Hi all-
I’m a bit confused by the title here—Seeking Synergy Between Urban and Value Chain Development. The title is assuming that synergy is weak or nonexistant between urban economic development and value chain development. Yet market systems exist everywhere. I think the question is whether we as pracitioners working in poverty alleviation are identifying the market systems that are operating in an urban environment or just at one factor/component in the market system/value chain.

I would like to respond to parts of question 2: What kinds of value chain development opportunities are presented by a deeper understanding of urban issues? Could linking with organizations that represent poor communities help improve governance and regulation of value chains?

As governance refers to the inter-firm relationships and institutional mechanisms through which non-market co-ordination of activities in the chain is achieved, then we are looking at formal and informal institutions. And institutions are the rules of the game. So if we are going to link with organizations that represent poor communities we need to look at how these communities are socially regulated and how the social regulations enforce the formal regulations of the laws, and standards and licensee and who has access to all these things. If the formal institutions which govern the chain are set up to support a dominant group, then the subordinate group, which is usually the poorer communities, are going to have a difficult time to have more of a voice in the governance system.

How do we change these regulatory frameworks then—and that includes the social regulatory framework? It is interesting when there is an economic shock that sometimes opportunities open up for the groups that traditionally do not benefit equitably from value chain activities. For instance, with the increase in oil prices worldwide, the price of fertilizer is escalating. IDE-India has an interesting project where they have supported lower castes in the production of worms for composting. The input costs are reduced and a space has opened up for an excluded caste to participate and benefit from a value chain activity. Does anyone have any other experiences like this?

A contrary example can be found in urban centres where women are allowed to participate in petty trading but are prohibited to participate as wholesalers because of lack of access to capital and the reproductive responsibilities of staying close to home to care for the children and do the cooking and cleaning. Or another example of gender constraints is women who sell peanuts but do not have access to technology, or the capital to pay for the service, for roasting and shelling which would add value to the product and increase their income levels.

Religion, ethnicity and gender are types of social institutions which are embedded in how markets are regulated and operate. Do people have examples of projects that have taken these institutions into consideration to improve the governance of a chain so that the poor can benefit more from their participation?

Would be so interested in hearing about them.
Cheers
mary

Sonali,

you refer to water, sanitation, construction, and energy.

I am, I must admit, battling to see how the VC approach might be of much help regarding tasks like provision of water and sanitation. My reading of the recent discussion is: privatisation didn’t work in many places, public provision didn’t work for poor communities before that, and now we’re back to square one, where government needs to be persuaded to provide. As far as I can make out, water and sanitation is one of the few natural monopolies left, so it’s difficult to organise it as a market, and thus it’s also difficult to address them through a VC approach.

Obviously, things are profoundly different when we look at construction and energy. Both are organised as markets, and the value chain lens adds value in understanding how they work, and how they can be made to work better for the poor.

For instance, when you look at energy, a value chain perspective can easily be combined with a materials flow perspective, which usually helps to identify inefficient use of materials, in particular biomass, something that can be turned into a business opportunity, in particular for poor communities.

Looking at construction helps to understand where the challenges lie in urban VC development. Compared to agricultural products, where most of the VC work has been done in the past, the urban VCs are more complex by several orders of magnitude. If you look at a modern building, you are looking at something that is made of 10 000 different products. Mapping the value chain that leads to a finished building is, thus, a bit of a challenge. This does not mean, though, that the VC approach does not add value. On the contrary, I was involved in an activity a few years ago where we look exactly at this issue, and the VC perspective helped to identify a number of priority activities that led to significant reduction of wastage. This was based on a rapid appraisal of the value chain, though, not one of those in-depth VC mappings that donor organisations often conduct.

Conclusion: Even in some fundamental urban development issues, a VC perspective and approach can be useful. Moreover, there are lots of opportunities regarding product or service VCs. Urban and peri-urban agriculture has come up often in this online discussion, probably because many VC practitioners have a background in agricultural development. And there definitely is a lot of potential around agricultural products. Beyond that, we could also look at VCs in subsectors like garments (where obviously a huge amount of subcontracting into poor urban communities is going on), or catering, or toy production — basically anything that is labour-intensive while involving activities that are not too knowledge-intensive.

There are, in all likelihood, enormous synergies to be gained from intense interaction between urban development practitioners and VC development practitioners.

Having a background in private sector development, I found the intense interaction I had with urban development practitioners over the past ten years most enriching. They have a deep insight into the features that define urban quality, and that make cities work, that often escape the attention of practitioners from other fields — especially when one is, say, preoccupied with connecting businesses to markets and issues of urban quality appear like a distraction.

