Urban value chains are often tied to rural communities through product flows, workers that send support back to family members still in villages (and of course rural workers who come to urban centers looking for jobs), and on environmental factors (e.g. urban water supplies that are dependent on watersheds outside the urban area, or household energy from charcoal and firewood sales).
As practitioners we need to strive to articulate these linkages and recommend and facilitate implementation activities that look at the larger value chain dynamics that include the urban-rural social ties and the environmental services that urban people and value chains rely upon, but often are determined by rural populations practices.

Public private partnership venture

In urban areas the public private partnership venture are also important offer on urban economic development. Definitely PPP ventures can influences the urban value chain system. I would suggest including one of the strategy on creating environment for PPP ventures.

As a urban development practitioner, I feel there few important themes, which have a direct impact on the income and employment opportunities for urban poor. First, it is important to discuss the role of government and the enabling environmennt created by them. Informal sector operates because many governments, could not extend their control at that level and urban poor intelligently use this space for their livelihoods. Second important theme in the urban devevelopmet is the financing and investment scenario. National governments, private sector and international fiinancing agencies play an important role. I am hoping to contribute some more thoughts later in the discussion.

thanks

SMALI

I may be juming on the last question sent by Mary, but there are still 3 large barriers to the formalisation of the urban informal sector. Extensive work published by ILO from 1970 to 1985 explains the nature of informal economies. My own research related to urban waste sub-sector identified 3 major barriers to formalisation. In summary:

“Informal systems may not formalised in their existing form because, governments and large private sector do not recgnise them, the own capacity of informal sector are not strong enough to take certain responsibilities and majority of urban users may not trust them as providers of certain services”.

My research context (1992 to 1998) was urban waste, but most of the findings are still valid. I am keenn that some of the discussion must take place on how to overcome these barrier, so urban poor could get fast-track benefits from modernisation, investment and growth.

thanks

SMALI

Mary and all,

responding to the questions you pose, I am no urban development person, but wanted to put some thoughts on the issues. I just felt that Local Economic Development would be the over arching issue and then you have Infrastructure issues – and access to services (shelter, health, water, sanitation, roads etc). I felt that x-cutting to these would be the governance, representation, even environment…

The reason, I mention this is then we can see what issues we need to address and under LED, we could address the specific services – roads, shelter and have the urban value chain around these. This would be like the generic (cross cutting) services we talk of in our own value chain work – the BDS of accounting, management etc services. So, for the value chain, it is the Access to the Public Services that we work on.

Having then identified the issues to work on, I would like to see more thoughts on PPP here. Eknath has mentioned some type of PPP. Generally PPP is seen as a finite arrangement, based on a particular deliverable, eg. construction of road etc, but there are these type which are open ended too, that stretch beyond a particular deliverable.

Finally, in the document, we have the role of the CBOs, but the role of Government and the role of Private sector should also be analyzed and given equal importance. It is these three wings of society that need to work together for the effective implementation of services. This also leads to analyzing the partnerships between them in a more critical manner and some of the approaches that have been taken in partnerships around the world are evident.

Thanks you for these posts, which get into important and interesting issues. Some follow-up questions, for anyone:

1) What kinds of PPP arrangements have worked for helping the urban poor access services. One conclusion in the paper is that large-scale companies, contracted by government to provide water, sanitation, housing … have the same problems that government has … political and economic pressure to serve the elite, lack of appropriate and profitable technology, and the lack of land tenure and security or the urban poor themselves. Are there example of initiatives, even on a small scale, that have worked? Did they involved micro and small enterprises providing the urban services? Any lessons?

2) Some people believe that poor governance and the lack of representation and democracy for urban poor residents is fundamentally behind all other urban poverty challenges. Lots of CBOs and private companies avoid dealing with urban governments because of corruption and lack of responsiveness. What are some success stories of CBOs, government and the private sector – whether formal or informal – working together to solve urban development challenges? Lessons?

Thanks!

Mary McVay, Facilitator

Hi Mary,
I’m wondering whether maybe we have been missing a rather straightforward element in the discussion so far, namely the simple fact that urban centers are, by and large, thriving places. All sorts of people, including poor, move there both because of push factors and pull factors. The are pushed out of other areas, in particular rural areas, which are marked by precarious livelihoods, limited opportunities, perhaps also intolerance. They are pulled into urban centers because there are indeed many job opportunities there, even for unskilled, poor laborers. Thus, urban centers are not only centers of misery, where soon the majority of poor will live, but also centers of activity and opportunity.
The problem, of course, is that many poor people have little or no chance to exploit those opportunities. This takes us to the issue of exclusion, which is a term that does not appear in your paper. In my view, exclusion is the more serious issue than poverty — as I have argued in an earlier posting, poverty is to a certain extent a transitory phenomenon, while exclusion refers to those groups of people who are structurally stuck in poverty.
I feel that combining the concepts of exclusion and value chains can in principle be extremely powerful. Past developmental interventions that targeted excluded groups have not always alleviated the exclusion; ironically, development interventions that focus exclusively at excluded people run the risk of reinforcing exclusion. The strength of the value chain approach is its rigorous focus at markets and buyers — so completely different from past efforts to strengthen poor peoples’ supply capacity and then to hope and pray that somebody, somewhere, would hopefully buy their products. Thus, with a value chain approach one will quite naturally address the issue of exclusion and try to connect excluded groups to markets.
I attach a little paper where I explore the link between exclusion and LED a little further.

