EVALUATION OF DYNAENTREPRISES ACTIVITIES IN SENEGAL Contract No. 685-C-00-00-00002-00 Task Order under AMAP Contract # GEG-I-00-02-00012-00 Final Evaluation Report An Evaluation of Lessons Learned of the Dyna Program and Recommendations to USAID Senegal on the Nature, Scope, and Approach of Future Activities in Microfinance and Small Business Development Submitted To: John Stamm Private Sector Team (SO1) USAID/Senegal P.O. Box 49 Dakar, Senegal Submitted By: IBM Business Consulting Services Jacqueline Bass, Team Leader, Enterprise Resource Group Anne Dudte Johnson, Business Development Specialist, IBM Business Consulting Services Vincent Akue, Microfinance Specialist, IBM Business Consulting Services June 2004 June 24, 2004 John Stamm Private Sector Team (SO1) USAID/Senegal P.O. Box 49 Dakar, Senegal Ref: Task Order - AMAP/Senegal: Evaluation of DynaEntreprises Activities in Senegal Final Report - Contract No. 685-C-00-00-00002-00 IBM Contract Number: GEG-I-00-02-00012-00 Dear Mr. Stamm, IBM is pleased to resubmit the final report entitled: Evaluation of DynaEnterprises Activities in Senegal under the above referenced contract. IBM is now submitting two (2) bound copies of the complete report, each copy includes English and French versions of evaluation report plus 14 annexes. The remaining eight (8) bound copies contain the evaluation report in both languages excluding annexes. Ten copies of the annexes were previously submitted on June 11. In addition, IBM is submitting a CD with the report in both languages plus the annexes. For your convenience, the CD contains the report in MSWord and pdf formats. If any questions or concerns should arise relating to any portion of this submission, please do not hesitate to contact me at jsabetta@us.ibm.com or by telephone at 1-703-485-4524. Sincerely Yours Janis Sabetta AMAP Project Manager IBM Business Consulting Services 6700 Rockledge Drive Bethesda, MD 20817 United States of America Evaluation of Dynaentreprises / Senegal i EVALUATION OF DYNAENTERPRISES ACTIVITIES IN SENEGAL – WHERE TO FIND THE ANSWERS TO QUESTIONS FROM SOW DECEMBER 5, 2003 Issues to be addressed Primary response in Final Report Secondary response in final report – if any Comments, if any Recommendations to USAID/Senegal on the nature, scope and Approach of possible Future Activities Chapter V.4 Chapter V.5 for MF and V.6 for BDS Overall scope of the evaluation (please see purpose under USAID/Senegal SOW) 1. Assess the special circumstances that have positively or negatively affected the design and implementation of Dyna activities Annex 5 Following USAID/Senegal guidelines this has been summarized and attached as an annex in the evaluation. What are the principal lessons learned from the Dyna project? V.1 How could Dyna have designed more effectively its activities? V.3 Chapter III.10 for MF and IV.9 for BDS What would make Dyna’s activities more effective? V.3 V.5 for MF and V.6 for BDS Has Dyna effectively targeted beneficiaries’ needs and interests? V.2 And III.5,6,7,8,9 for MF and IV.7 for BDS; Also I.5 2. To what extent the Dyna activities have contributed to a)improved access to FS by microenterprises and small business entrepreneurs b)adoption by more micro entrepreneurs of best technical and managerial techniques See below for specific questions and answer locations To what extent has Dyna achieved its planned results with respect to indicators and targets? Chapter I.3 To what extent have Dyna activities met the needs of intended customers? Have the activities effectively reached their customers? V.2 Chapter I.4 and I.5. Evaluation of Dynaentreprises / Senegal ii Issues to be addressed Primary response in Final Report Secondary response in final report – if any Comments, if any 3. Microfinance See below for specific questions and answer locations What number of clients were served by targeted MFIs before Dyna, compared to now? Chapter III. 1,3, 5,6,7 Information is not available for segments 4 and 5. Global information is provided in III.3 To what extent has Dyna’s support to these MFIs contributed to their being able to increase their clientele? III.1,3, 5,6,7 What are the major constraints of these MFIs in satisfying their clients despite Dyna’s assistance? III 3 What was the amount of loans outstanding before Dyna and what are they now? III.1,3 Annex II What was the average loan size before Dyna, compared to now? III.1 To what extent did Dyna help client MFIs increase the number and value of loans? III.1,2 What were the interest rates charged before Dyna and what are they now? (repeated below) Annex 11 III.3 Have interest rates changed by targeted MFIs changed as a result of Dyna’s intervention? III.3 What were the savings outstanding before Dyna and what are they now? III.3 To what extent did Dyna help client MFIs increase the number and value of loans? III.1 What were the interest rates charged before Dyna and what are they now? (REPEATED) Annex 11 III.3 Have interest rates changed by targeted MFIs changed as a result of Dyna’s intervention? (repeated below) Annex 11 III.3 Evaluation of Dynaentreprises / Senegal iii Issues to be addressed Primary response in Final Report Secondary response in final report – if any Comments, if any What were the savings outstanding before Dyna and what are they now? To what extent has Dyna contributed to helping MFIs increase their savings deposits? III,1,2 Baseline does not include savings outstanding What training was directly provided by Dyna and what training did Dyna subsidize? III.10 What is the impact of the training provided or sibsidized by Dyna on the operation and management of these MFIs? III.2 What is the percentage of cost share contributed by MFIs to Dyna activities? How was the cost share calculated? III.3 To what extent has Dyna contribued to financial deepening? Change in # of clients reached by all MFIs Change in rural vs urban clients Change in distribution of loan size Change in loan terms Annex 2 III.1, 2 We do not have information on loan terms. How has the # of MFIs changed – before Dyna vs now? III.2 Annex 2 What is the likely future of the market with/without future subsidy investments? III.10 If investments are planned for the future, what are the key needs of the sector? III.1,2, 10, 11 V.5 Was the 75% subsidy appropriate? What would the client MFIs be willing to pay for future services similar to those received from Dyna? III.3,10 What is the current level of profitability and efficiency of MFIs receiving direct and indirect aid from Dyna? III.I,2,5,6,7,8,9 Information per segment is not available What were these figures before Dyna? III.1,2,5,6,7,8, 9 II.6 Evaluation of Dynaentreprises / Senegal iv Issues to be addressed Primary response in Final Report Secondary response in final report – if any Comments, if any To what extent did the technical assistance provided by Dyna to these MFIs contribute to their sustainability in terms of their ability to operate efficiently? III.1,2,5,6,7,8, 9 What is the current level or profitability and efficiency of MFIs receiving direct and indirect aid from Dyna? What were these figures before Dyna? To what extent did the TA provided by Dyna to these MFIs contribute to their sustainability in terms of their ability to operate efficiently? III 1,2,5,6,7,8,9 How many MFIs have reached financial sustainability and/or operational sustainability, or neither, before Dyna vs now? III 1,2,5,6,7,8,9 Which type of Dyna intervention most increased the performance of the MFIs? III.10 Which size of MFI benefited most and best from the Dyna interventions? III.10 III.10 What has been the overall pattern in client retention/drop out for MFIs receiving Dyna direct or indirect assistance? To what extent, and in what ways, has Dyna assistance contributed to client’s confidence? III.2 Were the processes used to select service providers transparent? III.10 Did contractors providing services to the MFIs benefit from their collaborations with Dyna other than the revenue from the contracts? If so, in what ways? III.10 To what extent have the participating MFI service providers independently followed through with non-subsidized contracts with their Dyna contract clients? III.10 Evaluation of Dynaentreprises / Senegal v Issues to be addressed Primary response in Final Report Secondary response in final report – if any Comments, if any Will MFI service providers be ready to charge full cost to entrepreneurs for the same types of services provided through Dyna contracts? III.3 Were the contractors’ follow-up evaluations of the MFI activities performed as planned? III.10 In what ways did Dyna use the evaluation feedback to improve the program? III.10 Business Development Services See below for specific questions and answer locations Did BDS providers benefit from their collaborations with Dyna other than the revenue from the contracts? If so, in what ways? Chapter IV.2 Subsidies – did the level of subsidy remain uniform among Dyna BDS interventions? If not, why not? IV.3 Annex 12 How were participant cost contributions calculated? IV.3 Has Dyna, promoted equal competition among Dakar-based and non Dakar-based providers? IV.4 V.2, Annex 5 What barriers have existed or still exist with respect to decentralization? IV.4 V.6 What were the processes used to select service providers, and were they transparent? IV.4 Annex 5 Have Dyna BDS interventions met trainee expectations? IV.5 I.5, V.2, Annex 5 In what ways has Dyna developed/improved the activities of supported SMEs? IV.5, 6 IV.3, Annex 13, 14 Once an intervention area was selected, was the depth of intervention sufficient to allow the trainees/participants to adopt best management practices? IV.5 Annex 13,14 Evaluation of Dynaentreprises / Senegal vi Issues to be addressed Primary response in Final Report Secondary response in final report – if any Comments, if any Has Dyna, in implementing its BDS activities, developed an appropriate approach for sustainability? IV.5 V Will Dyna-supported SMEs and BDS providers have changes to be sustainable in an open and fair competition after Dyan’s intervention? IV.5 IV.2,3, V Annex 5 To what extent have the participating BDS providers independently followed through with non-subsidized contracts with their Dyna contract clients? IV.2 Annex 5 Would participants have been willing to pay more for the services? Is so, how much would they have been willing to pay? IV.5,2 V Will BDS providers be ready to charge full cost to entrepreneurs for the same types of services provided through Dyna contracts? IV,2,5 V Were the contractors’ follow-up evaluations of the BDS activities performed as planned? In what ways did Dyna use the evaluation feedback to improve the program? IV.7 Which type of BDS intervention, according to the evaluations, had the highest impact on BDS clients? IV.8 IV.5,6 Evaluation of Dynaentreprises / Senegal vii Table of Contents Abbreviations ...............................................................................................................................ix I. Executive Summary ..........................................................................................................1 I.1. Background ..............................................................................................................1 I.2. Project Description...................................................................................................1 I.3. Project Achievements ..............................................................................................1 I.4. Principal Lessons Learned .......................................................................................4 I.5. Recommendations to Increase the Effectiveness of Dyna’s Program Design.........5 II. Introduction........................................................................................................................8 II.1. Purpose of the Evaluation........................................................................................8 II.2. Project Description...................................................................................................8 II.3. Organization of the Report.......................................................................................9 II.4. Acknowledgements..................................................................................................9 II.5. Approach................................................................................................................10 II.6. Methodology..........................................................................................................10 II.7. Project Phases ........................................................................................................12 III. Lessons Learned and Major Findings from the Microfinance Industry in Senegal.....13 III.1. Dyna MFI Achievements Against Targets ...........................................................13 III.2. Status of the Microfinance Industry in Senegal ....................................................15 III.3. Strategic Activities Undertaken by DynaEnterprises............................................18 III.4. Segments and Activities of Dyna ...........................................................................21 III.5. Activities to Support the Development of Recognized Networks.........................22 III.6. Activities to Support Networks under Consolidation............................................23 III.7. Activities to Support the Networks under Construction........................................24 III.8. Activities to Support Emerging Networks.............................................................25 III.9. Activities to Support Isolated MECs and GECs....................................................26 III.10 Summary of Lessons Learned................................................................................27 III.11 Conclusions on Microfinance ................................................................................28 IV. Lessons Learned and Major Findings from Business Development Activities in Senegal...............................................................................................................................30 IV.1 Dyna BDS Achievements Against Targets............................................................30 IV.2 BDS Providers’ Benefits from Collaboration Outside Revenue Generated ..........32 IV.3 Microcosm of BDS: Subsidy Placement and Cost Contributions .........................33 IV.4 Decentralization and Equal Competition for Service Providers Within BDS Markets..........................................................................................................35 IV.5 Development, Satisfaction and Sustainability of BDS Client Interventions .........36 IV.6 Activities Targeting Sub-sectors............................................................................39 IV.7 Follow-up Evaluations and Feedback ....................................................................40 IV.8 Activities Promoting Entrepreneurship: Highest Potential for Impact ..................41 IV.9 Summary of Lessons Learned................................................................................41 IV.10 Conclusions on Business Development Activities................................................43 Evaluation of Dynaentreprises / Senegal viii V. Principal Project Achievements, Lessons Learned and Recommendations...............44 V.1 Principal Lessons Learned from the Dyna Project ................................................44 V.2 Dyna’s Effectiveness in Targeting Beneficiaries’ Needs and Interests.................45 V.3 Recommendations to Increase the Effectiveness of Dyna’s Project Design .........46 V.4 Recommendations to USAID/Senegal on the Nature, Scope and Approach of Possible Future Activities ......................................................................................47 V.5 Specific Recommendations for Microfinance........................................................49 V.6 Specific Recommendations for BDS .....................................................................50 V.7 Conclusions............................................................................................................52 Annexes Annex 1: Approved Evaluation Workplan Annex 2: Key Program Results Annex 3: Institutions Interviewed Annex 4: List of Clients & Partner Institutions of the Dyna Project for BDS and MF Annex 5: The Dyna Approach: Developing the Capacity of the Microfinance and Business Development Sector by Outsourcing Technical Assistance Activities Annex 6: List of People Interviewed Annex 7: List of Documents Reviewed Annex 8: Microenterprise Results Report Data submitted by DynaEntreprise to USAID Annex 9: List Of Dyna's MFI Clients Per Segment Annex 10: Evolution of SDF/Type 1999 – 2003 Annex 11: Calculation of Effective Interest Rates in the Senegalese Microfinance Market Annex 11: BDS Client Retention Rate and Number of Clients Trained Annex 12: BDS # Activities by Type Annex 13: Sub-Sector Breakdown Annex 14: Dyna MF Contractors by Client Evaluation of Dynaentreprises / Senegal ix Abbreviations ACEP Alliance de Crédit et d’Epargne pour la Production AP Associations Professionnelles APIMEC Association Professionnelle des Institutions Mutualistes ou Coopérative d’Epargne et de Crédit au Sénégal AT/CPEC Assistance Technique aux Caisses Populaires et d’Epargne et du Crédit BOA Basic Ordering Agreement BDS Business Development Services CAPAF Programme de Renforcement des Capacités des IMF en Afrique Francophone CMECAT Caisse des Mutuelles d’Epargne et de Crédit des Artisans de Tamba CMS Crédit Mutuel du Sénégal CREC Caisses Rurales d’Epargne et de Crédit DFS Descentralized financial systems DynaEntreprise Dyna FENAFILS Fédération Nationale des Acteurs de la Filière Lait du Sénégal FNGPF Fédération Nationale des Groupements de Promotion Féminine GEC Groupements d’Epargne et de Crédit GERME Gérer Mieux Votre Entreprise GOS Government of Senegal IFAD International Fund for Agricultural Development ILO International Labor Organization INTER-CREC Entre les Caisses Rurales d’Epargne et de Crédit KIR Key Intermediate Result Evaluation of Dynaentreprises / Senegal x LOE Level Of Effort LOP Life of Project MEC Mutuelle d’Epargne et de Crédit MF Microfinance MFI Microfinance Institution PAMECAS L'Union des Mutuelles du Partenariat pour la Mobilisation de l'Epargne et du Crédit PMP Performance Monitoring Plan PROMER Projet des mcro entreprises rurales REMIX Réseau d’Etudes et d’Informations pour la Minimalisation des Risques d’Exploitations RESIG Réseau Sénégalais d’Institutions GERME RTT Results Tracking Table SO Strategic Objective UEMOA West African Economic and Monetary Union UMEC Union des Mutuelles d’Epargne et de Crédit - Sédhiou UMEC U Union des Mutuelles d’Epargne et de Crédit d’UNACOIS UNACOIS Union Nationale des Commerçants et Industriels du Sénégal UNAFIBS Union Nationale des Acteurs de la Filière Banane Sénégalaise USAID United States Agency for International Development USU Umbrella Support Unit Evaluation of Dynaentreprises / Senegal 1 EVALUATION OF DYNAENTREPRISES ACTIVITIES IN SENEGAL I. Executive Summary I.1. Background This evaluation of the DynaEntreprises Senegalaises Project of Senegal was conducted by IBM Business Consulting Services and Enterprise Resource Group, Inc. under the Accelerated Microenterprise Advancement Project, (Contract # GEG-1-00-02-00012-00) beginning in March 2004 and ending in April, 2004. The consulting team evaluated the DynaEntreprise contract signed between Chemonics International, the Umbrella Support Unit, International Business Initiative and the Center for International Private Enterprise and successive contract amendments. The evaluation has three purposes, namely to: 1. Analyze the impact of USAID-funded microfinance and business development activities; 2. Identify lessons learned; and 3. Make recommendations to USAID/Senegal regarding the nature, scope and approach of possible future activities in microfinance and business development services. I.2. Project Description USAID/Senegal signed a five-year US $26.5 million contract with Chemonics International to implement the DynaEntreprise Senegalaises Project in November 1999. The goal of this project was to support the Mission's private sector strategic objective number 1: “sustainable increases in private sector income generating activities.” The purpose of the DynaEntreprise project was to support key intermediate results (KIR1.2): improved access to financial services” and (KIR1.3) “increased use of managerial best practices” which target the development of micro, small, and medium enterprises. I.3. Project Achievements Over its four years of operations, the Dyna project has gained increased levels of activity and results by outsourcing as many activities as possible through local private sector subcontractors. The tendering and contracting approach promoted by Dyna has grown in popularity among service providers, and has gradually been institutionalized within Senegal as a standard process for contracting. Dyna has been able to establish a functional administrative network of five regional offices, which has enabled the program to carry out its brokering activities through a decentralized project structure. As a result, Dyna has continued to gain operational efficiencies in the management of the tendering process and develop effective policies and procedures that have enabled the institution to achieve and surpass its objectives in most indicators of key intermediate results 1.2 and 1.3. The charts below indicate that Dyna has generally exceeded targets in 7 out of 9 indicators for KIR1.2, and has exceeded targets in 6 out of 8 indicators for KIR1.3: Evaluation of Dynaentreprises / Senegal 2 Achievements under KIR 1.2: Improved Access to Financial Services 2000 - 2003 Project Results Achievements Vs. Targets Indicators 2001 2002 2003 1. Number of institutions using full cost-recovery interest rates and fees 62% 212% 117% 2. Number of MFI’s with delinquency rates below 10% 100% 200% 81% 3. Number of MFI’s with loan losses below 5% 83% 175% 104% 4. Total number of savers 148% 157% 201% 5. Total number of borrowers 121% 277% 81% 6. Value of loans offered 177% 205% 123% 7. Value of savings collected 165% 280% 160% 8. Branch offices trained 52% 121% 116% 9. Ratio of the value of loans offered by USAID-funded partners to the value of loans offered by all MFI reported 97% 304% 334% From 2000 through 2003, the Dyna project provided capacity-building activities to the microfinance sector contributing to an increase in its robustness, stability, and economic growth. Most of the project results through the four years of implementation of the programs have been reached and surpassed as per the targets above. The program's technical assistance activities have enabled rapid sectoral growth and increased formalization of the microfinance industry in Senegal. As a result, the microfinance sector has experienced continuous growth in its client base of borrowers and savers and today is considered the largest in West Africa. Most of Dyna’s capacity-building activities have focused on developing and strengthening microfinance institutions. Technical assistance delivered under the project has been concentrated on the asset side of microfinance and network institutions: encouraging savings mobilization, delivery mechanisms, information systems and human resources. In the table above, the indicators related to client growth such as the number of savers and value of savings collected are among the most salient achievements reached by the program. The Dyna capacity-building activities in the microfinance sector pursued both breadth and depth in their outreach. A key indicator that has been widely surpassed is the achievement in the ratio of the value of loans offered by USAID-funded partners to the value of loans offered by all MFIs reported. Given the availability of funds under this project, Dyna was able to target all segments of the market. This is clearly demonstrated by Dyna’s market coverage of 91% of the Senegalese microfinance market. Most of the microfinance institutions operating in the country were touched by the program resources in one way or another which enhanced Dyna’s branding strategy. It is also important to note that the downscaling of operations in 2003 has negatively impacted the project's ability to extend its outreach to new clients. Undoubtedly, the phase-out of subsidies from the Dyna project will also negatively impact the level of project outreach. In addition, it Evaluation of Dynaentreprises / Senegal 3 appears that some of the critical decisions made by the program to focus on depth of outreach has negatively impacted the quality of the Dyna portfolio and explains why the institution has not been able to reach its intended delinquency target. Achievements under KIR 1.3: Technical & Managerial Best Practices Project Results Achievements Vs. Targets Indicators 2001 2002 2003 1. Number of fee paying participants from SMEs, consulting firms, associations and groups that purchase business training 139% 152 178% 2. Number of private sector participants 154.% 176% 143% 3. Number of Agricultural-related participants 170% 317% 146% 4. Number of all new products and services 225% 373% 47% 5. Number of agricultural -related new products and services 260% 1380% 34% 6. Number of SME's acquiring quality technical assistance (not training) from BDS providers 262% 558% 167% 7. Number accessing market and technical information 146% 334% 155% 8. Number purchasing market and technical information 604% 1673% 350% Note: The project results indicators have been calculated based on targets and achievements for 2003, includes the latest set of indicators made available by the Dyna project. Raw data is contained in Annex 2. In the same time period from 2000 through 2003, the Dyna project has also been the driving force behind MSME development in Senegal. While most project resources had been allocated towards microfinance activities, the business development services under the project have struggled to produce similar gains and have surpassed most of its BDS targets. The business development services interventions have tried to bring services deeper into the rural areas where most of Senegal’s population lives, while offering MSME’s wider options for enterprise growth. Initially, Dyna pursued BDS interventions based on the general mandates dictated by the private sector objective of providing information sharing and technical interventions based on perceived demand. Much of the first year of operations was devoted to understanding existing local markets for business services, its main actors, characteristics, needs, and willingness to pay but still managed to surpass all of its project results. In 2002 the program performed a market assessment that led to further understanding of the demand, supply, and delivery of BDS services in the local markets and enabled the program to understand the different tiers of market players, namely service providers, associations and MSMEs. Wanting to stimulate the market for business services, Dyna revamped its model in 2002 targeting specific sub-sectors and associations and federations providing them with an opportunity to scale up their operations. These successful dissemination channels for BDS led Evaluation of Dynaentreprises / Senegal 4 the program towards its highest level of growth enabling them to double and in many cases triple their project results for that year. The business development service component has achieved and surpassed most of its targets. Nevertheless, given the actual short-term implementation of the program compounded by the downsizing of operations, the program has not been able to fully roll-out all of its activities. To date, Dyna has issued over 351 contracts for microfinance activities with a contract value of US $10,124,806 providing training, equipment, organizational development, and information dissemination to Senegalese microfinance institutions, reaching over 43,769 borrowers and 219,760 depositors. The project has also leveraged its resources to nearly twice the scale of its business development service operations which have included more than 237 contracts valued at US $1,832,057, surpassing the initial funding allocated for this component. This has encompassed interventions in ten different sub-sectors and included a wide array of activities reaching more than 38,727 micro small and medium enterprises in 20031 . The scale of the funding provided under this umbrella project has positioned Dyna as an important player in the local market for goods and services, enabling the institution to have a broad impact. Dyna capitalized on this opportunity by revamping local contracting. Through its open tendering process, the project has been able to upgrade the skills of local consulting companies. Many of the companies interviewed mentioned that Dyna’s solicitation process provided a valuable learning experience. As a result of the tendering process introduced by the Dyna project, many local consulting firms have gained additional expertise by responding to solicitations. These new skills-- acquired by service providers-- have enabled local companies to increase their overall proposal acceptance ratios to between 30 to 50 percent, a figure that seems to be an acceptable local standard among consulting firms. I.4. Principal Lessons Learned The principal lessons learned on the Dyna Project from this evaluation include: 1. Increase Private Sector Involvement: The magnitude of the funding provided under this project positioned Dyna as an important player in the local market for goods and services, enabling them to have a broader impact. Dyna capitalized on this opportunity by revamping local contracting, and through its open tendering process was able to upgrade the skills of local consulting companies. Many companies interviewed mentioned that the solicitation process was an important learning experience. 