutral: K-REP: K-REP has complete control over the process, but without any special requirements beyond a good hive location, the selection becomes a pure credit worthiness issue, which should be in the MFI’s hands. NGO Partner: K-REP or other loan provider is in charge of the selection process, but the process is based solely on the client’s perceived fitness to pay the loan, so no new criteria would be added to create animosity toward FINCA. Negative: Beekeepers: Although Honey Care’s partners, especially K-REP, retained full responsibility for determining client eligibility, some confusion remained over other partner responsibilities, suggesting that perhaps K-REP was not clearly identified as the responsible party. However, to fully understand this issue will require additional interviews with beekeepers who used their own resources to purchase the hives. Authors’ Note*: The fact that FINCA would be responsible for the partner selection process seems fairly neutral, since the only possible criteria beyond credit worthiness might be cohesiveness among groups sharing equipment and clustering hives, as well as the fitness of the intended hive location. It may actually be of benefit to FINCA, since it would be no different than any other loan dispersal process. CRITERION #15: GEOGRAPHIC RANGE/FLEXIBILITY OF BUSINESS HONEY CARE OVERALL SCORE: 2.75 2.0 (K-REP) + 3.5 (Management)

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Positive: Management: There are no limits identified to where Honey Care can expand. Areas with lower beekeeping knowledge may require an additional training commitment, but it is anticipated. Localized training can be done anywhere Honey Care staff can reach. Negative: K-REP: Limited to rural areas due to apiary requirements – adequate space, seclusion and vegetation. Geographic area must have abundant rainfall to maximize honey yields, therefore expansion would be limited. Management: Management’s desire to start in an area with similar biodiversity to an existing location suggests that some settings may be easier to work with than others. Existing local beekeeping knowledge may increase chances of success. CRITERION #16: MINIMIZE APPLE OF DISCORD HONEY CARE OVERALL SCORE: 4 Authors’ Note*: The only potential jealousy that might arise is during the initial pilot project if a limit is set on the number of hives allotted in the project. Otherwise, since the client selection process will largely mirror the process for other loans, little jealousy should be anticipated among clients if they are not included. However, additional criteria may become necessary if FINCA and Honey Care limit the number of hives distributed in the test project. CRITERION #17: FINCA EXCLUSIVE REGIONAL PARTNER HONEY CARE OVERALL SCORE: 4 4 (K-REP) + 4 (Management) Positive: K-REP: Although K-REP shared responsibility with Africa Now, it is apparently the exclusive MFI provider in the region. Management: FINCA would enable Honey Care’s entrance into Uganda. It would be the first partner and potentially the exclusive partner in regions where both Honey Care and FINCA want the project to expand to, but there is no guarantee indicated that this would hold in the long term. Authors’ Note*: A partnership with FINCA is likely to be Honey Care’s first foray into Uganda, and ensuring partnership exclusivity, at least among MFIs that compete with FINCA seems quite feasible.

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APPENDIX 3.4 – FINAL COMPOSITE SCORES FOR KICKSTART OILSEED PRESS

Description: Below is a composite of all the scores derived from each relevant interview for every criterion in the Evaluation Scorecard for KickStart’s Oilseed Press. Under each criterion, the final score attributed to responses from each interview group who commented on a given criterion are listed individually. The overall score at the top was derived from these individual scores, taking their average and making any minor adjustments in the event of limited data availability under the guidelines described in Section IX. of the text. Additionally, brief summaries of positive, negative and neutral feedback from each interview group are included as a way of providing a written explanation for the final score assigned to it.

Note: Some descriptions below are not summaries of comments made by respondents. Rather they are either explanations or comments on how scores were obtained or they are author comments on the responses or scoring. For example, some scores from FINCA clients were derived from individual comments rather than from collective responses to quantitative focus group questions. These explanations are indicated with a * next to the interview group from which they come. CRITERION #1: FINCA CLIENT DEMAND FOR EACH BUSINESS OPPORTUNITY KICKSTART OIL PRESS OVERALL SCORE: 3.1 2.9 (Management) + 2.1 (Field Staff) + 3.5 (Owners) + 3.0 (Retailers) + 3.3 (FINCA Uganda Staff) + 3.5 (FINCA Clients) Positive: Management: Uganda has been a strong market for the technology despite lack of retail presence. This may suggest that the presses appeal to FINCA clients as well. FINCA financing mechanism will boost client demand given startup cost. Field Staff: Demand rises in high traffic areas, which is how retail outlet locations are targeted. Demand would also increase with active product marketing. Owners: No electricity need to operate the machine. KickStart provides strong training in production, input sourcing, and bookkeeping. Has an enticing demonstration program and local market demand in the owners’ location. Offers employment creation opportunity. Oil is nutritious and seedcake can be used for farm animal feed. Retailers: No claims of quality issues and perception of compatibility with microcredit program to facilitate financing. FINCA Uganda Staff: Perception that this is appropriate for the region. Neutral: FINCA Clients*: This was determined by combining the percentage of actual respondents who expressed interest in the product (alone or as compared with the others) with individual comments indicating enthusiasm or skepticism about it. Negative: Management: Perception that business drive, entrepreneurship, enthusiasm and determination, access to inputs and the drive to market and sell mean that only a certain type of person is likely to thrive using the technology. Issues with seed sourcing and competition from cheap imports also cut into client demand.

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Field Staff: Demand is lowered because of limited existing product marketing and sales, rich variety of skills and strong drive required to achieve success, rising technology production costs, input sourcing issues, and competition. Owners: Seed availability is a major concern and operation exertion is high. No existing information about marketing, packaging, sales. Adding a marketing component would make it even better. Retailers: Market demand issues for oil impacted sales of the technology. No product promotion and competition from cheaper imitations. Only groups and NGOs have purchased the products – no individuals. FINCA Uganda Staff: Concerns about seed availability and competition. CRITERION #2: FINANCIAL RISK TO FRANCHISEES KICKSTART OIL PRESS OVERALL SCORE: 2.6 2.0 (Management) + 2.25 (Field Staff) + 2.8 (Owners) + 3.9 (Retailers) + 2.0 (FINCA Clients) Positive: Management: Recognition of the improvements necessary to bolster the model may motivate KickStart to more actively engage with FINCA in tackling these issues. Field Staff: Access to microcredit significantly reduces the financial risk that most owners have been facing as they start their press businesses. Owners: No input availability problem expressed in owner location. Pricing consistent with our numbers. Group purchase reduces financial risk. Training good on production, input sourcing, bookkeeping. Income improvement seen. Active marketing efforts by owners. Clients with fewer business skills get more support. Retailers: MFIs sometimes buy presses to sell to their clients. No repayment issues among customers who chose to pay for the presses gradually on a layaway plan. . Product quality and guarantee lowers risk. Neutral: Retailers: Long-term risk of market saturation means careful vetting of potential technology purchasers necessary from the start. Saturation is not a short-term risk. FINCA Clients*: Based on comments only. Negative: Management: Seed sourcing issues, current training gaps, market access, and competition from cheap imports all increase financial risk. Field Staff: Seed availability, competition, skill variety needed to be successful, access to market information, and vulnerability to natural disasters can all add to financial risk. Owners: Market prices and inputs may differ in Uganda. Limited seed availability and exertion levels are reducing production. No marketing, packaging or sales training. Oil prone to spoiling without proper storage. Buyers may not differentiate oil quality. No quality control or packaging standards. Retailers: Even with more support, training is limited. CRITERION #3: MODEL REPLICABILITY KICKSTART OIL PRESS OVERALL SCORE: 3.0 2.1 (Management) + 2.7 (Field Staff) + 2.6 (Owners) + 3.75 (Retailers) + 4.0 (FINCA Staff) Positive: Management: Significant existing experience setting up retailers will help with Uganda expansion. Huge untapped demand in urban areas to support model replication and clear understanding of issues that need to be addressed.

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Field Staff: Retail staff and the training they receive from KickStart will be a key resource for setting up local training and providing product support. Microfinance is easily integrated into the model and will solve key financing problems. Owners: An existing product demonstration program means that fewer changes will have to be made to the model. Training is solid on production, input sourcing, and bookkeeping. Retailers: Precedent set for integrating with microcredit. Likely to be compatible and increase sales. Presence of existing training program. FINCA Uganda Staff: No major concerns about adjustments to be made to loan terms. Just slight variations from the norm. Neutral: Owners: How will seeds be sourced in Uganda? (Note: This is a question that arises from owner comments about conditions in Kenya. It is not a comment made by Oilseed Press owners. Negative: Management: Will need to build market research into the model, since KickStart doesn’t have any. Limited product marketing at present. Need to significantly enhance training effort and materials. Need to develop a new supply chain to take advantage of urban demand. Field Staff: New marketing materials must be developed, M&E strategy and execution for the presses must be revived, and training must be expanded. Owners: Location for operation may require renting a space. Most current owners use savings or donations to purchase the presses, not loans. No training exists in marketing, packaging or sales. Retailers: Training program needs to be enhanced and systematized. CRITERION #4: POVERTY/HUMAN DEVELOPMENT IMPACT ON FRANCHISEES KICKSTART OIL PRESS OVERALL SCORE: 3.5 3.75 (Management) + 3.3 (Owners) Positive: Management: KickStart’s impact assessment helps it monitor and improve poverty and human development among product purchasers, which could be redirect toward FINCA clients who purchase the presses. Presses have shown the capacity to significantly raise incomes for owners under the right conditions. Owners: Pricing consistent with the encouraging numbers we used in our revenue estimates. Some income improvements seen, and the groups showed much improvement in access to food and children’s education. Negative: Owners: Income improvement slower than anticipated, production rates lower than expected, and the current system includes no poverty and human development monitoring. CRITERION #5: PROJECT VISION AND DESIGN SYNERGY WITH PARTNER KICKSTART OIL PRESS OVERALL SCORE: 3.2 3.4 (Management) + 2.7 (Field Staff) + 2.75 (Owners) + 3.5 (Retailers) + 3.75 (FINCA Uganda Staff) Positive:

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Management: Significant mission overlap, compatibility and ability to enhance program with microfinance, interest in partnership and collaboration by KickStart, potential shown based on past experience to invest more in training, input sourcing, or access to markets if it had a partner committed to the products. Field Staff: Providing access to credit would complement a constraint faced to date by KickStart, retailers and buyers. Retailer education and product knowledge is consistent with FINCA’s commitment to maximizing client success and an important resource for establishing appropriate linkages to make partnership a success. Owners: Existing product demonstration program, training solid in production, input sourcing and bookkeeping, and presence of a monitoring and evaluation system to build on. Retailers: Worked with MFIs and developed successful repayment plans, increasing sales and customer success. FINCA Uganda Staff: One staff member believed FINCA would be very interested – little problem with inputs, agriculture-based economy, and recognition of available markets. Neutral: FINCA Uganda Staff*: This score was taken from responses to questions about FINCA Uganda’s capacity and interest in launching a project with this partner. Negative: Management: Not seen by KickStart as a potential growth area, as explained by the lack of existing product support, which may put more responsibility into FINCA’s hands. Field Staff: Monitoring of presses is more limited than before and monitoring in general may be compromised in practiced, which is not consistent with FINCA vision. FINCA would prefer a partner that provided much more support than KickStart currently does for the presses in all phases of the business. Owners: No training in marketing, packaging and selling, M&E program needs more on poverty and human development impact, KickStart is not currently conducting monitoring and evaluation or offering ongoing support, and the press seems more easily used by men, who aren’t FINCA targets. Retailers: One retailer only saw donations pay for purchase; training revisions and greater KickStart participation necessary FINCA Uganda Staff: One staff member was concerned about the lack of a guaranteed market. CRITERION #6: MARKET DEMAND FOR PRODUCT KICKSTART OIL PRESS OVERALL SCORE: 3.0 2.25 (Management) + 2.75 (Field Staff) + 4 (FINCA Uganda Staff) + 3.0 FINCA Clients Positive: Management: Untapped demand in urban areas, strong press sales in Uganda despite lack of retail presence or marketing support suggests that demand could be strong there. Field Staff: Ongoing demand for the presses at retail suggests there must be some product demand. Neutral: FINCA Uganda Staff: This score was taken from a composite of responses to questions about staff perceptions of client demand for each opportunity, for each opportunity among youth, and for staff interest and capacity to launch the project as well as some general comments. FINCA Clients*: Based on comments only.