There are examples of partnerships that encompass PPP. The website I gave earlier www.bpdws.org is one kind of partnership going beyond simple PPP. There is a lot of talk on partnerships in the DAVOS meeting and this is also available on their website. We can take learning from there as well.

Hi, kindly check out this website: www naga.gov.ph (or naga city, philippines), governance innovation – economic development. On the my last visit for October 2007 with ME’s included in the MSME development planning. although, the MSME initiative is still not so much documented but there PPP served to support the informal sector including the challenges/mechanisms to in to prevent alienation of the urban poor sector!

Hi all

I am jumping into the discussion a bit late. As I was reading about the CBOs in the “ThinkPiece” I started wondering whether there were any examples of these groupings being leveraged for service delivery – whether business services or services surrounding health, water, and education? Has an organization expanded the “hook” for these groupings and used them as an entry point for VCD programming in an urban setting?

I certainly agree with the thread of the discussion from Part I that urban and rural value chains are inter-related. You can’t really examine them in a vacuum as many of the value chains where we work involve businesses based in rural, urban, and peri-urban settings. Ann’s comment on the different ties between rural and urban settings raised the issue of “domestic remittances.” How do firm’s find the financial resources to upgrade and take advantage of opportunities given the different families that they support?

Somebody has pointed out before that PPPs have quite different meanings in different countries. In some cases it’s about the private sector taking up tasks that the public sector cannot cope with. In other cases it’s about local government and private sector jointly addressing a given issue. In still other cases the term PPP is used to describe arrangements that elsewhere would be called contracting.

Irrespective of the local meaning of the term PPP, I think it is important to note each local variant of PPP requires that public sector and private sector can have meaningful communication. That is surprisingly often not the case. In our practical work, we typically find that little or no trust exists, that each side regards the other side as a major headache, and that communication channels don’t work well. In the context of LED processes, the main challenge then is to create opportunities for constructive communication to evolve, and for both sides to develop at least a minimum amount of trust. Only at a later stage does it make sense to consider PPPs.

I have quite consistently made the experience that there are three communities of practice involved in urban development:
— planners, urbanists, architects
— social development and employment promotion practitioners
— business development people
In order to understand why this is an issue, imagine a town planner, a social worker and a business development person sitting around a table and discussing the future of a given city. There are great examples of how the three approaches can complement each other and create synergies. However, at the early stages of local development processes, the three groups — each with a specific disciplinary background, its own definitions of what is right and wrong, and its specific jargon — tend to battle to establish constructive communication. It usually takes some time for practitioners to understand and accept that each of the three approaches is legitimate, and that none of them can naturally prevail over the other two. This is a difficult, and sometimes protracted, process because it implies that each group has to compromise on what it regards as “best practice”.

I greatly appreciate Jorg’s comments, particularly regarding exclusion and inclusion and specialization, but I struggle to apply some of these general comments to actual cases. Collaborative planning involving local stakeholders and their advocates is grounded on bridging these differences and we all struggle to discover a good way forward that meet a mission’s criteria. But the problems in Baltimore’s inner-city are different than Accra or Amman and I always hesitate to draw many lessons from one place to another. That said, language is critical. We must understand and have sympathy for one another because where we sit at the table is not necessarily where we stand on the issues.

I agree with Meyerstamer’s point that some development interventions reinforce social exclusion. There have been numereous development initiatives that do not start from a market point of view and finally fail to link the produce to the market on a continous basis and tapers off along with the life of the project. Adopting a market based or value chain approach from the very begining may solve the issue of a.sustainability and b. social exclusion.

However from a practitioner point of view I have also struggled with organizations that often do not have enough vision and resources to do a comprehensive market scan and subsector analysis to build products that can reach a wider market. Even if some programs do get initiated with a market focus, they fail to sustain after the project period as the gestation period for market based projects is really long in order to be branded “succesful”.

On the other hand some of the programs that do have a larger vision and start from a market approach fail to reach downmarket most of the time. Therefore I am really interested to see and hear about more urban programs that have started with a market focus, have reached significantly downmarket and penetrated a huge section of the population on a sustainable basis.

Dear all,

I’ve been following the conversation with interest and want to add particularly on the point of the potential for applying value chain development principles to the delivery of services in urban areas.

As has been pointed out, many services are already provided privately (and profitably), and are purchased by the urban poor. For example, a study in Hyderabad District found that over 60% of students attended private school and many of these were poor with parents who were daily laborers. These schools had better student-teacher ratios than government schools.