2. Build on local skills and communicate results: Dyna’s strategy to outsource technical services from local firms and particularly firms from rural areas contributed to the branding of the project. This was viewed as a highly positive outcome from the project. The development of communication tools in the form of manuals, reports, events, and intranet web pages has contributed tremendously to the project branding. 3. Provide opportunities for service providers and clients to learn incrementally: The project’s efforts to upgrade the capacity of local service providers were also integral to the 1 The 38,727 MSME’s reached by the program correspond to the actual number of enterprises which BDS partner institutions have reported to Dyna they are reaching through their programs. Evaluation of Dynaentreprises / Senegal 5 success of the Dyna strategy. The project's policy of offering training services to local service provider staff provided an ideal opportunity for local firms to upgrade their skills and provide improved services to MFI/BDS clients. 4. Support product development by upscaling and downscaling consulting services: By outsourcing technical activities to local consulting firms, Dyna has supported the development of new products. This has provided consulting companies opportunities to either a) downscale their services for the MSME market, or b) upscale their services by reaching a higher tier of this market segment or by forming sole proprietorships. 5. Promote training interventions: Although training activities only represented 33 percent of all BDS interventions, Dyna's trainings have experienced a strong level of demand. For example, in Tambacounda, over 40 staff from PROMER attended the GERME and Making Cents training. These training modules have now been replicated in the field providing micro, small and medium enterprises the opportunity to access business training. The replication of training resources in reaching MSME’s has been very successful. 6. Develop interventions for disadvantaged groups (rural populations, youth, disabled, female clients) and upgrade indigenous associations and networks: A successful strategy pursued by Dyna has been to work in partnerships with federations, a type of cooperation that has provided an innovative and effective information and service distribution system and made a direct link with intended target populations. 7. Work through indigenous networks and associations: Dyna was able to reach and work through existing indigenous networks and associations successfully by taking advantage of the existing exchange and mutual support mechanisms within Senegal. The project's work with local associations and federations has enabled these organizations to reach economy of scale and cost-effectiveness. 8. Create synergy with other SO’s in health and governance: Other USAID-funded projects have been able to benefit from the success behind Dyna's branding and communication strategies. For example, computer stations in the public entrance of major microfinance institutions now include information technology kiosks that disseminate health messages. I.5 Recommendations to Increase the Effectiveness of Dyna’s Program Design Though the numbers reached and lessons learned from Dyna are impressive, there are also challenges to the approach it pursued. Dyna inserted itself into the complex tendering contracting process of supply and demand as an indispensable broker between the MFI/BDS clients and the service provider. Dyna’s insertion of itself as a requisite institution in service delivery and defining demand-driven activities has perhaps retarded MFI and BDS institutions from mastering the process of contracting between service providers and clients. Through the tendering and contracting process, Dyna has become the integral link between service providers and clients. The structure of Dyna’s intervention as an intermediary between supply and demand has therefore promoted a tendering response capacity rather than direct client demand￾identification. Evaluation of Dynaentreprises / Senegal 6 The Dyna project has brought to the forefront some of the impinging issues on how donor agencies might better serve the microfinance and business development industry by shifting the focus away from direct provision of services toward removing barriers by building capacity within institutions and in the sector as a whole. Performance-based projects like Dyna have strong incentives to show results in numbers of operations and combined volume. In this context, Dyna provided an innovation: the development of a tailored technical assistance strategy that enabled the institution to allocate large-scale resources available under the project through its tenders. This provided a transparent and competitive mechanism. Although the program provided substantial operational support to individual microfinance and business development institutions it did not provide as much emphasis to very specialized technical assistance to strengthen these markets as a whole such as credit bureaus in microfinance or particular interventions through out the value chain of critical sub-sectors to strengthen the participation of MSME in these sectors as well as contribute to the overall economy of Senegal. This assistance could have built the capacity of the microfinance and business development industry as a whole and provided further competition and dynamism within the sector on a sustained basis. The Dyna project has had positive results in stimulating the consulting services market, making it perform more dynamically in Senegal, as well as establishing positive linkages between service providers and MFI and BDS institutions. A key recommendation of this evaluation is for USAID/Senegal to continue its investments in these two sectors to maximize the results of the investments that have already been made, bearing in mind that an exit strategy must be in place. Since the Dyna program will not be extended beyond its funding cycle, it is important to ensure that the momentum created by this large scale project is fully maximized. Therefore the evaluation team recommends a rethinking of the framework and delivery structure of assistance to microfinance institutions and the provision of business development services. The key overall recommendations for the Dyna Project are as follows: 1. Move from brokering towards facilitation of business services 2. Invest in market research to define a possible follow-up design to the Dyna project 3. Focus market research on capacity, willingness, and ability to pay for services 4. Phase-out subsidies particularly at the transaction level 5. Ensure that performance results adequately measure market development goals 6. Perform mid-term evaluations 7. Catalyze donor consensus towards market development goals. Evaluation of Dynaentreprises / Senegal 7 It is envisioned that the recommendations proposed in this report would enable the USAID/Senegal mission to: accomplish more with fewer resources; strengthen operating models by aligning follow-up programs more closely with good practice principles; maximize the results of earlier investments; and continue the momentum and branding that have been successfully built by the Dyna project. Evaluation of Dynaentreprises / Senegal 8 II. Introduction This evaluation of the DynaEntreprises Senegalaises Project of Senegal was conducted by IBM Business Consulting Group and Enterprise Resource Group, Inc. under the Accelerated Microenterprise Advancement Project Contract, (Contract # GEG-1-00-02-00012-00) from March through April, 2004. This introductory chapter explains the purpose of the evaluation and the project description from the scope of work, and concludes with a description of the organization of the report. II.1. Purpose of the Evaluation This is the final evaluation of the DynaEntreprises Senegalaises Project Contract No. 685-C-00- 00-00002-00, signed between Chemonics International and USAID/Senegal on December, 1999. The evaluation has three purposes, namely to: 1. Analyze the impact of USAID funded microfinance and business development activities; 2. Identify lessons learned; 3. Make recommendations to USAID/Senegal regarding the nature, scope and approach of possible future activities in microfinance and business development services. II.2. Project Description DynaEntreprises Senegalaises is a market-demand project implemented on behalf of USAID/Senegal by Chemonics International Incorporated, the Umbrella Support Unit, International Business Initiative and the Center for International Private Enterprise. The project officially began its five-year capacity building activities in December 1999 and has been working with service providers and MFI and BDS client institutions with the goal of building technical capacity in these two areas that are crucial towards the development of the micro, small and medium enterprise sector. Through its microfinance intervention the program has expanded access to savings and other financial services, while fostering an array of business development services to improve market access, technology and management skills catalyzing complementary and synergistic relationships between these interventions. The Dyna project has focused its activities on building the capacity of local and national MFI and BDS institutions operating in five regions of the country including: Pikine/Rufisque, and in the regions of Kolda, Thies, Tambacounda and Zinguinchor which offer the greatest potential for entrepreneurial development. Dyna has developed an innovative capacity building program for MFI and BDS institutions outsourcing technical assistance to private local consulting firms. The Dyna program strategy has been to work with local firms, partly for sustainability and partly because local service providers have a better chance to meet the needs of a large proportion of MFI and BDS institutions affordably. The goal of the project has been to strengthen the capacity of Senegalese consulting firms and the institutional capacity of MFI and BDS institutions to link both the demand and supply of services. Over its four years of operations the Dyna project has gained increased level of activities and results by outsourcing as many activities as possible through local private sector subcontractors. Dyna has been able to establish a functional administrative network of five regional offices, Evaluation of Dynaentreprises / Senegal 9 which have enabled the program to carry out its brokering activities through a decentralized project structure. The Dyna headquarter based in Dakar and regional offices have played a brokering role between MFI/BDS client institutions and service providers. Until 2003, the project had focused approximately 42 percent of its resources to contract firms for local technical services, allocating 35 percent of these resources for microfinance client institutions and 7 percent for business development services activities. Through out its four years of operations Dyna has paid substantial attention to managerial and financial issues developing the project’s capacity to fulfill adequately its brokering role between MFI/BDS client institutions. II.3. Organization of the Report Following this introductory chapter, Chapter II presents the evaluation’s scope of work and the methodology developed in the evaluation work plan approved by USAID Senegal. This section provides a causal model utilized during the evaluation and articulates the project objectives and the aims and measurements utilized during the evaluation. Chapter III: Lessons Learned and Major Findings from the Microfinance Industry in Senegal, provides a detailed analysis of each of the activities undertaken by Dyna under this component of the project. The chapter identifies lessons learned, findings, and recommendations for the MFI component. Chapter IV: Lessons Learned and Major Findings from the Business Development Services Activities in Senegal, provides a detailed analysis of each of the activities undertaken by Dyna under this component of the project. The chapter identifies lessons learned, findings, and recommendations for the BDS component. Chapter V: Principal Lessons Learned and Recommendations, includes lessons learned and makes recommendations concerning ways in which USAID/Senegal could provide further assistance to the microenterprise sector should the Mission decide to do so. Annexes 1- 15: The report annexes include the statement of work for the evaluation, quantitative findings for each of the program objectives negotiated with Dyna under the second contract amendment, and baseline, targets, and achievements for each of the four years of implementation of the program. II.4. Acknowledgements The evaluation team gratefully acknowledges the help of many people who were interviewed for this evaluation. A list of interviewees is provided under Annex 4. Of particular importance in providing information and clarifying issues were Mr. Charles May and Mr. Victor Lubyoeski, as well as the following individuals: • John Stamm, Private Enterprise Officer, USAID/Senegal • Ousmane Ndao, Monitoring and Evaluation Specialist, USAID/Senegal • Annica Jansen, USAID • Charles Alan MAY, Ph.D., Project Director, Economist, DynaEntreprises • Victor Luboyeski, Deputy Director, DynaEntreprises • Mamata Bah LO, Responsible for Contracts, DynaEntreprises Evaluation of Dynaentreprises / Senegal 10 • Awa Paye Gueve, Administrator for the Support of the Decentralized Financial Systems, Dyna • Helene SOW-DAHOU, Technical Director for the Microfinance Department • Madeleine Cisse, Administrator for the Support of the Decentralized Financial Systems • Fatou Thiam, Director for Monitoring and Evaluation, Analysis, and Communication • Bachir N’daye, Technical Director for Business Development Services II.5. Approach As required by the scope of work, the evaluation team had an initial entry interview with the Mission Project Officer, Monitoring and Evaluation Specialist, and Contracts Specialist. Within a week of initiating the evaluation, the team submitted a draft work plan for the evaluation which included the methodology that would be pursued in the evaluation and a draft detailed outline of the final report for the Mission review. Subsequent comments served to identify issues to which the Mission assigned high priority and the work plan was resubmitted and approved by USAID/Senegal (Annex 1). II.6. Methodology The evaluation team obtained information from a variety of sources to analyze the impact of USAID/Senegal-funded microfinance and business development activities implemented by Dyna. The evaluation of the Dyna project followed a causal model, described below, which attempted to identify lessons learned, and to make recommendations to USAID/Senegal regarding the nature, scope and approach of possible future activities in microfinance and small business development. Causal Model for the Evaluation of the Dyna Project The consulting team applied a comprehensive approach to gather pertinent information from USAID/Senegal, the GOS, Dyna, technical service providers contracted by the project, and microfinance and business development client institutions affiliated with the project. The evaluation included the following project objectives that represent the indicators negotiated between Dyna and USAID/Senegal during its second contract amendment and baseline targets: MF and BDS Providers Tenders and BOA’s stimulate the local consulting market to develop new products responding to the demand of BDS & MF Providers Increase in Services available to MF and BDS institutions MF and BDS Clients Increase in use of BDS and MF service providers Improved performance of MF and BDS client institutions Higher MF and BDS services to MSME’s Dyna Project Initiative Evaluation of Dynaentreprises / Senegal 11 Indicators for KIR 2 Baseline Indicators for KIR 2 Measure Year Value 1. # of institutions using full cost-recovery interest rates and fees among institutions receiving assistance from DynaEntreprises 2000 2 2. # of institutions with delinquency rates below # with delinquency rate below 10% 2000 2 10% and loan losses under 5% of the institution's loan portfolio # with loan losses below 5% 2000 2 # of male savers 2000 6,796 # of female savers 2000 12,629 # of male groups savers 2000 85 # of female groups savers 2000 1,353 3. # of savers disaggregated by gender # of mixed groups savers 2000 483 TOTAL Number of Savers 21,346 # of male borrowers 2000 2,129 # of female borrowers 2000 4,640 # of male groups borrowers 2000 23 # of female groups borrowers 2000 435 4. # of active borrowers disaggregated by gender # of mixed groups borrowers 2000 110 TOTAL Number of Borrowers 7,337 5. value of loans offered Value 2000 2,086,803,530 6. value of savings collected Value 2000 964,648,290 7. branch offices trained Number 2000 68 Number 2000 104 8. managers & tellers trained by gender % women 2000 83% 9. Share of all decentralized financial system loans at the National Level provided by USAID funded partners Ratio of the value of loans offered by USAID-funded partners to the value of loans offered by all Microfinance Institutions reported by the Ministry of Finance regulatory body * 2000 0% Indicators for KIR 3: Baseline Indicators for KIR 3: Measure Year Value 1. Number of fee paying participants from SMEs, consulting firms, associations and groups that purchase business training Number 2000 0 2. Number of private sector participants Number 2000 0 3. Number of Agricultural-related participants Number 2000 0 4. Number of all new products and services Number 2000 0 5. Number of agricultural -related new products and services Number 2000 0 Evaluation of Dynaentreprises / Senegal 12 Baseline Indicators for KIR 3: Measure Year Value 6. Number of SME's acquiring quality technical assistance (not training) from BDS providers Number 7. Number accessing market and technical information Number 2000 0 8. Number purchasing market and technical information Number 2000 0 The performance results achieved by the Dyna project have been compiled in Annex 2, based on information provided by the Dyna Project. These performance results include the baseline, target and achievements for each of the indicators included above as project tables. The focus of this evaluation has been to analyze critically these results in light of the contract terms and conditions to gather lessons learned from the projects and make additional recommendations to USAID/Senegal on future programming activities. II.7. Project Phases The consulting team applied a comprehensive approach to gather pertinent information from all stakeholders affiliated with the project. During the first phase of the evaluation, the team reviewed relevant documents prepared by DynaEntreprise Senegalaise and contract amendments and drafted a work plan. In the second phase of the evaluation, a focus group was performed with 16 client and partner institutions. This enabled the evaluation team to obtain a wide perspective of the lessons learned and to narrow in on specific issues that were further pursued through individual interviews and field visits. During the third phase, the consulting team performed a random sampling of 41 service providers, microfinance, and business development client institutions. These were interviewed to identify the lessons learned from this large-scale project. (Annex 3 contains a list of the Institutions Interviewed). Evaluation of Dynaentreprises / Senegal 13 III. Lessons Learned and Major Findings from the Microfinance Industry in Senegal This section presents the following: · Dyna's achievements against targets for the MFI component of the project · The status of the microfinance industry in Senegal · A detailed analysis of each of the activities undertaken by Dyna under this component · Lessons learned findings, and recommendations for the MFI component. The Dyna activities reviewed in this component are: · Activities to Support the Development of Recognized Networks · Activities to Support Networks under Consolidation · Activities to Support the Networks under Construction · Activities to Support Emerging Networks · Activities to Support Isolated MECs and GECs. III.1 Dyna MFI Achievements Against Targets From 2000 through 2003, the Dyna project provided capacity-building activities to the microfinance sector contributing to an increase in its robustness, stability, and economic growth. The program's technical assistance activities have enabled rapid sectoral growth and increased formalization of the microfinance industry in Senegal. As a result, the microfinance sector has experienced continuous growth in its client base and today is considered today the largest in West Africa. Increasingly, MFI’s and networks have been formalized by signing recognition agreements with the ATCPEC, the regulatory body for microfinance institutions in the country. The ATCPEC estimates that over 400 agreements were signed with local microfinance institutions and networks during Dyna’s program implementation period of which over 60 percent are GEC. Dyna’s capacity-building efforts and technical assistance for the microfinance sector has been integral to the growth and formalization of the microfinance sector. Most of Dyna’s capacity￾building activities have focused on developing and strengthening microfinance institutions. Technical assistance delivered under the project has been concentrated on the asset side of microfinance and network institutions: encouraging savings mobilization, delivery mechanisms, information systems and human resources. In the table below, the indicators related to client growth such as the number of savers and value of savings collected are among the most salient achievements reached by the program. The Dyna capacity-building activities in the microfinance sector pursued both breadth and depth in their outreach. A key indicator that has been widely surpassed is the achievement in the ratio of the value of loans offered by USAID-funded partners to the value of loans offered by all MFIs reported. Given the availability of funds under this project, Dyna was able to target all segments of the market. This is clearly demonstrated by Dyna’s market coverage of 91percent of the Senegalese microfinance market. Most of the microfinance institutions operating in the country were touched by the program resources in one way or another which enhanced Dyna’s branding strategy. Evaluation of Dynaentreprises / Senegal 14 Below are the MFI achievements of the Dyna project against target through 2003: Achievements under KIR 1.2: Improved Access to Financial Services KIR 1.2 Project Results Achievements Vs. Targets2 Indicators 2001 2002 2003 10. Number of institutions using full cost-recovery interest rates and fees 62 percent 212 percent 117 percent 11. Number of MFI’s with delinquency rates below 10 percent 100 percent 200 percent 81 percent 12. Number of MFI’s with loan losses rates below 5percent 83 percent 175 percent 104 percent 13. Total number of savers 148 percent 157 percent 201 percent 14. Total number of borrowers 121 percent 277 percent 81 percent 15. Value of loans offered 177 percent 205 percent 123 percent 16. Value of savings collected 165 percent 280 percent 160 percent 17. Branch offices trained 52 percent 121 percent 116 percent 18. Ratio of the value of loans offered by USAID-funded partners to the value of loans offered by all MFI reported 97 percent 304 percent 334 percent During the period 2000 to 2003, the number of actives borrowers working with institutions supported by Dyna went up significantly moving from 7 337 in 2000 to total of 104 373 at end of year 2003. During the same period, the amount of savings was multiplied by 16 while the amount of loan offered was by 8. The value of savings collected jumped by 263% from 2001 to 2002. The table below summarizes the growth in savings collected and the amount of loans offered by USAID-funded partners as they join the program over the period 2001 to 2003. Growth in value of savings and loans offered From 2001 to 2003 Amount in million FCFA By Dyna partners 2000 % 2001 % 2002 % 2003 Value of Savings collected 965 114% 2 061 263% 7 482 108% 15 562 Value of Loans offered 2 087 112% 4 425 146% 10 882 48% 16 108 The average loan size with regard to MFI which have received support from Dyna has increased by 30percent over the period 2001 to 2002, rising from $438 at end of year 2000 to $569 at end of year 2003. Both number of borrowers and total loan offered have been multiplied by 5 and 6.8 respectively. This average loan size is comparable to the sector’s ratio which indicates an increase of 15percent from 1999 to 2001. By end of year 2003, 26 institutions were using full cost-recovery interest rates and fees. Only two had reached this target at the inception of the Dyna project. This indicates that performance has improved within the sector. It also indicates the scale of Dyna’s contribution to the 2 The project results indicators have been calculated based on targets and achievements for 2003, which includes the latest set of indicators made available by the Dyna project. Evaluation of Dynaentreprises / Senegal 15 structuring of the MFI in Senegal given the fact that the project has reached over 90percent of the market. Dyna project did not monitor the retention ratio and the evaluation team does not have adequate historical information to appreciate the overall retention/drop out pattern of the IMF supported by the project. It is important to note that the downscaling of operations in 2003 has negatively impacted the project's ability to extend its outreach to new clients. A large number of commitments made through mutual agreement (Protocôle d'Accord) with IMF partners will not be honored because of the program's cash shortage. The program experienced cash deficit in early 2003 and on to 2004 as a result of the spending mechanism in place and also the weakening of the USD dollar. Undoubtedly, the phase-out of subsidies from the Dyna project will also negatively impact the level of project outreach. In addition, it appears that some of the critical decisions made by the program to focus on depth of outreach has negatively impacted the quality of the Dyna portfolio and explains why the institution has not been able to reach its intended delinquency target. Although Dyna has undertaken tremendous efforts to build the capacity of the microfinance sector particularly in financial management and reporting, there is still barely sufficient information on financial performance. The delinquency problem particularly of the savings and credit groups is largely due to the lack of industry statistics and insufficient transparency. The increased involvement of the public through savings puts donor agencies and regulators in a complicated situation: how can they support the funding of the industry without crowding out the private sector? Given the large funding levels allocated by USAID/Senegal for Dyna and its microfinance component, the project has been able to assume greater risk in the provision of technical services to client institutions. It has gone down-market by providing technical consulting services to most of the actors involved in microfinance in the country. Given the actual capacity which has been built within the microfinance sector, USAID/Senegal will need to make some critical decisions to define their funding role within the sector in a follow-on program reconciling the many market segments and their potential absorptive capacity. A decision on a follow-up program will need to consider the tradeoffs between breadth and depth of outreach particularly given the projected lower availability of resources and the low potential for isolated MEC and GEC's sustainability. III.2 Status of the Microfinance Industry in Senegal Although difficult to measure precisely, Senegal has an estimated 9.7 million poor people or between 1,616, 667 poor households as a potential market for microfinance services3 . Official figures reported by the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) estimate that market penetration has evolved from 18.2 percent in 1999 to 25.5 percent in 2001. These figures are corroborated by those of the Central Bank of Senegal, which state that the country has one of the largest microfinance sectors in the West African Economic and Monetary Union West African Economic and Monetary Union (UEMOA) region. Based on these statistics of market penetration, it appears that access to financial services does not only affect the poor but the country as a whole. 