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Negative: Management: Input supply, import competition, and poor seed quality have all cut into market demand. CRITERION #7: PARTNER BUSINESS PLAN DESIGN KICKSTART OIL PRESS OVERALL SCORE: 2.6 2.7 (Management) +2.3 (Field Office) + 2.5 (Retailers) Positive: Management: Strong effort to maximize efficiency and lower costs in the production process, no concern that KickStart will saturate the market with technologies, strong plan compatibility with microfinance, M&E program that improved internal performance, identification of key issues in the existing model. Field Office: Strong presence of retail sales force provides an important resource for FINCA to tap into – for knowledge as it looks to improve the model and develop the pilot project, as well as presence of staff to provide training to FINCA staff and clients. Retailers: Existing knowledge and information sharing among retailers; product quality and guarantee, and evidence of strong business plan. Neutral: Field Staff: There is lack of marketing and support provided with the presses, but they both continue to sell well in some high traffic areas and are selling well in Uganda. Negative: Management: Support for the presses has been nearly abandoned although it benefits from some piggybacking on irrigation pump support. Need to significantly bolster market research, input sourcing, training, client support, establishing markets despite lack of current backing for the presses. Have not developed a rural to urban supply chain to fully exploit the market potential. Field Staff: Limitations of training (input sourcing and preparation, establishing supply chains, marketing and sales, business management, etc.) lack of marketing and sales support at retail level, lack of monitoring and evaluation, and lack of ongoing technical and business support to technology owners. Retailers: No sales incentives or marketing support from KickStart. Unclear whether KickStart trains retailers or does training themselves. Need to set up good system. Training needs enhancement as well. CRITERION #8: PROJECTED IMPACT ON LOCAL YOUTH UNEMPLOYMENT KICKSTART OIL PRESS OVERALL SCORE: 4.25 (FINCA Uganda Staff) + 3.75 (FINCA Clients) Positive: FINCA Uganda Staff: Women likely to be interested in the oil press. Neutral: FINCA Uganda Staff*: This result is based on the staff’s assessment of youth demand for each type of business and parental willingness to cosign for a loan.

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FINCA Clients*: This score was derived from the collective results of three questions – perceived youth interest in each opportunity, perception of local youth unemployment issue, and willingness to guarantee a loan on behalf of one’s child (asked of all, not just those who had young adult children). CRITERION #9: ADDITIONAL FINCA STAFF RESOURCES REQUIRED KICKSTART OIL PRESS OVERALL SCORE: 1.7 1.25 (Management) +1.25 (FINCA Uganda Staff) Positive: Authors’ Note*: While the management note is legitimate and additional staffing may be necessary beyond what would be required in the case of Honey Care, it is not nearly as bleak as the number attributed to management’s comment implies. If additional market linkages are necessary, it may require more staff time than setting up a block press project. Negative: Management: Additional staff resources may be necessary to establish all linkages necessary to launch the project and ensure that FINCA clients have adequate support in the absence of current backing for the presses. May need to get involved in the training or at least collaborate in the development of enhanced training manuals. FINCA Uganda Staff: Additional staff might be needed to sell the technologies. (1 comment) CRITERION #10: PROJECT STARTUP COST FOR FINCA KICKSTART OIL PRESS OVERALL SCORE: 2.5 2.5 (Management) + 2.5 (FINCA Clients) Positive Management: KickStart’s previous efforts to help bolster production during high demand periods indicate a willingness to take on more responsibility in resources and financing, which could be applied to the weak links in the current model. No separate investment fund will be necessary to finance clients, since they can earn nearly immediate returns on investment to begin loan repayment. Neutral: FINCA Clients*: Based on comments only. Negative: Management: Additional funding may be necessary to establish all linkages necessary to launch the project and ensure that FINCA clients have adequate training and support in the absence of current backing for the presses. CRITERION #11: COST OF ENTRY FOR FRANCHISEES KICKSTART OIL PRESS OVERALL SCORE: 3.2 3.5 (Management) + 2.9 (Field Staff) + 3.15 (Retailers) Positive: Management: Although startup cost is much higher than the beekeeping business, income returns are immediate and there is potential to achieve profitability within a few months, meaning that the initial investment is tied up for less time and less interest is paid per dollar

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Field Staff: Although microfinance will not lower the cost of entry, it lowers the amount of capital that must be raised to meet that cost. Retailers: Successful repayment by those taking out loans indicates that the cost of entry is manageable. Negative: Field Staff: Suggestion that startup cost may be cause for delay or avoidance of purchase by potential investors, especially since production costs have risen in recent years. Retailers: Perception that the cost of entry is too high for individuals, although it may be due to lack of access to credit. CRITERION #12: CURRENT PARTNER FINANCIAL PERFORMANCE KICKSTART OIL PRESS OVERALL SCORE: 3.0 1.25 (Management) Positive: Author’s Note: KickStart has been very successful in obtaining donor funding and has operated its business much like a for-profit would, rigorously monitoring aspects of its operations to improve efficiency and cut costs. It is looking into moving production to China to further reduce costs and increase grassroots impact. The only significant negative is that they do not earn strong financial returns on the presses, which has limited their support for them. Negative: Management: Low financial returns on the presses has reduced KickStart’s and their donors’ incentive to support them. CRITERION #13: COMMUNITY POVERTY/HUMAN DEVELOPMENT IMPACT KICKSTART OIL PRESS OVERALL SCORE: 3.75 Positive: Authors’ Note*: The oil press will have an employment impact and therefore a poverty reduction impact that could be comparable to the block press’s – fewer employees per press, but perhaps more presses sustainable in any given community. Cooking with seed oil will improve health outcomes over other oils and fats used. CRITERION #14: FINCA AVOIDS PARTICIPANT SELECTION RESPONSIBILITY KICKSTART OIL PRESS OVERALL SCORE: 2.5 Neutral: Authors’ Note*: FINCA will inevitably have full participant selection responsibility because KickStart is unlikely to be involved directly with clients except to train them, and even there it may be through retailers. However, beyond assessing a client’s creditworthiness, the only additional criteria will be that s/he has established a market, knows where s/he will source soil and cement, and has people in mind as laborers. As a result, it is likely that FINCA would want to retain this control.

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CRITERION #15: GEOGRAPHIC RANGE/FLEXIBILITY OF BUSINESS KICKSTART OIL PRESS OVERALL SCORE: 3.4 2.5 (Management) + 2.1 (Field Staff) Positive: Management: No difficulty seen in the potential to expand the reach of the presses. Authors’ Note*: Although seed availability is the primary potential geographic limitation, once a source is found, it can be transported to most areas FINCA serves. More importantly, the press can be operated successfully in urban and rural areas as long as owners can find a market and survive against competition. Negative: Management: Additional confirmation here of geographic limitations resulting from seed availability, although the situation described here is Kenya specific. Demand may be constrained if there is no investment in marketing. Field Staff: Retailers need to be in high visibility areas and need to have reliable credit ratings. The project may need to be in an area in close proximity to a retailer to keep transportation costs down. CRITERION #16: MINIMIZE APPLE OF DISCORD KICKSTART OIL PRESS OVERALL SCORE: 3.25 Positive: Authors’ Note*: Loan application standards will be higher than for beehives, but lower than for the block press. The only two issues beyond creditworthiness are sourcing seeds, which applies to anyone who is not a grower and to some growers as well, and knowing one’s market and avoiding saturation. These skills are less specialized than what is required to access the oil market. CRITERION #17: FINCA EXCLUSIVE REGIONAL PARTNER KICKSTART OIL PRESS OVERALL SCORE: 4.85 4.75 (Management) + 5 (Field Staff) Positive: Management: Lack of retail presence in Uganda and lack of sales and marketing effort behind the presses means that FINCA will be the initial point of entry into Uganda and has a good chance of remaining at least the exclusive MFI partner. Field Staff: Lack of consistent access to credit among purchasers reinforces the potential for FINCA to be an exclusive regional partner for the presses.

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APPENDIX 3.5 – FINAL COMPOSITE SCORES FOR KICKSTART BLOCKS PRESS

Description: Below is a composite of all the scores derived from each relevant interview for every criterion in the Evaluation Scorecard for KickStart’s Block Press. Under each criterion, the final score attributed to responses from each interview group who commented on a given criterion are listed individually. The overall score at the top was derived from these individual scores, taking their average and making any minor adjustments in the event of limited data availability under the guidelines described in Section VIII of the text. Additionally, brief summaries of positive, negative and neutral feedback from each interview group are included as a way of providing a written explanation for the final score assigned to it. Note: Some descriptions below are not summaries of comments made by respondents. Rather they are either explanations or comments on how scores were obtained or they are author comments on the responses or scoring. For example, some scores from FINCA clients were derived from individual comments rather than from collective responses to quantitative focus group questions. These explanations are indicated with a * next to the interview group from which they come.

CRITERION #1: FINCA CLIENT DEMAND FOR EACH BUSINESS OPPORTUNITY KICKSTART BLOCK PRESS OVERALL SCORE: 3.25 3.25 (Management) + 2.0 (Field Staff) + 3.75 (Owners) + 2.9 (Retailers) + 3.1 (Manufacturer) + 2.25 (Consultant) +4.3. (FINCA Uganda Staff) + 3.9 (FINCA Clients) Positive: Management: Uganda has been a strong market despite the fact that they lack a retail presence, suggesting that the presses may be appealing to FINCA clients. FINCA financing mechanism will boost client demand given startup cost. Field Staff: Demand rises in high traffic areas, which is how retail outlet locations are targeted. Demand would also increase with active product marketing. Owners: Limited challenges, strong operational training are enticing to clients. Retailers: No claims of quality issues and perception of compatibility with microcredit program to facilitate financing. Manufacturer: Research found that there is a manufacturing in Uganda who markets and sells block presses. This lead the team to conclude that there is a local market for the technology. Consultant: With revisions and improvements to training, including marketing and setting cost structure, demand will rise. FINCA Staff: Perception that the economy is growing and can support it, and that high returns will be enticing. Neutral: FINCA Clients*: This was determined by combining the percentage of actual respondents who expressed interest in the product (alone or as compared with the others) with individual comments indicating enthusiasm or skepticism about it. Negative: Management: Perception that the MicroFranchisee must have all of the following to be successful: business drive, entrepreneurship, enthusiasm and determination, access to inputs and the drive to market and sell.

