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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 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. This can be solved by recommending that all farmers who take out loans are within a 20 km range of the extraction center. 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 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 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 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 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 construction experience was also recommended by staff interviewed. 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.


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. 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. .


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

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 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 MicroFrachising 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 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. 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 are women.
Generally, we 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 byproduct 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 requires 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. We 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.


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. 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 child bearing 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 Response

Yes

No

No Response

Yes

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
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. 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.


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



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 the Research Design section on page 5.

**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 was 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.
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 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.
Aftere 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.

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.


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