K-REP: The long delays before and between harvests will scare off some clients.
NGO Partner: Africa Now has seen a preference among men. Nearly all FINCA clients are women; however, women can hire men to care for hives or share responsibility with other family members, but this would be an added expense.
FINCA Uganda Staff: One staff member expressed the perception that in Busia people are not patient enough for the business.
CRITERION #2: FINANCIAL RISK TO FRANCHISEES
HONEY CARE OVERALL SCORE: 3.5
3.75 (K-REP) + 4 (Beekeepers) + 3.75 (Management) + 3 (NGO Partner) + 2 (FINCA Uganda Staff) + 2 (FINCA Clients)
K-REP: Existing training, adding business and entrepreneurship training, adding a community extension officer incentivized to help all producers, charting annual production among producers, limiting the geographic range of support among Honey Care project officers, and encouraging clients to mix beekeeping with more consistent income sources will all mitigate financial risks.
Beekeepers: Most beekeepers talked about the ease of the process, which made the financial risk low.
Management: No specialized skills required to manage business, guaranteed market, refinements to and shift to localized training, and loan repayment structure all mitigate risk.
FINCA Uganda Staff*: This is based on just a few comments.
FINCA Clients*: Based on just one comment.
K-REP: Overextended Honey Care field staff and the delay prior to and between harvests increase financial risk. Plus, the low repayment rates this project experienced in its early stages speak to the potential risks if the project is not executed properly
Beekeepers: Beekeepers mentioned problems such as drought, pestilence, and problems with extraction timing that increase risk of harvesting successfully and regularly.
Management: Indication of a low but present failure rate.
NGO Partner: Although clients benefit from a guaranteed market, there are other significant obstacles beekeepers face to earn income from their hives. Much of this is fixable, but some is cultural and will be more difficult to overcome.
CRITERION #3: MODEL REPLICABILITY
HONEY CARE OVERALL SCORE: 3.2
3.25 (K-REP) + 3.5 (Beekeepers) + 4 (Management) + 1.75 (NGO Partner) + 2 (FINCA Uganda Staff)
K-REP: The changes K-REP has adopted have brought the model closer to the point where it can be replicated as is. Additionally, we recommend a series of adaptations based largely on our interviews with K-REP that we anticipate will further enhance its replicability.
Beekeepers: In its early stages, relationships with aid organizations made Honey Care’s expansion model less sustainable. Training was also provided remotely and extraction centers had not been created yet. Now the model, especially as applied by K-REP, is much more structurally sound and sustainable.
Management: Existing business plan, operations, partnership arrangements appear to be replicable with moderate changes to improve efficiency, and client performance.
K-REP*: This number would be higher except that the model cannot be replicated in urban places or in regions with limited vegetation that appeals to bees.
Beekeepers: The beekeepers have encountered a number of problems that must be addressed for the model to be successfully replicated and maximize success for the beekeeper. These pitfalls include limited ongoing training and support and long distance to extraction centers.
Management: Areas hampering replication include geographic limitations, the need to keep beekeepers clustered within range of an extraction center, the cost of extraction centers, and the expectation of relying on external funding.
NGO Partner: The third partner takes on many responsibilities even though the relationship is temporary. However, FINCA would be unlikely to involve a third partner on the ground.
FINCA Uganda Staff: Concern that a separate investment fund would need to be set up given the delay in ROI.
CRITERION #4: POVERTY/HUMAN DEVELOPMENT IMPACT ON FRANCHISEES
HONEY CARE OVERALL SCORE 4.25
3.75 (K-REP) + 4.75 (Beekeepers) + 4.25 (Management)
K-REP: The use of the hives as a secondary source of income is likely to provide an important income-enhancing tool to reduce poverty levels and enhance development indicators. Additionally, building centers and hiring a local extension officer will not only enhance poverty-reduction efforts, but it will also strengthen community ties and provide a forum for boosting social capital.
Beekeepers: Respondents indicated that honey production improved their income, some by a lot. When asked about other human development indicators, some reported that health and education outcomes had improved for their families. Nearly everyone indicated that they plan to purchase more hives, suggesting higher future returns for farmers as they become more accustomed to caring for their hives.
Management: Projected annual income per hive would lift most clients out of poverty, although the figure used is in dispute and unresolved. Monitoring and evaluation will assist FINCA and Honey Care in making any necessary adjustments if they aren’t reaching benchmarks.
K-REP: Harvest delays will negatively impact poverty reduction.
Beekeepers: Although a few mentioned that they had had problems paying off loans or had encountered family health problems, rendering them unable to attend to the beekeeping business.