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Field Staff: Limited existing product marketing and sales, rich variety of skills including construction experience and strong drive required to achieve success, rising technology production costs, and competition all lower demand. Owners: Clients need training in marketing and sales. Retailers: Market demand issues for oil impacted sales of the technology. No product promotion and competition from cheaper imitations. Only groups and NGOs purchase the product – no individuals. Manufacturer: Construction demand likely to ebb and flow with the economy. Lack of investment in marketing and advertising leads to low client demand, but FINCA will not move forward without working with KickStart to develop a marketing plan for its clients. Consultant: Training improvements would be only marginally helpful because of the specialized skills recommended to achieve success. FINCA Uganda: Staff: One staff member expressed uncertainty about the market, and another expressed concern about market saturation. CRITERION #2: FINANCIAL RISK TO FRANCHISEES KICKSTART BLOCK PRESS OVERALL SCORE: 3.2 2. 5 (Management) + 4 (Field Staff) + 2.6 (Owners) + 4.0 (Retailers) + 2.8 (Consultant) + 3.5 (FINCA Clients) Positive: Management: FINCA has a comparative advantage due to its its extensive network, which it could utilize to facilitate the formation of unions that share market information. Field Staff: Access to microcredit also significantly reduces the financial risk that most owners have been facing as they start their press businesses. Owners: Lower early output and experiencing an operational learning curve at the outset are very reasonable and surmountable early challenges, resulting in slightly lower returns up front, but recovering in time. Retailers: MFIs sometimes buy presses to sell to their clients. No repayment issues among customers who chose to pay for the presses gradually on a layaway plan. . Product quality and guarantee lowers risk. Consultant: Risk would fall dramatically with more comprehensive training. Neutral: FINCA Clients*: Based on comments only. Negative: Management: Lack of proper training in soil management increases risk. Owners: The fact that owners had problems drying the blocks during rainy season implies that production will result in a significantly drop in production during rainy season unless the owner builds some sort of shelter to protect drying blocks. This is an added expense to the owner. Retailers: Even with more support, training is limited. Consultant: Finding a good market is a challenge, even with a strong product and good training. Construction skills and entrepreneurial traits will not be present in every buyer. CRITERION #3: MODEL REPLICABILITY KICKSTART BLOCK PRESS OVERALL SCORE: 3.0

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1.9 (Management) + 2.5 (Field Staff) + 2.4 (Owners) + 3.75 (Retailers) + 4 (Manufacturer) + 3.2 (Consultants) + 4.0 (FINCA Uganda Staff) Positive: Management: Significant existing experience setting up retailers will help with Uganda expansion. Field Staff: Retail staff and the training they receive from KickStart will be a key resource for setting up local training and providing product support. Microfinance is easily integrated into the model and will solve key financing problems. Owners: Operational training appears very solid. Retailers: Precedent set for integrating with microcredit. Likely to be compatible and increase sales. Presence of existing training program. Manufacturer: Possibility to work with this manufacturer to link with Uganda representative and link program with marketing by this representative. Consultant: Acknowledgment of some interest in microfinance. Consultant is a potential training resource. Knowledge and materials to improve training are present and just need to be accessed. FINCA Uganda Staff: No major adjustments needed for loan terms, except for slight variations from the standard terms. Neutral: FINCA Uganda Staff: Suggestion from one staff member to set geographic limits on technology distribution, although this did not work with Grameen. Negative: Management: Will need to build market research into the model, since KickStart does not do any. Limited product marketing at present. Need to significantly enhance training effort and materials. Field Staff: New marketing materials must be developed, M&E strategy and execution for the presses must be revived, and training must be expanded. Requiring construction experience of owners would seriously limit model replicability efforts. Owners: Donor money appears to be a significant source of funding for the presses. Information about marketing and sales of blocks will have to be added to training. Retailers: Training program needs to be enhanced and systematized. Consultant: It is more difficult to replicate the model widely when specialized skills are necessary. His personal opinion is that people avoid the risk of taking out loans. CRITERION #4: POVERTY/HUMAN DEVELOPMENT IMPACT ON FRANCHISEES KICKSTART BLOCK PRESS OVERALL SCORE: 3.6 3.75 (Management) Positive: Management: KickStart’s impact assessment helps it monitor and improve poverty and human development among product purchasers. It will have to redirect this assessment toward FINCA clients who purchase the presses, though. Both presses have shown the capacity to significantly raise incomes for owners under the right conditions. Authors’ Note: Employment potential adds to poverty/human development impact. Additionally, in areas with construction growth looming, these could really change the community.

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Negative: Authors’ Note*: Limited to areas already experiencing construction growth, which are not the poorest. Also skills required of owners will limit sales and impact. CRITERION #5: PROJECT VISION AND DESIGN SYNERGY WITH PARTNER KICKSTART BLOCK PRESS OVERALL SCORE: 3.25 3.4 (Management) + 2.5 (Field Staff) + 1.5 (Owners) + 3.5 (Retailers) + 4.2 (Manufacturer) + 2.2 (Consultant) + 4.25 (Oil Press) + 4.25 (FINCA Staff) Positive: Management: Significant mission overlap, compatibility and ability to enhance program with microfinance, interest in partnership and collaboration by KickStart, potential shown based on past experience to invest more in training, input sourcing, or access to markets if it had a partner committed to the products. Field Staff: Providing access to credit would complement a constraint faced to date by KickStart, retailers and buyers. Retailer education and product knowledge is consistent with FINCA’s commitment to maximizing client success and an important resource for establishing appropriate linkages to make partnership a success. Retailers: Worked with MFIs and developed successful repayment plans, increasing sales and customer success. Manufacturer: Product quality boosts the value of partner association for FINCA. Existing local rep doing sales and marketing provides important market linkages to improve collaboration efforts. Consultant: Consultant can provide (paid) assistance in setting the cost structure in Uganda for supplies, labor and sales as well as providing marketing insights and materials to improve collaboration. FINCA Uganda Staff: One staff member thought this was the best idea. Neutral: FINCA Uganda Staff*: This score was taken from responses to questions about FINCA Uganda’s capacity and interest in launching a project with this partner. Negative: Management: Not seen by KickStart as a potential growth area, explaining its lack of existing product support, which may put more responsibility into FINCA’s hands. Field Staff: Monitoring of presses is more limited than before and monitoring in general may be compromised in practiced, which is not consistent with FINCA vision. FINCA would prefer a partner that provided much more support than KickStart currently does for the presses in all phases of the business. It would also prefer to offer a business to clients that require far less specialized skill. Owners: Donor money appears to be a significant source of funding for the presses. Retailers: One retailer only saw donor funding pay for the purchase of presses; training revisions and greater KickStart participation necessary. Consultant: FINCA would prefer to work with a product that has broader potential to achieve success. Consultant believes combining press project with microfinance is a challenge. CRITERION #6: MARKET DEMAND FOR PRODUCT KICKSTART BLOCK PRESS OVERALL SCORE: 3.35 2.8 (Management) + 2.75 (Field Staff) +4.15 (FINCA Uganda Staff) + 3.75 (FINCA Clients)

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Positive: Management: Strong press sales in Uganda despite lack of retail presence or marketing support suggests that demand could be strong there. Information-sharing unions would link supply to demand. Field Staff: Ongoing demand for the presses at retail outlets suggests there must be some product demand. Neutral: FINCA Uganda Staff*: This score was taken from a composite of responses to questions about staff perceptions of client demand for each opportunity, for each opportunity among youth, and for staff interest and capacity to launch the project as well as some general comments. FINCA Clients*: Based on comments only. Negative: Management: Quality will suffer and demand will decline if clients don’t learn how to properly mix the soil. FINCA Uganda Staff: Concern from one staff member about market demand for the blocks. Another expressed concern about saturating the market with presses. CRITERION #7: PARTNER BUSINESS PLAN DESIGN KICKSTART BLOCK PRESS OVERALL SCORE: 2.7 2.6 (Management) + 2.3 (Field Office) + 3.25 (Owners) + 2.5 (Retailers) + 3.8 (Manufacturer) + 1.75 (Consultant) Positive: Management: Strong effort to maximize efficiency and lower costs in the production process, no concern that KickStart will saturate the market with technologies, strong plan compatibility with microfinance, M&E program that improved internal performance. Field Office: Strong retail sales force will be an important resource for FINCA to tap into for knowledge as it looks to improve the model and develop the pilot project, as well as potentially staff to provide training to FINCA staff and perhaps clients. Owners: Based on the experience of a group of unpaid volunteers, the number of ideal press operators appears to be six, which means it presents a legitimate employment opportunity, including for youth. Limited early challenges by owners also indicate solid training and client preparation for the business. Retailers: Existing knowledge and information sharing among retailers; product quality and guarantee demonstrate strong business plan. Manufacturer: Reinforcement of KickStart’s commitment to product quality. Local representative will create important market linkages for demand, sales and marketing. Neutral: Retailers: An owner with a problem would likely seek support from the retailer, not KickStart directly. Negative: Management: Support for the presses has been nearly abandoned although it benefits from some piggybacking on pump support. Need to significantly bolster market research, input sourcing, training, client support, establishing markets despite lack of current backing for the presses. Low sales margins on block presses leaves no funding for marketing.

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Field Staff: Limitations of training (input sourcing and preparation, establishing supply chains, marketing and sales, business management, etc.) lack of marketing and sales support at retail level, lack of monitoring and evaluation, and lack of ongoing technical and business support to technology owners. Owners: Donor money appears to be a significant source of funding for the presses, and training in marketing and sales is lacking. Retailers: No sales incentives or marketing support from KickStart. Unclear whether KickStart trains retailers or does training themselves. Need to set up good system. Training needs enhancement as well. Manufacturer: Impact of KickStart not marketing the press has extended to the manufacturer. Consultant: Knowing your customer is important, but KickStart is supposedly geared toward providing easy-to-use technologies that offer broad opportunities to earn income rather than specialized knowledge. CRITERION #8: PROJECTED IMPACT ON LOCAL YOUTH UNEMPLOYMENT KICKSTART BLOCK PRESS OVERALL SCORE: 4.15 4.5 (Owners) + 4.25 (FINCA Uganda Staff) + 3.75 (FINCA Clients) Positive: Owners: Based on the experience of a group of unpaid volunteers, the number of ideal press operators appears to be six, which means it presents a legitimate employment opportunity for youth. FINCA Uganda Staff: Men likely to be interested in the brick press. Neutral: FINCA Uganda Staff*: This result is based on the staff’s assessment of youth demand for each type of business and parental willingness to cosign for a loan. FINCA Clients*: This score was derived from the collective results of three questions – perceived youth interest in each opportunity, perception of local youth unemployment issue, and willingness to guarantee a loan on behalf of one’s child (asked of all, not just those who had young adult children). Negative: FINCA Uganda Staff: Women less likely to be interested in the block press. CRITERION #9: ADDITIONAL FINCA STAFF RESOURCES REQUIRED KICKSTART BLOCK PRESS OVERALL SCORE: 1.9 1.35 (Management) Neutral: Authors’ Note*: While the management note is legitimate and additional staffing may be necessary beyond what would be required in the case of Honey Care, it is not nearly as bleak as the number attributed to management’s comment implies. Negative: Management: Additional staff resources may be necessary to establish all linkages necessary to launch the project and ensure that FINCA clients have adequate support in the absence of current backing for the presses. May need to get involved in the training or at least collaborate in the development of enhanced training manuals.

