Revisión Anual 2006 del Programa Regional De Medio Ambiente En Centro América PREMACA

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Danish International Development Assistance Danida Danish Ministry of Foreign Affairs Technical Advisory Services Regional Environment Programme for Central America Programa Regional de Medio Ambiente
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Danish International Development Assistance Danida Danish Ministry of Foreign Affairs Technical Advisory Services Regional Environment Programme for Central America Programa Regional de Medio Ambiente en Centroamérica PREMACA Revisión Anual 2006 del Programa Regional De Medio Ambiente En Centro América PREMACA Assessment of Sub-Component 4.b: Support for eco-enterprises, sustainable management of natural resources and poverty reduction in Honduras File no 104. CA.29 December 2006 Table of Content 1. EXECUTIVE SUMMARY INTRODUCTION BRIEF SUMMARY OF THE PROPOSAL ASSESSMENT OF THE PREPARATION PROCESS ALIGNMENT TO THE NATIONAL AND SECTOR CONTEXT ASSESSMENT OF THE PROPOSAL OUTLINE OF RECOMMENDED MODIFICATIONS TO THE DESIGN PROCESS ACTION PLAN ANNEXES Annex 1 Annex 2 Annex 3 Annex 4 Detailed Budget according to Draft Proposal Brief Assessment of FIDE and FUNDER Budget Outline for Recommended Design Modification Structure of the Original Proposal and the Recommended Design Modification - i - Abbreviations ARM AWPB BDS CABEI CNC Danida DEM EEF FIDE FPX FUNDER GoH IAEE ICT IDB MFI MSME NGO PNC PREMACA RDE RNR RT SAG SERNA SETCO SIC SME TAS Regional Monitoring Advisory Unit (for PREMACA) Annual Work Plan and Budget Business Development Services Central American Bank for Economic Integration National Commission of Competitiveness Danish International Development Assistance Decentralised Environmental Management Eco Enterprise Fund Foundation for Investment and Export Development Federation of Agro Exporters of Honduras Foundation for Rural Enterprise Development Government of Honduras International Advisor on Eco Enterprises Information and Communication Technology Interamerican Development Bank Microfinance Institution Micro, Small and Medium Enterprises Non Government Organisation National Programme on Competitiveness Regional Environment Programme of Central America Royal Danish Embassy (in Managua) Renewable Natural Resources Reformulation Team Secretariat (ministry) of Agriculture and Livestock Secretariat (ministry) of Natural Resources and Environment Technical Secretariat (ministry) for International Cooperation Secretariat (ministry) of Industry and Trade Small and Medium Enterprise Technical Advisory Services of the Danish Ministry of Foreign Affairs Exchange rate: USD 1.00 = DKK ii - EXECUTIVE SUMMARY Based on the appraisal report of 2005, on the assessment of a proposal presented to the team, as well as on discussions with stakeholders in Honduras, the team finds that support to Ecoempresas in Honduras is highly relevant to the context of Honduras. The basic idea of PREMACA s component 4 is to improve the environment using the demand for organic products or products produced in processes that are environmentally sustainable as pull factor. The team recommends a modification of the design in order to improve the prospects of efficiency and effectiveness. The modified design is based on the assessment presented in this report and takes into account the views and comments presented by concerned government institutions and other stakeholders. As part of the 2006 annual review mission, a rough outline of the recommended revision was presented to representatives of the Government of Honduras and to members of the regional steering committee of PREMACA, who welcomed the recommendations. The main features of the recommended modification include: Introduction of two executing agencies: (i) FIDE with responsibility for development of two clusters; and (ii) FUNDER with responsibility for developing value chains with participation of poor rural producers, indigenous peoples, and women. FIDE and FUNDER will receive a pre-allocated technical assistance budget while an unallocated budget is reserved for later allocation to FIDE and/or FUNDER according to performance. FIDE and FUNDER will receive an administrative overhead of 15% of their technical assistance budget for administration and operational expenses. A third party is introduced to monitor and evaluate, analyse experiences and produce lessons learnt. A minor budget for financing specific capacity development support to FIDE and FUNDER according to demand and need is introduced. 