CRITERION #5: PROJECT VISION AND DESIGN SYNERGY WITH PARTNER
HONEY CARE OVERALL SCORE: 3.85
4 (K-REP) + 3.75 (Management) + 3.75 (FINCA Uganda Staff)
K-REP: Honey Care already has extensive experience integrating its model with a microfinance partner. FINCA can benefit from the experience gained along the way, thereby deepening the level of collaboration between partners. K-REP practices a variation on the village banking model, and has already set up a loan structure that can be adapted to meet FINCA’s needs. The business is easy to learn, and Honey Care has targeted people who fit FINCA’s client profile.
Management: Proposed division of labor seems appealing to FINCA, Honey Care client targets are consistent with FINCA’s except for the urban limitations, partnering with MFIs is an integral part of Honey Care’s business model, and requiring clients to purchase the hives all align the two potential partners closely in terms of project vision.
FINCA Uganda Staff*: This score was taken from responses to questions about FINCA Uganda’s capacity and interest in launching a project with this partner.
K-REP: K-REP took on some responsibilities – especially extension support – that extended beyond its responsibilities. Limitation in expanding to urban areas means a portion of FINCA’s clientele cannot benefit from the project. Although the loan structure is adaptable, it still must account for the delay before harvest, which means FINCA’s money will be tied up in loans with a delay on returns.
Management: Honey Care’s proposed financial arrangement is problematic for FINCA, and the time required to reach first harvest means the test pilot project will have to extend over a year just to obtain initial results.
CRITERION #6: MARKET DEMAND FOR PRODUCT
HONEY CARE OVERALL SCORE: 4.75
4.75 (Beekeepers) + 5 (Management) + 4.3 (FINCA Uganda Staff) + 5 (FINCA Clients)
Beekeepers: Honey Care provides a guaranteed market and gives beekeeper the option of selling it on the local market or to Honey Care. In both cases, the beekeeper benefits from having a market.
Management: Projected annual income for beekeepers and the continuing expansion of Honey Care’s distribution suggests a vast growth potential.
FINCA Uganda Staff: Market is guaranteed.
FINCA Uganda Clients: Based on guaranteed market
FINCA Uganda Staff*: This score was taken from a composite of responses to questions about staff perceptions of client demand for each opportunity, for each opportunity among youth, and for staff interest and capacity to launch the project as well as some general comments.
CRITERION #7: PARTNER BUSINESS PLAN DESIGN
HONEY CARE OVERALL SCORE: 3.45
3.75 (K-REP) + 2.75 (Beekeepers) + 4 (Management) + 3.25 (NGO Partner)
K-REP: Despite problems encountered, Honey Care, Africa Now and K-REP learned many lessons in the early phases. They have taken these learnings to revise their partnership model, which we have incorporated into our recommendations. These learnings include: require clients to buy the hives to increase ownership and accountability to the business, make farmers cluster their hives, set up realistic expectations for when harvest might begin, make sure that adequate beekeeping equipment is available to ensure that proper care/ harvesting is done, make sure that small, regular payments are made even when not harvesting, make training local, make sure hives are sold to individuals even if people organize into groups, set up extraction centers, build a local extension officer into the model, track annual production person-by-person, and enable beekeepers to sell up to 50% of honey to local markets. As a result, the model is significantly stronger.
Beekeepers: Honey Care has also made some significant improvements – relying much more heavily on partnerships that enable clients to purchase hives with loans rather than having them donated, on-site training instead of remote training centers, and setting up extraction centers to make that process easier.
Management: Tripartite model engages the community to collaborate with a for-profit venture. New systems in place based upon previous experience have strengthened the model. Partnership formation, division of labor between organizations, expansion plans and site evaluation prior to launch all appear to be carefully planned. Launch timing for expansion after funding is approved seems reasonable.
NGO Partner: New systems are in place for cash transactions that limit risk for both partners and for the initial training period, which is now localized and provided in stages.
K-REP: Indicated that Honey Care’s current system of spreading project officers too thin, which will hopefully be overcome by limiting their range.
Beekeepers: Honey Care clients have obviously encountered a number of problems as a result of Honey Care’s business strategy. The most obvious problem is that there are not enough project officers available to provide ongoing support and to extract the honey when it is ready for harvesting.
Management: FINCA’s role in the expansion is not as clearly outlined as is Honey Care’s, although the team has a much better sense of its role after meeting with K-REP. Model assumes that funding for centers and equipment will come from a third party.
NGO Partner: Better extension support is necessary. This is feasible by limiting the geographic range of Honey Care project officers and adding the independent local extension officer.