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CRITERION #10: PROJECT STARTUP COST FOR FINCA KICKSTART BLOCK PRESS OVERALL SCORE: 2.4 2.5 (Management) + 2 (Consultant) + 2.5 (FINCA Clients) Positive: Management: KickStart’s previous efforts to help bolster production during high demand periods indicate a willingness to take on more responsibility in resources and financing, which could be applied to the weak links in the current model. No separate investment fund will be necessary to finance clients, since they can earn nearly immediate returns on investment to begin loan repayment. Neutral: FINCA Clients*: Based on comments only. Negative: Management: Additional funding may be necessary to establish all linkages necessary to launch the project and ensure that FINCA clients have adequate training and support in the absence of current backing for the presses. Consultant: If we need to use the consultant as a training resource, then we will incur additional startup costs. CRITERION #11: COST OF ENTRY FOR FRANCHISEES KICKSTART BLOCK PRESS OVERALL SCORE: 2.75 3.5 (Management) + 1.6 (Owners) + 3.15 (Retailers) Positive: Management: Although startup cost is much higher than the beekeeping business, income returns are immediate and there is potential to achieve profitability within a few months, meaning that the initial investment is tied up for less time and less interest is paid per dollar Field Staff: Although microfinance won’t lower the cost of entry, it lowers the amount of capital that must be raised to meet that cost. Retailers: Successful repayment by those taking out loans indicates that the cost of entry is manageable. Negative: Field Staff: Suggestion that startup cost may be cause for delay or avoidance of purchase by potential investors, especially since production costs have risen in recent years. Owners: Initial cost goes up slightly if earnings are a bit lower at the outset, and building a shelter for the blocks to protect them from rain as they dry adds unanticipated costs to the startup. Retailers: Perception that the cost of entry is too high for individuals, although it may be due to lack of access to credit. CRITERION #12: CURRENT PARTNER FINANCIAL PERFORMANCE KICKSTART BLOCK PRESS OVERALL SCORE: 3.0 1.25 (Management) Positive: Author’s Note: KickStart has been very successful in obtaining donor funding and has operated its business much like a for-profit would, rigorously monitoring aspects of its operations to improve

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efficiency and cut costs. It is looking into moving production to China to further reduce costs and increase grassroots impact. The only significant negative is that they do not earn strong financial returns on the presses, which has limited their support for them. Negative: Management: Low financial returns on the presses has reduced KickStart’s and their donors’ incentive to support them. CRITERION #13: COMMUNITY POVERTY/HUMAN DEVELOPMENT IMPACT KICKSTART BLOCK PRESS OVERALL SCORE: 3.75 4 (Owners) Positive: Owners: The press is used to construct buildings for orphans and can be used for other community projects. Using it to this end is not income generating, though. Negative: Authors’ Note*: The above comment is relevant and the employment impact the presses could make is genuine, but limits to its demand potential means poverty/HD impact will not likely be as widespread as the one score obtained indicates.. CRITERION #14: FINCA AVOIDS PARTICIPANT SELECTION RESPONSIBILITY KICKSTART BLOCK PRESS OVERALL SCORE: 2.5 Neutral: Authors’ Note*: FINCA will inevitably have full participant selection responsibility because KickStart is unlikely to be involved directly with clients except to train them, and even there it may be through retailers. However, beyond assessing a client’s creditworthiness, the only additional criteria will be that s/he has established a market, knows where s/he will source soil and cement, and has people in mind as laborers. As a result, it is likely that FINCA would want to retain this control. CRITERION #15: GEOGRAPHIC RANGE/FLEXIBILITY OF BUSINESS KICKSTART BLOCK PRESS OVERALL SCORE: 3.15 3.5 (Management) + 2 (Field Staff) + 4 (Manufacturer) Positive: Management: No difficulty seen in the potential to expand the reach of the presses, although expansion may be constrained by lack of market demand. Manufacturer: Research found that a manufacturer is marketing and selling the block press, indicating that there is a local market demand for the presses. Negative: Field Staff: Retailers need to be in high visibility areas and need to have reliable credit ratings. The project may need to be in an area in close proximity to a retailer to keep transportation costs down. Soil consistency is not appropriate in some areas, limiting range of expansion. If there is need for construction experience, then successful model replication could only work in areas with active construction markets.

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CRITERION #16: MINIMIZE APPLE OF DISCORD KICKSTART BLOCK PRESS OVERALL SCORE: 2.75 Positive: Authors’ Note*: Most people who won’t qualify to own the block press are unlikely to want to either. If they do, then perhaps they can try to gain employment with a block press owner to learn the skills they will need to operate their own businesses. Negative: Authors’ Note*: Selection criteria on individual capabilities are likely to be stringent, which may cause some jealousy. Also, the number of owners a community can support is probably lower here than the other two businesses. CRITERION #17: FINCA EXCLUSIVE REGIONAL PARTNER KICKSTART BLOCK PRESS OVERALL SCORE: 4.85 4.75 (Management) + 5 (Field Staff) Positive: Management: Lack of retail presence in Uganda and lack of sales and marketing effort behind the presses means that FINCA will be the initial point of entry into Uganda and has a good chance of remaining at least the exclusive MFI partner. Field Staff: Lack of consistent access to credit among purchasers reinforces the potential for FINCA to be an exclusive regional partner for the presses.

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APPENDIX 4 - TIMELINE FOR IMPLEMENTATION OF TEST PILOT PROJECT AND ACTIVITY DESCRIPTIONS

APPENDIX 4.1 – HONEY CARE TIMELINE AND ACTIVITY DESCRIPTION Project Timeline for Implementation of Honey Care Test Pilot Project Month Tasks Responsibility Duration 1 2 3 4 5 6 7 8 9 - 19 20 - 31 32 1. Initial Market Assessment FINCA 2 months 2. Establish relationship with Honey

Care FINCA 2 months

1.a Discuss partner responsibilities FINCA 1 month 1.b Generate legal agreement FINCA 1 month 3. Detailed assessment of location for

beekeeping potential Honey Care 2 months

4. Develop a data collection and management system

FINCA/ Honey Care

2 months

5. Develop marketing materials Honey Care 1 months 6. Select and train community

extension worker FINCA/ Honey Care

2 months

7. Train FINCA staff Honey Care 3-5 days 8. Manufacture of new hives Honey Care 2 months 9. Creation of community center 3 months 10. Conduct beekeeping awareness

demonstrations in test project area Honey Care Ongoing

11. Verify client interest in beekeeping and conduct credit assessments

FINCA g Ongoin

12. Deliver beehives/loans FINCA/ Honey Care

Ongoing

13. Train new beekeepers Honey Care Ongoing 13.a Initial training 3 days 13.b Ongoing training Ongoing

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14. Colonization Period before first harvest

12 months

15. Monitoring and evaluation phase FINCA/ Honey Care

12 months

15.a Baseline collection FINCA 15.b Impact evaluation Honey Care 15.c n Program evaluatio FINCA 16. Refine protocols Ongoing 17. Provide ongoing support and

troubleshooting Honey Care/ Extension Officer

Ongoing

18. Final Assessment of test project FINCA

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Activity Description for Implementation of Honey Care Test Pilot Project 1. Initial Market Assessment: (2 months)

a. Where does FINCA want to conduct a test? b. Is there existing beekeeping in the region? c. Is the area sufficiently rural? d. Is there adequate foliage and water in the area? e. Is there a local market for honey sales? f. How accessible is the area for Honey Care’s collection process? g. Is there ample capacity and interest among FINCA staff to take on the new project? h. Is there initial interest among FINCA clients to take on the new project?

2. Establish relationship with Honey Care (2 months) a. Confirm interest in collaboration b. Agree on partner responsibilities, information sharing and project implementation

protocol, success benchmarks c. Confirm staff contacts at each level d. Generate legal agreement

3. Detailed assessment of location for beekeeping potential (2 months) a. Fact-finding and information gathering about the region b. Profiling of existing beekeepers and assessment of production quality c. Identification of candidates d. Identification of gaps of knowledge and capacity within the community e. Assessment of potential community extraction centers

4. Develop a data collection and management system and integrate into MIS (1 month) 5. Develop marketing materials (1 month) 6. Select and train community extension worker (2 months) 7. Train FINCA staff (3-5 days)

a. Marketing of beekeeping b. Client selection c. Loan management d. Monitoring and evaluation

8. Manufacture of new hives (2 months) 9. Creation of community center (3 months) 10. Conduct beekeeping awareness demonstrations in test project area (Ongoing) 11. Verify client interest in beekeeping and conduct credit assessments (Ongoing) 12. Deliver beehives/loans 13. Train new beekeepers (Ongoing)

a. Initial training (3 days) b. Ongoing training (Ongoing)

14. Colonization Period before first harvest 15. Monitoring and evaluation phase (Ongoing)

a. Program evaluation b. Impact evaluation on clients

16. Refine and establish protocols (Ongoing) 17. Provide ongoing support and troubleshooting (Ongoing) 18. Final Assessment of test project

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APPENDIX 4.2 – KICKSTART TIMELINE AND ACTIVITY DESCRIPTION

Project Timeline for Implementation of KickStart Test Pilot Project Month Tasks Responsibility Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 19. Preliminary Market Assessment FINCA 3 months 1.a Design FINCA 1 month 1.b Implementation FINCA 2 months 20. Establish relationship with KickStart FINCA 2 months 1.a Discuss partner responsibilities FINCA 1 month 1.b Generate legal Agreement FINCA 1 month 21. Develop a data collection and

management system FINCA 2 months

22. Establish supply chain and purchasing system

FINCA/ KickStart

2 months

23. Develop marketing materials KickStart 2 months 24. Develop and refine training KickStart 2 months 25. Train FINCA staff KickStart 3-5 days 26. Conduct product demonstrations in test

project area KickStart Ongoing

27. Take orders from clients, and conduct credit assessments

FINCA Ongoing

28. Train press owners FINCA/ KickStart

Ongoing

10.a Session one 1 day 10.b Session two 2 days 29. Deliver technologies/loans KickStart Ongoing 30. Refine protocols Ongoing 31. Provide ongoing support and

troubleshooting FINCA/ KickStart

Ongoing

32. Monitoring and evaluation phase FINCA/ KickStart

Ongoing

14.a Baseline collection KickStart Ongoing 14.b Impact evaluation KickStart 2 months 14.c Final Assessment of test project FINCA

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Activity Description for Implementation of KickStart Test Pilot Project 1. Preliminary Market Assessment: (1 month design, 2 months implementation)

a. Where does FINCA want to conduct a test? b. How rural or urban is the test market? c. How much access is there to inputs? d. How many presses could the market support? e. What is the level of FINCA client demand for the product? f. What competition exists and what new competition may emerge? g. To what degree is local construction occurring? h. Are local builders receptive to using the blocks? i. Are local individuals and businesses receptive to using sunflower oil? j. How will the market change after FINCA client entry?

2. Establish relationship with KickStart (2 months – may take place concurrently with part of the market assessment)

a. Reconfirm interest in collaboration b. Agree on partner responsibilities, information sharing and project implementation

protocol, and success benchmarks c. Confirm staff contacts at each level d. Generate legal agreement

3. Develop a data collection and management system and integrate into MIS (3 months) 4. Establish supply chain and purchasing system (2 months)

a. Who will be the producer(s)? b. How will presses be transported? c. What will be the location(s) of retailer(s)? d. Who will be the purchaser – FINCA or client? e. Will FINCA purchase in bulk or purchase on order? f. How will purchase be made? Will FINCA pay directly?

