21-April-2022
What has been the contribution of the African Development Bank (AfDB) and International Fund for Agricultural Development (IFAD) to agriculture-related value chain development, and to what extent has value chain development been effective in reducing poverty? Evaluations conducted by the AfDB Independent Development Evaluation(IDEV) and IFAD Independent Office of Evaluation (IOE) in 2018 and 2019, respectively, offer insights.
The growth in interest
The AfDB’s project interventions focusing on value chain development increased from
15 percent from 2005 to 2010 to 52 percent from 2011 to 2016. AfDB’s Feed Africa Strategy (2016–2025) promotes an integrated value chain development approach, with the private sector at the heart of the development process. At IFAD, interest in and commitment to developing or improving pro-poor value chains have grown significantly since the mid-2000s, marking a departure from the previous almost exclusive focus on production. As a result, the proportion of value chain–relevant projects approved increased from 41.5 percent between 2007 and 2009 to 72.3 percent between 2016 and 2018.
How inclusive are development projects?
As evaluators for the AfDB and IFAD, Fabrizio Felloni and I focus on measuring the inclusiveness of the development projects financed by our respective organizations. How can development projects ensure that benefits from value chain development reach poor farmers, women, and young people?
We offer a systemic perspective to conceptualize value chains and value chain development for poverty reduction. For instance, value chain support can lead to transformative changes for smallholder farmers and rural small-scale producers if well designed and implemented. The fundamental common questions in our respective evaluations of value chain development were:
- Were the organizational setup and instruments conducive to supporting value chain development?
- Have the strategies and interventions been relevant in their focus on value chain development?
- To what extent have value chain development interventions been effective in achieving their planned objectives and the corporate mandate?
- Have value chain development interventions been inclusive (e.g., of the poor, women, and youth)?
Strategic choices
The three value chain flows – commodity, money, and information - were approached differently by the AfDB and IFAD. AfDB’s support tended to focus on the primary production segment, with the most significant proportion of resources dedicated to infrastructure, equipment, and inputs in support of production (irrigation, seeds, and seedlings) and a lesser extent on processing and marketing (bulking centers, landing sites, milk collection centers and market sheds). Few AfDB projects strengthened links between actors (public, private, farmer’s organizations, civil society) or fostered agreements between them (contracts and trust-building). Evidence of the distribution of value within value chains was fragmented, but the distribution appeared to be more stable and equitable when efforts were made to develop dialogue and trust between stakeholders, producer organizations were empowered to negotiate exchange conditions, the competition was high between buyers, the focus was on niche markets, and buyers were committed to fair terms of trade. IFAD-funded projects focused on strengthening products and processes, and linkages among stakeholders at the same functional level of the value chain (e.g., creation of cooperatives, federations, capacity building of producer organizations) to increase their bargaining power.
The 5 fundamentals
IDEV in 2018 identified five fundamentals to be applied in all value chain interventions: careful context-specific value chain analysis to ensure the addition of value along the chain; inclusion of poor farmers, women, youth, and other vulnerable groups in participation and benefit-sharing; flexibility and responsiveness to changing contexts and market needs; a primary focus on the profitability and efficiency of the value chain; and application of strategies to ensure the sustainability of outcomes.
The 5 enablers of success
The IDEV evaluation also recognized five enabling factors that are good predictors of
positive outcomes in developing pro-poor value chains: appropriate infrastructure and technology, policy and a regulatory environment favorable to the targeted value chain, appropriate business support services to improve the skills of value chain actors, access to finance for value chain actors to make necessary investments to increase profitability, and private sector engagement and working relationships between value chain actors.
The AfDB and IFAD evaluations both concluded that it is worth investing in support for inclusive value chains, which can have transformative effects on poverty reduction and development in rural areas, although such support is conceptually complex and requires a systemic perspective and transformation in the capacity, skills, and organization of the supporting agencies. The IDEV evaluation (2018) concluded that the AfDB’s processes lacked a systemic approach to inclusiveness, examining not only the position of vulnerable populations all along the value chain, but also their capacity to access productive assets (water, capital, knowledge, land), low literacy levels, lack of formal representation and the social norms they encounter within their communities and households. Fabrizio Felloni and I concurred that working on value chains requires major changes in the organizational culture. We believe that it is important to create consistency and guidance on value chains through corporate-level strategies which include project design and implementation guidelines. We also recommend that development agencies strengthen partnerships with private sector organizations, which have value chain expertise to ensure that projects are based on a thorough analysis of commodity market structure, demand and supply, price level, and volatility, and barriers small-scale producers face. In short, taking a top-down systemic approach through a corporate strategy will ultimately be beneficial for those at the bottom of the pyramid. With less than 10 years left to achieve the Sustainable Development Goals, evidence drawn from evaluations of all types should be put to good use to make sure we leave no one behind. Agricultural value-chain evaluation findings are food for thought for other sectors and other development institutions.
References
AfDB IDEV (African Development Bank Independent Development Evaluation).
2018. The African Development Bank’s support for agricultural value
chains development: Lessons for the Feed Africa Strategy. Abidjan, Côte
d’Ivoire: AfDB.
IFAD IOE (International Fund for Agricultural Development Independent
Office of Evaluation). 2019. Corporate-level evaluation on IFAD’s support
to pro-poor value chain development. Rome: IFAD
Credits
Extract from The Potential of Value Chain Development for Transformative Change: The Experiences of AfDB and IFAD, by FABRIZIO FELLONI AND GIRMA KUMBI. Credit to Van den Berg, Rob D., Cristina Magro and Marie-Hélène Adrien (eds.) 2021. Transformational Evaluation for the Global Crises of Our Times. Exeter, UK: IDEAS.