3 Banque Centrale Des Etats de l’Afrique de L’Ouest, Monographie des Systèmes Financiers Decentralises.Senegal.2001 Evaluation of Dynaentreprises / Senegal 16 Another feature of the local demand for financial services is that most Senegalese live in very small rural communities, thus complicating the ability of microfinance institutions (MFIs) and other organizations to provide and deliver cost-effective financial services4 . The microfinance market in Senegal is estimated to comprise 446,000 to 700,000 clients with approximately US $56.2 million in savings mobilized and loans outstanding of US $56.8 million. This variation in the client base is mainly due to how the credit and savings groups have been counted, either as a unit or individually. Therefore the estimated microfinance market penetration varies between 26 percent (if GEC’s are counted as a unit of one) to 42 percent (if members are counted individually). Therefore the microfinance market penetration rate in Senegal is quite impressive when compared to the penetration rates in other countries in the UEMOA region. The key players in the Senegalese microfinance market are large-scale networks of cooperatives, which focus narrowly on the market and have by far the largest lending operations among microfinance institutions. The Crédit Mutuel du Sénégal (CMS) is the most important network accounting for 40 percent of the customers and 54 percent of deposit operations. It is followed by l'Union des Mutuelles du Partenariat pour la Mobilisation de l'Epargne et du Crédit (PAMECAS), that groups approximately 27 percent of local microentrepreneurs. Femmes Développement Entreprise en Afrique (FDEA) represents the third network in terms of the number of branches in the country. The next microfinance institutions in line are Alliance de Crédit et d’Epargne pour la Production (ACEP), Union des Mutuelles d’Epargne et de Crédit - Sédhiou (UMEC) and Union des Mutuelles d’Epargne et de Crédit d’UNACOIS (UMECU), which all have over 10,000 members each. Most of these market leaders offer both savings and credit services. All offer time deposits, and the majority offer demand deposits. On the credit side, all networks offer mainly short-term loans and increasingly are entering the business of providing larger scale loans. The most developed and sophisticated networks are also starting to develop technological innovations such as the use of automated teller machines (ATM’s), although this is a very recent undertaking. The following table provides some critical statistics for these microfinance market leaders in Senegal furnished by the ATCPEC and the BCEAO. This provides a picture of the performance of some of the leading local institutions: Microfinance Statistics for Sector Leaders until September 20035 Number of Clients % Outstanding Savings Amount % Outstanding Loan Portfolio % CMS 176,763 40% 30,114,112 54% 16,115,849 28% ACEP 21,653 5% 2,569,957 5% 17,216,588 30% 4 BCEAO reported a population density in Senegal of 50 habitants/KM2 in 2001. 5 Source: BCEAO statistics of end of December 2003 published on the BCEAO site and data provided by the ATCPEC for the end of September 2003. Important to note that the rationale for the accounting of microfinance clients for the ATCPEC is to count each grouping (GEC) as one customer. Actually, each GEC groups a number of customers ranging from 50 to over 500 members. Accordingly, the actual number of GEC should be around 100,000. Therefore it would be more accurate to estimate the number of customers served by the decentralized financial system in Senegal at or around 700,000 by the end of September 2003. Evaluation of Dynaentreprises / Senegal 17 Number of Clients % Outstanding Savings Amount % Outstanding Loan Portfolio % UM-PAMECAS 119,483 27% 11,310,532 20% 9,001,271 16% UMECU 37,815 8% 6,393,704 11% 4,318,982 8% FDEA 63, 323 14% 1,304,627 2% 1,604,549 3% UMEC 13,156 3% 474,771 1% 555,846 1% S/total 432,193 97% 52,167,703 93% 48,813,086 86% Total Industry 446,023 100% 56,201,538 100% 56,787,692 100% As in other parts of the West Africa region, the savings and credit cooperatives tend to be predominant among microfinance institutions. Even though credit unions have been in existence in Senegal for a long time, they have achieved a substantial percentage of growth within recent years due to the development of new lending technologies. The number of clients served within the microfinance market has grown at an average rate of 21 percent per year during the period of implementation of the Dyna Project, 1999 until 2004. This dramatic growth suggests that there is a strong market demand for microcredit in Senegal and that people are willing and able to pay relatively high prices to access such loans. Most MFI’s charge effective rates at or above market interest rates and effective rates locally have been calculated at 45 to 60 percent per year, for short-term working capital loans6 . The majority of MFI’s served by Dyna expect to see continuing high rates of growth in the short-to￾medium term. Based on current market-penetration levels, there is clearly vast potential for future growth of the microfinance industry in the country as well as some consolidation within the sector which has not yet taken place. The PARMEC law has provided a very flexible and open regulatory system which has catalyzed a high-level participation of credit cooperatives in the microfinance market. Under the PARMEC legislation group institutions or cooperatives have been granted priority status. Non-cooperative or direct credit institutions have been able to offer financial service intermediation for a period of up to five years based on the signature of a conditional agreement. After that time has elapsed (even though they may have the duration of the conditional agreement extended), institutions have to either become a cooperative or a financial institution. To date, the overall health of the decentralized financial system (DFS) in Senegal shows a good standing with a 3 percent rate of defaulting loans. Meanwhile the number of deposits in the system totals more than 56.2 million dollars and has been growing steadily year after year, experiencing an average growth rate of 2 to 4 percent. Although the decentralized financial systems operating in the country seem to be in good health, there is still ample room for consolidation within the sector particularly in promote further profitability and permanence in the delivery of financial services to the micro, small and medium enterprise market. 6 Annex number 10 includes a thorough calculation of the effective interest rates in Senegal for each of the microfinance market segments. Evaluation of Dynaentreprises / Senegal 18 Microfinance institutions and the evolution of their clientele from 2000 to 2003: The different types of microfinance institutions in Senegal serve a wide range of clients. At the lower end of the spectrum are the GEC’s and MEC’s which serve a client base with no or limited business experience. These tend to be more predominant in the rural areas with lower population density. In the middle, one can find the networks under construction and consolidation that tend to serve more established microenterprises with more business experience. At the other end of the spectrum are the recognized networks, which have a diversified client base of micro, small, and medium enterprises that tend to focus mostly on the trade and services sector or production. Through their growing support, microfinance institutions in Senegal are helping to develop businesses from the bottom up by increasing incomes and creating new job opportunities. Demand for these services is high, and these institutions have been experiencing an exponential growth in client base over the past few years. Between 2000 and 2001, the clientele of microfinance institutions in Senegal rose from 251,322 to 281,390, increasing more than 12 percent. In 2002, it increased by a rate of 31 percent. By the end of September 2003, it is estimated that the client growth rate has been as high as 21 percent. III.3 Strategic Activities Undertaken by DynaEnterprises In the context of private sector strengthening, the Dyna project has been providing capacity￾building activities to the microfinance sector by contributing to an increase in its robustness, stability, and economic growth. Dyna's aim has been to strengthen the provision of financial services to micro, small and medium enterprises in Senegal, given that these businesses comprise most of the private sector in the country. Many of the country’s new businesses are very small, and a large proportion of these businesses are likely to be microentreprises. Similarly, self-employment has increased dramatically in the country. Dyna has sought to improve the productivity of micro, small and medium enterprises, to promote growth and employment and the emergence of a competitive and dynamic private sector. Some of the major developments that have preconditioned Dyna’s technical assistance to the sector have included following: - 100,000 200,000 300,000 400,000 500,000 Year Clients growth from 2000-2003 2000 2001 2002 2003 Evaluation of Dynaentreprises / Senegal 19 · The strong differentiation of networks both in their structure and their approaches; · The predominance of savings in the decentralized financial system (DFS) resources, particularly in rural areas; · An increased need for access to investment funds to strengthen the human and physical existing microfinance institutions; and · A fast developing sector of service providers. The cornerstone of the Dyna capacity-building strategy towards the microfinance sector was developed by the end of 2000. This included activities that would enable the microfinance sector to grow dynamically, reach significant scale, and become a permanent provider of financial services. The elements that helped to shape the Dyna strategy have included the following: · Technical assistance through local service providers: Dyna set up a pool of service providers with identifiable skills in specific areas of technical assistance. · Segmentation of the microfinance sector: microfinance institutions were classified according to a typology based on their level of development and professionalism. · A demand-led approach: that required institutions to express their request for technical services to Dyna and were offered technical assistance to improve their performance. Priority was given to institutions with a high level of outreach, particularly networks, as long as they had an operating branch in one of Dyna’s five target regions. · Availability of counterpart funding by the local MFI’s in order to reduce financial and physical risk and promote the consolidation of the MFI and its credibility in the local market. · Reinforcement of savings mobilization: Dyna made savings mobilization a prerequisite for the selection of its customers. · Reduction of the information asymmetry within the microfinance sector: MFI’s were required to submit quarterly reports on their performance to Dyna. Dyna has developed its strategy taking into account the major constraints of the targeted MFI which are as follows: a) Economic environment: The dynamism of the local economy depends largely on a satisfactory raining season. Any shortage affects the agricultural production which is the engine of the rural economy. b) Cost of servicing clients: indeed the lack of information on client creditworthiness and the geographic dispersion of small clients result in a high cost of servicing clients. Many MFI responded by charging high interest rates. It appears that most MFI will charge effective rates of interest comprises between 45 to 60 percent per year, for short-term working capital loans. c) Inadequacy between financing needs and the structure of MFIs resources: over 80percent of target MFIs use savings based methodology, this as result of the legal framework. Resources are short term in nature and clients are more and more in need for medium term loans. Dyna’s strategy has consistently been not to provide credit fund, the focus been in building MFI capacities that will enable them to mobilize adequate resources from funding sources. Only ACEP has received a grant, including a credit fund. Evaluation of Dynaentreprises / Senegal 20 d) Low capacity at GECs and isolated MEC: these institutions despite the impressive number of trainings received still present low potential for sustainability. Staff capacity is low and the governance structure continuously change, making training a permanent activity for which there is no willingness to pay. Dyna’s intervention has impacted the sector in different ways: · Provision of technical assistance through local service providers has been one of the greatest achievements of the Dyna program in developing a vibrant private sector in Senegal. The large majority of BDS providers interviewed declared that working with Dyna has provided them with many benefits: expertise, vision and ambition, product and geographic diversification, negotiation skills and access to new donors or other supporting institutions. The list of BDS providers is found in annex 4. Most of the BDS which collaborated with Dyna have improved their capacity through training offered by Dyna and also have become seasoned in service marketing and delivery as result of the open tender and BOA process. Their business has grown up tremendously. SEN-INGENIERIE for instance has seen his revenues multiplied by 5 and the number of professional and permanent staff moved from 2 to 18, of which one is based in Mali and nine in Fatick. SEN INGENIERIE has been able to access new funding sources other than Dyna: AFDS, a Word Bank project and Fonds National de Promotion de la Jeunesse (FNPJ). REMIX also has been able to downscale their services and reach out to many clients even without Dyna's subsidy. The list of domestic clients comprised RECEC, Plan International, CCF, MEC Guinaw with funding from FAIB, UMECU DEFS. The spin-over effect of the collaboration with Dyna has enabled this BDS provider to penetrate the regional and international market: Mauritania, Mali and Capo Verde. REMIX is part of the venture to develop the ATM system in Microfinance in Senegal. · In order to reduce financial risk and promote ownership within the MFI supported by Dyna, the project has established the principle of collecting 25 percent cost-sharing inputs from clients for the provision of services subsidized by Dyna. The evaluation team ran a random check covering ten technical assistance activities in MFI and the same number in BDS. Activities related to Microfinance comprise generic and specific trainings, organizational development, development of a new product, accounting review and materials supply activities. For the generic training offered via the CAPAF/CGAP partner, the rate is fixed and contributions are made in cash. For other activities, the cost sharing principle has been applied and the rate ranges from 4percent (computer training for PAMECAS) to 47percent (development of new product with UNACOIS-Dev). The rate is determined on a case-by￾case basis. Most of the contributions are in-kind (perdiem, lodging, site rental, transportation and time provided) and there is no accounting consistency in evaluating these services. In the provision of commodities (safes and computers for instance), the contribution entails cost of fixing the safe in the wall, the insurance policy which the MFI is required to Evaluation of Dynaentreprises / Senegal 21 subscribe in order to safeguard the program property, the transportation even if it is effectuated with the institution's vehicle. In one case (the furniture of 31 Safes to FNGPF), no value was determined for the MFI's contribution. More importantly, there is no mechanism built into the cost sharing system which permits a progressive phase-out of subsidies and clients deciding on the services they are willing to pay for. Services providers unanimously projected that after the end of Dyna’s interventions both products and prices would suffer tremendous readjustments in time, service/product restructuring and also in determination of real market prices. The fixed subsidy within the project has not driven demand for payment of services, nor to price determination at which it is currently able to support. · It is important to note that Dyna’s interventions did not directly result in any significant changes in interest rate in the market. Changes that were observed were due to the application of the PARMEC law. PAMECAS for instance has reduced its interest rate from 36percent to 24percent in order to comply with the BCEAO instruction which established the ceiling at 27percent. The competition also has forced some MFI to reduce their interest rate. UMECU Tamba reduced from 30percent to 20percent in order to be competitive in the local market. However, MFI found ways to increase revenues in order to be able to cover their operating expenses. Apart from requiring compulsory deposit to guarantee the loans, almost all MFI charge fees and various commissions to their clients, resulting in an effective rate comprised between 45 and 60percent. The UMECU network has just introduced a new service fee of approximately $1.25 per quarter on all accounts. This fee is to enable the network to purchase professional services as Dyna’s support has come to an end. III.4 Segments and Activities of Dyna In 2000, Dyna conducted a survey of microfinance institutions to define the nature, number and the geographical location of the DFS operating in Senegal3 . The results of the survey and the lessons learned by the Dyna project during its first year of operations catalyzed the segmentation of the microfinance sector in 2001. This illustrates one of the most important accomplishments of the project: its ability to learn and integrate such lessons in its planning in order to improve its performance. The list of institutions by market segment is found in annex 9. Evaluation of Dynaentreprises / Senegal 22 III.5 Activities to Support the Development of Recognized Networks This segment includes ACEP, l'Union des Mutuelles du Partenariat pour la Mobilisation de l'Epargne et du Crédit (PAMECAS) and Crédit Mutuel du Sénégal (CMS). These three network institutions represent about 80 percent of the market for financial services in Senegal. PAMECAS and CMS represent mutualist (co-operative) institutional structures. ACEP has been granted special status as it was already providing direct credit services prior to the institution of the PARMEC legislation. While ACEP and CMS have a national presence PAMECAS limits its operations to Dakar and its peripheral areas. Dyna has allocated more than US $1.2 million dollars to support these major networks, which comprise around 14 percent of its total investments. These investments have included one grant made to ACEP and the supply of computer equipment. The $250,000 grant issued to ACEP in 2001 has been allocated towards the establishment of four new branches. The majority of this grant, $230,000 has been utilized to capitalize these new branches and issue new loans. It is interesting to note that more than US $16,000 was spent to close this grant proving the high cost associated with the granting of federal funds. The other support for this market segment has been devoted for a large part to the modernization of customer information systems for ACEP, PAMECAS and CMS. It is important to note that Dyna’s contributions to PAMECAS have amounted to around $469,000 or 42 percent of the total contributions to this market segment. The majority of these investments were made in 2003. One of the last institutions to incorporate itself into the Dyna portfolio of recognized networks has been CMS. Dyna’s work with CMS has been spread out over two years (2002 & 2003) and has amounted to $324,000 or 29 percent of the investment in this market segment. The smallest investment in computer equipment support was to ACEP which received $62,000 or 5 percent of the resources allocated to this segment. All three MFI have significantly increased their outreach since year 2000 by an average of 63percent over the three year period. PAMECAS has almost doubled the number of clients served moving from 64 432 clients in 2000 to 119 483 in 2003. In terms of sustainability, only PAMECAS is reported by Dyna to be operationally viable, meaning this IMF generates enough revenue to cover all operating expenses. CMS has recently joined the program and did not yet provide Dyna with full financial information by the time of our review. Investments allocated towards Recognized Networks 24% 76% Contrat SIG Contrat Evaluation of Dynaentreprises / Senegal 23 Lessons Learned: · Technical assistance focused on information systems: Dyna’s support activities to recognized networks essentially focused on the supply of computer equipment and setting up of an information system at the central or regional office or at the national level of the network in the case of PAMECAS. · Tendering was the preferred mechanism utilized for contracting: The Tender and BOA were given priority over grants. Dyna seems to advocate open and closed tenders because they enabled both Dyna and recipient service providers to account for funding against results and achieve a more cost-effective mechanism for the disbursement of project funds. · Significant increase in the number of clients served by this segment: it is reported that the investment in new information technology has increased client confidence which in turn has boosted the demand of financial services provided by these IMF. III.6 Activities to Support Networks Under Consolidation This market segment is comprised of UMEC Sedhiou which is the only institution under consolidation supported by the Dyna project in the region of Kolda. This network distinguishes itself for its rural outreach. The network obtained its legal recognition but is still in the process of developing its financial systems. The activities undertaken by Dyna’s for UMEC Sedhiou have amounted to some $484,000 and have involved training, organizational development, particularly marketing activities and strategic planning. The marketing and strategic planning activities alone have comprised 83 percent of the investments made by Dyna for UMEC. The UMEC network represents 3 percent of all beneficiary customers and took in 6 percent of Dyna’s investments. The average investment per customer amounts to roughly $37 per beneficiary (not including UMEC contribution), or ten times more than the funds allocated towards the recognized networks. Microfinance training activities were allocated 52 percent of the funding available by the project and have focused on strengthening the skills of the elected leaders and technicians of the 22 cooperatives and the union’s main office. UMEC has increased its outreach by 27percent over the period 2001 to 2003. . Total number of clients served at end of year 2003 amounted to 13 156. Productivity has also improved as a result of Dyna’s supports. UMEC is reported by Dyna to be operationally viable. Investments allocated to network under consolidation 52% 31% 9% 8% Microfinance Training Organizational dev IT Equip & Training Security & other Equip. Evaluation of Dynaentreprises / Senegal 24 Lessons Learned · Varying degrees in the quality of services rendered by service providers: It has been consistently noted in the focus groups and in the interviews that the lack of clearly defined norms and guidelines for service providers often resulted in contradictory and incompatible activities, which not only created confusion for the customers but also hampered the efficiency of the program since the same issues and problems were dealt with several times. III.7 Activities to Support the Networks under Construction Three institutions make up this market segment: Union des Mutuelles d’Epargne et de Crédit d’UNACOIS (UMECU), Femmes Développement en Entreprise (FDEA) and Réseau des Caisses d'Epargne et de Crédit des Femmes de Dakar (RECEC). Dyna did not sign any protocol agreements with FDEA. Although this segment accounted for 26 percent of Dyna’s investments, or $2.6 million, it covers only 7 percent of the sector. The activities for this market segment have focused on three essential components: training in microfinance, organizational development and supply of computer and security equipment. A substantial part was allocated to investments for organizational development and microfinance training, which took in 62 percent of the allocated funds. Most of the training activities focused on accounting, management systems, strategic planning and the development of a new product. Over the last three year, RECEC and UMECU have significantly increased their outreach, with a greater impact on UMECU. By end of year 2003, the number of clients served by UMECU was threefold, moving from 9 657 in year 2000 to 37 815 at end of year 2003. RECEC has increased its outreach by 51percent during the same period (from 20 423 to 30 840). Both institutions have reached their financial autonomy. Lessons Learned: · Internship programs provided on-going and useful support: The experience of interns was much appreciated by the institutions. It was particularly noted that interns supplied continuous technical assistance and the support and coaching which is needed by young institutions. · Product development was not a large focus of technical assistance activities: Fewer efforts were devoted to the development of new products. Investments only amounted to $50,000 and were used to develop a funding tool for entrepreneurs in the UMECU network. Investments towards Networks under Construction Microfinance Training Organizational Dev. IT Equip &Training Security & other Equip. Business training Evaluation of Dynaentreprises / Senegal 25 · Technical assistance was tailored towards individual institutions: There was a substantial amount of overlap in the requirements for technical assistance by the different institutions. Most of Dyna’s technical assistance consisted of tailored technical interventions towards institutions instead of focusing on the market segment as a whole to achieve further cost￾effectiveness in their operations. III.8 Activities to Support Emerging Networks This category includes nine networks of which three have already been recognized: FNGPF, INTER-CREC and IMCEC/CCF. Three types of activities have been identified: training in microfinance, organizational development and the supply of computer and security equipment. The MFIs in this category reported that to date they had not received any computer equipment. They also reported that they did not benefit from any training in entrepreneurship. A total of $1.4 million was invested in this segment, including 47 percent for training and 38 percent for organizational development. Office and security equipment was the third technical assistance component offered by the project and comprised 15 percent of the allocated investments in support of this segment. It is worth noting that this was one of the few market segments in which the program did not make any investment for computer equipment and training in this segment. Eight networks are reported to have achieved their financial autonomous during the course of their collaboration with the Dyna project. None of them had reached this stage at the inception of the Dyna project in 2000. Lessons Learned · Entrepreneurial training and product development were not as predominant in the technical assistance package offered to emerging networks which perhaps would have enabled them to achieve a competitive advantage in the market place. For example, the network which was visited by the evaluation team did not seem to possess good internal control systems. Also, the individual clients interviewed seem to have fragile businesses which were unable to support market-based interest rates. Investments towards Emerging Networks 47% 38% 15% Microfinance Training Organizational Dev. Security & other Equip. Evaluation of Dynaentreprises / Senegal 26 III.9 Activities to Support Isolated MECs and GECs The MEC’s and GEC’s represent over 40 percent of the customers (taking into account direct and indirect clients) of the DFS structures. They are characterized by low levels of savings and are often in search of credit funds. They also seem to need continued training support for their members, managers and cashiers. Most of the activities implemented by the Dyna project for the MECs and GECs focused on equipment to secure the group and office operation. A substantial part was devoted to basic training for elected leaders and technicians. Another component focused on the technical assistance required to enable these institutions to produce their statements and financial reports regularly. Dyna recently initiated the interns’ program which consists of supplying such institutions with young graduates supervised by service providers. The experiment was well received and greatly appreciated by clients who vehemently advocated its expansion. The number of GEC has significantly increased over the period 2000 to 2002, moving from 148 in 1999 to 384 in 2002. It is important to note that the number of GEC’s almost doubled in 2000, rising from 148 at the beginning of the year to 278 at year end. This increase has been due principally to two factors: first that the year 2000 corresponds with the implementation of new instructions aimed at integrating GEC’s into the accounting system of DFS and second that as a result of the Dyna project, many groups got organized to benefit from these important resources devoted to this segment as Dyna has made registration with the Ministry of Finance a prerequisite for any support from the project. Most of the groups have organized themselves by sector of activities. Over 250 GEC’s were recognized by the Ministry of Finance within a four￾year period, most of which were registered in 2000 (130). Sustainability remains a great concern for many of these GECs. Even though Dyna reported fifteen of them to be financially autonomous, the team is reserved giving the fact that the accounting system is not transparent enough to capture and reflect full costs. This concern is confirmed by the APIMEC, the professional association. During the focus group discussion held with the association members, they indicated having created a special body within the association to deal with this segment. They think that the best solution would be rather to regroup and consolidate such small-scale structures into larger networks. Lessons Learned: · Technical assistance focused on the formalization of credit and savings groups: Dyna intervention has created an incentive for informal GEC to comply with the legislation and build their capacity. Despite the important resources devoted to this segment, capacities remain low due to the inability of the GEC to attract and retain professional staff. · Formalization of activities did not lead towards further consolidation of the Savings and Credit Group market segment: The issue of the sustainability of such groupings is a major concern for actors in the sector. Consolidation of small-scale structures into larger networks is recommended. Evaluation of Dynaentreprises / Senegal 27 III.10 Summary of Lessons Learned Below is a restatement of the lessons learned on microfinance that is presented in the sub￾sections earlier in this chapter: 1. Dyna has targeted its technical assistance to the need of each market segment even though there are a lot of cross-border activities: for recognized and well established networks, the focus was on information technology in order to improve performance. For networks under consolidation or construction as well as emerging networks, the primary interventions were microfinance training and organizational development activities. Only networks under construction have received business training. 