5. Develop marketing materials (2 months) 6. Develop and refine training for FINCA staff, retail store attendants and prospective press

purchasers (2 months) a. Refine training in seed and soil knowledge b. Add training in marketing and sales c. Include block and cooking oil marketing materials in manual sold to clients

7. Train FINCA staff (3-5 days) a. Marketing, sales of presses b. Client selection c. Loan management

8. Ongoing support, troubleshooting 9. Monitoring and evaluation 10. Conduct product demonstrations in test project area (ongoing) 11. Take orders from clients, and conduct credit assessments (ongoing)

a. Credit rating b. Input sources arranged c. Production team arranged (to operate machine) d. Operation and storage location and curing or drying location determined e. Relationships established with potential buyers

12. Train press owners (1 day session one, 2 days session two) a. Session one (After order has been placed but before final loan approval):

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i. Bookkeeping and basic business procedures ii. Sourcing inputs (knowledge on types of good quality soil and seeds) iii. Marketing and sales

b. Session two Block Press (after technology has been delivered): i. Soil selection and testing; ii. Mixing soil and cement; iii. Press operation; iv. Labor; v. Curing, storing and testing blocks; vi. Press maintenance and repair; vii. Potential problems and solutions.

c. Session two Oilseed Press (after technology has been delivered): i. Seed selection and drying; ii. Press and filter operation; iii. Labor; iv. Packaging and storing oil and seedcake; v. Press and filter maintenance and repair; vi. Potential problems and solutions.

13. Deliver Technologies (ongoing) 14. Refine and establish protocols (ongoing) 15. Provide ongoing support and troubleshooting (ongoing) 16. Monitoring and Evaluation phase (ongoing)

a. Program evaluation b. Impact evaluation on clients c. Final Assessment of test project (Begin 6 months after first loans distributed)

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APPENDIX 5 – SURVEY INSTRUMENTS APPENDIX 5.1 - FINCA SURVEY INSTRUMENTS

APPENDIX 5.1.1 - FINCA Uganda Staff Questionnaire Name Date Position held at FINCA Date started: Primary Responsibilities FINCA CLIENT/COMMUNITY INFORMATION 1. What is the age range of FINCA clients you serve? Minimum Age: Maximum Age: 2. Is there a minimum age required to obtain a loan of any kind from FINCA? Yes No If yes, age Do you think the age minimum is appropriate? 3. Approximately what percentage of FINCA clients (in your territory) has completed the following levels of education? None Completed primary Completed secondary Completed higher (university) 4. How many FINCA clients or children of FINCA clients in (Uganda) (your territory) that are young adults ages 15-18 are: Still in school None Some Most All Self/family employed None Some Most All Employed by others None Some Most All Unemployed None Some Most All 5. Has the income FINCA clients have generated for their families increased employment opportunities for clients or children of clients: Ages 15-18? Yes No Ages 18-21? Yes No Ages 21-24? Yes No 6. Do you think there is an employment problem for young adults in (the regions FINCA Uganda serves) (your territory)? Ages 15-18? Yes No Ages 18-21? Yes No Ages 21-24? Yes No 7. Do you think there is a demand for new small business opportunities in (the regions FINCA Uganda serves) (your territory)? No demand Weak demand Solid Demand High Demand

8. What is the basis for your answers to questions three through 11? Data gathered by FINCA Data from Ugandan government or other independent services Informal feedback from FINCA clients Informal feedback from FINCA field staff Personal observation Other

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9. If FINCA Uganda offered a new small enterprise creation opportunity to clients where it (or a partner) provided the idea, any equipment needed, and training in how to start up and operate the business, along with a loan to offset startup costs, do you think there would be demand for this in (the regions FINCA Uganda serves) (your territory)? Startup loan $100 No demand Weak demand Solid Demand High Demand

Startup loan $150 No demand Weak demand Solid Demand High Demand

Startup loan $300 No demand Weak demand Solid Demand High Demand

Startup loan $350 No demand Weak demand Solid Demand High Demand

Startup loan $500 No demand Weak demand Solid Demand High Demand

10. If this opportunity were in beekeeping at a startup cost of $100, would demand increase, remain the same, or decrease compared with your previous answer at that startup cost?

Increase Remain the same Decrease 11. If this opportunity were to form a new business using Grameen Village Phone technology at a startup cost of $150 or less, would demand increase, remain the same, or decrease compared with your previous answer at that startup cost?

Increase Remain the same Decrease

12. If this opportunity were as a cooking oil producer at a startup cost of $350, would demand increase, remain the same, or decrease compared with your previous answer at that startup cost?

Increase Remain the same Decrease

13. If this opportunity involved becoming the owner of a brick-press business at a startup cost of $500, would demand increase, remain the same, or decrease compared with your previous answer at that startup cost?

Increase Remain the same Decrease 14. If this opportunity were offered to young adults – either existing clients or children of existing clients – would demand increase, remain the same, or decrease compared with the rest of your client base? Men Ages 15-18 Increase Remain the same Decrease Women Ages 15-18 Increase Remain the same Decrease Men Ages 18-21 Increase Remain the same Decrease Women Ages 18-21 Increase Remain the same Decrease Men Ages 21-24 Increase Remain the same Decrease Women Ages 21-24 Increase Remain the same Decrease 15. If this opportunity were offered to young adult children of clients, do you think clients would cosign their children’s loans? Men Ages 15-18? Yes No Men Ages 18-21? Yes No Men Ages 21-24? Yes No Women Ages 15-18? Yes No

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Women Ages 18-21? Yes No Women Ages 21-24? Yes No MEDIUM PRIORITY QUESTIONS 16. How many FINCA clients (in Uganda) (in your territory) are affected by these obstacles to increasing income/improving local development? Illiteracy, inadequate literacy None Some Most All Inadequate numeracy None Some Most All Inadequate overall education None Some Most All Poor soil quality/erosion None Some Most All Poor farming techniques None Some Most All Misguided choice of crops to grow None Some Most All Limited access to agricultural extension services None Some Most All Limited access to markets/market information None Some Most All Limited access to inputs for business, home None Some Most All Lack of basic business skills None Some Most All Skills not appropriate to market demand None Some Most All Lack of employment opportunities None Some Most All Lack of initiative None Some Most All Failed/corrupt local government None Some Most All Large family/many children None Some Most All Child health problems None Some Most All Adult health problems None Some Most All Weak local infrastructure – bad roads, no electricity, poor water, sanitation None Some Most All Other 17. Has the income FINCA clients (in Uganda) (in your territory) have generated for their families increased educational attainment for their children? (For example, are children going to school longer, going to better schools, or spending more time in their studies and therefore learning more in school?) Yes No LOW PRIORITY QUESTIONS 18. How many FINCA clients in (Uganda) (your territory) possess the following skills: Basic literacy None Some Most All Basic numeracy None Some Most All Basic farming techniques None Some Most All Advanced farming techniques None Some Most All Basic training in a trade None Some Most All Advanced training in a trade None Some Most All Basic accounting/budgeting None Some Most All Entrepreneurship None Some Most All Basic computer/technology training None Some Most All

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Advanced computer/technology training None Some Most All Basic product sales/marketing None Some Most All Advanced product sale/marketing None Some Most All Other 19. How many FINCA clients in (Uganda) (your territory) possess the following skills in entrepreneurship? Ability to generate a new idea None Some Most All Initiative to start a new business None Some Most All Problem-solving None Some Most All Drive to overcome obstacles None Some Most All Ability to make it financially sustainable None Some Most All Other 20. (Field staff only) What percent of FINCA clients in your territory have one of the following as their main source of income? Agricultural production Road side food crop vendors Itinerant traders – second hand clothes Simple groceries and kiosks Tin Charcoal dealers Simple poultry Makeshift restaurants SMEs dealing in processing, marketing Beekeeping Other FINCA ORGANIZATION INFORMATION 1. How many staff members are in (the FINCA Uganda country office) (your regional office)? 2. Are any members of your staff involved in the Grameen Village Phone program? Yes No If so, then have they taken on responsibilities for Grameen Village Phone in addition to core FINCA operational responsibilities or were they hired expressly to work on the Grameen Village Phone initiative? Split time between GVP and FINCA core program 100% devoted to GVP If time is split between programs, how is it allocated? 3. If a small enterprise creation opportunity (MicroFranchising) were to be offered to clients by an implementing partner that provided the idea, any equipment needed, and training in how to start up and operate the business with support from FINCA to provide a startup loan, then how important would the following criteria be to ensuring its feasibility? Low cost of entry for MicroFranchises Essential Very important Somewhat important Not important No opinion Potential employment opportunity for youth (ages 15-18) Essential Very important Somewhat important Not important No opinion Potential employment opportunity for youth (ages 18-21) Essential Very important Somewhat important Not important No opinion Potential employment opportunity for youth (ages 21-24) Essential

Very important Somewhat important Not important No opinion

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Potential to positively impact youth unemployment in (the regions FINCA Uganda) (your community) serves Essential Very important Somewhat important Not important No opinion Replicability of business model Essential Very important Somewhat important Not important No opinion Well-designed and implemented partner business model Essential Very important Somewhat important Not important No opinion Low cost to FINCA Uganda (or support from FINCA Int’l) Essential Very important Somewhat important Not important No opinion Minimal additional time effort required by existing staff Essential Very important Somewhat important Not important No opinion Desire of partner to leverage FINCA network capacity Essential Very important Somewhat important Not important No opinion Partner interest in working with FINCA Uganda Essential Very important Somewhat important Not important No opinion Project capacity to maximize loan repayment rates on loans provided for this business Essential Very important Somewhat important Not important No opinion Project capacity to generate a new revenue stream Essential Very important Somewhat important Not important No opinion Marketing potential for new service to attract new clients Essential Very important Somewhat important Not important No opinion Minimize competitiveness or jealousy among clients who do not fit selection criteria for starting the business Essential Very important Somewhat important Not important No opinion Need to place final selection decision-making power in partner’s hands Essential Very important Somewhat important Not important No opinion Project exclusivity to FINCA Essential Very important Somewhat important Not important No opinion 4. What is (FINCA Uganda’s) (your territory’s) capacity to launch a test pilot project of this nature if FINCA International headquarters supplies the funding? Impossible Possible, but need additional staff and funding Possible, but need additional staff Possible, but need additional funding Possible, few institutional constraints Other ________ 5. What is (FINCA Uganda’s) (your territory’s) capacity to launch a test pilot project of this nature if FINCA Uganda is responsible for funding the test at a budget of _________? Impossible Possible, but need additional staff and funding Possible, but need additional staff Possible, but need additional funding Possible, few institutional constraints Other

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6. Absent capacity considerations, what do you think would be (FINCA Uganda’s) (your territory’s) level of interest in launching such a pilot project? Not interested slightly interested Interested Very interested 7. If this opportunity were in beekeeping, and if prospective beekeepers had a guaranteed market for production, would your interest increase, remain the same, or decrease compared with your previous answer? Increase Remain the same Decrease

8. If this opportunity were to form a new business using Grameen Village Phone technology, would your interest increase, remain the same, or decrease compared with your previous answer? Increase Remain the same Decrease 9. If this opportunity were to own an oil press that would enable clients to become cooking oil producers, would your interest increase, remain the same, or decrease compared with your previous answer? Increase Remain the same Decrease 10. If this opportunity were to own a block press that would enable clients to start a business producing low cost blocks for use as building materials, would your interest increase, remain the same, or decrease compared with your previous answer? Increase Remain the same Decrease 11. How would you structure loans for this type of enterprise creation opportunity at the $100 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$150 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$300 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$350 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$500 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

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Yes No

12. If these microenterprise opportunities explicitly targeted youth, how would you adjust the loan structure to account for the increased credit risk? $100 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$150 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$300 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$350 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

$500 level? Client Eligibility

Loan Type (Indiv./Village Bank)

Interest Rate

Loan Period

Guarantee Required Training

Yes No

LOW PRIORITY QUESTIONS 13. What is the division of responsibilities among staff in your office? __________________________________________________________________________________________________________________________________________________________________________ 14. Under what conditions would you hire an additional staff member? __________________________________________________________________________________________________________________________________________________________________________ 15. When FINCA Uganda makes a decision to enhance services or offer a new product, how does your office handle the additional responsibility? __________________________________________________________________________________________________________________________________________________________________________

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APPENDIX 5.1.2: FINCA CLIENT QUESTIONNAIRE (FOCUS GROUP) Date of Interview Location of Interview Number of respondents present Observations about group

1. If an opportunity became available through FINCA to invest in a business of beekeeping and honey

production with a guaranteed market and the training, equipment, and a loan to pay for the startup cost is provided to assist in starting the business, would you be interested in investing in this opportunity? Yes respondents No respondents

a. Why or why not?

