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Consider cross-cutting or bundles of value chains. Working with the vulnerable as producers of goods or services is often not an appropriate entry point,
given high barriers to entry (e.g., the need to establish vertical linkages, achieve a minimal scale of production, have entrepreneurial ability, invest in
equipment and infrastructure) and the accompanying risks of market fluctuations. Supporting the vulnerable as consumers to improve their access to
products and services that cut across multiple value chains (e.g. irrigation, transport, inputs) are often of greater utility, as many do not produce a surplus or
cannot meet the needs of demanding buyers. This strategy also supports diversificationa common risk mitigation strategy among the vulnerableby not
tying the vulnerable into a single value chain. Rather, they can apply gains (e.g., cheaper or more accessible transportation services) across a range of
domestic and market-oriented activities. Promoting multiple value chains is another strategy to support diversification that reflects the livelihood strategies of
the vulnerable.
Competitiveness Strategy
Adjust project expectations. Project results are often slower than with non-vulnerable populations given the greater number of constraints that are
typically present, particularly at the beginning of a project when trust is weak and risk tolerance is low. Project targets should be adjusted accordingly to
reflect this.
Understand (dis)incentives. Risk aversion, social pressure, lack of confidence, food insecurity, illnesses (e.g., HIV) and other factors shape the incentives
and capacity of vulnerable groups. These incentives are often quite different from those of their less-vulnerable peers. Understanding the range of
non-economic incentives and disincentives to participation and upgrading is important to determine if and how vulnerable groups will engage with value chain
programming.
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microfinance institutions. For the vulnerable, however, indebtedness often increases vulnerability through the loss of productive assets and social capital.
Generating capital through savings mobilization is generally a preferable strategy.
Avoid targeting when possible. Focusing programming exclusively on a vulnerable group is rarely compatible with building a competitive value chain. The
participation of the less vulnerable builds scale and leverages additional skills and capacity. Projects have more impact when horizontal linkages and other
strategies pull up the vulnerable into wider opportunities. Moreover, taking an inclusive approach avoids stigmatizing or isolating the vulnerable, who from
the perspective of other community members may be perceived as being no different than themselves.
Cardno and the 'Inclusive not Exclusive' Approach
Cardno's Stability, Peace and Reconciliation in Northern Uganda (SPRING) project targets areas of the country that have been previously affected by violence. In
such an environment, targeting specific groups such as ex-combatents, young mothers, orphans has the potential to create significant stigma and resentment
toward targeted groups and even reignite violence. Cardno has therefore adopted an 'inclusive not exclusive' strategy that remains open to the participation of all
groups, while putting in place measures to reach the most vulnerable. One component of this strategy was a 50 percent weighting on value chains that support
stability and social inclusion during the value chain selection process.[1]
Support lower risk activities. Tailor intervention strategies to the limited capacity of vulnerable populations to assume risk. Depending on the level of
vulnerability, options may include:
1.
2.
3.
4.
5.
Developing the market for risk-reducing products and services, including health or life insurance.
Reducing initial cash outlay, such as through embedded services from lead firms.
Looking for potential linkages to lead firms.
Promoting opportunities for employment rather than investment in business start-ups.
Building on existing resources, skills and behaviors, where the vulnerable may already feel confident and that that have comparatively smaller time and
financial investment requirements. If larger changes are required, these should be divided into smaller intermediate steps to promote confidence and reduce
the psychological and financial risk of failure. The figure below presents this graphically.[2]
Recognize the diversity of vulnerability. There are variations in vulnerability within communities and even among the most impoverished. Effective
programs recognize these differences and build diverse entry points into their interventions. For instance, projects may support self-employment
opportunities for individuals with more risk tolerance, while promoting employment and asset building opportunities for those who are more risk adverse.
Take a multi-sectoral approach. The greater constraints faced by vulnerable populations often require using a more diverse set of intervention strategies
and tools to address non-economic constraints. Doing so requires that staff has skills not only in value chains but also in working with the type of vulnerable
population that is being targeted.
Build horizontal linkages to reach markets and develop confidence. Build horizontal linkages among the vulnerable to improve upon weak economies of
scale and to address social issues of empowerment and increasing confidence. These typically informal structures are not always be durable and need not be
structured to be so, but offer an entry point through which quick wins can be generated. Including the non-vulnerable within these structures is often a
powerful strategy to leverage their skills and status while benefiting the less advantaged.
Build market readiness. Vulnerability often limits the capacity and confidence to respond to market incentives. Investing in confidence building, peer
support and market exposure is likely to improve the response of vulnerable populations to value chain interventions. Promoting "quick wins"activities that
can be quickly and easily implemented and that produce immediate (if modest) paybackis especially effective in building confidence, as is supporting peer
demonstrations that prove the potential for success.
Footnotes
1. N. Felton, Early Lessons Targeting Populations with a Value Chain Approach, (2009), 12-17.
2. J. Wolfe, Household Economic Strengthening in Tanzania: Framework for PEPFAR Programming, (2009), 16.
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