2. Tendering was the preferred mechanism utilized for contracting: The Tender and BOA were given priority over grants. Dyna seems to advocate open and closed tenders because they enabled both Dyna and recipient service providers to account for funding against results and achieve a more cost-effective mechanism for the disbursement of project funds. 3. Varying degrees in the quality of services rendered by service providers: It has been consistently noted in the focus groups and in the interviews that the lack of clearly defined norms and guidelines for service providers often resulted in contradictory and incompatible activities, which not only created confusion for the customers but also hampered the efficiency of the program since the same issues and problems were dealt with several times. The cases of RECEC and COCOGES were cited as illustrations. 4. Internship programs provided on-going and useful support: The experience of interns was much appreciated by the institutions. It was particularly noted that interns supplied continuous technical assistance and the support and coaching services which are needed by young institutions, especially MEC and GEC. 5. Product development was not a large focus of technical assistance activities: Fewer efforts were devoted to the development of new products. Investments only amounted to $50,000 and were used to develop a funding tool for entrepreneurs in the UMECU network. 6. Technical assistance was tailored towards individual institutions: There was a substantial amount of overlap in the requirements for technical assistance by the different institutions. Most of Dyna’s technical assistance consisted of tailored technical interventions towards institutions instead of focusing on the market segment as a whole to achieve further cost￾effectiveness in their operations. 7. Entrepreneurial training and product development were not as predominant in the technical assistance package offered to emerging networks which perhaps would have enabled them to achieve a competitive advantage in the market place. Per example the network which was visited by the evaluation team did not seem to possess good internal control systems and had not even reached operational sustainability. Also the individual clients interviewed seem to have fragile businesses which were unable to support market based interest rates. Evaluation of Dynaentreprises / Senegal 28 8. Technical assistance focused on the formalization of credit and savings groups: Over 250 GEC’s were recognized within a four-year period, most of which were registered in 2000 (130). Indeed, the number of GEC’s almost doubled in 2000, rising from 148 by the end to 278 during that same year. This increase has been due principally to two factors: first that the year 2000 corresponds with the implementation of new measures aimed at integrating GEC’s into the accounting system of DFS and second that as a result of the Dyna project many groups got organized to benefit from these resources. Most of the groups have organized themselves by sectors. 9. Formalization of activities did not lead towards further consolidation of the Savings and Credit Group market segment: The issue of the sustainability of such groupings is a major concern for actors in the sector; they think that the best solution would be rather to regroup and consolidate such small-scale structures into larger networks. 10. Application of a fixed subsidy rate was not appropriate to drive the demand for paid services: Even though it has increased significantly MFIs’ access to technical assistance provided through local BDS providers, it did not promote MFI ownership and determination of the services they are willing to pay for resulting in a higher price in the market. Discussions from the focus groups indicate that if IMFs recognize the need and value of the services provided by local BDS on behalf of Dyna, they are by no means willing to pay the same price without any subsidies. They expect the BDS providers to structure their services to match their financial capacities. 11. Interventions with greater impacts entail business training modules using GERME or Making Cents approach. Some targeted MFI (UMEC Sedhiou for instance) have adopted this training program as a prerequisite to obtaining a loan. Microfinance best practice courses provided by CAPAF also has had tremendous impact of MFI's confidence in providing better services to their clients and improving their capacity in portfolio management, reporting systems, services delivery and outreach. Also, the compulsory follow-up evaluation conducted by BDS provider provides incentive to participant MFI and resulted in positive changes in service delivery. One of these changes is the change in format for training technicians separately from elected board members. Technical staff and board members used to be trained together resulting in inefficiency and poor results. Another illustration is the launch of the accounting and management review as a diagnostic tool and an entry point. The program was launched as results of follow-up evaluation conducted following the training sessions. III.11 Conclusions on Microfinance 1. Move from direct provision towards the facilitation of services: The Dyna project has brought to the forefront some key issues on how donor agencies might better serve the microfinance and business development industry by shifting the focus away from direct service provision and towards removing barriers by building institutional and overall sectoral capacity. While the Dyna project attempted to increase its facilitator role by providing infrastructure and information needed by microfinance and BDS client institutions, there is still much work to be done. Unfortunately, the capacity-building activities undertaken by Dyna in the microfinance market were mainly in operational areas such as management information systems, accounting, and training. However, less Evaluation of Dynaentreprises / Senegal 29 was pursued in strategic activities such as development of credit bureaus and smart card technology. This would have addressed information asymmetries in local markets, enabled quantification of risk, and improved commercial investment to the sector. 2. Performance-based contracts have a strong incentive to show results: Performance￾based contract have strong incentives to show results in number of operations and combined volume. Dyna’s innovation was the development of a tailored technical assistance strategy that enabled the institution to allocate large-scale resources available under the project through its tenders, which provided a transparent and competitive mechanism. However, little attention was placed on technical assistance and in the comparative advantage of use of public funds that the institution had to manage. Although the program provided substantial operational support to individual microfinance institutions, critical strategic technical assistance was missing from the package of services. This could have built the capacity of the microfinance industry and provided a more equal footing and further competition and dynamism in the sector. 3. The microfinance sector in Senegal offers potential for growth and consolidation: The microfinance market in Senegal seems to offer tremendous potential for continued growth, but one of its critical constraints is its lack of capacity and information asymmetry. Although Dyna has helped support the sector, there is still much to be done by donor agencies and development partners to provide funding that will ensure the permanence of the local microfinance industry through the provision of a cost-effective and profitable delivery structure. Evaluation of Dynaentreprises / Senegal 30 IV. Lessons Learned and Major Findings from Business Development Services Activities in Senegal This section presents Dyna achievements against targets, reviews the status of business development activities in Senegal, and provides a detailed analysis of each of the activities undertaken by Dyna under the BDS component of the project. The chapter further identifies lessons learned, findings, and recommendations for the BDS component. The Dyna activities reviewed are: · BDS providers’ benefits from collaboration outside revenue generated · Microcosm of BDS: Subsidy placement and cost contributions · Decentralization and equal competition for service providers within BDS markets · Development, satisfaction and sustainability of BDS client interventions · Activities targeting subsectors · Follow-up evaluations and feedback · Activities promoting entrepreneurship: Highest potential for impact IV.1. Dyna BDS Achievements Against Targets From 2000 through 2003, the Dyna project has been the driving force behind MSME development in Senegal. While most project resources had been allocated towards microfinance activities, the business development services under the project have struggled to produce similar gains. The project reflects an interesting convergence of these two sides of MSME development. The business development services interventions have tried to bring services deeper into the rural areas where most of Senegal’s population lives, while offering MSME’s wider options for enterprise growth. In this way, Dyna has fostered an array of business development services improving market access, technology, entrepreneurial and management skills, and offering BDS client institutions the tools needed to produce high quality products efficiently, reach new customers, manage their finances and ultimately increase their incomes. Dyna provides business development and support services, including information technology, business management, and hands-on training and technical assistance to entrepreneurs in the Senegalese market. Initially, Dyna pursued BDS interventions based on the general mandates dictated by the private sector objective of providing information sharing and technical interventions based on perceived demand. Much of the first year of operations was devoted to understanding existing local markets for business services, its main actors, characteristics, needs, and willingness to pay. Dyna’s first and second year workplans document these facts. A market assessment performed in 2002 led to further understanding of the demand, supply, and delivery of BDS services in the local markets and enabled the program to understand the different tiers of market players, namely service providers, associations and MSMEs. Wanting to stimulate the market for business services, Dyna revamped its model for information-sharing and technical assistance and utilized the contract tendering mechanism to 1) learn more about existing markets; 2) share and disseminate information to market players; and 3) approach demand not only through BDS clients but through specific sub-sectors. Furthermore, Dyna learned that associations and federations were the lifeblood behind local BDS markets and an important channel for BDS service delivery to MSMEs, providing them with an opportunity to scale-up their operations. Given Dyna’s perception of its role as a private sector investor in the Evaluation of Dynaentreprises / Senegal 31 economy, the project did not coordinate its activities with the government, opting to use private channels such as federations and associations as client institutions to deliver BDS services. Dyna also utilized other strategies to stimulate demand by anticipating demand, (“Anticipation à la demande”). This included advertising in local papers to assess the potential demand from local institutions and entrepreneurs to attend Dyna pre-determined fee for service trainings (such as Making Cents, marketing, GERME, etc). The Dyna project heavily subsidized the supply with the implicit assumption that through this intervention the information deficit on the demand side would also be addressed. Dyna’s business development services included interventions both on the supply and demand side by trying to promote investments in the training market by reducing information asymmetries, improving the quality of the training supply, and attempting to stimulate the demand for these services. Although the reality is that information is lacking both on the demand and supply sides of the market for training in Senegal, Dyna’s approach was not conducive to the development of an ultimately sustainable market for training.7 The business development service component has achieved and surpassed most of its targets. Nevertheless, given the actual short-term implementation of the program compounded by the downsizing of operations, the program has not been able to fully roll-out all of its activities. This has made it even more difficult to evaluate its actual results. Many of the BDS activities implemented by Dyna have focused on market research, information sharing, and organizational support to associations and federations. By pursuing a series of tailored interventions aimed not at overall market segments but at existing institutions and groups, the program has been able to easily achieve its targets and add both breadth and depth to their operations. Below are the BDS achievements of the Dyna project against target through 2003: Achievements under KIR 1.3: Technical & Managerial Best Practices 2000 - 2003 Project Results Achievements Vs. Targets Indicators 2001 2002 2003 9. Number of fee paying participants from SMEs, consulting firms, associations and groups that purchase business training 139% 152 178% 10. Number of private sector participants 154.% 176% 143% 11. Number of Agricultural-related participants 170% 317% 146% 12. Number of all new products and services 225% 373% 47% 13. Number of agricultural -related new products and services 260% 1380% 34% 14. Number of SME's acquiring quality technical assistance (not training) from BDS providers 262% 558% 167% 15. Number accessing market and technical information 146% 334% 155% 16. Number purchasing market and technical information 604% 1673% 350% 7 Experience in BDS and in the market for training based on the Donor Committee Agency conferences held in Harare and in Rio de Janeiro have shown that when training is relevant and accurate, the trainings hold tremendous potential for cost-recovery. This is substantiated by a number of case studies from these conferences. Among them the most salient is the Paraguay Voucher experience. Evaluation of Dynaentreprises / Senegal 32 An analysis of the performance for 2003 demonstrates that most targets have been achieved and surpassed. The only indicators which demonstrate a lack of target completion are the product development and agricultural related products. This supports some of the findings of this evaluation regarding the focus of the technical assistance towards market assessments and information-sharing which have not led to many new interventions. This has hampered the overall development of new products. Dyna project strategy for business development has been to substitute the underdeveloped BDS market with subsidized services, basing service delivery on the availability of public funds. The lack of timing allotted towards the actual implementation of activities has also hampered the potential success and fruition of existing strategies. Nevertheless, when one looks at the project results in terms of scale and outreach, one can easily observe some success. It is therefore important to carefully scrutinize performance results and also to look at attributions and causality. IV.2 BDS providers’ benefits from collaboration outside revenue generated Even though Dyna focused its primary attention on the demand-based not supply-driven model, few service providers were able to benefit from the program outside the revenue derived from their contracts. Dyna focused on decentralized locations; selected service providers based in Dakar were therefore able to expand their activities and presence into the five regions of operations of the program, which gave them a cutting edge over other Dakar-based providers. In at least two cases, large firms even opened up regional offices.8 These few, larger service providers were also able to adapt and create new services on behalf of regional clients, such as in marketing, accounting, training, management and awareness raising activities; they also lowered their prices from what would normally have been charged in Dakar. In fact, there were five BDS clients9 that were interviewed who maintained contact with their service providers to provide additional services to them at a fee which was acceptable both to the BDS client and service provider. Price and service adjustment for the down-scale market is a huge step in terms of market development, and one which goes far in creating a competitive advantage, even if it has started with only a few providers. This shows us that a few service providers have been able to develop a commercial strategy of problem solving and finding their market niche—especially in terms of local technology and understanding the demand. Indeed, more often than not, service providers neither expanded nor differentiated their products nor adjusted their prices long-term to be able to meet the needs and demands of the BDS clients. Service providers did adjust their costs in the short-term for their contract negotiations with Dyna—there was even one service provider saying that the intense bargaining done by Dyna made it difficult for them to come out even! But even at these reduced costs these services (refer to Annex 9 for the full list of services) are still too expensive for BDS clients. The service providers’ pricing schemes (known colloquially as the “Dyna Price”) were not market-driven or connected to the client’s pricing structure, but developed and negotiated with and for Dyna. This lack of facilitation in market transactions highlights the gaps between appropriateness and pricing structures between supply and demand which did not happen and which also stymies a long-term approach to sustainable linkages. 8 Hodar Conseil and Sahel3000 9 AGP, OCC, Sahel3000, Cabinet Vet Consult, and ARHMT Evaluation of Dynaentreprises / Senegal 33 The Dyna project has undoubtedly made some significant progress over its four years of implementation particularly in private sector development. Although the program has not adhered to some of the latest thinking in market development the large-scale investments made by the project to develop the market of service providers in the country have definitely appeared to have a positive impact. At the center of the innovations promoted by the Dyna project has been the tender mechanism and its ability to quickly source consulting services from the local market. Nevertheless there are still many unanswered questions with regards to the sustainability of the investments made by Dyna and the linkages established between client institutions and service providers which will need to be evaluated once the program ends and over time, which are included within the recommendations made by the evaluation team. Lessons Learned: · Program downscaling has led to price and service adjustments: Five BDS client institutions interviewed had been able to negotiate contract arrangements outside of the Dyna program. This demonstrates the potential that might still exist within the program for the sustainability of the linkages brokered by the project. IV.3 Microcosm of BDS: Subsidy placement and cost contributions Even though there were some problems associated with direct service provision, and we are aware of the potential pitfalls resulting from the distortions created by subsidies placed between the demand of services and their provision, it is interesting to note the creativity and contracting results achieved by the BDS group in comparison to microfinance. Interestingly enough, it seems that the lower levels of funding allocated for the BDS component spurred some interesting interventions which are worth looking at in order to draw some substantial lessons learned from the Dyna project and its experience. The small allocation of funding of US$1,823,057 which is equivalent to approximately 10 percent of the resources received by the microfinance group enabled the BDS to choose carefully each intervention and rely on innovative value-adding techniques in order to stimulate the market. Dyna BDS staff confirmed that they were concerned about getting the most value out of their limited resources, and that they were often on the phone with service providers negotiating prices to make sure that each CFA being spent was for a reason. If we compare the overall results between BDS and microfinance by the sheer number of contracts generated through the life of the project (267 contracts in BDS versus 351 in MF), the BDS team managed to go beyond original expectations and generate momentum and activity. Also, some additional cross learning seems to have taken place between the microfinance and BDS teams as two techniques initially utilized by BDS were subsequently applied by the microfinance department; namely the Restitution Days and feedback discussions between clients/service providers and Dyna. Although the Dyna project was set-up to collect 25 percent cost-sharing inputs from clients for the provision of services subsidized by Dyna, a random sampling showed that the BDS team “Dyna’s BDS Staff Join the Private Sector” All Dyna BDS staff have created and joined a registered association to keep the skills they learned through Dyna so as to deliver services to clients themselves. At least three other BDS staff has started their own business after having finished with Dyna. Evaluation of Dynaentreprises / Senegal 34 managed to collect an average of 31 percent of in-kind contributions from their client institutions10. This finding is quite positive, as shows that high subsidies do not necessarily reflect high output of activity. Furthermore, the level of subsidy did not remain uniform in various interventions. Although Dyna aimed for a 75 percent subsidy to a 25 percent (in-kind) cost contribution per BDS client as in the Microfinance division, there were certain interventions on the BDS side that were carried out with a lower level of counterpart funding as they were deemed important by Dyna. Through our review of operations, we can observe that many times Dyna made decisions on a case-by-case basis to either continue an activity based on its intrinsic value even though cost contributions were either not available or less than 25 percent. For example, members in UNAFIBS did not pay for approximately 10 interventions on behalf of the banana sector—which included website, CD creation and other publicity tools. Also, many global events, such as Techno-Fairs, did not ask for full 25 percent cost share of the total cost through entry and stand fees. These multi-sector events, according to the service providers involved in setting them up, were not designed to recuperate the money invested into them, but was designed to stimulate public participation and interest in the events. Those interventions which requested participant cost contributions outside of cash contributions for events generally were made by providing transport, food, lodging, training room, facilitator honorarium, and coffee breaks. Cash contributions were funneled and tracked through the Dyna accounting department and made up about 3.24 percent in 2001 and 6.81 percent in 2002 of the total funding allocated by the project on an annual basis. Looking at the running total of cash contributions vis-à-vis the actual amount allocated by the project, these only amounted to 1.1 percent of the total funding allocated by the project until the end of December 2003. It was interesting to note that Dyna did not pursue a strategy for calculating in-kind contributions, which reflects, in a way, the mandate of a much larger and well endowed level program. Note in Table 1 the breakdown and cost-efficiencies, with an overall 17.5 percent BDS client institution retention rate.11 The Dyna project seems to have been concerned with reaching as many people as possible, without paying attention to the level of costs associated with interventions. Indeed many of the interventions pursued by Dyna were operational in nature and lacked a strategic focus that would enable enterprises to improve their profitability and therefore their willingness to pay for these services and commercialize business services. The drawbacks of a lack of strategic services and high level subsidies have been compounded by the lack of a clear exit strategy at the onset of the project, contributing to a costly operational structure which is dependent on continuous injections of subsidy to be able to deliver services. Several organizations and consultants, such as Direco and Amadou Lo among others, stated that the “big emptiness” now without Dyna in terms of bridging the gap of delivering services without continual subsidy through the Dyna contracting mechanisms, but that perhaps clients could approach the donor for a subsidy to receive services. Service providers do not seem to perceive other solutions or strategies outside the Dyna mechanism and continual subsidies. ACEP even went as far on this subject to ask the question, “How can people go on?” and Avysee Consulting said with Dyna leaving it was like a ‘part of the organization has been cut’. Most organizations 10 This calculation was based on a random sampling of ten BDS contracts to determine cost-share information. Dyna did not track this information outside of their individual contracts, therefore a sampling was necessary. This is not reflective of the overall project. 