1. INTRODUCTION 1. When the Regional Environment Programme for Central America (PREMACA) was appraised in June-July 2005, the proposal on support for eco-enterprises in Honduras, i.e. sub-component 4.b, had not yet been formulated. The Appraisal 2005 therefore recommended that Component 4 b) should be prepared for appraisal at the first Joint Review of the Program in October The Appraisal Report also recommended that a specialist in eco enterprises be contracted for two years, starting PREMACA - Budget for Danida's Contribution Component/Sub-component Executing DKK Agency million 1 Institutional Support to the Central American Environment and Development Commission (CCAD) CCAD 15 2 Support to Environmental Research and Advocacy Organisations (two subcomponents) IUCN 51 3 Support to Decentralised Environmental Management (DEM) in Guatemala and Honduras a DEM in Guatemala Municipalities 50 3.a/ UNDP Programme for DEM and UNDP Reconstruction in San Marcos, Guatemala UNDP 12 3.b DEM in Honduras Municipalities 62 4 Support for Eco Enterprises, sutainable NR management, and poverty reduction in Guatemala and 40 4.a Eco Enterprises in Guatemala Agexport 22 4.b - 1 Eco - Enterprises in Honduras FIDE 18 Regional Monitoring Advisory Unit; ARM in Guatemala City ARM 20 TOTAL DANIDA CONTRIBUTION 250 January 2006, and covering sub-components 4.a and 4.b with base in the Regional Monitoring Advisory Unit (ARM) in Guatemala City. 2. Based on meetings with the Honduras Office of the Danish NGO, Nepenthes, the Appraisal Team considered that there could be three options for involving Nepenthes in subcomponent 4.b, viz.: (i) as consultants to develop and formulate 4.b; (ii) provide financial support from 4.b to Nepenthes for enhancing Nepenthes programme in Honduras; and (iii) as an Executing Agency for the sub-component. These options were, however, not fully pursued (see section 3). Instead the International Advisor on Eco Enterprises (IAEE) of ARM was assigned to formulate a draft proposal which was submitted on 5 th November 2006 to Danida s Technical Advisory Services (TAS) for appraisal. 3. As part of the annual review of PREMACA, 22 November- 12 December 2006, led by Ms Elsebeth Tarp, DANIDA and Mr. Danielo Saravia, CCAD the proposal for a sub-component 4.b was assessed. During the period 4-8 December 2006, part of the team worked in Honduras and met with relevant agencies of government, civil society and the private sector, including the proposed Executing Agency: Fundación para la Inversión y Desarrollo de Exportaciones (FIDE) which together with other partners provided valuable support to the team. Preliminary findings were presented to key partners and stakeholders in Honduras, and subsequently to a meeting in Managua with members of the Regional Steering Committee of PREMACA. 2. BRIEF SUMMARY OF THE DRAFT PROPOSAL PRESENTED TO THE TEAM 4. Strategy and Objectives: As for sub-component 4.a, the basic strategy of sub-component 4.b is to identify markets, demand, and buyers for products that are produced in an environmentally friendly way and then on this basis to assist the producers and suppliers, within the value or supply chain, with satisfying the demand and requirements of the buyers. In this way, it is envisaged that the increasing demand for environmentally friendly products will influence production towards becoming environmentally sustainable, while at the same time being profitable and creating employment and income for the poor. The development objective is defined as, Generation of employment and income in poor communities in Honduras, through creation of successful enterprises based on environmental conservation and sustainable management of the natural resources 5. Targets: The Logical Framework defines the targets/indicators for the three main aspects of the objective: a) Poverty reduction: (a.1) more than 5,000 jobs of which more than 40% are for women; and (a.2) family incomes increased by USD 3 million. b) Successful enterprises: (b.1) sales increased by USD 6 million; and (b.2) more than USD 300,000 of generated profits are reinvested to strengthen the capitalisation of the enterprises c) Improved environment: (c.1) more than 85% of the production chains apply a cleaner production agenda; (c.2) more than 85% of the products are certified; (c.3) more than 350 managers have received training to raise their environmental awareness; and (c.4) more than 85% of the enterprises have environmental management plans. 6. Nature and Phasing of the Support: The basic nature of the proposed support is technical assistance, i.e. experts and training, but it may also include financing of promotional activities, such as participation in fairs and visits to buyers, as well as some limited support for information and communication technology (ICT). The support is envisaged delivered in two stages. During the first stage, it is expected that the executing agency or another provider of Business Development Services (BDS) will: (i) analyse the potential of different eco value chains or clusters 1 (e.g. organic coffee, eco-tourism, certified precious wood), assessing the visions and plans of different players in the chain (ii) identify the buyers and their requirements to product quality, quantity and delivery; (iii) identify potential producers who have the commitment and potential to meet these requirements; (iv) on basis of demand, assist these producers with developing a business plan, including a plan for technical assistance and investments required to achieve the targets of the plan; and (v) support the producers in negotiating a contract or commitment with the buyers. 