Competitiveness and Job Creation Support Project
- Reference: P-MW-IE0-004
- Approval date: 16/12/2011
- Start date: 26/06/2012
- Appraisal Date: 24/10/2011
- Status: OngoingOnGo
- Implementing Agency: Ministry of Industry and Trade
- Location: Malawi
1Capacity BuildingSub-component 1.1: Institutional Strengthening (UA 1.89) - Strengthen the capacity of the Ministry of Industry and Trade (MoIT), which is the key Private Sector Development (PSD) policy making body in Malawi, through TA and training of 15 MoIT staff. - Training of 35 MoIT, SETFI and MITC staff on Entrepreneurship skills development; - Conduct baseline survey; - sensitise local communities on gender equality -Support the development and implementation of a Gender Equality and Women's Economic Empowerment Action Plan, relevant to the Project; and - Conduct labour force sample survey.
Sub-component 1.2: Entrepreneurship skills development (UA 1.65) - Develop 160 business to business (B2B) linkages between MSMEs and 16 large firms in Malawi, through competitive matching grants to large firms to provide embedded business development services to competitively selected MSMEs. - Mentor and Counsel 50 MSMEs, on matching grant basis, for extended durations of between 1 and 2 years. - MSMEs grow and create 2,000 sustainable jobs (50% women and 25% youth) 2Strategic Value Chains Development & Access to Finance6.59 Sub-component 2.1: Competitiveness of Strategic Value Chains (UA 5.00) - Organise pigeon pea and soya bean smallholder farmers into cooperatives; - Conduct competitive selection and support, through matching grants; innovative pigeon pea and soya bean value chain development sub-projects; - Promote the soya and pigeon pea value chains through direct facilitation and technical assistance. - Improve market information, through value chain communications and identify 2 new international markets for pulses and competitive national markets for soya bean oil, milk and cake, through market research. - Identify a third edible oil value chain (sunflower, groundnuts or other), through a value chain analysis study, and promote its development.
Sub-component 2.2: Access to Finance (UA 1.59) - Incentivise commercial banks, through matching grants, to develop innovative lending practices for lending to MSMEs; - Monitor the implementation of innovative lending practices and changes in lending volumes to MSMEs by commercial banks supported by the Project with matching grants. 3Project Management1.05- Undertake project implementation (procurement, disbursement and financial management activities); - Supervise all Project activities and prepare and submit all project reports on schedule.
Under the Capacity Building Component of the Project, the staff of the MoIT will be trained in the following areas: a) identification and the prioritization of PSD policy reforms; b) conduct 5 of policy research studies and develop policy briefs to advocate for policy reforms; c) facilitation of Public-Private Partnerships; d) analysis of export performance and competitiveness; and e) Gender sensitization. Also, the staff of SETFI, MITC and MoIT will be trained on the development of business to business linkages, value chain development and access to finance for Micro, Small and Medium Enterprises (MSMEs). Training and services to MSMEs will include corporate governance, preparation of business plans, basic accounting and introduction to financiers offering different financing options.
Under the Value Chain Development Component of the Project, pigeon pea and soya bean value chains will be developed. These crops were identified, through a value chain analysis study conducted in 2010; pigeon pea was identified as a crop with a high export potential and soya as a high potential import substitution crop - see Technical Annex C2 and C3. The financial value of pigeon pea compared to the traditional crop (maize) is about 2 to 3 times, as outlined in Technical Annex C2, Box 2. Under the strategic value chains development sub-component, pigeon pea and soya bean farmers will be targeted in the 10 Districts of Mzimba, Kasungu, Ntchisi, Dowa, Lilongwe Rural, Dedza, Zomba Rural, Chiradzulu, Thyolo and Mulanje. 20,000 existing and 5,000 new pulse farmers as well as 40,000 existing and 10,000 new edible oil farmers will be targeted in these Districts. Innovative sub-projects to be supported under the Project will include those on improved seed variety multiplication and distribution, improved soil and water management practices, processing, packaging and marketing. Technical assistance will be provided to 10 smallholder cooperatives to be created under the Project. The situation of cooperative development in Malawi is outlined in Technical Annex C1,
To improve the capabilities and the competitiveness of the private sector as well as increase export diversification and job creation.
In responding to the GOM's request, the Bank is focusing its intervention in a sector that receives considerably less support from donors (just 1% in 2010) compared to other sectors. The Private Sector, and in particular the MSMEs, has been recognized by all donors and the GOM as the engine of growth, required to sustain the high economic growth observed in Malawi in the past few years. The Bank will thus be bringing greater value-addition by focusing on the development of the private sector in Malawi, through the proposed Project. The project equally aims at developing a critical mass of MSMEs, which currently each employ about 5 workers, to grow into MSMEs employing over 25 workers each, by developing their entrepreneurial skills and facilitating their access to finance.
The proposed Project will pursue and strengthen priority areas in Malawi's development agenda and facilitate further interventions, in the country, in key areas of the Bank's Mid-Term Strategy. The Project includes institutional capacity building, which will contribute to governance efforts and in improving the enabling environment for businesses to operate and grow sustainably. Entrepreneurship skills development activities are also included in the Project, with linkages to the Bank's development efforts in Technical Education, Vocational and Entrepreneurship Training (TEVET) and Higher Education Science and Technology (HEST). The Project will also prepare the ground for the Bank's private sector operations by building the capacity of Financial Institutions (FIs) to deliver services to MSMEs in Malawi.
The socioeconomic benefits of the project will result from the increased incomes of about 60,000 men, women and youth already involved in the pigeon pea and soya bean value chains in the targeted districts. The project also aims at providing agribusiness related work for about 15 ,000 additional people, who will be incentivised to engage in the production, processing and commercialisation of pigeon peas and soya beans. MSMEs to be supported under the project are expected to grow and create about 2.000 formal jobs for the youth in particular. The reduction of poverty among the targeted population, resulting from increased production, value-addition and job creation in the targeted value chains, will translate into improved nutrition and food security for the household as well as overall social wellbeing (health, education and reduced vulnerability).
The project will support advocacy and sensitization of men and large private sector operators to build support for women's economic empowerment. The project will use a quota system to encourage participation of women in leadership positions of producer associations. All training activities supported under the project will include a quota for women participants. Similarly, the project's Innovation Challenge Facility will set quotas on number of women owned enterprises benefiting from mentoring and counseling services as well as Business to Business Linkages and will further give priority to financial institutions seeking matching grants to develop innovative products that enhance women's access to finance. For example, the project commits to ensuring that 35% of MSMEs accessing adequate financing will be women-owned, proportionally with the percentage of MSMEs owned by women in the country.
The Project will work to strengthen the existing initiatives supporting youth employment; linkages will be created with the Youth Enterprise Development Fund. The innovative approaches embedded in the Project would foster financial inclusion, enhance participation of MSMEs in the selected value chains and promote the participation of the youth, women and other vulnerable groups in the value chain and non-agricultural MSMEs. In implementing the Project attention will to be paid to spatial inequalities, with measures taken to extend benefits to remote locations.
BESONG Raymond Eyoh - OSHD1