CRITERION #8: PROJECTED IMPACT ON LOCAL YOUTH UNEMPLOYMENT
HONEY CARE OVERALL SCORE: 2.25
2 (K-REP) + 1.5 (Management) +1.5 (NGO Partner) + 4 (FINCA Uganda Staff) + 3.75 (FINCA Clients)
FINCA Uganda Staff*: This result is based on the staff’s assessment of youth demand for each type of business and parental willingness to cosign for a loan.
FINCA Clients*: This score was derived from the collective results of three questions – perceived youth interest in each opportunity, perception of local youth unemployment issue, and willingness to guarantee a loan on behalf of one’s child (asked of all, not just those who had young adult children).
K-REP: Not likely to attract a lot of youth to become clients and own their own hives, but rural children might become involved in caring for hives on behalf of parents.
Management: Focusing on youth is a challenge. It’s better to integrate some youth into a larger project, which may work only for certain young people who are mature and willing to learn from others.
NGO Partner: Attracting youth to participate in either owning or managing hives will be a challenge.
CRITERION #9: ADDITIONAL FINCA STAFF RESOURCES REQUIRED
HONEY CARE OVERALL SCORE: 3.15
2.5 (K-REP) + 3.75 (Management)
Management: Localized training reduces FINCA staff and resource commitments. Although it isn’t clear from management’s list of FINCA responsibilities what additional resources are required, the team has gathered this information from other interviews.
K-REP: Although only one person from K-REP has managed this project locally, he works full time on it in addition to providing extension support. Our proposed recommendation alleviates the problem of staff overextension, which would make it more acceptable to FINCA.
CRITERION #10: PROJECT STARTUP COST FOR FINCA
HONEY CARE OVERALL SCORE: 1.9
1.5 (K-REP) + 2 (Management) + 2 (NGO Partner) + 2 (FINCA Uganda Staff)
K-REP: Extraction center construction/improvement is not a cost that FINCA necessarily wants to support, although it is much more reasonable than the figure provided by Honey Care.
Management: FINCA is expected to fund the cost of the centers. Management indicated a higher cost for this than K-REP. It is unclear whether additional capital investment is required.
NGO Partner: An additional vehicle for each pilot location may be helpful.
FINCA Uganda Staff*: This is based on just a few comments.
CRITERION #11: COST OF ENTRY FOR FRANCHISEES
HONEY CARE OVERALL SCORE: 3.75
3.5 (K-REP) + 4.25 (Beekeepers) + 3 (FINCA Clients)
K-REP: Removing price subsidies for the hives did not appear to cause problems, and in fact, repayment rates improved. Although using an extraction center and a local extension officer increases costs to franchisees at startup and beyond, this should be more than offset by improved yields.
Beekeepers: Comments mostly indicated that startup cost was low and easy to manage. Loan structure also made owning the hives very financially manageable. One person said that the startup cost was difficult, but that a loan would make it manageable.
FINCA Clients*: Based on select clients.
CRITERION #12: CURRENT PARTNER FINANCIAL PERFORMANCE
HONEY CARE OVERALL SCORE: 4.25
Management: Shift toward honey and honey products will boost the long-term financial outlook for the company. Diversity of revenue sources is also valuable. Volume has more than doubled and HC is expanding into higher profit sales of pollen and propilis.
Authors’ Note*: The score was reduced because if management is stretching project officers too thin. Because project officers are essential to business model, overextension can weaken financial performance.
CRITERION #13: COMMUNITY POVERTY/HUMAN DEVELOPMENT IMPACT
HONEY CARE OVERALL SCORE: 3.5
K-REP: A center operated by a community member with a stake in the community outcome will reduce poverty and provide a forum for collective human development improvement by facilitating the sharing knowledge to improve production.
Authors’ Note*: The score was reduced because overall community poverty/human development impact can only extend as widely as the project does. It does not have secondary and tertiary impacts in the same way that the Grameen Village Phone program does.
CRITERION #14: FINCA AVOIDS PARTICIPANT SELECTION RESPONSIBILITY
HONEY CARE OVERALL SCORE: 2.5
2.5 (K-REP) + 2.0 (Beekeepers) + 2.25 (NGO Partner)
K-REP: K-REP has complete control over the process, but without any special requirements beyond a good hive location, the selection becomes a pure credit worthiness issue, which should be in the MFI’s hands.
NGO Partner: K-REP or other loan provider is in charge of the selection process, but the process is based solely on the client’s perceived fitness to pay the loan, so no new criteria would be added to create animosity toward FINCA.
Beekeepers: Although Honey Care’s partners, especially K-REP, retained full responsibility for determining client eligibility, some confusion remained over other partner responsibilities, suggesting that perhaps K-REP was not clearly identified as the responsible party. However, to fully understand this issue will require additional interviews with beekeepers who used their own resources to purchase the hives.