2. Do you think young adults would be interested in this opportunity? Men Ages 15-18? Yes respondents No respondents Women Ages 15-18? Yes respondents No respondents Men Ages 18-21? Yes respondents No respondents Women Ages 18-21? Yes respondents No respondents Men Ages 21-24? Yes respondents No respondents Women Ages 21-24? Yes respondents No respondents

3. If an opportunity became available through FINCA to invest in a business of owning a cellular phone and selling the use of that phone with the training, equipment, and a loan to pay for the startup cost provided to assist in starting the business, would you be interested in investing this opportunity? Yes respondents No respondents

a. Why or why not? 4. Do you think young adults would be interested in this opportunity?

Men Ages 15-18? Yes respondents No respondents Women Ages 15-18? Yes respondents No respondents Men Ages 18-21? Yes respondents No respondents Women Ages 18-21? Yes respondents No respondents Men Ages 21-24? Yes respondents No respondents Women Ages 21-24? Yes respondents No respondents

5. If an opportunity became available through FINCA to invest in a business of producing and selling

cooking oil from seeds and the training, equipment, and a loan to pay for the startup cost is provided to assist in starting the business, would you be interested in this opportunity? Yes respondents No respondents

a. Why or why not? 6. Do you think young adults would be interested in this opportunity?

Men Ages 15-18? Yes respondents No respondents Women Ages 15-18? Yes respondents No respondents Men Ages 18-21? Yes respondents No respondents Women Ages 18-21? Yes respondents No respondents Men Ages 21-24? Yes respondents No respondents

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Women Ages 21-24? Yes respondents No respondents 7. If an opportunity became available through FINCA to invest in a business of producing and selling low-

cost bricks for buildings using local materials and the training, equipment, and a loan to pay for the startup cost is provided to assist in starting the business, would you be interested in this opportunity? Yes respondents No respondents

a. Why or why not? 8. Do you think young adults would be interested in this opportunity?

Men Ages 15-18? Yes respondents No respondents Women Ages 15-18? Yes respondents No respondents Men Ages 18-21? Yes respondents No respondents Women Ages 18-21? Yes respondents No respondents Men Ages 21-24? Yes respondents No respondents Women Ages 21-24? Yes respondents No respondents

9. Do you see underemployment – not being able to make enough money to support yourself or your

family – as a problem for young adults: Men Ages 15-18? Yes respondents No respondents Women Ages 15-18? Yes respondents No respondents Men Ages 18-21? Yes respondents No respondents Women Ages 18-21? Yes respondents No respondents Men Ages 21-24? Yes respondents No respondents Women Ages 21-24? Yes respondents No respondents

10. If you were the parent of a young adult, would you guarantee his or her loan to start one of these

businesses? Men Ages 15-18? Yes respondents No respondents Women Ages 15-18? Yes respondents No respondents Men Ages 18-21? Yes respondents No respondents Women Ages 18-21? Yes respondents No respondents Men Ages 21-24? Yes respondents No respondents Women Ages 21-24? Yes respondents No respondents

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APPENDIX 5.2 – HONEY CARE SURVEY INSTRUMENT

APPENDIX 5.2.1: Honey Care Africa Management Survey Name _________________ Date __________________ Position held at Honey Care _______________ How long have you worked there? ____ HONEY CARE ORGANIZATIONAL INFORMATION 1. What are the characteristics of successful beekeepers? What do you look for when selecting beekeepers? __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 2. What percentage of beekeepers have completely independent operations rather than some community

sharing? Why are these used in some instances rather than completely independent bee keeping? __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 3. Do many or any farmers fail with their operation? Why? ____________________________________________________________________________________________________________________________________________________________ 4. Can you describe the financial operations of most beekeepers? (eg. how much they make, how long to

pay off the loan, form/schedule of payments) __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 5. What is typically involved in the contracts of the tripartite relationships? What all does an NGO usually

agree to? __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

6. Can you describe the role of project officers? ( Activities, time commitment, number of farmers supported)

____________________________________________________________________________________________________________________________________________________________ 7. How many youth are currently operating beekeeping businesses and how successful have they been? __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ EXPANSION CONSIDERATIONS Domestic Expansion: 8. How do you proceed with new expansions in Kenya (in terms of starting location, what staffing used,

finding new beekeepers)?

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__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 9. What was the timeframe that this expansion took? ____________________________________________________________________________________________________________________________________________________________ 10. What do you currently look for when performing site evaluations? Do you have evaluation criteria that

you can share? ____________________________________________________________________________________________________________________________________________________________ Tanzanian Expansion: 11. How did you proceed with your expansion into Tanzania? (in terms of starting location, what staffing

used, finding new beekeepers, timeframe)? __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 12. What complications did you encounter with this expansion? __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ FINCA Partnership 13. What additional steps do you foresee in the potential expansion to Uganda? (in terms of timeframe,

staffing, cultural challenges) __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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APPENDIX 5.2.2: HONEY CARE AFRICA PROJECT OFFICER QUESTIONNAIRE

Name Date 1. Demographic Information Gender Male Female Age Education level None Some primary Completed primary Some secondary Completed secondary Some university Completed university Can you read? Yes No Are you trained in basic math? Yes No Number of people in your household: Location: Number of beekeepers you support: Years of experience working with beekeepers: Other sources of income: 2. Project Officer Work What activities do you perform in your role as Project Officer? How involved are you in assisting beekeepers? How many hours each week do you typically spend working with beekeepers? How could the support of beekeepers be improved? Specifically, how are the support, collection, payment, and quality assurance processes in your job? 3. About Beekeepers Can you describe most farmers that you work with? What is the average age range for the farmers you work with? Under 18 years % 18-24 years % 25 – 32 years % over 32 years % Living situation? rural % urban % What percentage is male or female? male % female % Do most work in groups or independently groups % individual % Other occupations or sources of income? Agricultural production Road side food crop vendors Itinerant traders – second hand clothes Simple groceries and kiosks Tin Charcoal dealers Simple poultry Small restaurants Business dealing in processing, marketing

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Other (please identify): What skills or tools does the farmer need before starting? In your opinion, what makes a farmer successful in beekeeping? Geographical considerations? (Living in a closer community, on a farm) Time/scheduling considerations? Education level? (Math, reading, or communication skills) Age? Other (please identify): What are common problems that beekeepers encounter? What do you think is the best way to deal with such problems? Problems Solutions

4. Starting new operations Have you helped many farmers start new beekeeping operations? Yes No Were they successful? Yes No What are common problems with new beekeepers? How long does it usually take to have a person independently making honey from when they start with Honey Care? Would you change anything about the current process of training and starting new beekeepers? How could you improve the process?

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APPENDIX 5.2.3: HONEY CARE AFRICA NGO SUPPORT SURVEY Name Date 1. Demographic Information Affiliated organization: Location: Number of beekeepers you support: Years of experience working with beekeepers: 2. Partnership with Honey Care Africa What is your organization’s relationship with Honey Care Africa? For how long has your organization worked with Honey Care? What is your role in working with the beekeepers? What activities does this entail? How have these activities changed over the years/months? In what ways, if any, would you like to change the relationship? Do you have recommendations for other organizations who will work with Honey Care? What is the procedure used to select or offer the beekeeping opportunity to clients? Which partner is responsible for deciding whether clients are eligible to become beekeepers? How did you arrive at this division of responsibilities with Honey Care? 3. About Beekeepers Can you describe most farmers that you work with? What is the average age range for the farmers you work with? Under 18 years % 18-24 years % 25 – 32 years % over 32 years % Living situation? rural % urban % What percentage is male or female? male % female % Do most work in groups or independently groups % individual % Other occupations or sources of income? Agricultural production Road side food crop vendors Itinerant traders – second hand clothes Simple groceries and kiosks Tin Charcoal dealers Simple poultry Small restaurants Business dealing in processing, marketing Other (please identify): _____________________________________________________________

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_______________________________________________________________________________ 4. Successful Operations What skills or tools does the farmer need before starting? In your opinion, what makes a farmer successful in beekeeping? Geographical considerations? (Living in a closer community, on a farm) Time/scheduling considerations? Education level? (Math, reading, or communication skills) Age? Other (please identify): What are common problems that beekeepers encounter? What do you think is the best way to deal with such problems? 5. Starting new operations Have you helped many farmers start new beekeeping operations? Yes No Were they successful? Yes No

Loan Type (Indiv./Village Bank)

What are common problems with new beekeepers? How long does it usually take to have a person independently making honey? What roles have you and your organization played in helping new beekeepers get started? How would you improve the process? 6. Loan Provision What is a common loan structure that you provide to beekeepers? Specifically: Startup Capital

Interest Rate %

Loan Terms (Payment amount, frequency)

Loan Repayment Period

- What percentage expands their businesses? - What percentage takes out additional loans for expansion or for other needs? - Do you experience any repayment problems? - Do you give loans to youth or support any younger beekeepers?

What advice would you give to other organizations that are going to support new beekeepers?

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APPENDIX 5.3 – KICKSTART SURVEY INSTRUMENTS

APPENDIX 5.3.1: KickStart Staff Questionnaire Name Date Position held at KickStart How long have you worked there? KICKSTART ORGANIZATIONAL INFORMATION

1. How many companies are currently manufacturing the Oilseed and Block Presses?

a. In which countries?

2.

___________________________________________________________________________

Approximately how many retailers are selling the two products? What is the geographic distribution of these retailers? a.

______________________________________________________________________________________________________________________________________________________

3.

What kind of market research does the organization conduct in order to assess the need/potential demand for these products in the regions it serves?

__________________________________________________________________________________________________________________________________________________________________________

a. Has this research been done in Uganda for the Oilseed and Block Press? Yes No

4.

Has the organization done extensive marketing in Uganda? How many retailers are selling the products? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

5. Has KickStart encountered any problems with regards to the production and or sale of the products? For sales in Uganda?

______________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

6. There seems to be less of a focus on the Oilseed and Brick Presses within the organization? Why? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

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7. What is the geographic potential for expansion with regards to these two products? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

8. If you were to expand to another country would you set up the same kind of operations for these products?

__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

9. Under what conditions do you simply export? How do you make this decision? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ INFORMATION ON OILSEED AND BLOCK PRESS OWNERS

10. In regards to the training provided to the buyers, how (if at all) do you feel it needs to be improved? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

a. How difficult would it be for the organization to do this? Easy Manageable Difficult Impossible

b. Are there any plans to improve in this area? Yes No

11. Has your organization considered providing other business services in order to help individuals start businesses using the oil and brick presses? Yes No

a. If so, can you describe them?

________________________________________________________________________________________________________________________________________________________________________________________________________________________

b. Are there any plans to offer such services in the future or to partner with an organization that could provide these services? Yes No

12. In your opinion what are the personal characteristics and the environment necessary for an individual to start a business using a Block or Oil Press?