It seems to me that we could apply value chain development principles to improve and expand these private (or primarily private) systems for the delivery of social services to the urban poor at reasonable cost and quality. I think it would work particularly well for education, health and possibly, sanitation. There are small success stories here already – for example see www.cfbt.com re strengthening private schools for the poor in India and www.psp-one.com re strengthening urban and rural health services in Uganda.

I’m wondering if we could do this on a significantly bigger scale. Any thoughts or experiences from either urban development practitioners or VCD practitioners?

Best,

Aly

I’ve been reading everyone’s comments with interest. Just wanted to add that a major challenge for urban settlers is the lack of social capital and networks. Rural migrants who settle in urban slums are cut off from social and family ties making them more vulnerable to economic downturns and recessions. I think initial emphasis should be on informal sector development first and then we can focus on institutional linkages and formalising value chains etc.

After reading the attchment ‘ BPSU 1st stake holders meeting in Nairobi UN Habitat ‘, a quote form the conference …......“Dr. Jennifer Riria brought the issue of women in focus, particularly
on poor women. There are certain things poor do not
need: being statistics, pity, half-baked commitments, etc. What
poor need is access to basic services, they need water and cooking
facilities, they need respect, protection, involvement, and engagement.
They mostly need to be involved. Dr. Riria emphasized the
need to work on youth in rural areas, so to prevent them to move
to cities. Material things are easy to change; the challenge is the
change of mind.”..........The values Dr Riria mentions, especially those of respect and engagement, must be taken very seriously at top level in PPP projects. All too often, ‘Branding’ is achieved, littering the slums with ever smaller plastic bags, and badly maintained signboards and projects fail.

When private sector appears to have the stronger arm, which in most cases it does, the public involvement is diluted subliminally as there is no feeling of true ownership. Ownership is key.

We have found a ‘branded’ car wash project for the youth in Kibera Nairobi, failed as the youth felt they were sacrificing their time to do a job with poor renumeration ‘for the benefit of the private partner. They never felt true ownership of the project, which was widely ‘branded’.
They lost enthusiasm whilst the business was still in it’s infantile stages.

The project we are currently working on, reclaiming a garbage dump and turning it into an organic farm, demands huge effort and time, unpaid at that, from the youth involved. We have decided to keep all donations towards the project underwraps, no branding. The only signs are those of the youth group. Consequently we have great energy in the project and the youth are extremely proud of their efforts. Our approach is ‘hands on 3 times a week’ and only for implementation of skilled issues…like setting up the drip, as well as training the youth on organic principles etc. The youth take turns with the chores, and have created a rosta even working sundays to meet the targets we set. The project is new but showing great success already. In fact, the youth themselves, realising the need for composting materials, are starting to educate their peers in the community and those using the site, on how to sort their garbage, so that they can use the biodegradable materials on the farm. Garbage now has a value.

The community around are extremely impressed and this is helping to motivate the youth (who are self reformed ex convicts).

This little example tells me that ownership and recognition are key to success.

Sorry to jump in a bit late in the day, but I hope this will still be useful.

I think that one of the missing issues from an ‘urban development’ perspective concerns the nature of urban informal economies. Markets tend to be both easily saturated and fragmented. Sectors where the poor are concentrated tend to have low barriers to entry with low requirements for investments and skills. Levels of income vary widely, with a significant proportion surviving on a hand-to-mouth existence. There is lots of copying and multiplying of anything that looks like a good idea. This means that all the obvious (and some not so obvious) market niches tend to be already occupied. In this context, implementing agencies can find themselves in a zero-sum game, boosting some enterprises at the cost of others.

The major challenge is in identifying and supporting viable sub-sectors where there is good market potential and scope for the informal sector, and where there are (or could be) lots of poor producers/entrepreneurs participating.

I would be really interested to hear any stories of how others have successfully identified sub-sectors that avoid these problems.

Thanks
Lucy Stevens (Practical Action)

Hi Lucy et al,

In my experience, there are often a few subsectors that look promising when you start investigating an area – and then it’s a matter of figuring out which ones are actually promising and which aren’t. Sometimes another subsector surfaces, while investigating the more obivous ones.

Looking at trends in an area is useful – is tourism growing, what about industry, are there other service sectors (such as transportation) that are experiencing increased demand or are undergoing changes, or are exports for a particular product up…etc.

Wherever there is growth or change, there could be a good opportunity for new contributors. Getting out and talking to players in the market, traders, government officials, private sector players provides clues about opportunities. I find that project staff sometimes are very keen on a product that does not have a good chance to be sustainable.

At the end of the day, opportunities require rigorous research. Mary referred to the MEDA toolkits for market research and program design. They can be found at: http://www.meda.org/WhatWeDo/ProductionMarketingLinkages/Resources/Publi…

In the value chain field we talk about the need to ‘assess market demand’ – and I am begiining to realize that the pull of markets is not easily assesed a lot of the time. With my background in marketing, I didn’t realize until recently that we need more tools for this – ones that are rigorous and quantify and analyse cost benefit etc…..and one’s that can be used by a practitioner who doesn’t have a private sector background.

Best,
Linda