Authors’ Note*: The fact that FINCA would be responsible for the partner selection process seems fairly neutral, since the only possible criteria beyond credit worthiness might be cohesiveness among groups sharing equipment and clustering hives, as well as the fitness of the intended hive location. It may actually be of benefit to FINCA, since it would be no different than any other loan dispersal process.
CRITERION #15: GEOGRAPHIC RANGE/FLEXIBILITY OF BUSINESS
HONEY CARE OVERALL SCORE: 2.75
2.0 (K-REP) + 3.5 (Management)
Management: There are no limits identified to where Honey Care can expand. Areas with lower beekeeping knowledge may require an additional training commitment, but it is anticipated. Localized training can be done anywhere Honey Care staff can reach.
K-REP: Limited to rural areas due to apiary requirements – adequate space, seclusion and vegetation. Geographic area must have abundant rainfall to maximize honey yields, therefore expansion would be limited.
Management: Management’s desire to start in an area with similar biodiversity to an existing location suggests that some settings may be easier to work with than others. Existing local beekeeping knowledge may increase chances of success.
CRITERION #16: MINIMIZE APPLE OF DISCORD
HONEY CARE OVERALL SCORE: 4
Authors’ Note*: The only potential jealousy that might arise is during the initial pilot project if a limit is set on the number of hives allotted in the project. Otherwise, since the client selection process will largely mirror the process for other loans, little jealousy should be anticipated among clients if they are not included. However, additional criteria may become necessary if FINCA and Honey Care limit the number of hives distributed in the test project.
CRITERION #17: FINCA EXCLUSIVE REGIONAL PARTNER
HONEY CARE OVERALL SCORE: 4
4 (K-REP) + 4 (Management)
K-REP: Although K-REP shared responsibility with Africa Now, it is apparently the exclusive MFI provider in the region.
Management: FINCA would enable Honey Care’s entrance into Uganda. It would be the first partner and potentially the exclusive partner in regions where both Honey Care and FINCA want the project to expand to, but there is no guarantee indicated that this would hold in the long term.
Authors’ Note*: A partnership with FINCA is likely to be Honey Care’s first foray into Uganda, and ensuring partnership exclusivity, at least among MFIs that compete with FINCA seems quite feasible.
APPENDIX 3.4 – FINAL COMPOSITE SCORES FOR KICKSTART OILSEED PRESS
Description: Below is a composite of all the scores derived from each relevant interview for every criterion in the Evaluation Scorecard for KickStart’s Oilseed Press. Under each criterion, the final score attributed to responses from each interview group who commented on a given criterion are listed individually. The overall score at the top was derived from these individual scores, taking their average and making any minor adjustments in the event of limited data availability under the guidelines described in Section IX. of the text. Additionally, brief summaries of positive, negative and neutral feedback from each interview group are included as a way of providing a written explanation for the final score assigned to it.
Note: Some descriptions below are not summaries of comments made by respondents. Rather they are either explanations or comments on how scores were obtained or they are author comments on the responses or scoring. For example, some scores from FINCA clients were derived from individual comments rather than from collective responses to quantitative focus group questions. These explanations are indicated with a * next to the interview group from which they come.
CRITERION #1: FINCA CLIENT DEMAND FOR EACH BUSINESS OPPORTUNITY
KICKSTART OIL PRESS OVERALL SCORE: 3.1
2.9 (Management) + 2.1 (Field Staff) + 3.5 (Owners) + 3.0 (Retailers) + 3.3 (FINCA Uganda Staff) + 3.5 (FINCA Clients)
Management: Uganda has been a strong market for the technology despite lack of retail presence. This may suggest that the presses appeal to FINCA clients as well. FINCA financing mechanism will boost client demand given startup cost.
Field Staff: Demand rises in high traffic areas, which is how retail outlet locations are targeted. Demand would also increase with active product marketing.
Owners: No electricity need to operate the machine. KickStart provides strong training in production, input sourcing, and bookkeeping. Has an enticing demonstration program and local market demand in the owners’ location. Offers employment creation opportunity. Oil is nutritious and seedcake can be used for farm animal feed.
Retailers: No claims of quality issues and perception of compatibility with microcredit program to facilitate financing.
FINCA Uganda Staff: Perception that this is appropriate for the region.
FINCA Clients*: This was determined by combining the percentage of actual respondents who expressed interest in the product (alone or as compared with the others) with individual comments indicating enthusiasm or skepticism about it.
Management: Perception that business drive, entrepreneurship, enthusiasm and determination, access to inputs and the drive to market and sell mean that only a certain type of person is likely to thrive using the technology. Issues with seed sourcing and competition from cheap imports also cut into client demand.