J.5 ELAN RDC Lessons web.pdf

ÉLAN RDC Lessons Learnt

Final Report July 2019

Contents Introduction

Specialty Crops (cocoa & coffee)

Grains and Horticulture

Renewable Energy

SME Finance

Branchless Banking

Transport

Business Enabling Environment

Business Development Services

Markets in Crisis

Gender Equality and Social Inclusion

Political Economy & Conflict Analysis

Market Systems Development

Adaptive Management

Thin Markets

Consumer versus Producer

Measurement and Results Management

Conclusions

Introduction In spite of the extraordinary economic potential of the Democratic Republic of the Congo (DRC), most of the population remains desperately poor. Decades of conflict, instability and poor governance have taken their toll, and the 85% of the population living in poverty lack the opportunities to lift themselves out.

In 2012, DFID DRC launched an ambitious private sector development programme designed to reduce poverty by addressing market constraints inhibiting economic growth and improving the business climate in order to increase incomes for poor producers and households. The programme was intentionally designed to be large, adaptive and comprehensive, tackling private sector challenges from different angles, across a broad range of sectors and regions.

The market system development component, ÉLAN RDC, was designed to increase the incomes of more than one million Congolese by at least £30 per year, resulting in a cumulative income increase of £88m by the end of 2020. It has worked with the private sector to design and spread new economic models that increase income, create jobs and lower prices for the poorest in Congolese society. The work has placed a particular focus on advancing the role of poor Congolese women and adolescent girls, some of the most marginalised in the world.

ÉLAN RDC’s operations have been concentrated in six broad sectors of the economy:

Grains and Horticulture Specialty Crops Renewable energy

SME access to finance Branchless banking Transport

In addition to these economic sectors, there have been several cross-cutting elements:

Business Enabling Environment Gender Equality and Social Inclusion

Business Development Services Political Economy and Conflict Analysis

Markets in Crisis

As the first phase of the ÉLAN RDC programme comes to an end, there is a wealth of information and experience about constraints and drivers of private sector growth, partnership models that have been shown to work and other lessons for future programmes, in the DRC and elsewhere.

The results show that a market system approach can be used to support pro-poor, sustainable private sector growth in the DRC. This document brings together the collective lessons from over five years of activity by the ÉLAN RDC team in a very challenging operating environment.

Document Structure

During the course of five years of implementation, ÉLAN RDC has learnt a number of lessons. Some have served to confirm or reinforce knowledge and experience gained from previous programmes to support private sector development. Other lessons are new, based on the relatively new experience of working in a conflict-affected state such as the DRC.

What follows is a summary of the key lessons and experiences from ÉLAN RDC, gathered together into a single location for ease of reference.

The lessons are grouped into three parts:

1. The six priority intervention sectors;

2. The five cross-cutting intervention areas;

3. General lessons on markets system development in a difficult environment.

Each topic is covered in a standard format. The main section is a summary of the key lessons learnt, presented as bullet points. Following this is a section listing the key documents which provide further, more detailed information about the experiences of ÉLAN RDC, and also some additional documents that provide further examples of ÉLAN’s work. Some of these original documents are available via hyperlinks to the ÉLAN web site.

A note on content

The primary function of this report is to gather together in a single document the collected lessons from the five years of implementation of the ÉLAN RDC programme. These lessons, some new and others not so new, can add to the body of knowledge and experience of market systems development in general and MSD in the DRC in particular. As such, the lessons can and should be widely disseminated, not only across DFID programmes but also throughout the donor community.

Some of the documents that provide further detail on some aspects of the experience and lessons arising from the work of ÉLAN RDC, especially those concerned with political economy and business environment issues, contain information of a sensitive nature, which is not suitable for distribution beyond the DFID DRC private sector development programme. In this public version of the report, therefore, links to these supporting documents are not available. They are indicated with a padlock () symbol in the document listings. Requests for access to any of these documents should be addressed to DFID DRC.

The Decision Support Unit (DSU), the third triad of DFID DRC’s private sector development programme (alongside ÉLAN and ESSOR), includes within its remit the gathering and dissemination of knowledge on the lessons that emerge from the PSD work. The DSU has prepared a number of reports on the experiences of ÉLAN and ESSOR1, and continues to do so. These reports can be found on the DSU website.

1 ESSOR is the government component of DFID DRC’s private sector development programme, a sister project to ÉLAN RDC. It is a flexible programme to improve the business environment in the Democratic Republic of Congo.

Specialty Crops (cocoa & coffee) In order to develop the sectors’ performance and improve the lot of poor farmers, ÉLAN RDC worked with cocoa and coffee stakeholders to improve quantity, quality, consistency and competitiveness.

Below are some of the lessons learnt during five years of implementation.

1. Promotion of good agricultural practice (GAP) is a quick and effective way to increase the incomes of existing small producers. ÉLAN quickly discovered that exporters were the best stakeholder group to train small planters in applying GAP. Indeed, exporters have a direct interest in (a) increasing yields and overall production and (b) improving their relationships with farmers and their loyalty in a fiercely competitive environment. They also have the capacity to train large numbers of smallholders (in contrast to government agencies, cooperatives and NGOs).

2. The introduction of certification, and the adoption of and adherence to common standards are effective ways to offset extension system costs. Include Good Agricultural Practices into a broader system and develop additional market value for the product.

