The PRIME research team has conducted two missions for the case study of private sector support in the tourism sector in Uganda in October 2015 and July 2017. This resulted in a case-study report, one of the six case studies which we will use to reflect on enablers, barriers and additionality of the support provided by CBI and PUM.
This case focused on the coffee and agricultural sector in Uganda. This selection was part of the overall PRIME case study selection in which the CBI and PUM support portfolio was reviewed through the analysis of programme documents, the data on the supported firms in the last years, business case documents and personal interviews with CBI and PUM staff. This resulted in an overview of all countries involved in the support programmes and the number of firms enrolled or supported. The selection of the key sector in each country subject to PRIME research will be based on an assessment of the diversity in the support portfolio, the synergy between CBI and PUM activities, and logistical considerations.
Overview coffee sector in Uganda
Coffee is Uganda’s main export product: it contributes around 2.5% to global coffee production. Only 5-10% of production is consumed locally. Annual exports are worth around 425M$ and the main export destinations are the EU (Germany, Italy, Spain, Belgium), Sudan, Singapore and the US. The Netherlands represents only 2.5% of the Ugandan coffee export market. Uganda’s coffee export market is controlled by 29 national and multi-national companies, 10 of which control about 85% of the export market. The leading company (Ugacof (U), Ltd) controlled 15% of the coffee export in 2011 (UCDA, 2011). Most of Uganda’s coffee is produced by approximately 500.000 smallholder farmers. These smallholder farmers tend to have relatively low productivity due to limited use of inputs and technology. The main coffee types are Arabica and Robusta (grown in ratio of 1:4). Most smallholders also grow other non-cash crops such as bananas and beans for consumption. Recent years have seen a rise in the production and export of so-called fair-trade, organic & ‘specialty coffees’ to western markets.
Reflections on the intervention logic
Overall, the activities of both CBI and PUM in the coffee and agriculture sector in Uganda were perceived to contribute to improvement of business knowledge and practices, which were in turn linked to growth of productivity, sales and – for several CBI supported firms – increased exports. In the intervention logic, we proposed several key assumptions by which the activities of CBI and PUM are expected to achieve such effects. We now reflect upon the results and impressions with respect to these various assumptions.
Assumption: The support helps firms obtain a stronger position within the value chain
This point is particularly relevant with respect to the CBI program. Several firms indicated that as a result of the trainings and participation in the international trade fairs, they had developed more confidence in negotiating with buyers. Furthermore, it was reflected by several firms that through the program they learned to deal directly with buyers, and not through intermediary stakeholders. In addition, by gaining multiple business contacts during the international trade fairs, firms also strengthened their bargaining position.
Assumption The support contributes to business knowledge and skills
Next to helping firms in achieving a stronger position within the value chain, both the CBI and PUM activities also contributed to a number of concrete learnings. For example, participants in the CBI program reported to have learned several things about the importance of soil, cupping, biochemical analysis, and geotagging. In addition, several firms indicated that the CBI program and their interaction with potential buyers helped them developed a better appreciation of the various preferences of these clients, for example in terms of quick responding to emails about orders. Similarly, PUM beneficiaries indicated knowledge development in various areas, for example with respect to the importance of maintenance of proper soil moisture conditions for the growing of fruits, and the benefits and application methods of different types of fertilizers. Another firm indicated valuable learnings in terms of developing a business planning, and using this to apply for donor funds.
Assumption The support is complementary to existing advisory services in the sector
Another key point is whether the support provided by CBI and PUM is complementary to other business support services. As for the CBI-supported firms, only 1 interviewee indicated having previously hired private sector consultants, although several respondents mentioned that is was quite easy for them to obtain support from other donor organizations. As for PUM-supported firms, several interviewees indicated that hiring an international consultant against commercial prizes was too expensive for them, and that they were not too confident about the quality of local consultants. Interestingly however, one PUM-supported firm also indicated that they paid for one of the repeat missions from their own budget, as they had learned from previous missions that the support provided benefits to their business.
Assumption The support contributes to sustainable economic growth
Next, the underlying assumption for both the CBI and PUM programs is that it leads to sustainable economic growth. Administrative data and interviews suggest that indeed the CBI and PUM activities are associated with increased exports and sales respectively. With respect to the broader sector-level effects, it can be noticed that several CBI-supported firms indicated that the knowledge they acquired during the program was being shared with others firms in the supply chain, both with other processors and exporters, and with other coffee farmers. As such, the program seems to have benefits that are not only restricted to the selected sample of firms but more broadly across the sector, although it remains challenging to map the precise scope of these spillover effects. Furthermore, a PUM respondent indicated that the intervention had motivated them to seek advice and information not only from consultants but also from other firms, providing further support to the notion that the program can cause knowledge spillovers that in turn could contribute to more broad economic development across the sector. `