Identification of Livelihood Opportunities Sub-sector Analysis

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Arthur Montgomery
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1 Identification of Livelihood Opportunities Sub-sector Analysis Understanding economic system in which livelihoods operate What is Sub-Sector? Sub-sector is a network of firms that supply raw materials, transform them, and distribute finished goods to a particular consumer market Group of Commodities with Common procurement, processing and distribution channel can form a sub-sector 1

2 What Is Sub-sector Analysis? Sub-sector analysis is a process of getting to understand different stages in the value addition chain in a sub-sector and understanding who does the value addition, using what technology, at what terms and with whose help. Four steps of Sub-sector Analysis 1. Preparing a preliminary sub-sector map 2. Refining understanding of sub-sector 3. Analyzing sub-sector dynamics and leverage points 4. Choosing intervention point 2

3 Preparing a Preliminary Sub-sector Map Immerse yourself in the sub-sector Interview key informants Draw a preliminary sub-sector map Interview Key Informants 1. Raw material from where? 2. Sell to whom? Where? 3. Use what technology? Why? Any alternative? 4. Main regulations that affect business? 5. Sources of funds? 6. Supporting agencies/actors? How? 7. Main problems faced? 3

4 Draw Preliminary Sub-sector Map List all functions involved in converting raw material to final product in left hand column Identify final markets and list all final markets across the top Map various participants who perform different functions in respective rows Draw arrows to describe product flows Refine Sub-sector Map Specifying institutional context Specifying environmental context Refining sub-sector map Quantifying overlays of particular interest 4

5 Specify Institutional Context Regulatory Institutions Promotional Institutions Credit Institutions Other institutional factors: Producer organizations, Trade Associations, Labor associations Specify Environmental Context Check: Do activities have environmental impacts? Are environmental conditions favorable? Could more environment friendly practices be introduced? Are investments required for processes to become more environment friendly? 5

6 Refine Sub-sector Map Add information collected in these stage to refine sub-sector map Add credit/ promotion institutions to the map Add environment organizations to the map Quantify overlays of particular interest Number of enterprises at each level Employment and livelihoods generated at each level Gender division of employment Volume of product Price margins at each level Income to different players Returns to labor Environmental impacts 6

7 Analyzing Sub-sector Dynamics and Leverage Points Analyzing the dynamics of sub-sector Identifying sources of leverage Analyze Dynamics of Sub-sector Market Demand: Going up? Down? Stagnant? Technological Change: New Innovations? Profitability of different components Risk: Are there some new risks? Barriers to entry: New policy? Trade condition? Input Supply: New raw material? New Supplier? 7

8 Identify Source of Leverage System Nodes Geographical Clustering Policy Constraints Choosing Intervention Point List all possible interventions on different columns Assess competencies/ resources needed on left hand side Put a tick mark in boxes for competencies required Put tick mark in boxes for the competencies/ resources that the organization has access to 8

9 Choosing Intervention Point e.g. Intervention in Dairy Competencies Required Organizing People Agronomy/ Animal Husbandry Managing Procurement & Distribution Market Linkages Introduce Fodder Improve breed quality Enhance Milk Marketing Choosing Intervention Point e.g. Intervention in Dairy Required Competencies Required Organizing People Agronomy/ Animal Husbandry Managing Procurement & Distribution Market Linkages Introduce Fodder Improve breed quality Enhance Milk Marketing 9

10 Choosing Intervention Point e.g. Intervention in Dairy Required Available Competencies Required Organizing People Agronomy/ Animal Husbandry Managing Procurement & Distribution Market Linkages Introduce Fodder Improve breed quality Enhance Milk Marketing Choosing Intervention Point e.g. Intervention in Dairy Identify the key players in the chosen intervention Develop a project plan in consultation with them Mobilize resources Initiate action 10

11 Best wishes Happy Enterprise Promotion 11

A SHORT GUIDE TO PRO-POOR VALUE CHAIN PROGRAM DESIGN

Suite 304 4600 North Fairfax Drive Arlington, VA 22203 USA +1 703-243-9172 fax +1 703-243-9123 www.actionforenterprise.org A SHORT GUIDE TO PRO-POOR VALUE CHAIN PROGRAM DESIGN Prepared for the Australian