__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________

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13. What are some of the main challenges facing these business owners? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

14. Do you know if any of the individuals have used microcredit schemes to purchase Block or Oil Presses? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

_________________________________________________________________________________

15. Do you think that many potential clients would be interested in microcredit in order to purchase a Block or Oil Press and to start a business? Yes No

16.

Startup Capital

Based on the needs for starting a business using these products, in your opinion, what characteristics should a microcredit product have in order for an individual to be able to successfully purchase and start a business with one of these products?

Loan Type

(Indiv./Village Bank)

Interest Rate %

Loan Terms/Period

Guarantee

Yes No

17. Would your organization be interested in working with FINCA International in order to assist individuals to start small businesses using the Oilseed or Block Press in Uganda? Yes No

a. What type of relationship do you think would be ideal in order to accomplish this? _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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APPENDIX 5.3.2: KICKSTART BLOCK PRESS MANUFACTURER QUESTIONNAIRE Name Date Name of business MakigaEngineering Works INFORMATION

1. How did you decide to start producing the Block Press technology? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

2. How many Block Press technologies do you produce a month?

3. Have you encountered any problems in producing and selling the technology? _________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________

4. Is your business as successful in producing this technology as you had anticipated? _________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________

5. Do you have any plans to expand? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

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APPENDIX 5.3.3: KICKSTART OILSEED AND BLOCK PRESS RETAILERS QUESTIONNAIRE Name Date Name of business INFORMATION

6. How many Oilseed technologies do you sell in a month?

7. Who generally buys these technologies-are they using them to start a new business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

_________________________________________________________________________________

8. How many Block Press technologies do you sell in a month?

9. Who generally buys these technologies-are they using them to start a new business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

_________________________________________________________________________________

10. Do you know if any of the individuals have used microcredit schemes in order to purchase Block or Oil Presses?

__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

_________________________________________________________________________________

11. Do you think that many potential clients would be interested in microcredit in order to purchase a Block or Oil Press and to start a business?

__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

_________________________________________________________________________________

12.

Based on the needs for starting a business using these products, in your opinion, what characteristics should a microcredit product have in order for an individual to be able to successfully purchase and start a business with one of these products?

__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

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_________________________________________________________________________________

13.

Please describe the type of training you provide to the clients who buy the technologies.

__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

_________________________________________________________________________________

14. Have any of your clients reported having any trouble with the technologies? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

.

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APPENDIX 5.4 – GRAMEEN PHONE SURVEY INSTRUMENTS

APPENDIX 5.4.1: Grameen Village Phone Staff Questionnaire

Name Date Organization: FINCA Uganda MTN Grameen Village Phone Position held How long have you worked here? FINCA/GRAMEEN VILLAGE PHONE PARTNERSHIP/OPERATIONS INFORMATION 1. How many of your staff members are devoted to (the partnership with FINCA) (the Grameen Village Phone project)? What is their average weekly time commitment to Grameen Village Phone? 2. What is the division of responsibilities between FINCA Uganda and MTN Grameen Village Phone? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 3a. How does (FINCA) (MTN Grameen Village Phone) monitor partnership performance? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 3b. What indicators are used? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 4a. Do you think these indicators provide a complete picture of how the partnership is performing, how FINCA’s Grameen Village Phone Operators are performing, and what impact Grameen Village Phone is making in the communities it serves? Yes No 4b. Why or why not? 4c. What, if any, additional monitoring indicators do you think FINCA and Grameen Village Phone should use? 4d. What, if any, existing indicators should be removed? 5. Has the FINCA partnership with Grameen Village Phone exceeded, met, or underperformed on objectives established prior to launching the partnership in the following areas: Number of Village Phone Operators in the network Exceeded Met Underperformed Geographic distribution of network Exceeded Met Underperformed

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Number of villages served Exceeded Met Underperformed Income generated for GVP Operators Exceeded Met Underperformed Poverty/human development impact (HDI) on GVP Operators Exceeded Met Underperformed Poverty/HDI on communities served by GVP Operators Exceeded Met Underperformed Calls generated per week Exceeded Met Underperformed Weekly revenue per operator Exceeded Met Underperformed Loan repayment rates on GVP Operator loans Exceeded Met Underperformed Total revenue generated for FINCA Exceeded Met Underperformed Total revenue generated for MTN Village Phone Exceeded Met Underperformed Cost management Exceeded Met Underperformed Achieving financial sustainability Exceeded Met Underperformed Defined as: Other 6. After startup, have you revised these expectations? Yes No Are your objectives more ambitious the same less ambitious

? If your expectations have changed, then is the FINCA partnership with Grameen Village Phone exceeding, meeting, or underperforming on your most recently revised expectations in the following areas: Number of Village Phone Operators in the network Exceeded Met Underperformed Geographic distribution of network Exceeded Met Underperformed Number of villages served Exceeded Met Underperformed Income generated for GVP Operators Exceeded Met Underperformed Poverty/human development impact (HDI) on GVP Operators Exceeded Met Underperformed Poverty/HDI on communities served by GVP Operators Exceeded Met Underperformed Calls generated per week Exceeded Met Underperformed Weekly revenue per operator Exceeded Met Underperformed Loan repayment rates on GVP Operator loans Exceeded Met Underperformed

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Total revenue generated for FINCA Exceeded Met Underperformed Total revenue generate for MTN Village Phone Exceeded Met Underperformed Cost management Exceeded Met Underperformed Achieving financial sustainability Exceeded Met Underperformed Other 7. What were the primary causes of the performance you achieved at startup and what are the primary causes of your current performance? AT STARTUP AT PRESENT

8. From (FINCA’s) (MTN Grameen Village Phone’s) point of view, what have been the most promising and successful aspects of the partnership to date? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 9. What have been the greatest challenges your organization has encountered in the partnership? __________________________________________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 10. What has each partner done to overcome those problems? FINCA MTN Grameen Village Phone

11. What (if anything) would you have done differently from the partnership’s outset and after it launched? __________________________________________________________________________________________________________________________________________________________________

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__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ MEDIUM PRIORITY QUESTIONS 12. How does FINCA market the Grameen Village Phone program to its clients to attract new Grameen Village Phone Operators? _____________________________________________________________________________________ _____________________________________________________________________________________ 13. Has either partner identified any new microenterprise opportunities that it could generate using the technology or the relationship between partners? Yes No If yes, then has it taken any steps to test or implement these ideas? Yes No If so, then what steps has it taken? __________________________________________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________ 14. What is the current growth plan for the partnership? How many years out is the plan measured? Operator network: Geographical distribution: Number of villages served: Income generated for GVP Operators: Calls generated per week Weekly revenue per operator Loan repayment rates on GVP Operator loans Total revenue generated for FINCA Total revenue generate for MTN Village Phone Achieving financial sustainability Poverty/human development impact (HDI) on GVP Operators: Poverty/HDI on communities served by GVP Operators Other FINCA/GRAMEEN VILLAGE PHONE OPERATOR INFORMATION 1. If you have it available, please furnish the following information about FINCA’s Grameen Village Phone Operators: Median Age Age range % Female Average number of people per household Average level of education achieved Minimum education level achieved

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% with basic literacy skills % with basic numeracy skills Median household income prior to becoming a GVP operator Current median household income of GVP operators Median weekly profit generated from GVP after loan repayment Average loan repayment rate Average number of additional enterprises operated Types of additional enterprises operated :

Agricultural production Road side food crop vendors Itinerant traders – second hand clothes Simple groceries and kiosks Tin Charcoal dealers Simple poultry Makeshift restaurants SMEs dealing in processing, marketing

Other (Please identify) 2. What is the basis for your response? Data gathered by FINCA Date gathered by MTN Grameen Village Phone Data from an independent source Informal feedback from GVP Operators Informal feedback from FINCA/GVP staff Personal observation Other 3. What are the most important qualities that contribute to a Village Phone Operator’s success? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 4. Would it be feasible to offer young adults the opportunity to become Grameen Village Phone Operators? Ages 15-18? Yes No Ages 18-21? Yes No Ages 21-24? Yes No Under what conditions would it be feasible? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ MEDIUM PRIORITY QUESTION 5. Does FINCA conduct any prescreening to identify these qualities in prospective Grameen Village Phone Operators? Why or why not? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ COMMUNITY IMPACT FROM GRAMEEN VILLAGE PHONE PROGRAM 1. What are the most common uses of Grameen Village Phones by customers of FINCA Grameen Village Phone Operators? Family/personal communications with friends, family who have migrated to cities/other countries Very common Common Occasional Rare Never Track remittances Very common Common Occasional Rare Never Obtain exchange rate information Very common Common Occasional Rare Never Obtain market prices of commodities Very common Common Occasional Rare Never

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Conduct business transactions Very common Common Occasional Rare Never Other business-related calls Very common Common Occasional Rare Never Obtain information about employment opportunities Very common Common Occasional Rare Never Obtain medical information Very common Common Occasional Rare Never Obtain education information Very common Common Occasional Rare Never Other (Please identify): 2. What, if any, new businesses have been created by FINCA Grameen Village Phone customers that would not have been possible without access to telephones? __________________________________________________________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________

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APPENDIX 5.5: MICROFRANCHISEE QUESTIONNAIRE Name Date 1. Demographic Information: Gender Male Female Age Education level None Some primary Completed primary Some secondary Completed secondary Some university Completed university Can you read? Yes No Can you add, subtract, multiply and divide numbers? Yes No Number of people in your household 2. Please name your primary and all other sources of income: Agricultural production Road side food crop vendors Itinerant traders – second hand clothes Simple groceries and kiosks Tin Charcoal dealers Simple poultry Makeshift restaurants Small businesses dealing in processing, marketing Grameen Village Phone Operator Honey Production Cooking oil production Brick-making Other (please identify): 3a. (For KickStart only) Where do you get your materials? (Seeds or block materials) __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 3b. Where do you press your (blocks) (oil)? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 3c. (Block press owners only) How many employees do you have? ___________________ 3d. Where do you sell your (blocks) (oil)? 3e. How much do you charge?

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3f. Who are your customers? 4a. (For Grameen only) Describe your business. __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

4b. Where do you operate it?__________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 4c. How many phones do you own? _________________ 4d. What are you selling? (calling time, voicemail, other phone services, other services made possible with the use of your phone) __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 5. When did you begin your (Village Phone Operator) (honey production) (cooking oil production) (block-making production) business? _____________________ 6. Why did you decide to invest in this business? __________________________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________ 7a. (Honey Care Africa only) What has been the role of your loan provider or the organization that helped you start? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 7b. How close is this relationship? __________________________________________________________________________________________________________________________________________________________________ 7c. How has it changed since you started your business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 8. How did you raise the money you needed to start your business? Loan from microfinance institution Loan from moneylender Loan from credit association Loan from bank Personal savings

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Help from family Other 8a. If you obtained a loan, then What was the amount? Did it cover all of your startup costs? Yes No What were the repayment terms? Is it an individual or group loan? Individual Group Do you make enough money from your business to make your payments on time? Yes No Have you paid off your loan? Yes No 9. What information did (FINCA) (Honey Care Africa) (your oil press or brick press retailer) give you that helped you decide to invest in this business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 10. Describe the training you received to help you start your business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 11. What challenges did you face in starting up your business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 12. How, if at all, could (FINCA) (Honey Care Africa) (your oil press or brick press retailer) have better prepared you to run this business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 13. What problems have you encountered in operating your business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________

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14. What, if any, additional assistance or services would help you to run your business better now? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 15. What information does (FINCA) (Honey Care Africa) (KickStart/your oil press or brick press retailer) collect to keep track of your performance? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 16. How, if at all, does (FINCA) (Honey Care Africa) (your oil press or brick press retailer) ensure the quality of the product you (produce) (sell)? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 17. Has this business improved your family income? Yes No Gotten worse If yes, then how much? A lot Some A little How long did it take your business to become profitable? Less than 3 months 3-6 months 6 months to 1 year 1-2 years More than 2 years If it is worse, then by how much? A lot Some A little 18. What plans, if any, do you have for improving your business and increasing your income from it? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 19. Do you have any plans to increase the size of your business? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 20. (All except Honey Care Africa) How do your customers learn about your product? Who are your primary customers? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 21. (For Grameen only) How many customers do you serve?