11 Please refer to Annex 11 for a chart of repeat client institutions and number trained. Calculation determined by taking the number of repeat institutions from one year to another and dividing them by the total number of client institutions. Evaluation of Dynaentreprises / Senegal 35 are not sure how operations will evolve after Dyna has left, some organizations appear to have closed, and many are returning to how they operated before the Dyna project.12 Table 1: YEAR 2000 YEAR 2001 YEAR 2002 YEAR 2003 TOTAL Number Trained 119 278 609 711 1,717 people Avg Cost Per Person $678 $567 $1,181 $940 Average $947 Table 2: 13 YEAR 2000 YEAR 2001 YEAR 2002 YEAR 2003 TOTAL Client Institutions 6 8 15 20 40 different institutions Avg Cost Per Institution $13,454 $19,700 $47,979 $33,431 Average $40,666 Therefore although overall client growth rate of Dyna’s breadth has also increased, from over a 100 percent increase from the year 2000 to 2001; 200 percent increase from 2001-2002 and then decreasing to a 16 percent growth rate from 2002-2003. Although the BDS side did not achieve sustainable results through reduced funding and in-kind and cash contributions given the nature of the program set-up, the BDS team maximized their resourcefulness and promoted a flexible approach in their outreach, which became a key component to boost the local demand for services Lessons Learned: · Lower levels of funding for BDS spurred innovations and value-adding techniques, demonstrating that creativity exists when there are limited funds and a short timeframe to show results. Through techno-fares and business-to-business linkages, the BDS group was able to leverage its resources and catalyze some interesting innovations. The amount of activity that BDS was able to execute with less than US$2 million is amazing particularly when compared to the resources allocated towards the microfinance component, thus proving its resourcefulness and the freedom derived from not being tied to large-scale funding sources. · For programs with more funding, it can be much harder to enforce match requirements: The evaluation could identify many instances in which an intended match took place without planning. It is worth mentioning that Dyna did not pursue a strategy for calculating in-kind contributions, which one would find much larger and better funded programs. IV.4 Decentralization and equal competition for service providers within BDS markets Dyna, in its attempt to decentralize markets has attempted to promote equal competition among Dakar-based and non-Dakar based service providers. There is even the possibility, although not 12 Avysee Consulting, ACEP, AGP, Mutuelles de Eleveurs; APEFA, AGROBIO, G-Com, APS; Senagrosol, Radio Oxyjeune, AST, Cabinet Vet Consult 13 The difference between the cost per # trained and client institutions fluctuates—this is probably partly due to the multiple￾sector work in techno-fairs and other large-scale events. Evaluation of Dynaentreprises / Senegal 36 confirmed categorically, that selection criteria for service providers may have been even slightly slanted to promote regional service providers over Dakar-based service providers. These indicators Dyna developed to select service providers, which are valid and transparent, included placing a lot of value on understanding of the zone and regional language skills. This may have promoted regional firms with specific language and regional skills. Additional criteria in service provider selection included the technical ability aspect as well as financial submissions, among other criteria specific to the terms of reference. The overall selection process (see Annex 15 for full detail) of service providers was widely applauded by all. In fact, the extremely transparent and strict submission guidelines were the main positive points brought up in individual and group discussions and interviews. Most service providers were originally put off by the strict deadlines and requirements, but ultimately came to respect the standard of quality they were held to. It is clear that Dyna went to extensive lengths to ensure transparency and high quality of submissions from service providers. BDS staff stated worked very hard as well to make sure that this standard of submissions were kept up during the entire process of interventions, and payments were also dependent upon acceptance of reports and other deliverables set forth by Dyna. Given Dyna’s work with both regional and Dakar-based service providers, most people identified the initial barriers to decentralization as lack of information sharing between Dakar and the regions. Most service providers admitted to not being aware of the regions’ activities and potential before the Dyna program, and that Dyna enabled them to study the market and be involved in regional work. Service providers were allowed to intersect and study the market at primarily the donor’s expense through their contracts in the regions. This could also be considered an additional benefit to service providers outside of the revenue generated. To some extent this supply of information has been ameliorated, however there still exists an overall lack of communication between the regions and Dakar. The perception of ‘distance’ between Dakar￾based service providers and regional clients exists geographically, technically and financially. Geographically, infrastructure and sheer distance between Dakar and other regions remains a physical separation. Technically, many regional clients and service providers feel that the perception of their Dakar-based peers tend to group rural business people as slightly ‘behind the eight ball’ in technical caliber, whether or not justifiable. Finally, the pricing structure between Dakar-based firms and regional firms tend to vary, which may hamper collaboration. The perception of rural clients may assume that they cannot afford the costs of a capital-based consulting firm. Finally in terms of potential and/or existing barriers to decentralization, governmental priority in the regions is still unclear. IV.5 Development, Satisfaction and Sustainability of BDS Client Interventions In Dyna’s quest for defining demand-driven services, Dyna prioritized intervening with associations and federations through consolidation and professionalism. Dyna also worked with already consolidated organizations to get them more representation and power; and with weaker associations to give better services and to become more professional. These interventions were mostly operational in nature, including 1) sub-sector studies, 2) Restitution Days, which broadcasted sub-sector information, 3) international study tours, 4) creation of action plans 5) creation of an association/federation, 6) awareness raising “sensitization”, 7) creation of sub￾sector manuals, 8) dinner debates, and 9) website creation and CD-ROMs. The interventions promoted by Dyna have included day-to-day operations services instead of strategic business Evaluation of Dynaentreprises / Senegal 37 services, which would have addressed issues such as improving the performance of enterprises and their long-term access to markets. Although Dyna identified and worked through existing indigenous networks reaching MSMEs and disadvantaged populations by ‘investing’ in social capital improving the breadth and depth of Dyna’s outreach, client interventions lacked strategic depth and focus. As such, clients have not had the opportunity to put in place technical processes to increase their productivity or increase their ability to pay for services in the long-term. In fact, there appears to be a deep￾rooted dependence among all BDS clients, associations and federations in finding new donor funds and subsidies to fund these strategic activities, which would enable them to increase their overall efficiency and income generation. Of virtually all those interviewed, client institutions stated that they were unable to pay full price for service providers. Both client and service provider institutions stated that the clients did not have the ability to pay full price for their services; and at the same time no one has yet worked with the service providers to help them adjust their price to determine the real market prices of what clients can and are willing to pay. (See Section V for further discussion). Therefore there is remains a wide gap between determining how much clients can pay and what price which can be charged by the service providers. Companies such as Hodar Conseil, AGP, Cabinet Veterinaire Consult and Avysee stated that clients lack know-how to approach the service provider, and the service provider needs to learn how to adapt their price to the client, not the donor (in this case Dyna). Over 75 percent of all of those interviewed stated that the donor is their service provider (or client)—quite a sobering picture in terms of market development and chances for SMEs and BDS providers to be sustainable in an open and fair competitive environment. This shows how Dyna subsidized the price of services on a long-term basis without an exit strategy in place which most likely could crowd out or displace the commercial provision of services. As noted with several institutions, Association de Soudeurs Tambacounda stated that their institution existed before Dyna and will continue to exist after Dyna. They felt that the actual cost for technical services had actually risen due to the ‘Dyna price’, and they were waiting for the project to end where they would take up their activities again at a normal price. Further discussions along this vane of market distortion was noted in interviews with ASPI, Avysee, Radio Oxyjeune, Senagrosol, Mutuelles des Eleveurs, OCC, AST and ACEP in their statements how Dyna determined the approach, selection criteria and cost paid in the market (not the actual market players). Sud Informatique also stated that donors and implementing agencies can be indirect competitors to them with their subsidies. Clients and service providers are looking for other substitutes for their lack of medium-long term strategies and other commercial possibilities. Interestingly enough, on an individual level, trainee expectations seemed to have been met adequately and individual customer satisfaction seems to be high. On a global scale, however, many clients felt that Dyna prioritized and conceptualized their needs for them, sometimes leaving a gap in the appropriateness of the intervention. Additional and wide-spread frustration lies in the rapid manner in which Dyna vacated their regional offices and activities, leaving many interventions undone, and in most cases, without explanation to the actors as to why. Not only did this rapid retreat denote no exit strategy or real plan to pass over particular skills in negotiating and paying for contracts with service providers, but it also breaks down the trust that Dyna tried hard to build between BDS clients and service providers and with Dyna and USAID itself. It undermines potential impact on the operations of the project actors and regrettably has Evaluation of Dynaentreprises / Senegal 38 left some hard feelings and confusion in the program’s place. Many clients stated additional frustration that ‘if they had only known that Dyna was here for a specific amount of time, then they would have prioritized their needs differently’. In terms of depth and breadth, it is true that the membership of the associations and federations across the board have increased up to 150 percent in some cases since Dyna interventions. Many associations, however, are quick to state that several of their members are or have been primarily motivated by Dyna by providing direct and subsidized assistance to them. It is also likely that the Dyna activities and funds contributed to and stimulated membership growth. If funds and activities are no longer provided, active, paid up membership may decrease again. Dyna’s depth of intervention primarily focused on information dissemination and operational interventions. Strategic interventions and an exit strategy have been absent for clients to be able to utilize the momentum created by membership growth to improve enterprises’ ability to fully adopt best management practices and compete in the market in the medium-to-long term, as noted in conversations with the banana federation and other professional associations, in horticulture, aviculture and aquaculture. Although it is clear that especially in the banana sector there have been extensive study tours, group meetings, planning sessions, website and CD creations and many other interventions which has generated a lot of momentum within the subsector and with the participants themselves, the actors perceive their current lack of ability to operate independently and effectively without additional outside ‘assistance’. Even the gardening sector, in which Dyna has intervened in a grass-roots and a rather non-distortionary manner, Dyna-contracted consultant Laurent Gomis stated that to get these newly formed groups and individuals to function using best practices will take more time and patience. Dyna has done its best to set up what has been possible within the time allocated, but many of these aforementioned associations, among others are still very weak in terms of organizational and strategic capabilities, as well as continually dependent upon subsidies. Less is More: Lowered Membership Leads to Profit As in the case of many gardening groups in Kolda, there were many members who would split a small piece of land between themselves to grow vegetables, and then share the proceeds from the sales. Luckily, Dyna service provider, Laurent Gomis, identified this problem early on with his evaluation visits, and was able to inform the groups to widen their space of land and actually decrease the number of people using the land. This led to increased revenue through decreased membership but with increased land area. MILK: A Positive Impact between Depth and Breadth An important part of this discussion of depth of intervention is the momentum (ripple-effect) that has been created working with professional associations and federations. This allows for wide￾ranging participation from micro-entrepreneurs, producers, transformers and the retail market. One major highlight in Dyna’s work with professional association and federation work can be seen in the milk subsector. This shows an exciting combination of both depth of clients (reaching individual cow herders) and breadth (from the local, regional and national level) demonstrating a comprehensive sense of organization and appropriate technology, which has been very impressive. This also exemplifies valorization of local products and includes wide￾range participation from rural individuals to Dakar-based consulting firms. Evaluation of Dynaentreprises / Senegal 39 Lessons Learned: · Federations and Associations were an important channel for BDS delivery and their membership grew as a result: The success in the scale of outreach of Dyna’s BDS strategy has been the use of federations and associations for service delivery. As a result, they have spurred over 150% in their membership motivated by participants' eagerness to benefit from the program: · Techno-fairs and large-scale events contributed to the breadth and depth of outreach of BDS services: Some large scale activities implemented by the BDS component of the Dyna program achieved successful results regarding outreach and also catalyzed additional educational opportunities. For example, the inclusion of computer terminals in the techno￾fairs attracted many participants to these events. Also the development of CD-ROMs on particular sub-sector topics enabled the program to quickly and cost-effectively disseminate the results of their market assessments. · Momentum and valorization have increased by working through associations and federations: Broad depth of participation and working with local products has enabled many to participate in certain subsector work. Primarily this can be seen in the milk subsector. This momentum has generated activity, and although there is still an absence of associations and federations able to completely take over independent of additional assistance or subsidy using best practices, the momentum should capitalized on (see Section V). IV.6 Activities targeting subsectors The majority of Dyna activities also correlated to sub-sector work, which corresponds to the domains in which associations were working. Outlined in Annex 9 we can see 18 separate sub￾sectors that Dyna intervened in over a very short time-period. In fact throughout the entire country, only seven of the 18 sub-sectors received more than five interventions over the life of the project. The number of activities in each sub-sector and cost per sub-sector (Annex 9 and 10) show a wide breadth of sub-sectors but of limited depth in the interventions. Indeed, given the type of interventions as well as the limited number of interventions in most sub-sectors, that there are little or no resulting activities coming from Dyna’s sub-sector approach. In fact, there is a clear lack sub-sector development focus for any real impact. Emphasis for sub-sector work was placed on research and organizational development activities. Although there is no doubt that momentum and information has been generated in regard to sub￾sector development, e.g. the KIR 3 objectives, looking from a technical lens at the business viability of these sectors, there was not much attention spent by Dyna in developing interventions which could impact the sub-sectors as a whole. There are simply too many sub￾sectors touched with the majority of interventions on information dissemination. Only 24 interventions over the life of the project gave technically-specific assistance to a sub-sector; 9 interventions are in the gardening sub-sector. There is a lack of sector-specific impact given the majority of non-technical interventions. An example of this lack of business strategy within the sub-sectors is Dyna’s work with imported vetiver for soil-erosion control. The only ‘technical’ intervention on behalf of vetiver was the Dyna contract for an Expert Junior, a type of Dyna-intern. All other activities for vetiver valued Evaluation of Dynaentreprises / Senegal 40 at US$155,392 were invested for the development of the market for vetiver through creation of demonstration plots, information days and the techno-fair14. Although there seems to have been some demand created through Dyna’s marketing of this imported species of vetiver, there is a lack any real business orientation in the local market, and there are serious doubts as to any long￾term impact on the subsector, much less on MSMEs that are not working with vetiver. Dyna’s approach to subsectors was Dyna’s ability to generate or add value or ‘valorization’ to local Senegalese products. This valorization is the crux of some of the enthusiasm and momentum expressed by MSMEs and service providers around the country. By using products already on the market and adapting those to the Senegalese taste, producers, through the local market chain, are able to participate making the interventions applicable at a local level. Nevertheless, it is our view, that information generation and even ‘valorization’ used as the primary tools for achieving impact are limiting in their ability to develop and expand markets as a whole. Although their has been a lot of breadth catalyzed by Dyna in various sub-sectors interventions have been quite shallow limiting themselves mostly to market research which has not led to interventions with the potential to address some of the critical constraints that would enable MSME’s from playing a larger role in these sectors. Given the costs involved in subsector development the project would have better served intended recipients by targeting a lower number of subsectors while addressing these constraints in more depth and with a private orientation model in mind that would have ensured a strong demonstrational impact validating the approach which would have potentially catalyzed even more demand for these services. Lessons Learned: · Sub-sector assessments need to contemplate interventions towards constraint points: Although Dyna invested program resources in the development of over 10 sub-sectors, it is difficult to pinpoint direct interventions resulting from these assessments. It is important for programs to look at subsector assessments in light of possible direct interventions that could develop these markets for MSME’s. IV.7 Follow-up evaluations and feedback Follow-up evaluations after the intervention to the BDS client were extremely useful and effective for all parties. These evaluations were completed as planned as a deliverable and as most everything else during the intervention process, tied to payment. Many times the service provider would send its senior staff to look in on the client to see how the impact from the client interventions was progressing. The rationale for sending high-level service provider staff would be to ensure that the subordinates’ work was well done—this was another way of providing their own internal quality control. Although these evaluations were obligatory for the service provider, most providers found it to be one of the highlights of the entire contracting mechanism. It enabled the service provider to see the effects of their training short-to-medium term; it helped the client discuss and hone in on their skills with the service provider directly and also allowed all parties to discuss the entire intervention and its results. There were many additional ideas and interventions which came out of the evaluations that were used in subsequent interventions: these ranged from Dyna hosting additional trainings through 14 It should be noted that the TechnoFoire was not just for vetiver, but included a wide-range of products and technologies. Evaluation of Dynaentreprises / Senegal 41 service providers with the same participants but with a different training objectives; creating manuals and other information sharing modules; breaking up the GERME model into three separate parts (3 sessions at 3 days each) to accommodate for hectic client schedules; and the initial demand for Fiscalité. These were among the recommendations taken by Dyna from participants and clients in the implementation and improvement of the program. IV.8 Activities Promoting Entrepreneurship: Highest Potential for Impact With over 81 interventions in multi-sector, entrepreneurial interventions valued at US$738,652, there has been a lot of momentum created among MSMEs. The overwhelmingly favorite interventions noted by service providers and BDS clients alike were the Techno-Fairs, business forums, dinner debates and other discussion groups. These decentralized activities that Dyna subsidized to unite a broad base of actors in the market to discuss relevant issues and possible answers encouraged full access by all market players, with outcomes from these gatherings including making contacts and finding others interested in similar topics. These interventions account for 40 percent of all BDS activity and are a perfect example of facilitation in the market place and have the highest potential for developing into actual business￾to-business connections and spin-off activities which could really impact, develop and expand market development. Regrettably though, these activities stopped short of going to the next step of focusing on real interventions and activities to further promote and develop long-term business-to-business linkages. On the other side of information sharing activities stimulating discussion and awareness, there were over 44 interventions in the GERME model also focusing on MSME development. Although training activities only represent 33 percent of all BDS interventions, this activity was another favorite and the one providing most spillover for MSME clients. Client institutions participation in this hands-on training enabled their members to capitalize on the skills learned without replicating the subsidy mechanism to teach other MSMEs the same skills and use the technical skills to take their ability to another level. A strong example is in Tambacounda, where over 40 staff from PROMER attended the GERME model series, and they are now replicating this model in the field to individual MSMEs. The ability for replication to reach a depth of MSMEs is profound and has also been a model that has been very popular among Senegalese. Lessons Learned: · GERME and Making Cents modules have had a spill-over effect among donor and private sector institutions: The impact resulting from entrepreneurship training within Dyna’s programs is really worth noting. Many donors like PROMER have taken advantage of the costs associated with the introduction of these training curricula and have incorporated them into their services. Over 40 staff from PROMER participated in these trainings and now use them in their work with credit and savings groups associations. IV.9 Summary of Lessons Learned Below is a restatement of lessons learned related to the business development component that has been cited earlier within this chapter: Evaluation of Dynaentreprises / Senegal 42 1. Lower levels of funding for BDS spurred innovations and value-adding techniques, demonstrating that creativity exists when there are limited funds and a short timeframe to show results. Through techno-fares and business-to-business linkages, the BDS group was able to leverage its resources and catalyze some interesting innovations. The amount of activity that BDS was able to execute with less than US$2 million is amazing particularly when compared to the resources allocated towards the microfinance component, thus proving its resourcefulness and the freedom derived from not being tied to large-scale funding sources. 2. For programs with more funding, it can be much harder to enforce match requirements: The evaluation could identify many instances in which an intended match took place without planning. It is worth mentioning that Dyna did not pursue a strategy for calculating in-kind contributions, which one would find much larger and better funded programs. 3. Federations and Associations were an important channel for BDS delivery and their membership grew as a result: The success in the scale of outreach of Dyna’s BDS strategy has been the use of federations and associations for service delivery. As a result, they have spurred over 150% in their membership motivated by participants' eagerness to benefit from the program: 4. Techno-fairs and large-scale events contributed to the breadth and depth of outreach of BDS services: Some large scale activities implemented by the BDS component of the Dyna program achieved successful results regarding outreach and also catalyzed additional educational opportunities. For example, the inclusion of computer terminals in the techno￾fairs attracted many participants to these events. Also the development of CD-ROMs on particular sub-sector topics enabled the program to quickly and cost-effectively disseminate the results of their market assessments. 5. Program downscaling has led to price and service adjustments: Five BDS client institutions interviewed had been able to negotiate contract arrangements outside of the Dyna program. This demonstrates the potential that might still exist within the program for the sustainability of the linkages brokered by the project. 6. Sub-sector assessments need to contemplate interventions towards constraint points: Although Dyna invested program resources in the development of over 10 sub-sectors, it is difficult to pinpoint direct interventions resulting from these assessments. It is important for programs to look at subsector assessments in light of possible direct interventions that could develop these markets for MSME’s. 7. GERME and Making Cents modules have had a spill-over effect among donor and private sector institutions: The impact resulting from entrepreneurship training within Dyna’s programs is really worth noting. Many donors like PROMER have taken advantage of the costs associated with the introduction of these training curricula and have incorporated them into their services. Over 40 staff from PROMER participated in these trainings and now use them in their work with credit and savings groups associations. Evaluation of Dynaentreprises / Senegal 43 IV.10 Conclusions on Business Development Activities A well-structured BDS program depends on effective dissemination channels, updated market knowledge, horizontal and vertical coordination, and an overall approach that is continually assessed in order to adapt to, not distort, a strong framework for BDS activities. While Dyna has been able to achieve scale in it operations and breadth and depth in its outreach, it has narrowly focused on market research, information sharing, entrepreneurship training, and organizational support and consolidation through associations and federations. This narrow market focus and fixed subsidy structure which defines the Dyna approach to BDS has attempted to jump-start investments in product development by existing suppliers, but it has not yet arrived to fruition. There is still much room for USAID/Senegal to build on the momentum set by the interventions led by Dyna to ensure that the market for BDS services in Senegal can become more competitive and to ensure the sustainability of key services promoted by the Dyna program. Evaluation of Dynaentreprises / Senegal 44 V. Principal Project Achievements, Lessons Learned and Recommendations This section identifies the principal lessons learned through the Dyna project and makes recommendations to USAID/Senegal regarding the nature, scope and approach of possible future activities in microfinance and small business development. V.1 Principal Lessons Learned from the Dyna Project Based on the analysis of the microfinance and business development activities undertaken by Dyna in Chapters III and IV broad lessons emerge for the program as whole from this experience: 1. Increase Private Sector Involvement: The magnitude of the funding provided under this project positioned Dyna as an important player in the local market for goods and services, enabling them to have a broader impact. Dyna capitalized on this opportunity by revamping local contracting, and through its open tendering process was able to upgrade the skills of local consulting companies. Many companies interviewed mentioned that the solicitation process was an important learning experience. 2. Build on local skills and communicate results: Dyna’s strategy to outsource technical services from local firms and particularly firms from rural areas contributed to the branding of the project. This was viewed as a highly positive outcome from the project. The development of communication tools in the form of manuals, reports, events, and intranet web pages has contributed tremendously to the project branding. 3. Provide opportunities for service providers and clients to learn incrementally: The project’s efforts to upgrade the capacity of local service providers were also integral to the success of the Dyna strategy. The project's policy of offering training services to local service provider staff provided an ideal opportunity for local firms to upgrade their skills and provide improved services to MFI/BDS clients. 4. Support product development by upscaling and downscaling consulting services: By outsourcing technical activities to local consulting firms, Dyna has supported the development of new products. This has provided consulting companies opportunities to either a) downscale their services for the MSME market, or b) upscale their services by reaching a higher tier of this market segment or by forming sole proprietorships. 5. Promote training interventions: Although training activities only represented 33 percent of all BDS interventions, Dyna's trainings have experienced a strong level of demand. For example, in Tambacounda, over 40 staff from PROMER attended the GERME and Making Cents training. These training modules have now been replicated in the field providing micro, small and medium enterprises the opportunity to access business training. The replication of training resources in reaching MSME’s has been very successful. 6. Develop interventions for disadvantaged groups (rural populations, youth, disabled, female clients) and upgrade indigenous associations and networks: A successful strategy pursued by Dyna has been to work in partnerships with federations, a type of Evaluation of Dynaentreprises / Senegal 45 cooperation that has provided an innovative and effective information and service distribution system and made a direct link with intended target populations. 7. Work through indigenous networks and associations: Dyna was able to reach and work through existing indigenous networks and associations successfully by taking advantage of the existing exchange and mutual support mechanisms within Senegal. The project's work with local associations and federations has enabled these organizations to reach economy of scale and cost-effectiveness. 