7. In the second stage (once there is a commitment from the buyers/market and the producers), technical assistance will be provided to support producers and suppliers in the implementation of their business plans. This support is to be financed from an Eco-Enterprise Fund (EEF) and may include: technical advice related to the conversion from a traditional production system to an environmentally friendly production process, certification of the products, product development, design and packaging, and training in management and quality control. In addition it is envisaged that the BDS providers will assist the producers in accessing credit from the financial sector for investments and incremental working capital required to implement the business plans; such assistance may include elaboration of brief feasibility studies. In order to ensure that the beneficiaries are fully committed to and have ownership of the plans, they are required to co-finance the technical assistance from the EEF with counterpart contributions of minimum 50%, either in cash or in kind. 8. Intervention Areas and Results: The sub-component comprises four main intervention areas: (i) establishment of an Eco Enterprise Fund (EEF) managed by a Selection Committee and administered by FIDE (the Foundation for Investment and Export Development) according to defined regulations; the functions of FIDE would include assessment of proposals and monitoring and evaluation of their implementation; some 30 to 65 value chains and two to four clusters are expected to be supported; (ii) Business Development Services which include funding of the cluster development activities of FIDE as well as preparatory activities for the execution of the EEF financed activities, e.g. market analysis, an electronic platform, and strengthening of local BDS centres; (iii) learning and good practices which include an electronic learning platform, 1 A cluster is a geographical zone where there is a concentration of a certain type of business, including all supporting private and public services and goods. Thus, apart from the main industry there would be a number of supporting value chains. For example, in a dairy cluster the main industry/value chain would comprise dairy farmers dairy plants and companies supermarkets and exporters while supporting value chains may comprise industries for supplying inputs to farmers, machinery and services for the dairy plant, packaging materials industries, dairy technology training institutes, transport enterprises etc development of networks of stakeholders and mentors, and linkages to regional good practices and relevant policy and thematic forums. 9. The fourth intervention area is titled other activities and includes administrative support and operations but also a capacity development intervention that proposes to contract the Honduras office of the Dutch NGO, SNV, to provide advisory support for: (i) FIDE s management and strategy which will focus on assisting FIDE with including environment and poverty reduction as pillars in its strategy and operations and to change the perception among government and other stakeholder agencies from considering FIDE as an organisation for big business to being an organisation also supporting poverty reduction and micro, small and medium enterprises (MSMEs); (ii) developing FIDE s technical capacity for assessment of BDS and financial services, value chains, and environment and poverty issues: and (iii) learning and exchange of good practices. 10. Institutional Arrangements: FIDE is proposed as the executing agency administering the EEF and serving as the secretariat for the sub-component Steering Committee and the Selection Committee for the EEF. In addition, FIDE will manage the execution of cluster plans, and contract services for the implementation of the plans, including the value chains within the clusters. The Steering Committee is proposed chaired by FIDE, which also will serve as secretariat; the Royal Danish Embassy (RDE) in Managua will be a member and ARM will participate as an observer, represented by the IAEE. At least two meetings per year are envisaged. Danida (through ARM in Guatemala) will be represented in the Selection Committee which may have six or more meetings per year, with the option that some may be of a virtual nature (teleconferences). 11. Partners and Target Group: Two categories or types of partners are identified, i.e. Component Partners and Partners of Initiatives. Component Partners include FIDE and Danida as well as government, private and civil society agencies that have interest in and relevance for the activities. Such may include the Ministries of Environment and Natural Resources, Agriculture and Livestock, and Industry and Trade, environmental NGOs, business and SME organisations, and commercial associations. 