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22. (All except Honey Care Africa) What do you say to your clients and what materials do you use (such as signs, business cards, banners, pictures) to help convince your customers to buy your product? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ MEDIUM PRIORITY QUESTIONS 23. Has your business improved other parts of your life? Your health A lot Some A little Not at all Your access to food A lot Some A little Not at all Your spouse’s health (ask only if there is a spouse) A lot Some A little Not at all Your parents’ health (ask only if there are parents) A lot Some A little Not at all Your children’s’ health (ask only if there are children) A lot Some A little Not at all Your children’s’ educations (ask only if there are children) A lot Some A little Not at all Gives you more time A lot Some A little Not at all Respect in your home A lot Some A little Not at all Respect in your community A lot Some A little Not at all 24a. Do you have any large revenue changes over time caused by things you have no control over such as changing seasons, natural disasters, outbreaks of illness? Yes No 24b. How do you protect your business and your family during downward fluctuations? __________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________ 24c. What are the common causes? Changing seasons/weather fluctuations Natural disasters Outbreaks of illness Other 25. Do you have competition from other people who are trying to sell the same product? None A little Some A lot Too much

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List of Contacts

The George Washington University Capstone Team Emily Bracken Telephone: (614) 866-9673 Cell: +34 658-721-511 (Valid after June 14, 2006) Email: brackene@gmail.com

Washington, DC 20036

Nicole Chao 3401 38th Street, NW Apt. 510

Cell: 917 536 5471 Email: nthchao@gmail.com

Darin Phaovisaid Telephone: (202) 271-6616 (Valid until May 24, 2006)

(Valid May 25, 2006 – March 24, 2007) Telephone: +66-9-908-1628

Email: darin_phaovisaid@yahoo.com

1338 Randolph Street N.W. Brian Slocum

Washington, DC 20011 Telephone: (202) 291-3258 Cell: (202) 746-9185 Email: bslocum@gwu.edu

Telephone: (202) 682-1510

FINCA International

John Hatch Founder and Director of Research (Valid until June 2006) FINCA International 1101 Fourteenth Street NW, 11th Floor Washington, DC 20005 USA

Fax: (202) 682-1535 Email: jhatch@villagebanking.org Website: www.villagebanking.org Katie Torrington Research Coordinator Policy and Technical Assistance Department FINCA International 1101 Fourteenth Street NW, 11th Floor Washington, DC 20005 Telephone: (202) 682-1510 ext. 248 Fax (202) 682-1535 Email: ktorrington@villagebanking.org

Scott Graham Relationship Manager FINCA International 1101 Fourteenth Street NW, 11th Floor Washington, DC 20005 USA Telephone: (202) 682-1510 Fax: (202) 682-1535 Email: sgraham@villagebanking.org

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Chief Executive Officer FINCA Uganda

P.O. Box 24450, Kampala, Uganda

FINCA Uganda Fabian Kasi

Plot 22 Ben Kiwanuka Street

Telephone: +256-41-231134 or +256-31-262372/3 Fax: +256-41-340078 Cell: +256 (0) 77-791541 Email: fkasi@finca.or.ug

Scovia S. Mulindwa Public Relations Officer FINCA Uganda Plot 22 Ben Kiwanuka Street P.O. Box 24450, Kampala, Uganda Telephone: +256-41-231134 or +256-31-262372/3 Fax: +256-41-340078 Cell: + 256 (0) 77-2473534 Email: sswabrah@finca.or.ug or snanziri@hotmail.com

Mary Nasinza

Jinja, Uganda

Cell: +256 (0) 77-401001

Moses Kaleeba

P.O. Box 1659

Social Performance Monitor Eastern Region Plot 45 Lubas Road, Jinja P.O. Box 1659

Telephone: +256 (0) 431-20058

Email: mnasinza@finca.or.ug

Regional Manager Eastern Region Plot 45 Lubas Road, Jinja

Jinja, Uganda Telephone: +256 (0) 431-20058 Cell: +256 (0) 77-469017 Email: mkaleeba@finca.or.ug or Moseskaleeba@yahoo.co.uk

Honey Care Africa Vipul Kumar

P.O. Box 24487

Jamhuri Park, Nairobi-00502

Telephone: +254-20-387-4448

Commercial Director

Muringa Avenue

Kenya

Fax: +254-20-387-4450 Cell: +254-734-4455566 Email: vipul@honeycareafrica.com Website: www.honeycareafrica.com

Margaret K. Mimoh

P.O. Box 24487

Jamhuri Park, Nairobi-00502

Telephone: +254-20-387-4448

Cell: +254-733-731627 or 722-234120

Operations Manager

Muringa Avenue

Kenya

Fax: +254-20-387-4450

Email: margaret@honeycareafrica.com

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Country Director, Kenya

KickStart

John Kihia

P.O. Box 64142 00620 Nairobi, Kenya Telephone/Fax: +254 (0) 20 787380/1, 783046 Mobile: +254 (0) 733 62935, 723 431645 Email: john.kihia@kickstart.org

George Kapere

Website: www.kickstart.org

P.O. Box 2693

Cell: +254 (0) 733-842-319 or 722-406-867 Email: george_kapere@yahoo.com

Regional Sales Manager

Kisumu 40100 Kenya Telephone: +254 (0) 57-202-2134 Fax: +254 (0) 57-202-2151

Website: www.kickstart.org

Africa Now Shadrach Maloba Project Officer P.O. Box 2514 British Council Building

Kisumu, Kenya

Cell: +254 (0) 722-278-546

Oginga Odinga Road

Telephone/Fax: +254 (0) 57-202-1181

Email: kisumu@africanow.org or shadmulah@yahoo.com

James Mailu Programme Manager P.O. Box 2514 British Council Building Oginga Odinga Road Kisumu, Kenya Telephone/Fax: +254 (0) 57-202-1181 Cell: +254 (0) 735-638-725 Email: jmailu@africanow.og

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NOTES i Hatch, John. “Brief Primer on FINCA.” July 21, 2004. Internal document. ii Hatch, John. “Slogging Toward a Poverty-Free World: The Need for Microfinance-Microfranchise Partnership.” Jan. 2006. Internal document. iii Ibid. iv Ibid. v Holland, Rob. “Planning against a business failure.” Agricultural Development Center. October 1998. vi Lund, Francis and Caroline Skinner. “The Investment Climate for the Informal Economy: A Case of Durban, South Africa.” 15 Sept 2003. vii Holland, Rob. viii Fairbourne, Jason. “BYU MicroFranchise Development Initiative (BYU- MFDI).” MicroFranchise Learning Lab. Washington, DC. 6 January 2006. ix Gibson, Steven W. and Jason Fairbourne. Where There Are No Jobs: The MicroFranchise Handbook. Volume 4 MicroFranchise Case Studies. Provo: The Academy for Creating Enterprise, 2005. 6. x Gibson and Fairbourne. xi Ibid. xii Magleby, Kirk. “MicroFranchising as a Solution to Global Poverty.” Omidyar Network. September, 2005. 19. Accessed on 2 November 2005. <www.omidyar.net/group/poverty/file/7.35.11055472357/> xiii Ibid. p. 21 xiv Ibid, p. 39. xv Ibid, p. 45. xvi GF USA, “Grameen Technology Center.” Accessed on 19 Feb. 2006. <www.gfusa.org/technology_center/> xvii Honey Care Africa “About Us” Accessed on 19 Feb. 2005. <www.honeycareafrica.com/files/about.php> xviii Ibid. xix Ibid. xx Ibid. xxi KicStart Staff. Questionnaire. 19 Dec. 2005. xxii Ibid. xxiii KickStart “Oil Technologies.” Accessed on 18 Nov. 2005. <www.kickstart.org/tech/oilpress> xxiv Ibid. xxv KickStart “Building Technologies.” Accessed on 18 Nov. 2005. <www.kickstart.org/tech/build> xxvi UN-HABITAT. Accessed 26 Feb 2006. <http://www.unhabitat.org/habrdd/conditions/eafrica/uganda.htm> xxvii Copson, p. 5. xxviii Ugandan Bureau Of Statistics. Labor Force Survey. http://www.ubos.org xxix Macbeth, James. “Professionalism and Positioning” p.2 xxx “Uganda Summary” FINCA International. Internal Document. 2004 xxxi Kasi, Fabian. “Gender Targeting of Rural Financial Services: Is this Appropriate? Case Study of FINCA Uganda.” Paper presented at Paving the Way Forward for Rural Finance, An International Conference on Best Practices. 2003 xxxii FINCA Grameen Village Phone Staff Interview, March 13, 2006. xxxiii Ibid. xxxiv Ibid. xxxv FINCA Grameen Village Phone Staff Interview, March 12, 2006. xxxvi FINCA Grameen Village Phone Staff Interview, March 13, 2006. xxxvii FINCA Grameen Village Phone Staff Interview, March 12, 2006. xxxviii MTN Village Phone Staff Interview, March 13, 2006. xxxix FINCA Grameen Village Phone Staff Interview, March 13, 2006. xl Ibid. xli FINCA Grameen Village Phone Staff Interview, March 12, 2006. xlii FINCA Grameen Village Phone Staff Interview, March 13, 2006. xliii FINCA Grameen Village Phone Operator Interview 1, March 12 2006. xliv Ibid. xlv FINCA Grameen Village Phone Operator Interview 2, March 12, 2006. xlvi Personal Interviews. Honey Care Africa staff. March 6, 2006; K-Rep Staff. March 7; Africa NOW staff. March 8. xlvii KickStart Staff Questionnaire. xlviii Ibid.

xlix Ibid. l Ibid. li Ibid. lii Ibid. liii Ibid. liv KickStart Staff. Personal Interviews. March 7, 2006. lv Ibid. and KickStart Staff. Personal Interview. March 7, 2006. lvi KickStart Staff. Personal Interviews. March 7, 2006; March 8, 2006. lvii FINCA Uganda Staff Interview, March 15, 2006 lviii FINCA Uganda Staff Interview, March 15, 2006 lix FINCA Uganda Staff Interview, March 14, 2006 lx FINCA Uganda Staff Interview, March 15, 2006 lxi FINCA Uganda Staff Interview, March 10, 2006, March 15, 2006 lxii http://www.unido.org/en/doc/4786 lxiii FINCA Uganda Staff Interview, March 10, 2006 lxiv FINCA Uganda Staff Interview, March 10, 2006 lxv FINCA Client Focus Group Interview, March 15, 2006 lxvi FINCA Client Focus Group Interview, March 14, 2006 lxvii FINCA Client Focus Group Interview, March 15, 2006 lxviii Personal Interviews. Honey Care Staff. March 6, 2006; K-Rep Staff March 7. lxix Personal Interview. Honey Care staff. March 6, 2006.