At the same time, urban development practitioners are not always aware of the evolution that the whole discussion on private sector development has taken over the past ten or 15 years, especially the improved understanding of market processes and who to make markets work / create effective markets. Urban development practitioners tend to be planners, and their professional socialisation has often been around hierarchies, not markets. Thus, the value chain perspective can add signficant value to discussions on urban development by highlighting how the real economy is effectively organised, and what spatial implications this has.

Sonali, Permit these thoughts as follow-up to comments by Mary Morgan and Jorg Meyer-Stamer. If poverty is the result of inadequate education, health care, nutrition and human rights, then VC and urban planning constructs are secondary to improving these basic conditions. As victims of misfortune, circumstances or an unjust system, some among the poor will be more ambitious to find remedies to their condition than others and it is market demand near the origins of a supply chain that will ignite the spark of initiative.

Urban development professionals (public sector) and suppliers (private sector) work together in an ideal world to solve local problems. But as we all know the devil is in the details and solutions are driven by the wisdom, dedication and personal synergy of the individuals involved in the intervention process.

But the taxonomy itself does not differ that much from city to city, sector to sector, considering the dynamic between urban development and the entry of pro-poor policies into specific sectoral value chains. I have attached a schema in an attempt to show this graphically. As we search for good and best practices, we must also remember that while thinking globally, acting locally is the work we do to actually elevate people’s lives.

Alvin & co
You mention that the taxonomy itself does not vary much from city to city, and you provide a schema to illustrate this.
One of the goals of this program will be to understand how to scale up intiatives to integrate large numbers of the urban poor into effective market systems.
Do you think that a general model of the urban situation can be developed that will assist in scaling of initiatives (either through replication in other places or incorporation of larger numbers of businesses/workers or both)?
It would be interesting to get others thoughts on the scale issue.
Thanks,
LInda

The problem with generalities is that there are infinite exceptions, but its the next level of boxes in the chart that tell the local story. Only a few (like the scrap metal shipyards in Bangladesh) create whole new industries with unintended, unexpected and spinoff good consequences. AGOA textiles tried and failed with China’s entry into the marketplace. It seems as if a thousand opportunities were missed after Hurricane Katrina in New Orleans. My organization, Citizens Development Corps, is working with the oil industry in Angola and Sudan, but adding locations, businesses and workers take time. It’s scalable and replicable, but building roads and laying pipe in the bush do not happen quickly.

Alvin said “My organization, Citizens Development Corps, is working with the oil industry in Angola and Sudan, but adding locations, businesses and workers take time. It’s scalable and replicable, but building roads and laying pipe in the bush do not happen quickly.”
Is that perhaps part of our issue – that in the quest for the silver bullet, we don’t have the patience/resources/time (or perhaps the donors don’t have patience with funds) to take the inevitable time required to effect such change???

Hi,
I like the example that Sarah provided regarding private sector delivery of fundamental services when the public sector fails to do so. It is pragmatic – yes the government should do this, but they aren’t. It also illustrates how microenterprises can be utlized this way – so that if and when the government does fund these services, a delivery mechanism has been established. In some ways, that’s almost ideal – if the government is planning solutions, they will tend to think of large top-down models. By provng the efficacy of microenterprise delivery, we have the basis for a model for an efficient city that utilizes its human potential.
I also agree with Jorg’s statement – but with one clarification. In VC development when we use the term ‘systemic’ we are talking about having the view of an entire industry or subsector and not the entire view of the situation in a country. So, definitely, the way you use the term systemic, value chains can be part of and contribute to overall systemic change, but probably one value chain at a time.As practitioners, we can make a decent contribution, but we are part of a much bigger whole and it is good to understand our place within that to be effective.
Very interesting and thought-provoking comments about what is and isn’t possible.
Linda

Dear all,

Apologies for the late posting. I’ve been traveling and my internet access went out for most of the week.

One of the best ways to learn from past and current programs is finding out what their impact was and what aspects of the program were critical to achieving the impact. But getting an accurate understanding of the impact of a program on poor people is challenging, let alone understanding which aspects of the program were most important in achieving that impact. An even greater challenge is getting figures and information on the poverty reduction results of projects which is comparable, and would then allow us to compare the effectiveness of different approaches.

Of course, impact assessment is challenging in all fields. But urban value chain development may have particular challenges because it is at the intersection of fields and impact on poor people may rely on a number of changes resulting from program activities.

- What are the particular challenges of impact assessment for uban value chain programs? – How have you all tackled these? And what lessons can we draw for effective impact assessment?

It would be great to hear about your experiences on this topic.

Best,

Aly

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