8. Create synergy with other SO’s: Other USAID-funded projects have been able to benefit from the success behind Dyna's branding and communication strategies. For example, computer stations in the public entrance of major microfinance institutions now include information technology kiosks that disseminate health messages. V.2 Dyna’s Effectiveness in Targeting Beneficiaries’ Needs and Interests The demand-led orientation of Dyna’s project and delivery structure has responded to the needs of existing microfinance and business development institutions and achieved substantial depth and breadth. Dyna’s support to micro, small and medium enterprises has increased substantially over its five year of operations and the project has gained considerable experience in the brokering of service provision in microfinance and business development services. Dyna has stressed the importance and the appropriateness of the service provision to the MSME market segment which it intended to reach. The vast majority of the MFI and BDS clients receiving technical assistance from the Dyna project through local service providers have commended the project for building on local firms and highlighted the appropriateness of the personnel. In many cases, the Dyna project took the care to ensure that service providers could speak local languages and made the effort to source services from rural firms in areas of project operations. Dyna’s tendering process ensured that the firms selected could not only provide services in a professional manner but had the vision, culture, motivation and attitudes demonstrating a commitment towards providing services in a business like fashion towards the MSME market. It further encouraged service providers and individual consultants to develop ownership and responsibility for their work by enforcing clear guidelines. The Dyna project has been able to successfully reach and work through existing indigenous networks and associations. In this manner they have been able to leverage the existing exchange and mutual support mechanisms to reach scale and cost-effectiveness particularly with BDS sub￾sector interventions. The outcome of the investments made by Dyna to solidify these indigenous and grassroots federations and associations is still hard to predict, but will be interesting to watch. The dependency of many of these institutions was observed on field visits, with many looking for the project to provide the necessary equipment for their operations. As for the MSME clients themselves, the interviews conducted by the evaluation team with MSME clients seem to point out to positive impact although these are largely inconclusive as the evaluation team had few possibilities to interview MSME beneficiaries and these interviews were orchestrated by the project partners. Nevertheless it is important to point out that the development of actual communication tools in the form of manuals, reports, events, and intranet web pages by the Dyna project have contributed tremendously to the project branding and Evaluation of Dynaentreprises / Senegal 46 therefore the awareness with regards to the project is large in all of the four areas visited by the evaluation team. In its four years of operations, Dyna has issued more than 351 contracts for microfinance activities with a contract value of US $10,124,806 providing training, equipment, organizational development and information dissemination to Senegalese microfinance institutions, which have jointly reached more than 43,769 local borrowers and 219,760 of local depositors15. The project has also been able to leverage its resources to nearly twice the scale of its business development service operations which have included more than 237 contracts valued at US$1,832,057. This has surpassed the initial funding allocated for this component, encompassing interventions in ten different sub-sectors and a wide array of entrepreneurial training activities reaching more than 38,727 micro, small and medium enterprises MSME’s in 2003 16 . Over the four years of operations of the Dyna project, both the microfinance and business development services markets in Senegal have acquired further dynamism and sophistication. Dyna’s interventions have also had a larger impact on the MSME market segment, which has been strengthened indirectly through the project. As a result, the consulting sector has been strengthened and the project seems to have had a tremendous impact on upgrading the skills of local firms to respond adequately to solicitations. Dyna’s capacity-building interventions among service providers has added value to the consulting market and has greatly expanded its reach. V.3 Recommendations to Increase the Effectiveness of Dyna’s Project Design Though the lessons learned from Dyna are impressive, there are also challenges to the approach it pursued. Although Dyna has demonstrated its ability to serve as an administrator of the tendering process and gained operational efficiencies in the management of the tendering process it has inserted itself into the complex tendering contracting process of supply and demand as an indispensable broker between the MFI/BDS clients and the service provider. Dyna’s insertion of itself as a requisite institution in service delivery and defining demand-driven activities has perhaps retarded MFI and BDS institutions from mastering the process of contracting between service providers and clients. Through the tendering and contracting process, Dyna has become the integral link between service providers and clients. The structure of Dyna’s intervention as an intermediary between supply and demand has therefore promoted a tendering response capacity rather than direct client demand-identification. The Dyna project has brought to the forefront some of the impinging issues on how donor agencies might better serve the microfinance and business development industry by shifting the focus away from direct provision of services toward removing barriers by building capacity within institutions and in the sector as a whole. Performance-based projects like Dyna have strong incentives to show results in numbers of operations and combined volume. In this context, Dyna provided an innovation: the development of a tailored technical assistance strategy that enabled the institution to allocate large-scale resources available under the project through its tenders. This provided a transparent and competitive mechanism. Although the program provided substantial operational support to 15 Information furnished by Dyna which includes achievements reported to USAID for Fiscal Year 2003. 16 The contract obligations include data furnished by DynaEnterprise Senegalaises to the evaluation team under the headings of Microfinance Support – Local Contract Value and BDS Support -- Local Contracts Value. Evaluation of Dynaentreprises / Senegal 47 individual microfinance and business development institutions it did not provide as much emphasis to very specialized technical assistance to strengthen these markets as a whole such as credit bureaus in microfinance or particular interventions through out the value chain of critical sub-sectors to strengthen the participation of MSME in these sectors as well as contribute to the overall economy of Senegal. This assistance could have built the capacity of the microfinance and business development industry as a whole and provided further competition and dynamism within the sector on a sustained basis. The following program design issues could increase the effectiveness of the Dyna project: 1. Facilitate rather than broker services: Since most of the focus of Dyna’s activities was placed on its tendering mechanism, little attention was given by the program to MFI and BDS client institutions developing their capacity as discerning clients. Instead they were often passive recipients of services. 2. Define a clear transition and exit strategy at the onset of the project: The initial strategy developed by Dyna did not seem to contemplate the issue of sustainability or of an exit strategy to extract itself as a crucial actor between market forces in the project. The Dyna project should have contemplated an exit strategy as a critical result to be achieved and linked to the achievement of interventions in market development. 3. Tailor interventions to specific market segments: Although the project provided added value on the development of a tailored approach for sub-sector activities, much of the technical assistance provided by the Dyna project would have been more cost-effective and relevant if it had been designed with a wider market segment in mind. For example, accounting, strategic planning, capacity building and other operational assistance could have been tailored to particular market segments instead of to institutions. 4. Benchmark microfinance and business development services: Although Dyna collected indicators on microfinance and BDS activities from its clients’ institutions, the program did not make an attempt to identify standardized criteria and indicators of performance for its microfinance and BDS operations. Given the resources invested in the Dyna project, further competition could have been catalyzed between peers and competitors--particularly among established market segments in microfinance and BDS to provide a solid basis for appraisal, evaluation, and improved design of interventions. V.4 Recommendations to USAID/Senegal on the Nature, Scope and Approach of Possible Future Activities A key recommendation of this evaluation is for USAID/Senegal to continue its investments in the MFI and BDS sectors in order to maximize the results of its investments. As the Dyna program will not be extended beyond its funding cycle, it is important to ensure that the momentum created by this large scale project is fully maximized. The evaluation team therefore recommends a rethinking of the framework and delivery structure of the Dyna project. The recommendations proposed by the evaluation team would enable USAID/Senegal to 1) accomplish more with fewer resources; 2) strengthen operating models to include a follow-up program aligned more closely with good practice principles; and 3) maximize the results of earlier investments, momentum, and branding which have been built by the Dyna project. Evaluation of Dynaentreprises / Senegal 48 All of the recommendations included below try to highlight aspects of the existing Dyna project that would have to be realigned in order to ensure closer adherence with best practice principles: 1. Move from brokering towards facilitation of business services: There is a need to introduce a structure that will enable the new project to move away from brokering towards facilitation in order to ensure that demand and supply is more aligned. As the Dyna program has become well-established within its five regions of operations, it will be important in the next to consider a project design which moves from a market leader role to a greater facilitating role. At a minimum, USAID/Senegal might consider using the brokering experience gained to facilitate services which have already been provided by Dyna and may be viable on a commercial basis, particularly those which might be assumed by local providers. 2. Invest in market research to define a possible follow-up design to the Dyna project: USAID/Senegal should consider making a small investment in research to inform a follow￾on program design. At a minimum, the research should focus on the pertinence of the plethora of products and services offered to clients through the Dyna program and other large scale donors like PROMER. This should focus on the potential clients of the project, taking into account client preference towards services sub-contracted under the program. In addition, this should examine three critical aspects to be measured at different times and on an ongoing basis throughout the new project: (i) the degree of satisfaction in relationship with the services rendered at the end of these activities ;(ii) the degree of satisfaction with the pertinence of the BDS provided, allowing at a minimum a period of three months to elapse to adequately evaluate these services; (iii) and the impact of the BDS activities on the competitiveness of enterprises allowing for at least 12 months to elapse to adequately evaluate these activities. 3. Focus market research on capacity, willingness, and ability to pay for services: The follow-on program should also perform exhaustive market research on the capacity of MFI/BDS institutions and MSME’s to contribute to cost-recovery on the basis of the following: (i) the disposition of clients to pay for services prior and after these have been rendered; (ii) the level of income of the various client segments; (iii) the potential structure of a diminishing subsidy structure. 4. Phase-out subsidies particularly at the transaction level: The implementation of a decreased phase-out of subsidies through the course of the new project is critical to ensure the longer-term viability of the funded interventions. It is recommended that additional resources be invested in an analysis of the prices and unit costs for services at least three to six months after the closure of Dyna. This should include, at a minimum, the following variables: (i) average and range of the variation of prices per participant hours, prices for technical hours from service providers, and other types of parameters related to the unit cost for the diverse products and services or family of products available in the Senegalese market place; (ii) comparison of similar parameters in the open market particularly after the Dyna program; (iii) analysis of the internal structure of the unit prices offered through the Dyna project, differentiation of technical costs for equipment and administration. Evaluation of Dynaentreprises / Senegal 49 5. Ensure that performance results adequately measure market development goals: It will be important for USAID/Senegal to review its performance-based results in an upcoming follow-up contract to ensure that these results concentrate on support for facilitation, technical assistance, and incentives to encourage competitive performance of new and existing providers, innovations, and the development of appropriate products. The performance results of a follow-on program should consider results at three levels: (i) client impact: in terms of changes in performance (sales, value added, profitability), (ii) institutional performance: according to indicators of outreach, cost-effectiveness and sustainability; and (iii) market development: measured per example by the price and quality of services available. These facilitative interventions often require less financial assistance and greater donor skills and market knowledge. Since a market development approach involves less control and predictability than institutional development approaches, the agency’s performance-based contracting might also need to develop new relevant indicators. 6. Perform mid-term evaluations: It would be important to perform a mid-term evaluation on any follow-on program, especially given the continuous advancements market development practices. USAID/Senegal should consider undertaking a mid-term evaluation for a follow￾up program by an objective third party to ensure systematic review of performance measurements. This would also provide a solid basis for any improvements in the design of instruments in response to client demand, and help facilitate select interventions to improve the extent and quality of services provided. 7. Catalyze donor consensus towards market development goals: Market development will not work if there is a lack of donor consensus on the objectives to be achieved. It therefore would be important for USAID/Senegal to engage other donors from the national level to forge consensus and commitment on close and effective local coordination. USAID/Senegal and the donor community should more adequately coordinate with the GOS to better understand the state's role in developing an enabling environment, in correcting or compensating for market failures, and in the provision of public goods, but not those goods that can be more efficiently provided by the market. By creating a better understanding of market development goals among donors and the GOS, USAID/Senegal will be able to control and further diminish any potential distortions in local markets. V.5 Specific Recommendations for Microfinance The following recommendations for microfinance activities are made in view of a future USAID support program: 1. Develop for the program a sector strategy taking into account, at its very inception, issues relating to sustainability. Instead of working with all DFS’s, Dyna could have limited its activities to DFS’s with a fairly strong potential to become autonomous in a reasonable time span. Such a strategy would have led Dyna to strengthen its role as facilitator. 2. Adopt a DFS approach for the microfinance sector which consists of steering activities towards the elimination of bottlenecks, redynamizing competition and securing equal access for all actors to the public resources made available by the program. Instead of undertaking activities with each DFS, Dyna could have developed new products such as a central risk office, credit scoring, credit insurance policies, and smart cards. Such institutions help to Evaluation of Dynaentreprises / Senegal 50 reduce sectoral risks and encourage competition. Activities at the transaction level inevitably lead to market distortions and jeopardize the sustainability of the positive results achieved during the life of the program. 3. Adopt, as DFS planning and support base, the results of the institutional evaluation and the accounting review. Basic evaluations are useful in determining the health of the DFS’s, assessing sustainability potential, and establishing referentials. It is therefore necessary to conduct this activity prior to signing a convention with the customer. The system of “concept paper” has shown its limits. It results in market distortions. 4. Harmonize and standardize the activities of service providers contracted by Dyna both for the training programs and the technical assistance. 5. Envision a specific institutional framework for GEC’s which would enable them to operate at their own pace. The government could put in place a stimulating scheme to encourage groupings to assume an officially recognized status or to merge with other already existing institutions. The Ministry of Finance, by authorizing a GEC, pledges the fiduciary responsibility of the government. The ATCPEC unit does not have the means to enforce control over so many groupings. By seeking to regulate the sector, the government contributes to increasing risks for savers. V.6 Specific Recommendations for BDS A well-structured BDS program depends on effective dissemination channels, up-dated knowledge of the market, horizontal and vertical coordination and an overall approach that is continually assessed in order to adapt to, not distort, a strong framework for BDS activities. Working with MSMEs should be done in ways that do not distort markets, undercut efficiency, or create long-term dependency. Investing in these following strategies will encourage spill-over from technical assistance and should stimulate domestic demand to ensure sustained growth. 1. BDS Market Assessment and Performance Measurement: The implementers of a BDS program should understand existing markets by determining current relationships between supply and demand, opportunities and current market distortions. From this market assessment, specific strategic and operational interventions should be planned and conducted based on this information that should be available to all actors. Business Forums, Techno￾Fairs, dinner debates, etc., may be initial catalysts for this process to stimulate and inform actors. Attention should be spent to derive direct actions and specific outcomes from market information based on an overall strategy, which should be continually assessed to (re)design marketing strategies, monitor client satisfaction, and respond to changes in demand as a result to the development of BDS markets. 2. Equal Access to the Market: Implementation of a future BDS program should be open to all market players, adopt a holistic subsector approach working to build and strengthen horizontal and vertical linkages, and reinforce social capital which should lead to the facilitation of network/cluster development on all levels. If sub sectors are not treated as a whole and remain unbalanced, supply and demand will be poorly coordinated; products Evaluation of Dynaentreprises / Senegal 51 targeted at the local level will not be properly commercialized and local producer benefits may stagnate. 3. Invest in social capital: A future program should continue to invest in social capital through existing federations and associations where opportunities for individual gain are thin. Many rural, isolated micro-enterprises cannot become and remain competitive in global markets on their own because they are far too small for their buyers to provide the services they need to improve upon their production and/or activities, and social capital becomes more important than financial. “The costs of ensuring product quality compliance are very high unless MSMEs are organized into producer groups, coops, and associations.”[2] 4. Valorization: A follow-on program should continue to build on local markets, which are adapted to the Senegalese context. This “valorization” of working with already existing local products is frequently listed in best practices as an initial point of departure for product development as well as can positively impact actors beginning from the individual producer level up through the entire market chain. The most important step at this level is that enterprise sees the market and its potential profit and considers it worthy of their investment. 5. Decentralize Development: Much work still remains to be done in regards to private sector development in the rural regions of Senegal even though there has been particular interest and dynamism already created with BDS clients and service providers. Future programming should facilitate service providers being able to appropriately adapt their services and pricing to the regional MSME market, as well as identifying and working within their niche markets. This will assist the vertical linkages down-market as well as horizontal linkages between urban and decentralized regions. There has been momentum already created regionally for market development and growth, however this does not necessarily seem attributable to the creation of separate regional offices that have little to no decision-making power. 6. Support the role of the government: Government policies, as well as how they are directly involved in market development, affect the operations of both the MSMEs themselves as well as programming in MSME development. USAID should draw their attention to the newly developed role of the ADEPME who are currently participating in the identification, response, and procurement of subsidized service delivery to vulnerable MSMEs in Senegal, much like the original Dyna program design which has been evaluated herein. Although the ADEPME has identified a need for intermediation in the private sector, there is the same concern of the consequences if they were to stay in this brokering role in the private sector market long-term, namely that their role could counteract positive impacts on a market approach through future USAID programming. In successful private sector markets, the government focuses their role of providing an enabling environment for MSMEs, in correcting or compensating for overall market failures, and in the provision of public goods, but not in the direct provision within private goods that can be more efficiently provided by the market.” [1] Therefore as with procuring donor consensus, there also needs to be consensus for the supporting role of the government, as their policies and interactions within the market influences how private enterprises buy and sell goods and services. 7. BDS Microcosm: Finally, but not least important, is continuing on the model of the BDS microcosm. This model has shown that creativity and innovation exist when there are limited funds and a short time frame. The amount of activity that BDS has been able to execute with Evaluation of Dynaentreprises / Senegal 52 less than US$2 million is inspiring. With that type of resourcefulness not tied to bulky funds and procedures and with an accompanying exit strategy, the overall market distortion will be less and the capacity for the MSMEs to do more long-term will be increased. V.7 Conclusions: The current trend of increased formalization and commercialisation of microfinance and the latest development of good practices in business development services have brought further recognition of the important role that donor agencies have in the marketplace as facilitators of business services. USAID/Senegal’s design and support of the Dyna project demonstrates the shift which is occurring among donor agencies as donors move away from direct funding towards facilitation activities. This shift in focus implies a dramatic change in the operations of donor agencies as they move away from direct service provision and towards development of the infrastructure and information that private sector actors need, but it not provided by the market. This transition from direct provision towards market facilitation has challenged the donor community to design new forms of support. In the short term, this has caused USAID and projects like Dyna to see a reduction in the range of suitable actions available. This in turn has prompted a revision of contractual mechanisms and further scrutiny of project activities and their potential towards market distortion. Though in general the donor community appears to recognize and respect this new paradigm of market development, the transition towards market facilitation activities has proven to be quite challenging. A critical aspect of the advancement of this new market development paradigm will be for donor agencies such as USAID/Senegal and governments like the GOS to gain further understanding of market development principles and in this process build consensus to work towards them by incorporating these principles into new program design. (Please see donor guidelines www.ilo.org). It is vital that USAID/Senegal, donor agencies, and the GOS coordinate their activities and work together to ensure that a high proportion of low-income clients have access to quality BDS. Donor agencies and projects like Dyna have strong incentives to show results in operations, combined volume, and impact. In this context, investing in the capacity-building of microfinance institutions is a particularly attractive option as the number and amounts add up quickly and demonstrate immediate results. Not surprisingly, many donor agencies and implementing organizations have been slow to adjust their programs and carefully scrutinize their delivery structures. Nevertheless, if USAID/Senegal is to continue to play a positive and useful role in the development of the microfinance and business development sector through market development, it will need to accept this changing landscape and their changing role within it. 42 Annexes Annex 1: Approved Evaluation Workplan Annex 2: Key Program Results Annex 3: Institutions Interviewed Annex 4: List of Clients & Partner Institutions of the Dyna Project for BDS and MF Annex 5: The Dyna Approach: Developing the Capacity of the Microfinance and Business Development Sector by Outsourcing Technical Assistance Activities Annex 6: List of People Interviewed Annex 7: List of Documents Reviewed Annex 8: Microenterprise Results Report Data submitted by DynaEntreprise to USAID Annex 9: List Of Dyna's MFI Clients Per Segment Annex 10: Evolution of SDF/Type 1999 – 2003 Annex 11: Calculation of Effective Interest Rates in the Senegalese Microfinance Market Annex 11: BDS Client Retention Rate and Number of Clients Trained Annex 12: BDS # Activities by Type Annex 13: Sub-Sector Breakdown Annex 14: Dyna MF Contractors by Client 43 Annex 1 Approved Workplan by USAID/Senegal For the Evaluation of the USAID-Funded Microfinance and Business Development Services Implemented by Chemonics International Inc. (DynaEntreprises Sénégalaises) I. Team Composition and Evaluation Objectives In response to the task order issued by the U.S. Agency for International Development (USAID) under the Accelerated Microenterprise Advancement Program (AMAP), the IBM Consortium has assembled an evaluation team of microfinance and business development services specialists with extensive experience in the area of quantitative and qualitative evaluations. The consortium’s consultants have a strong background in the implementation and analysis of sustainable micro, small and medium enterprise programs around the world, and a comprehensive understanding of the microfinance and business development environment in Senegal. The evaluation team includes Team Leader, Ms. Jacqueline Bass, who brings over 20 years experience in private sector, microfinance and business development services; Microfinance Specialist, Mr. Vincent Akue; and Business Development Specialist, Ms. Anne Dudte Johnson. All three consultants are adding a full range of experiences in diverse geographical areas to respond to the scope of work outlined by USAID. The primary objective of the evaluation for this team of leading consultants is to analyze the impact of the USAID/Senegal-funded microfinance and business development activities implemented by Chemonics International. The five-year Chemonics International Inc. initiative known as “DynaEnterprises Sénégalaises” or “Dyna” provides financial, managerial and commodity support to existing microfinance institutions; and information exchange, decentralized service provision and fee-based training to the business development sector in five rural areas of Senegal. These areas were identified as having the greatest potential for entrepreneurial development, and were developed to strengthen the country’s private consulting sector in a decentralized manner. The evaluation of the Dyna project will measure the performance of the project vis-à-vis project targets, identify lessons learned, and make recommendations to USAID/Senegal regarding the nature, scope and approach of possible future activities in microfinance and business development services. II. Document Review and Team Organization The consultant team was provided with a series of documents to provide information and background context for the activities undertaken by Dyna (see Table 1). After synthesizing the documents, the consultants will be able to identify specific purposes, objectives and goals of the project, and will supplement this information by meeting with key personnel in USAID, the Government of Senegal, and Dyna. The team will explore general findings related