12. The Partners of Initiatives comprise Value Chain Partners and BDS Partners. Value chain partners (of which some form the target group) include farmers and other primary producers (natural resource users), artisans, manufacturers, transport enterprises, wholesalers, retailers and exporters, service producers and providers, organisations of farmers and producers, and MSMEs. According to the proposal, potential industries and services, which may qualify for value chain development support, include: certified organic agricultural production, eco/cultural/ethnic tourism, environmental certification services, production of medicinal plants, manufacturing based on certified wood, light industries, alternative renewable energy, waste recycling, and treatment of solid and liquid waste. BDS partners include NGOs, consultants, auditors, certification agencies, universities, banks and microfinance institutions that may assist producers and enterprises with business plans, marketing, financial management, access to credit, certification, the production process including environmental management, quality control etc 13. Inputs and Budget: The total Danida contribution over the 4-year period is proposed at DKK 18 million (~USD 3 million). The major Danida inputs are: (i) The EEF (DKK 11.9 million); (ii) budget for FIDE for equipment and operations and for contracting a coordinator, three value chain specialists and three administrators (total staff costs to be financed by Danida amount to DKK 3,842,000); and (iii) the contract with SNV (DKK 356,000 ) for capacity development. In addition, budget is allocated for learning networks, electronic platforms, and promotional activities. The detailed budget of the proposal is presented in Annex 1, together with the comments and questions of the Appraisal. It should be highlighted that this budget includes some outcomes which are expected produced through FIDE s contribution but that the value of this contribution is not estimated. Thus, the actual contribution of FIDE remains unclear. Component 4.b: Danida Budget DKK 000 Objective 1: Eco-enterprise Fund (EEF: 11.9 mio), staff etc. 14,768 Objective 2: Services to Value Chains 371 Objective 3: Learning and Good Practice (Electronic Platform) 301 Other Costs (Coordinator, SNV, administration, audit etc.) 2,560 TOTAL 18, ASSESSMENT OF THE PREPARATION PROCESS 14. The preparation of the proposal has taken place in two stages. During the period 6-10 March 2006, a Danish consultant, assisted by a consultant/representative of Nepenthes in Central America, undertook a preliminary mapping of organisations and other actors relevant to subcomponent 4.b 2. This work followed up on the work done for preparation of PREMACA and formulation of Component 4, which, however, for Honduras had not resulted in a proposal for a Sub-component 4.b. In May 2006, the International Advisor on Eco Enterprises (IAEE) was fielded to ARM in Guatemala and after completion of work required to initiate implementation of sub-component 4.a, he prepared, during September-October 2006, the proposal on 4.b. A preliminary draft was presented to partners and stakeholders at a workshop held at the premises of FIDE on 24 October Based on the comments received, the IAEE, together with RDE, FIDE and SNV, prepared the draft description of the sub-component which was submitted on 5 November 2006 for appraisal. 15. The institutional mapping investigated in some detail four organisations and three international cooperation programmes 3, and looked briefly at some potential partner agencies (CATIE, Zamorano, Alianza ECOCAFÉ, AHPROL etc.). The findings on the four candidates for executing agency were summarised as follows: Criteria National/Regional/ International FPX FIDE FUNDER TechnoServe National National National but international International (USA) 2 Thomas Nielsen and André Mildam (Nepenthes) for the Royal Danish Embassy: Mapeo preliminar sobre organizaciones y otros actors relaciionados con el componente 4 en Honduras, 19 de abril UNDP s Programme of Small Donations (PPD/PNUD); Programme for Biodiversity Markets in Central America (CamBIO) funded by GEF and BCIE; Project for Integrated Management of Eco Systems by Communities and Indigenous Peoples, executed by ACICAFOC in coordination with CCAD Activities with Eco Enterprises Poverty Reduction income and employment generation Market search and linkages Exports Work with SMEs Preliminary conclusion: Is it relevant to consider the organisation as candidate? cooperation Little Little Some beneficiary SMEs are eco Indirect Indirect Main objective (not the main (not the main focus) focus) Yes Yes Some Yes Some, but not Some, but not Yes Yes main focus main focus Yes Yes Yes Yes None (apparently) Main objective The mapping is not conclusive with respect to whom to select as executing agency. Further studies were recommended. Yet, the text provides indirect suggestions (see below) that FUNDER (Foundation for Rural Enterprise Development) might be the favoured candidate, and it remains unclear why the subsequent formulation only pursued the FIDE track. 16. On FPX (Federación de agroexportadores de Honduras), the mapping study states FPX seems to be a relevant organisation for the component although one
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