to the overall project from these meetings and will then separate to meet individually with other pertinent contacts in overall micro, small and medium enterprise sector development (donors and other macro partners); and microfinance and business development services. The team leader will 44 alternate her time between the microfinance and business development services in order to bring about a comprehensive evaluation of both sectors, as well as to analyze the synergies created between both of these components. Table 1: List of Documents Document Type/Name Source Comments Quarterly Reports: 1-3; 5-7; 9-11; 13-15; 16 USAID Annual Reports: 1, 2, 3, 4 USAID Annual Workplans: 1, 2, 3 USAID Scope of Work USAID Scope of Work amendments: 2, 3 USAID Waiting for USAID to provide USAID/Senegal FY2003 Annual Report USAID USAID/Senegal Strategic Plan 1998-2006 USAID Performance Monitoring Plans USAID Dyna Auto-Evaluation Chemonics MFI/BDS Summary Sheets: 11 Chemonics List of BDS Providers and MFIs Chemonics Budget/Contract Breakdown Sheets Chemonics Dyna video-clips and round-table footage Chemonics Microenterprise Results Reporting Information Weidemann & Associates Inc. BDS/MFI Table 1 for the Implementation Grant Program of USAID Team USAID/EGAT/MD, MIGP The consulting team plans to apply a comprehensive approach to gather pertinent information from the donor, implementer, partners, and client organizations affiliated with the program. This will not only provide an overall view of project operations and processes to determine lessons learned, but will also serve to cross-check and dispel any potential inconsistencies. In addition to the direct interviews with donors, the Government of Senegal and key personnel within Dyna, the team plans on setting up a series of four small focus groups between partners and clients in the microfinance and BDS sectors. The focus will serve as an intermediary step allowing the team to note universal trends between partners and clients in a group setting, and to discuss the groups’ experiences through Dyna as a whole. Following the focus group meetings the team will randomly sample and meet with approximately 25 microfinance and BDS partners and clients separately in order to gain a better understanding of individual results and outcomes from Dyna interventions. These partners and clients will be selected through overall sampling (i.e., by number of contracts, contract value, geographical location, organization size, etc.) to ensure that a full representation of actors from Dyna’s activities are included. A comprehensive list of interviews will be developed by the consultants in consultation with USAID/Senegal as well as with Dyna in order to ensure that all appropriate organizations are included (see Annex 1). The list and timing will be flexible to obtain as many interviews as possible within the time span of the evaluation, as well as include a fair representation of the types of enterprises with whom Dyna worked. The interview list may be enlarged as necessary, 45 and may be supplemented as needed with face-to-face meetings, telephone conversations, existing surveys and studies, and/or other information sources. III. The Micro, Small-to-Medium Enterprise (MSME) Sector in Senegal: Its Actors, Processes and Changes The evaluation will include a thorough analysis of the 1) micro, 2) meso, and 3) macro levels (see Table Two). Through this analysis the evaluation will seek to provide a comprehensive review of the activities conducted by the Dyna project. This will include identifying a) the key actors involved at different levels, b) the main processes taking place which link these actors, c) the changes brought about through micro and small-to-medium enterprise interventions; and d) the overall context for the entire project. By targeting these three levels, the evaluation will clearly demonstrate how the actors involved in the micro and small enterprise development market relate to each other, and the particular processes which connect them together. The evaluation will provide a perspective for the different processes that are taking place within the Dyna project as well as the Senegalese business environment for micro and small enterprises. Table Two: Program framework Levels Actors Involved Macro Level Facilitators/Brokers (Dyna) Donors – USAID, GOS, Regulators & Others Meso – Level Providers/ Partners/Intermediaries (Service Providers, Consulting firms, etc) Micro—Primary Level Micro--Secondary Level Clients (Microfinance Institutions and Business Associations/Federations) Beneficiaries (Individual MFI clients and MSMEs) IV. Phase One: Interviews at the Macro Level The first set of interviews will be undertaken at the macro level through meetings with USAID/Senegal, the Government of Senegal (in particular the Ministry of Finance departments responsible for regulating MFIs and the Investment Promotion Agency), and Dyna senior and technical staff. These discussions and information gathering will focus on the range of activities and services directed towards micro, and small-to-medium enterprise development in Senegal and their effectiveness. The consulting team will determine the major project goals, objectives, and context of the project as a result of these meetings. The evaluation team will focus on assessing the performance of Dyna, and will address the following strategic questions which will be explored in depth through the evaluation: • What is the perspective of USAID/Senegal, Dyna, and the Government of Senegal in relation to ongoing activities, impact, and deeper background information on macro issues facing the sector as well as those issues directly impacting the project? • How has Dyna’s strategy for the program evolved over time and how can we measure the success of this experience? 46 • Has the Dyna project adequately achieved it targets? Has it furthered USAID/Senegal strategic private sector objectives and accomplished its intended goal of improving access to financial services and increasing the use of best technical and managerial practices? • Does the Dyna project compare favorably with alternative investments that USAID/Senegal could have made? • Has Dyna effectively targeted partner and client needs and interests? Have the interventions developed by Dyna caused a positive change to market dynamics, and to what extent is the new configuration of market actors and incentives sustainable? What have been major lessons learned by the program? • Were funds used cost-effectively? Can we identify evidence of program impact at the provider/partner level and in micro and small enterprises? • How could Dyna have designed more effectively its activities? What would make Dyna’s activities more effective? • If investments are planned for the future, what are the key needs of the MSME sector? What could be the nature, scope and approach of future activities in microfinance and small business development? V. Phase Two: Performance Assessment through Six Dimensions The review of key documentation provided by USAID/Senegal to the consulting team will be used to provide the general framework through which additional indicators and hypothesis can be developed. This will be supplemented by interviews with Dyna personnel, clients, partners and key stakeholders as outlined in previous sections. The evaluation process questions will be focused towards six main dimensions of performance: 47 Dimensions of Analysis Indicators Outreach: How many (breadth) and who are they (depth)? At the output level: • Number of clients served by targeted MFIs and BDS providers before and after Dyna’s interventions? Annual Percentage growth rate in clientele • Number of MFI and BDS providers • Number of MFI and BDS clients • % of female MFI and BDS clients • % of urban and rural MFI and BDS providers • Number of MSE’s participating in the MFI and BDS training programs At the purpose level: • Change in number of MSMEs buying MFI and BDS provider services (depth) • Change in number of MFI and BDS providers offering services relevant to MSEs (depth) • Change in number of MFI and BDS products being offered (breadth) • Change in number of clients reached by all MFIs • Change in rural versus urban clients • Change in size of fee paying and effect on demand and supply for MFI and BDS activities (breadth) • Change in aggregate market size for MFI and BDS activities (breadth) • Change in number of MFI and BDS organizations engaged in policy making change (breadth) Results/Efficiency: Measuring productivity Are they doing things in the most proficient way possible? • MFI’s loans outstanding growth per year and between the beginning and end of the project • MFI average loan size per year and between the beginning and end of project • Number of microfinance institutions using full cost recovery interest rates and fees • Transparency of service provider selection (BDS/MFI)using proxy of number of proposals received vs. number of contracts issued. • MFI savings outstanding growth per year and between the beginning and end of the project • MFI number of savings depositors per year between the beginning and end of the project • Total project cost per MSME’s customers reached for MFI and BDS activities. • Total project cost per provider assisted for MFI and BDS programs • Selection criteria and fair competition soliciting BDS service providers – the following proxy will be used to measure this :Number of contracts issued to sole proprietors (consultants)versus contracts issued to firms. • Confirmation of follow-up evaluations for MFI activities 48 • Proportion of facilitator resources devoted to direct “services” to partners for MFI and BDS programs. • Change in the productivity of MFI and BDS providers • Number and type of activities supporting and improving SMEs • Number of average BDS/MF contracts per year • Value of average BDS/MF contracts per year Impact/ Effectiveness: How successful where the methods employed by Dyna? • Dyna’s technical assistance impact on MFI’s ability to increase the number and value of loans • Dyna’s technical assistance impact on MFI’s ability to increase savings mobilization (number of accounts) and deposits (savings amount) • Dyna’s technical assistance impact which increased MFI and BDS client performance the most • Changes to the program as of result of MFI evaluation feedback • Differentiations of technical impact according to MFI size • Change in customers’ satisfaction levels (MFI/BDS). Incorporates the extent to which Dyna’s support to MFI’s has contributed to able to increase their clientele) • Willingness of client MFIs and BDS to pay for future services like Dyna • Change in % of MSE’s improving practices as a result of project interventions • Change in MSME-related policies and regulations • Change in average profitability • Change in distribution of loan size • Number of MFIs operating in Senegal now versus before Dyna • Change in BDS/MFproviders representations in economic development committees and organizations • Impact of MFI training on the operations and management of MFIs • % of cost share contributed by Dyna activities and rationale for calculation for the general project and for MFI and BDS activities. Sustainability: Will it last? If so, How will it last? • Change in loan terms of MFI financial products • BDS client willingness and ability to pay more for services, ability to participate in an open market • BDS providers ready to charge full cost to clients for similar services now as through Dyna contracts • Number of trainings provided by Dyna MFI and BDS activities. • Change in overall MFI efficiency now versus before interventions • Percentage of subsidization of training activities per year for MFI and BDS activities. • Change in % of total annual provider costs covered by revenue from fees for MFI and BDS activities • Further “positive” policy changes beyond initial project period 49 • Future of the market with/without future subsidy investments • Continued high level of customer satisfaction beyond initial project period for MFI and BDS activities • Continued growth in aggregate market size beyond initial project period for MFI and BDS activities • Changes to BDS subsidy levels • Key needs of the MFI sector for future investment • MFI and BDS client benefit outside of direct interventions • Number of independent, non-subsidized contracts with MFI and BDS clients • Number of BDS participants adopting best management practices Context: What are the external factors impinging or enhancing performance • Attitudes and actions from other donor agencies to intervention approaches • Constraints confronting MFIs • Barriers in decentralizing activities • Degree of “undermining” of true market forces by welfare-oriented subsidies for MFI and BDS activities. • Conditions of labor market for motivated and skilled personnel for MFI and BDS facilitators • Broad macroeconomic conditions • Broad political conditions Cost-Effectiveness • Percentage of cost-share contributed by MFIs to Dyna activities? • Cost share calculation breakdown (MFI and BDS) • Current level of profitability and efficiency of MFIs (before/now) • Number of MFIs who have reached financial sustainability (before/now) • Number of MFI service providers who are ready to charge full cost for same services The evaluation team will utilize the performance data gathered by the Dyna program in order to report on the above indicators. Special care will be taken to utilize contract information to assess the performance of the Dyna program in relation to its targets. Any contractual modifications to targets agreed by USAID and Dyna will be noted as well as assessed. The group will work with the Dyna program to assess the level of reporting from client MFI and BDS institutions and calculate the margin of error associated with this data and this will be noted within the evaluation findings. The source of all data sources included within the final evaluation report will be noted in order to validate the sources from which this data was obtained. VI. Phase Three: Formulation of Key Questions at the Meso and Micro Levels Both in a focus group setting as well as individual meetings, the evaluation team will undertake interviews and meetings with providers and clients, which will include many broad questions as outlined above and questions which are more specific, such as those outlined in Annex 2. The team will be setting up focus group and individual meetings and asking both broad-based and detailed questions which should encourage the interviewees to describe how program activities affected them (either positively, negatively or neither) which will go far in determining the project’s best practices and lessons learned. These interviews will begin with the general, broad-based questions, and move onto other benefits or services provided by the project that have not yet been discussed previously. All attempts to get actual results and documentation on institutional activities will be carried out. For example, if the interviewee’s organization has completed certain trainings, the interviewee might be asked specifically how the workshops have been concretely useful to his/her business, and to cite other similar outcomes. Similarly, the interviewee might be asked if the Dyna tendering initiatives were useful to improving economic efficiency and profitability of firms in his/her industry, and how so. The questioning would also examine the appropriateness of Dyna interventions in providing its services vis-à-vis other possible interventions. Additionally, the team plans to reference, although not necessarily track specifically, the USAID Implementation Grant Program Tables1 used to monitor microfinance and BDS performance as well as the Microenterprise Results Reporting data reported to USAID. These widely-accepted performance indicators will be used as a guide in the team’s interview and evaluation process. The overall focus on these interviews will on the partner institutions and their provision of services; however wherever possible the evaluators will attempt to examine the resulting services on individual Senegalese member firms (clients) and the synergy that may have been created by having both microfinance and business development services interventions. VII. Conclusion The questioning will focus on how the project has leveraged USAID funding facilitating linkages between service providers with microfinance and business development services clients and try to ascertain the impact of these linkages. The evaluation will attempt to review to what extent do the interviewees view the services as useful enough to pay for them. For example, are providers/partners willing to pay partial or the full cost of service delivery? Are end clients willing and able to pay and obtain the services of providers? The primary goal of the evaluation will address the overall benefits of the Dyna project pertaining to USAID/Senegal’s strategic objectives. Following the scope of work provided by USAID/Senegal, the evaluation will examine the value of the more important past and expected future benefits of the project. This would be compared to the approximately $26 million expenditure of the project over the past four years. In addition, the questionnaires will focus on the institutional change that has taken 1 Table 1 has been developed by the USAID Implementation Grant Program to track the performance of microfinance and business development services and comprises a set of performance indicators that are widely used within each of these industries. 51 place within Dyna over the 4 years of the project to determine the extent to which this supports the project and USAID’s strategic goals. The findings from the evaluation will be the base for the initial and final evaluation of the Dyna project identifying lessons learned and making recommendations to USAID/Senegal on the nature, scope, and approach of possible future activities in microfinance and business development services. An outline for the evaluation is provided as Annex 5 to this document. 52 Calendar of Activities Evaluation of DynaEntreprise’s Activities in Senegal Preparatory Work • Gather all working documents that will be used in the evaluation including those detailed in the scope of work (SOW of Dyna’s contract, Dyna’s quarterly performance and annual reports; Dyna’s annual work plans, PRSO and Dyna performance monitoring plans). • Begin to prepare a more detailed work plan, which includes an overall outline of the evaluation as well as some of the questionnaires that will be utilized by the team for interviews with key informants. Work plan is shared with USAID/Senegal one week after the signature of the contract as spelled out in the task order. • Based on the document review, discussions with USAID/Senegal, as well as information on the ground start developing an interview plan and make arrangements for these meetings as to ensure a productive first week in the field. Week 1 March 8- March 14 • Evaluation team meets with USAID/Senegal to review the workplan and objectives of the evaluation and ensure that there is agreement with regards to its nature and scope. • Workplan is submitted, discussed and approved. • Evaluation team meets with the Government of Senegal. • Evaluation team meets with Chemonics and DynaEntreprises key staff. • Evaluation team reviews roundtables conducted and filmed by Dyna Enterprise. • Meetings with other microfinance and BDS institutions on the ground take place. • Meetings with other donor institutions • Meetings with other programs providing similar services Week2 March 15-21 • Interviews and observations in the field continue. • Focus groups are conducted with service providers and MF and BDS clients. Week 3 March 22-28 • Interviews and observations in the field continue. • Preparations of the draft report start. Team meets to ensure clarity on outline and starts undertaking their writing assignments. • Meeting with USAID/Senegal to discuss preliminary findings and conclusions. Week 4 March 29- April 4 • Team members submit their writing assignments which are compiled into a final draft report by team leader and shared with the rest of the team and IBM. Week 5 April 5-11 • Recommendations are included into the draft report. • Draft report is edited/reviewed by IBM. • Report of Preliminary Findings is copied and sent to USAID/Senegal. • Results are reviewed by USAID Week 6 April 12-15 • USAID/Senegal provides comments on draft report to IBM. • Evaluation report is translated into French. • Contractor shares comments with the team. • Team leader incorporates comments and finalizes the evaluation. • IBM prepares final report and sends 10 final copies to USAID/Senegal Annex 2 Key Program Results Microfinance Results KIR 1.2 : Improved Access to Financial Services Baseline Fiscal Year 2001 Fiscal Year 2002 Fiscal Year 2003 Fiscal Year # 2004 Indicator Measure Year Value Target Achieve ment % of Goal Target Achieve- ment % of Goal Target Achie ve- ment % of Goal Target % of Goal TOTAL TARGE T 2000- 2003 TOTAL ACHIEV ED 2000- 2003 % of Goal 1 # of institutions using full cost￾recovery interest rates and fees among institutions receiving assistance from DynaEntreprises 2000 2 8 5 62.5% 8 17 212.5% 22 26 117.6% 29 110.5% 38 48 126.0% # with delinquency rate below 10% 2000 2 6 6 100.0% 10 20 200.0% 26 21 80.8% 34 161.0% 42 47 111.9% 2 # of institutions with delinquency rates below 10% and loan losses under 5% of the institution's loan portfolio # with loan losses below 5% 2000 2 6 5 83.3% 12 21 175.0% 26 27 103.8% 34 125.9% 44 53 120.5% # of male savers 2000 6,796 8,834 13,470 152.5% 17,511 37,747 215.6% 49,071 87,074 177.4% 63,792 73.3% 75416 138,291 183.4% 3 # of female savers 2000 12,629 16,418 23,587 143.7% 30,663 38,653 126.1% 50,249 110,43 6 219.8% 65,324 59.2% 97330 172,676 177.4% # of male groups savers 2000 85 110 287 260.9% 373 770 206.4% 1,001 1,590 158.8% 1,301 81.8% 1484 2,647 178.4% # of female groups savers 2000 1,353 1,759 2,870 163.2% 3,731 3,828 102.6% 4,976 15,251 306.5% 6,469 42.4% 10466 21,949 209.7% # of savers disaggregated by gender # of mixed groups savers 2000 483 628 929 147.9% 1,208 2,958 244.9% 3,845 5,409 140.7% 4,999 92.4% 5681 9,296 163.6% TOTALS 21,346 27,749 41,143 148.3% 53,486 83,956 157.0% 109,143 219,76 0 201.4% 141,886 64.6% 190378 344,859 181.1% # of male borrowers 2000 2,129 2,768 3,122 112.8% 4,059 15,538 382.8% 20,199 14,270 70.6% 26,259 184.0% 27026 32,930 121.8% 4 # of active borrowers disaggregated by gender # of female borrowers 2000 4,640 6,031 7,335 121.6% 9,535 22,477 235.7% 29,220 22,894 78.4% 37,986 165.9% 44786 52,706 117.7% 54 KIR 1.2 : Improved Access to Financial Services Baseline Fiscal Year 2001 Fiscal Year 2002 Fiscal Year 2003 Fiscal Year # 2004 Indicator Measure Year Value Target Achieve ment % of Goal Target Achieve- ment % of Goal Target Achie ve- ment % of Goal Target % of Goal TOTAL TARGE T 2000- 2003 TOTAL ACHIEV ED 2000- 2003 % of Goal # of male groups borrowers 2000 23 30 42 140.0% 54 200 370.4% 260 361 138.8% 338 93.6% 344 603 175.3% # of female groups borrowers 2000 435 566 939 165.9% 1,221 2,708 221.8% 3,520 5,517 156.7% 4,577 83.0% 5307 9,164 172.7% # of mixed groups borrowers 2000 110 142 142 100.0% 185 764 413.0% 993 727 73.2% 1,291 177.6% 1320 1,633 123.7% TOTALS 7,337 9,537 11,580 121.4% 15,054 41,687 276.9% 54,193 43,769 80.8% 70,451 161.0% 78784 97,036 123.2% 5 value of loans offered value 2000 2,086,803, 530 2,504,164 ,235 4,425,387,1 96 176.7% 5,310,464 ,635 10,882,172, 866 204.9% 13,058,60 7,439 16,108, 416,101 123.4% 15,670, 328,927 97.3% ##### ##### 31,415, 976,16 3 150.5% 6 value of savings collected value 2000 964,648,2 90 1,254,042 ,777 2,060,727,0 60 164.3% 2,678,945 ,178 7,481,935,2 91 279.3% 9,726,515, 878 15,561, 696,852 160.0% 12,644, 470,642 81.3% ##### ##### 25,104, 359,20 3 183.8% 7 branch offices trained number 2000 68 150 78 52.0% 101 122 120.8% 85 99 115.9% 60 60.4% 336 299 88.9% number 2000 104 250 97 38.8% 126 287 227.8% 201 246 122.4% 141 57.2% 577 630 109.2% 8 managers & tellers trained by gender % women 2000 83% 50% 75% 150.0% 50% 57% 114.0% 50% 44% 88.0% 50% 113.6% 2 2 117.3% Share of all decentralized financial system loans at the National Level provided by USAID funded partners Ratio of the value of loans offered by USAID-funded partners to the value of loans offered by all Microfinance Institutions reported by the Ministry of Finance regulatory body * 2000 0% 10% 9.66% 96.6% 12% 36.50% 304.2% 15% 50% 334.0% 19% 37.9% 0 1 260.2% * value of loans disbursed by DFS in national level (grands réseaux) during civil year 2001 Technical and Managerial Best Practices Component (KIR 3) Results and Targets Baseline FISCAL YEAR 2000 % FISCAL YEAR 2001 % FISCAL YEAR 2002 % FISCAL YEAR 2003 % FISCAL YEAR 2004 Contractor Results (CR) Targets established in proposal/negotiation process and updated through annual plans FY 2000 Targets Results Compl Targets Results Compl Targets Results Compl Targets Results Compl Targets 1.3.1 Number of participants from SMEs, consulting firms, associations and groups that purchase business training 1.3.1.a Number of fee paying participants Pikine/Rufisque 0 35 53 151% 30 54 180% 60 184 307% 60 186 310% 60 Kolda 0 15 23 153% 50 54 108% 100 44 44% 100 38 38% 60 Tambacounda 0 0 9 N/A 40 115 288% 80 51 64% 80 113 141% 0 Thies 0 0 34 N/A 50 55 110% 100 319 319% 100 290 290% 105 Ziguinchor 0 0 0 N/A 30 0 0% 60 11 18% 60 84 140% 75 Totals 0 50 119 238% 200 278 139% 400 609 152% 400 711 178% 300 1.3.1.b Number of private sector participants Pikine/Rufisque 0 35 53 151% 27 54 200% 48 151 315% 72 163 226% 30 Kolda 0 15 23 153% 45 54 120% 80 42 53% 120 38 32% 30 Tambacounda 0 0 9 N/A 36 115 319% 64 50 78% 96 113 118% 0 Thies 0 0 34 N/A 45 55 122% 80 310 388% 120 290 242% 52 Ziguinchor 0 0 0 N/A 27 0 0% 48 11 23% 72 84 117% 38 Totals 0 50 119 238% 180 278 154% 320 564 176% 480 688 143% 150 1.3.1.c Number of Ag-related 56 Technical and Managerial Best Practices Component (KIR 3) Results and Targets Baseline FISCAL YEAR 2000 % FISCAL YEAR 2001 % FISCAL YEAR 2002 % FISCAL YEAR 2003 % FISCAL YEAR 2004 Contractor Results (CR) Targets established in proposal/negotiation process and updated through annual plans FY 2000 Targets Results Compl Targets Results Compl Targets Results Compl Targets Results Compl Targets participants Pikine/Rufisque 0 5 20 400% 9 3 33% 9 16 178% 30 70 233% 20 Kolda 0 10 23 230% 15 38 253% 15 21 140% 50 38 76% 20 Tambacounda 0 0 0 N/A 12 45 375% 12 21 175% 40 43 108% 0 Thies 0 0 34 N/A 15 16 107% 15 132 880% 50 141 282% 35 Ziguinchor 0 0 0 N/A 9 0 0% 9 0 0% 30 0 0% 25 Totals 0 15 77 513% 60 102 170% 60 190 317% 200 292 146% 100 1.3.2 Number of new products and services offered by BDS providers 1.3.2.a Number of all new products and services Pikine/Rufisque 0 5 3 60% 3 11 367% 5 19 422% 11 5 44% 8 Kolda 0 0 1 N/A 5 7 140% 8 14 187% 19 10 53% 8 Tambacounda 0 0 0 N/A 4 7 175% 6 26 433% 15 11 73% 0 Thies 0 0 0 N/A 5 18 360% 8 32 427% 19 5 27% 14 Ziguinchor 0 0 0 N/A 3 2 67% 5 21 467% 11 4 36% 10 Totals 0 5 4 80% 20 45 225% 30 112 373% 75 35 47% 40 1.3.2.b Number of ag-related new products and services Pikine/Rufisque 0 2 0 0% 1 5 500% 1 13 1733% 8 3 38% 8 Kolda 0 0 1 N/A 3 6 200% 1 12 960% 13 3 23% 8 Tambacounda 0 0 0 N/A 2 7 350% 1 16 1600% 10 9 87% 0 Thies 0 0 0 N/A 2 8 400% 1 15 1200% 13 2 15% 14 Ziguinchor 0 0 0 N/A 2 0 0% 1 13 1733% 8 1 13% 10 57 Technical and Managerial Best Practices Component (KIR 3) Results and Targets Baseline FISCAL YEAR 2000 % FISCAL YEAR 2001 % FISCAL YEAR 2002 % FISCAL YEAR 2003 % FISCAL YEAR 2004 Contractor Results (CR) Targets established in proposal/negotiation process and updated through annual plans FY 2000 Targets Results Compl Targets Results Compl Targets Results Compl Targets Results Compl Targets Totals 0 2 1 50% 10 26 260% 5 69 1380% 52 18 35% 40 1.3.3 Number of SME's acquiring quality technical assistance (not training) from BDS providers Pikine/Rufisque 0 35 53 151% 15 69 460% 38 407 1085% 90 409 454% 160 Kolda 0 15 23 153% 25 31 124% 63 570 912% 150 19 13% 160 Tambacounda 0 0 8 N/A 20 135 675% 50 147 294% 120 117 98% 0 Thies 0 0 34 N/A 25 27 108% 63 264 422% 150 382 255% 280 Ziguinchor 0 0 0 N/A 15 0 0% 38 6 16% 90 73 81% 200 Totals 0 75 118 157% 100 262 262% 250 1,394 558% 600 1,000 167% 800 1.3.4 Number of SME's, consulting firms, associations and groups that access market and technical information 1.3.4.a Number accessing market and technical information Pikine/Rufisque 0 60 0 0% 3,262 5,839 179% 4,900 18,656 381% 17,500 23,318 12,750 Kolda 0 500 2,047 409% 233 128 55% 350 187 53% 1,250 638 750 Tambacounda 0 0 0 N/A 233 666 286% 1,000 4,023 402% 1,250 4,182 0 Thies 0 0 0 N/A 699 147 21% 400 386 97% 3,750 7,160 750 Ziguinchor 0 0 0 N/A 233 0 0% 350 149 43% 1,250 3,429 750 Totals 0 560 2,047 366% 4,660 6,780 145% 7,000 23,401 334% 25,000 38,727 15,000 1.3.4.b Number purchasing market and technical information Pikine/Rufisque 0 40 0 0% 23 63 280% 45 338 751% 450 2,381 160 Kolda 0 60 47 78% 38 128 341% 75 152 203% 750 141 160 58 Technical and Managerial Best Practices Component (KIR 3) Results and Targets Baseline FISCAL YEAR 2000 % FISCAL YEAR 2001 % FISCAL YEAR 2002 % FISCAL YEAR 2003 % FISCAL YEAR 2004 Contractor Results (CR) Targets established in proposal/negotiation process and updated through annual plans FY 2000 Targets Results Compl Targets Results Compl Targets Results Compl Targets Results Compl Targets Tambacounda 0 0 0 N/A 30 666 ##### 60 3,993 6655% 600 674 0 Thies 0 0 0 N/A 38 50 133% 75 386 515% 750 5,304 280 Ziguinchor 0 0 0 N/A 23 0 0% 45 149 331% 450 2,007 200 Totals 0 100 47 47% 150 907 605% 300 5,018 1673% 3,000 10,507 800 Note: The preceding BDS performance indicators (1.3.1, 1.3.2, 1.3.3 and 1.3.4) were defined in Quarter 2 of FY2002 through a collaborative effort on the part of USAID and DynaEntreprises. Dyna's BDS tecnicians in Dakar, Kolda, Tambacounda, Thies and Ziguinchor offices provide quarterly reports on their performance using these indicators. For Fiscal Year 2001, the results in the table above were tabulated in Quarter 2 FY2002 after the new indicators were defined. For other years, the results are derived from data available at the time the annual report is written. Visual Graphs of Microfinance Achievements 60 61 Annex 3: Client Institutions Included in the Field Visits No. Region Name Service Provider or MFI BDS Client Number of Contracts Contract Value Institution Visited 1 Dakar Amadou Lo—CFA Service Provider Yes 2 Dakar CompUS Service Provider 2 $38,902 Yes 3 Dakar Daouda Fall Service Provider 2 $4,960 Yes 4 Dakar Direco Service Provider 6 $33,526 Yes 5 Dakar GetConsult Service Provider 1 $2,542 Yes 6 Dakar Hodar Conseil Service Provider 14 $83,243 Yes 7 Dakar Radio Oxyjeune Service Provider 2 $3,639 Yes 8 Dakar Sahel 3000 Service Provider 6 $64,214 Yes 9 Dakar ASPI Client Yes 10 Dakar Fenafils Client Yes 11 Ziguinchor Avysee Consulting Service Provider 1 $23,594 Yes 12 Ziguinchor Cabinet Vet Consult Service Provider 1 $17,110 Yes 13 Ziguinchor OCC Service Provider 3 $5,474 Yes 14 Ziguinchor Senagrosol Service Provider 2 $63,828 Yes 15 Ziguinchor Sud Informatique Service Provider 5 $53,458 Yes 16 Ziguinchor Association des Aviculteurs Client Yes 17 Ziguinchor AGP Client Yes 18 Ziguinchor Mutelles des Femmes Eleveurs MFI Client Yes 19 Tambacounda Laurent Gomis Service Provider 2 $14,604 Yes 20 Tambacounda ARHMT Client Yes 62 21 Tambacounda AJMET Client Yes 22 Tambacounda Association Albinos Client Yes 23 Tambacounda Fenafils Client Yes 24 Tambacounda Promer Client Yes 25 Tambacounda UNAFIBS Client Yes 26 Dakar Remix SP MF and BDS Yes 27 Dakar SPIE SP MF Yes 28 Dakar Max Consulting SP MF Yes 29 Dakar RECEC Client MF Yes 30 Dakar CMS Client MF Yes 31 Dakar, Zinguinchor, Tambacounda UMECU Client MF Yes 32 Dakar PAMECAS Client MF Yes 33 Seydou ACEP Client MF Yes 34 Seydou UMECU Client MF Yes 35 Seydou Inter-CREC Yes 36 Zinguinchor FDEA Client MF Yes 37 Seydhou, Bignola, Tambacounda FNGPF Client MF and BDS Yes 38 Bakel GEC Ganda Client MF Yes 39 Tambacounda MEC Winrock Client MF Yes 40 Tambacounda Muproel Client MF Yes 41 Tambacounda APPROVAG Client MF Yes 42 Tambacounda RAFEG Client MF Yes 63 Annex 4 Full List of Clients and Partner Institutions Supported by the Dyna Project 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 Annex 5 The Dyna Approach: Developing the Capacity of the Microfinance and Business Development Sector by Outsourcing Technical Assistance Activities The Dyna Market-Led Demand Approach Through Open and Closed Tenders The Dyna project strategy has been to outsource technical assistance activities to local firms in order to build sustainability and to acknowledge that local service providers are better placed to meet the needs of a large proportion of microfinance and business development institutions affordably. The project's goal has been to strengthen the capacity of Senegalese consulting firms and the institutional capacity of MFI and BDS institutions to link the demand and supply of services. Through a competitive tendering process, Dyna has contracted with local service providers to offer technical assistance and training for MFI and BDS client institutions providing a varied set of tailored technical services to each of these client institutions. The Dyna project has institutionalized an effective tendering process by establishing criteria and prerequisites for service delivery through open and closed tender mechanisms. Initially the project envisioned using a variety of contracting mechanisms such as grants, sub-contracts, and purchase orders. Since then, Dyna has primarily used tenders to outsource technical assistance. Through an open and competitive tender-based approach, Dyna has replaced the initial grant component proposed under the scope of work thus demonstrating a professional, focused image for its brokering activities. Through use of the tender mechanism for contractual activities, Dyna has reached a wider range of local firms submitting applications for technical assistance. Dyna initially popularized the tender mechanism among local service providers by advertising in newspapers. It later developed a web-based portal to make tender documents available online at: www.appel-d-offres.sn. Dyna put in place an effective and transparent management structure to support its tendering activities. This included terms of reference, selection criteria, and transparent selection processes based on a quantitative rating assessment of both technical and financial offers2 . The tendering and contracting approach grew in popularity among service providers, and was gradually institutionalized within Senegal as a standard process for contracting, helping to contribute towards project branding. 2 Under the tender process proposals included a technical offer with a weight of 75 percent and a financial offer with a weight of 25 percent. Tender Website Opens Doors to Business Contracting The Portal website developed by Dyna has enabled the program to achieve a wide distribution network for its tenders. The website has contributed to the institutionalization of the tender process in Senegal and is now widely used by government and other local and regional donors to advertise their tenders. The site has tremendous potential to continue beyond the Dyna program as it also includes advertisement as well as fixed fees for tender placements. To date, the site has had more than 50,000 visitors and contains more than 639 tenders, which have been archived and classified. The cost for placement of a tender is $20 FCFA per month making it very competitive vis a vis the $20 FCFA charged daily by local newspapers for advertisement. The local IT company which developed the website is interested in acquiring ownership over the site in order to continue its maintenance and plans to develop a larger communication and dissemination strategy to capitalize further on this investment. 79 Evolution in the number of local contractors 0 20 40 60 80 100 120 140 160 2000 2001 2002 2003 Total MF BDS The Dyna project has been able to leverage this mechanism to institutionalize a results-based contracting process. The tenders have replaced the existing grant mechanism envisioned earlier by the program responding to the scope of work issued by USAID/Senegal. The Dyna project has experienced a continued growth in its level of local contracting by issuing more than 30 fixed price subcontracts and 26 task orders during its second year of operations. The growth of contracting has increased over time and on average 10 to 12 new contracts have been signed every month. Contracts for microfinance have had an average value of US $28,845 while the average value for BDS contracts has been US $7,692. BDS Support Local Contracts By Activities 46% 19% 17% 13% 5% Entrepreneurship and Support to Federations Agriculture Information Technology Natural Resource Management Handicrafts Basic Ordering Agreement (BOA): In order to scale up contracting to an even higher level of efficiency, the project revamped its tender contracting mechanism during its second year of operation by developing and introducing a Basic Ordering Agreement (BOA) to create pools of potential subcontractors available to provide technical assistance3 . Through its open tenders, Dyna has been able to cast a wide net of potential contractors, attracting bids from many service providers within the country. The open tenders have been complemented by the BOA’s or closed tenders, which have enabled Dyna to select pools of consultants and pre-qualify them for services in distinct technical areas. Dyna has experienced a continuous evolution in the number of local contractors. To date, more than 214 service providers have worked with Dyna in its four years of operations (81 in microfinance and 133 in BDS). These have included local contract and purchase orders provided to 38 sole proprietor firms and 198 small and medium enterprises. Through its contractual innovations, intensive communication strategies, and distribution channels, the project reached its highest peak of 3 The basic ordering agreement acts like a closed tender or an indefinite quantity contract pre-qualifying service providers and later issuing task orders among these pre-approved consulting pools. Microfinance Support KIR 2 -- Local Contracts by Activities 48% 25% 23% 4% Training Organizational development Equipment Information and Dissemination 80 operation in 2003 signing 216 local contracts and purchase orders with a value of nearly US $ 3 million dollars. Dyna’s support to micro, small and medium enterprises has increased substantially over its five year of operations and the project has gained considerable experience in the brokering of service provision in microfinance and business development services. (See section III.2 below for a description of the Dyna model.) Although project resources were earmarked mostly for microfinance activities (US $ 11 million) and less than ten percent (US $1 million) for business development services (BDS) the number of contracts issued for both of these technical areas has been almost identical. The project has thus been able to increase the financial resources for BDS interventions. In its five years of operations, Dyna has issued more than 351 contracts for microfinance activities with a contract value of US $10,124,806 providing training, equipment, organizational development and information dissemination to Senegalese microfinance institutions, which have jointly reached more than 43,769 local borrowers and 219,760 of local depositors4 . As mentioned earlier, the project has also been able to leverage its resources to nearly twice the scale of its business development service operations which have included more than 237 contracts valued at US$1,832,057. This has surpassed the initial funding allocated for this component, encompassing interventions in ten different sub-sectors and a wide array of entrepreneurial training activities reaching more than 38,727 micro, small and medium enterprises MSME’s in 2003 5 . On average, the program has expensed $4.7 million in funding in each of its five years of operations. III.2. How Did the Dyna Model Work? Following demand-side orientation, the Dyna project has responded to the need and the demand of existing microfinance and business development institutions with a presence in the five regions. The Dyna program has operated under a very broad program structure and has utilized a communication campaign to disseminate and advertise the availability of its services to microfinance and business development institutions and service providers. The communication campaigns enabled the project to broadly publicize its services and stimulate demand while local institutions began to approach them and demonstrate their interest to work with the Dyna project. 4 Information furnished by Dyna which includes achievements reported to USAID for Fiscal Year 2003. 5 The contract obligations include data furnished by DynaEnterprise Senegalaises to the evaluation team under the headings of Microfinance Support – Local Contract Value and BDS Support -- Local Contracts Value. 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 2000 2001 2002 2003 2004 Total Annual Expenditures Cumulative Expenditures 81 The demand-led orientation of Dyna’s project and delivery structure has responded to the needs of existing microfinance and business development institutions and achieved substantial depth and breadth. The service delivery model implemented by Dyna has enabled the project to intervene both in the demand and supply for services, producing market distortions and some sub-optimal effects on the sustainability of the linkages established between service providers and MFI/BDS client institutions. Due to the complex nature of the tendering contracting system, Dyna has become an indispensable broker between the MFI/BDS client and the service provider. Dyna's insertion as a requisite institution in service delivery and demand-driven activities has not permitted MFI and BDS institutions from learning the process of contracting between service providers and clients. Through the tendering and contracting process, Dyna has become the integral link between service providers and clients. Dyna’s brokering structure has therefore promoted a tendering response capacity rather than direct client demand-identification and these market distortions have potentially contributed to higher prices for technical services. Since the purchase of technical assistance has been led by Dyna, there is greater potential for market price distortions, as those market prices have not been determined by the clients nor by the service providers but through direct negotiations with Dyna. Ultimately it is Dyna, as the funding institution, that is deciding where to place the subsidy for purchase of services and also which institution will receive it, thus providing unequal access to the market for all key stakeholders/players. Although Dyna has effectively stimulated the consulting market in existence in Senegal and made it more vibrant, its brokering activities have prevented MFI and BDS client institutions from acquiring all the necessary skills involved in the direct outsourcing of technical activities. This finding was reconfirmed during focus group discussions and individual interviews. Clients and service providers unanimously projected that after the end of Dyna’s interventions both products and prices would suffer tremendous readjustments in time, service/product restructuring and also in determination of real market prices. The fixed subsidy within the project has not driven demand for payment of services, nor to price determination at which it is currently able to support. Therefore, the tailoring of technical services to individual MFI/BDS clients has not fully leveraged the use of subsidies and has actually been conducive to higher level prices6 . 6 Among a small sample of 20 BDS providers the evaluation group was able to find five contractual arrangements between BDS institutions and service providers which had been arranged outside of the Dyna project demonstrating that 25% of the BDS client institutions had sourced their technical services needs directly from the local market service providers demonstrating their willingness and ability to pay for technical assistance provision. Nevertheless this finding is not representative statistically of the entire program and these results will have to be evaluated in the medium and long-term as per specific recommendations issued under the recommendations sections of this report. 82 Annex 6 List of Persons Interviewed Name Position Organization Location Telephone/Fax Email Address John Stamm Private Enterprise Officer USAID/Senegal BP 49 Dakar, Senegal Dakar 869-6100 jstamm@usaid.gov Ousmane Ndao Monitoring and Evaluation Specialist USAID/Senegal BP 49 Dakar, Senegal Dakar 869-6182 ondao@usaid.gov Charles Alan MAY, Ph.D. Project Director, Economist BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 cmay@dynaenterprises.com Victor Luboyeski Deputy Director BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 vluboyeski@dynaenterprises.com Mamata Bah LO Responsible for Contracts BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 mlo@dynaenterprises.com Awa Paye Gueve Administrator for the support of the decentralized financial systems BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 agueye@dynaenterprises.com Helene SOW￾DAHOU Technical Director for the Microfinance Department BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 hsow@dynaenterprises.com Madeleine Cisse Administrator for the support of the decentralized financial systems BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 macisse@dynaenterprise.com Fatou Thiam Director for Monitoring and Evaluation, Analysis, and Communication BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 Fcisse@dynenterprise.com Basheer Ndaye Technical Director for Business Development Services BP 5457, Dakar￾Fann, Senegal Dakar 865-1737 Bndaye@dynaenterprise.com Annica Jansen USAID/Senegal BP 49 Dakar, Senegal Dakar 869-6100 Ajansen@usaid.gov 83 Olga Sedo USAID/Senegal BP 49 Dakar, Senegal Dakar 869-6100 Osedo@usaid.gov Cellule for Microfinance Ann Wessling, Directrice CAPAF: Programme de Renforcement Des Capacites Des IMF en Afrique Francophone 36 rue V. Hugo X J.T. Gomis Dakar 221-823- 6572/73/78 Ann-wessling@sentoo.sn Tanguy Gravot Expert en Microfinance CAPAF: Programme de Renforcement Des Capacites Des IMF en Afrique Francophone 36 rue V. Hugo X J.T. Gomis Dakar 221-823- 6572/73/78 tanguy@sentoo.sn Daniel Gaye Coordinateur de l’Antenne Sud Senagrosol B.P. 1180 – Zinguinchor, Senegal Telephone / Fax: 221-991-1626 senasud@sentoo.sn Omar Kante Financial and Administrative Assistant Senagrosol B.P. 1180 – Zinguinchor, Senegal Telephone / Fax: 221-991-1626 senasud@sentoo.sn Mr. Cisse OCC Ziguinchor Safitou Coly Manager GEC of Bignona Bignona 547-90-85 Mr. Sidibe Mutuelle et Development de Basse Bignona Adama Thiam Remix Dakar 644-8207 Amadou Bachiru Ndiaye SPIE Dakar 824-5190 Asane Ndiaye Max Consulting Dakar 864-3638 Madame Sanabu Diop RECEC Dakar 639-9947 Sebastian de Portal CMS Dakar 638-9932 Abrahima Lo UMECU Dakar 823-3456 Daniel Voizot Attache de Coopeartion Economie et Finances Ambassade de France au Senegal – Service de Cooperation et D’Action Culturelle Dakar 839-5170/ 8395308/ Fax 839-5301 Daniel.voizot@diplomatic.fr Hyacinthe Directeur Projet de Tambacounda 981-11-01 promerdp@sentoo.sn 84 Modou Mbengue Technique Promotion des Microentreprises Rurales Mbaye Toure Econmiste/ Directeur Executif ONG Sahel 3000 Dakar 835-19-09 Ongsahel3000@sentoo.sn 85 Annex 7 List of Documents Reviewed Document Type/Name Source Quarterly Reports: 1-3; 5-7; 9-11; 13-15; 16 USAID Annual Reports: 1, 2, 3, 4 USAID Annual Workplans: 1, 2, 3 USAID Scope of Work USAID Scope of Work amendments: 2, 3 USAID USAID/Senegal FY2003 Annual Report USAID USAID/Senegal Strategic Plan 1998-2006 USAID Performance Monitoring Plans USAID Dyna Auto-Evaluation Chemonics MFI/BDS Summary Sheets: 11 Chemonics List of BDS Providers and MFIs Chemonics Budget/Contract Breakdown Sheets Chemonics Dyna video-clips and round-table footage Chemonics Microenterprise Results Reporting Information Weidemann & Associates Inc. BDS/MFI Table 1 for the Implementation Grant Program of USAID USAID/EGAD/IGP RFP 86 Annex 8 Microenterprise Results Report Data Submitted by DynaEntreprise to USAID FY 2002 Microenterprise BDS Data View Chemonics International Inc. - DynaEntreprises Project/Senegal FIELD TITLE FIELD VALUE Institution Name Chemonics International Inc. - DynaEntreprises Project/Senegal FY of record 2002 Facilitators 1 - How long has your organization been involved in supporting other providers of BDS? How long has your organization been involved in supporting BDS? 3 2 - Assistance provided to BDS providers in FY 2002. Check all that apply. 2a - Market Research Assessment of market constraints Yes Identifying new opportunities or innovative products Yes Opening new markets Yes Other (describe) 2b - Supply-Side Services Market information services Yes Product development Yes Research and development (other than product development) Yes Test marketing Yes Capacity building Yes Training of trainers Yes Quality assurance Yes Business linkages/network Yes 87 development Franchising No Promoting best practice Yes Other (describe) 2c - Demand-Side Services Information Services Yes Building awareness of BDS services Yes Providing incentives for BDS services Yes Other (describe) 2d - Evaluation Monitoring and evaluation Yes Impact assesment Yes Other (describe) 2e - Advocating for Sound Policies BDS policy advocacy No Other (describe) 3 - Who were your clients in FY 2002? Select all that apply and indicate how many for each. How many for-profit firms 7,879 How many non-profit organizations 24 How many government agencies 0 88 How many other types of clients 0 4 - Please provide data (actual or estimated) on the microenterprise clients of the firms or organizations you assisted in 2002. 4a - How many clients received BDS services? 7,879 4b - What percent of these clients were women? 30.00% 4c - What percent of these clients lived in rural areas? 73.00% 4d - What percent operated businesses in these sectors? Agriculture % 16.00% Agribusiness % 32.00% Manufacturing % 7.00% Commerce % 10.00% Service % 34.00% Other % 1.00% 5 - If possible, please report on the poverty level of the microenterprise clients of the BDS providers you assisted in 2002: 5a - What percent do you estimate have income below the poverty line in your country ("the poor")? 0.00% 5b - What percent do you estimate have income amounting to less than 50 percent of the poverty line in your country ("the poorest")? 0.00% 5c - Recent U.S. legislation requires USAID request this information. The Agency uses this data to provide input on the way in which its suppported programs address the needs of the poor. Estimate the percent of microenterprise clients of the assisted organizations with loans from any souce in the following amounts: • US$300 equivalent or less in Aftica, Asia, Near East; • US$400 equivalent of less in Latin America and the Caribbean; or • US$1000 equivalent or less in Europe or Eurasia. 89 0.00% 6a - For which of the following category(ies) does your organization collect data? Please select all that apply. "Customers" refers to the microenterprise clients of the BDS providers to which you provide services, not the BDS providers themselves. For those items you select, please email a copy of the information collected to MRR2002@mrreporting.org. Customer satisfaction (repeat customers, referrals) No Gross profit of customers/clients No Business starts fostered No Change in business practice No Awareness of business services available No Other (describe) 6b - Have you had an internal or external evaluation of your organization’s performance? If yes, please send a copy of the evaluation to MRR2002@mrreporting.org. No 6c - Have you had an internal or external evaluation of your program’s impact on microenterprise clients? If yes, please send a copy of the evaluation to MRR2002@mrreporting.org. No 7 - How do your customers purchase or acquire your services? Customer refers to the end client - the microenterpreneur. Check all that apply: Payment of fees Yes Margins on goods sold No Bundled with other products and/or services No Partially subsidized Yes Free of charge No 90 Other ways in which your clients acquire your services? 8 - What percentage of your direct operating costs is covered by client revenues? Client refers to BDS Providers 0.00% 9 - The types of BDS Providers in the market include which of the following... (Select all that apply) 9a - The types of BDS Providers in the market include which of the following... (Select all that apply) Our competitors are For-profit firms Yes Our competitors are Non-profit organizations Yes Our competitors are Government agencies No We have no competitors No Please describe any other competition. 9b - Since our organization has been engaged in facilitating the BDS market, the number of providers in the market serving the same general clients, has Increased 9c - The BDS market can be characterized as Very competitive 9d - Since our orgainzation has been engaged in facilitating the BDS market, the demand for the type(s) of BDS we support has Increased 9e - Comments? Please add your comments. 91 Demand has increased particularly in the decentralized zones (outside the capital city). We find that BDS providers have gone out on their ow n to organize training to market their services at events and to 10 - Exit Strategy 10a - What are your plans regarding an exit strategy? Plan to develop an exit strategy 10b - For those who have an exit stategy, what is the time frame? Record Change Info 7/25/2003 12:09:34 PM Institution/Chemonics International Inc. - DynaEnt Web 9E Comments: Demand has increased particularly in the decentralized zones (outside the capital city). We find that BDS providers have gone out on their own to organize training, to market their services at events and to Professional Associations, and have expanded their organizations to provide new services in sectors that they otherwise did not consider to be profitable. 92 Annex 9 LIST OF DYNA'S MFI CLIENTS PER SEGMENT Segment #1: Recognized Networks N° Offices N° Caisses reporting N° Members ACEP 4 744 Sep-03 PAMECAS 28 28 119,493 Sep-03 CMS NI Segment #2: Networks Under Consolidation N° Caisses N° Members UMEC 25 24 13,163 Sep-03 Segment #3: Networks Under Construction N° Caisses N° Members UMECU 50 40 36,215 Sep-03 RECEC 16 15 30,840 Dec-03 67,055 Segment #4: Emerging Networks N° Caisses N° Members ACRA 18 17 6,865 Dec-03 FNGPF 49 42 19,982 Sep-03 PPMEH 9 9 7,910 Sep-03 Inter-CREC 6 6 3,801 Sep-03 PROFEMU 7 7 10,866 Sep-03 MEC FADEC 3 1 1,161 Sep-03 COCOGES 7 5 1,004 Sep-03 IMCEC / CCF 13 13 11,787 Sep-03 93 UFC 10 7 1,598 Sep-03 64,974 Segment #5: Isolated MECs & GECs N° Caisses N° Members FEMUNI 1 1 457 Sep-03 COFDEC 1 1 60 Mar-03 NAFA 1 1 1,530 Sep-03 MECFEMZOP 1 1 595 Sep-03 GANDA 1 1 638 Sep-03 GEC LAWTAN 1 1 879 Sep-03 MECPROPEM 1 1 2,669 Sep-03 MEC EGAM 1 1 716 Mar-03 MUPROEL 1 1 222 Sep-03 TINAARE 1 1 185 Sep-03 CAPEC JOOBASS 1 1 480 Sep-03 MFC 1 1 496 Sep-03 MECFAM 1 1 476 Mar-03 CMECAT 1 1 1,328 Sep-02 APROVAG 1 1 0 n/a RAFEG 1 1 124 Mar-03 GEC UGPF 1 1 689 Dec-02 CAPEC SAM SA NGOR 1 1 758 Sep-03 12,302 Source: DynaEntreprises 94 Annex 10 Evolution of DFS/Types from 1999 to 2003 Type of Decentralized System Structure Baseline Newly Created Structures 1999 2000 2001 2002 Est. 2003 Structure faîtière 2 2 0 0 1 MEC agréé 173 43 20 24 54 Convention cadre 6 2 0 0 0 GEC 148 130 53 53 17 Total 329 177 73 77 72 Cumulative 329 506 579 656 728 Structures in existence in 1999 : UM-PAMECAS et UMEC/Sédhiou Structures in existence in 2000 : CMS et UMECU/ DEFS 95 Annex 11 Calculation of Effective Interest Rates in the Senegalese Microfinance Market CASE 1: GEC Month Year Nominal Interest rate (%) 1.5 18% Mode Constant Reimbursement Frequency monthly Amount Reimbursed capitl + int Obligatory Savings 3.5% 25% Commission ( montant forfait) 2% Inflation 3% Effective Interest Rate 58% CASE 2: UNACOIS-Tamba Month Year Nominal Interest Rate (%) 1.5 18% Mode Constant Reimbursement Frequency monthly Amount Reimbursed capitl + int Obligatory Savings 3.5% 10% Commission ( flat rate) 4.5% Inflation 3% Effective Interest Rate 44.4% CASE 3: Approvag Month Year Nominal Interest Rate (%) 2% 24% Mode Constant Reimbursement Frequency monthly Amount Reimbursed capitl + int Obligatory Savings 3.5% 20% Commission ( flat rate) 2% Inflation 3% Effective Interest Rate 50.6% CASE 3: GEC Nacader￾Tamba Month Year Nominal Interest Rate (%) 1.5% 18% Mode Constant Reimbursement Frequency monthly Amount Reimbursed capitl + int Obligatory Savings 3.5% 20% Commission ( flat rate) 2% Inflation 3% Effective Interest Rate 47.8% Effective Interest Rate Real Only the loan 33.8% Including Savings 58.0% Effective Interest Rate Real Only the loan 36.9% Including Savings 44.4% Effective Interest Rate Real Only the loan 36.0% Including Savings 50.6% Effective Interest Rate Real Only the loan 31.8% Including Savings 47.8% 96 Client Institution Retention Rate Number of Individuals Trained Number of Interventions # Name of Client Institution 2000-2001 2002 2003 Total # Interventions # Trained LOP 1. Directoire des Femmes Eleveurs 3 3 55 2. Synergie Femmes 2 1 3 56 3. UNACOIS 1 1 16 4. Entrepreneurs (GIE) 2 4 6 12 177 5. FCGPF 1 1 43 6. Association Gerants Telecentres Bakel 1 1 2 28 7. ARMT 2 1 3 46 8. Association Xun Pang 4 2 2 8 114 9. Rural Radios 1 7 8 114 10. ARHMK 2 2 26 11 Groupement Feminin de Mboro 3 3 56 12 Pepinieristes et Agents Projets 8 8 136 13 15 SMEs 2 2 40 14 PAEP 3 3 52 15 Promer-ASACASE-CFAVA-Conforge 1 1 15 16 FNPJ 2 2 110 17 GIE-Xaal Yoon 1 1 7 18 Laureats Techno-Fair 1 1 7 19 Union des Femmes Commercantes 1 1 15 20 Facilitators Peace Corps 1 1 9 21 Association of Albinos 2 2 13 22 Handicapes of Mbour 3 3 41 23 APEFA 3 3 87 24 Association Business Development 1 1 14 25 UNAFIBS 3 3 32 26 APAD 2 2 34 27 Association de Coutures 1 1 25 28 Producteurs de PODOR 2 2 45 29. Maraichers des Niayes 5 5 75 30. Maraichers of Kolda 1 1 26 31. Banana + Milk transformers 1 1 7 32. AGP 1 1 14 33. Groupement des producteurs Boukhou 1 1 15 34. Groupement Femmes de Ngaparou 1 1 34 35. Technician ANCAR 1 1 14 TOTAL 1598 Trained Annex 12 97 SECTORS MULTIPLE AGRICULTURE IT NRM HANDICRAFTS Sub-sectors: Activities Multiple Entrepreneurs AP Other Banana Poultry Milk Gardening Slaughterhse +Beekee pin g Website Radio CyberCafe Telecentre Vetiver Sustainable AG Neem Arc Welding Improved Stoves Silk Screen Sewing Welding Ct TOTAL Demo Site, fix-up 2 19 1 22 Exchange Visit 1 1 Info Day 2 1 1 4 Fair & Forum 16 2 1 19 Sector Study 2 2 3 1 1 1 1 11 Arbitrage/Mediation 1 1 Radio program 1 1 Family Business 9 9 Website 11 11 Manuals created 2 2 Census 1 1 Appt book/Calendar 6 6 Internet Passport 2 2 CD-Rom 2 1 3 Marketing 1 1 1 1 3 7 Professional Meeting 1 6 7 3 1 18 Study Tour 2 2 Privatization 2 2 Suivi +Radio Emission 1 1 8 10 Tenders 5 5 Management Tools 1 1 Information Sharing Fiscalite 2 2 TOTAL 28 11 2 2 15 2 12 3 4 18 9 5 25 1 1 1 1 140 SECTORS MULTIPLE AGRICULTURE IT NRM HANDICRAFTS Annex 13 98 Subsectors: Activities Multiple Entrepreneurs AP Other Banana Poultry Milk Gardening Slaughterhse +Beekeeping Website Radio CyberCafe Telecentre Vetiver Sustainable AG Neem Arc Welding Improved Stoves Silk Screen Sewing Welding TOTAL GERME 39 3 2 44 AP-professionalism 4 3 7 Sector specific TA 4 9 1 2 1 1 2 4 24 Expert Junior 6 3 1 2 12 TOT 1 1 Business Planning 1 1 Techno-fair 1 1 Marketing 1 1 2 Fiscalite 1 1 Making Cents 1 3 Technical Assistance 4 TOTAL 2 42 10 4 3 1 12 1 5 1 4 1 2 2 4 1 97 99 0 100000 200000 300000 400000 500000 600000 $US 1 Subsector Subsector Breakdown Beekeeping Welding & Carpentry Sewing Silk screen Telecentre Improved Stoves Slaughterhouse Neem Other Sustainable Ag Arc Welding Gardening Milk Cybercafe Poultry AP Radio Website Banana Vetiver Entrepreneuriat Mutiple Annex 14