3. Treatment and processing are key to improving the quality and reliability of Congolese specialty crops, which were shown to be the main issues of concern for international traders wanting to buy Congolese coffee. Improving processing does not translate directly into increased farmer incomes but it allows exporters to market their product better, increasing sales volumes and prices. As a result, they are able and willing to buy more from poor producers and invest in them.

4. Processing technologies need to be appropriate for the operating environment. ÉLAN RDC supported the development, integration and proliferation of value-adding equipment such as box fermentation units, drying tables, micro-washing stations, pruning shears, pulpers, etc.

Similarly, enhanced systems, tools, and IT were introduced in order to improve operational performance. These interventions have helped to bring the DRC’s cocoa and coffee value chains into line with the operational standards of other major growing origins.

5. Facilitating market entry of social impact lenders has been successful as a way to provide local cooperatives and exporters with access to finance. Traditional financial institutions are not geared to finance the coffee & cocoa sector; this is especially true of local banks and finance institutions. Impact investors on the other hand can prepare local stakeholders for international partnerships. ELAN sought to diversify the number, type and scope of investments and investors, encourage increased engagement with existing and potential clients, and increase the number of creditworthy actors throughout the cocoa and coffee value chains.

6. Private sector associations have been very effective in advocating for an improved regulatory environment. Advocacy from exporters’ groups has resulted in a less oppressive export tax structure. The process of public-private dialogue has improved the level of collaboration between business and government to create a more business-friendly environment for the cocoa and coffee sectors nationally.

7. Marketing activities to promote the DRC brand have been a key element of success.

ÉLAN’s promotional activities played a substantial role in informing buyers, both nationally and internationally, of the technical and quality improvements made in the coffee and cocoa value chains. Greater transparency and increased information flows instilled higher levels of trust in the DRC as a reliable origin from which to source.

ÉLAN RDC Lessons Learnt Specialty Crops

8. The role of the exporter is critical at every level. Exporters have both the capacity and the incentives to develop extension systems at producer level, invest in processing infrastructure, engage effectively in negotiations with the government, and market their product as well as the DRC brand.

9. The DRC has strong potential, if it can continue to improve quality and quantity.

Producers and exporters will have to invest in the fundamentals of good production, processing and good business practices — models that promote continuous improvement and capacity building. Replanting, particularly in the northern and western parts of the country, will be key to increasing production. The country’s size and agro-climatic conditions make the DRC a potential major source for coffee and cocoa as demand continues to rise and the effects of climate change force buyers to diversify their sources.

Primary Documents

Building a national industry in the DRC: the role of key players and institutions (2018)

The Cocoa and Coffee Opportunity in the DRC (2019)

DRC cocoa sector market systems analysis

Coffee sector perception research and proposed marketing action plan (2016)

ÉLAN RDC’s Women’s Economic Empowerment Learning Series – Case Study 3: Exploring empowerment outcomes and the upgrading of women’s economic and social roles in South Kivu’s coffee sector

Série d’apprentissages d’ÉLAN RDC sur l’émancipation économique des femmes. Étude de cas 3: Explorer les résultats de l’émancipation et le renforcement des rôles économique et social de la femme dans le secteur du café au Sud-Kivu (French)

Additional Documents and Information

Impact of taxation on DR Congo coffee exports (2014)

Credit for purchase of cacao and financing export from Equateur (French) (2015)

Identification of roadblocks along the main transport routes-exportable coffee in the Kivu (2016)

Saveur du Kivu: Congo – The Future of Coffee (YouTube video) (2018)

Saveur du Kivu: Discover Congo through Coffee (YouTube video) (2018)

Saveur du Kivu: Découvrez le meilleur café du Congo (YouTube video) (French) (2018)

Saveur du Kivu: Un café, un business (YouTube video) (French) (2018)

Saveur du Kivu: Conférence de presse 2018 (YouTube video) (French)

Grains and Horticulture Grains and horticulture production costs in the DRC are generally higher than in neighbouring countries. Poor quality inputs and difficult logistics, compounded by harassment from government officials, are the main causes of this. The interventions of ELAN RDC have focused primarily on improving the accessibility and availability to farmers of better quality inputs – seeds, fertilizers, pesticides, etc., both through increasing supply and by providing mechanisms for financing these inputs. A second area of support has been to provide greater structure to markets by improving links with regional organisations. Key lessons are:

1. Access to inputs, seeds in particular, is the single most important issue DRC farmers face if they are to improve yields and incomes. ÉLAN’s interventions have shown that DRC farmers are ready to pay for high quality inputs if they are confident that the resultant outputs will be of a similar quality.

2. Seed is the foundation of more productive agriculture – improved seeds can be used on their own. Once smallholders use them, other inputs and services (fertilizers, phytosanitary products, mechanisation, etc.) can be profitably added.

3. Technical advice is critical to improve yields but can only be provided as an embedded service to seed distribution. Smallholder farmers will not pay for stand-alone advice and creating a network to provide free extension services is not economically viable. Using pre-existing sales networks can overcome this limitation.

4. Selling seeds to smallholder farmers requires tailored marketing. Effective approaches include smaller, more appropriate package sizes, consumer education – especially demonstration plots, mobile sales forces, and development of a distribution network. ÉLAN partners (both international companies and local producers) have demonstrated that smallholders constitute a viable market.

5. Although seeds are relatively inexpensive and can be purchased outright, other inputs, fertilizers in particular, are unaffordable for many smallholders. Out-grower and input credit schemes are ways to circumvent the financial constraints of smallholders and increase incomes. These approaches are difficult to scale, however, because there are few large out-grower systems in operation on which to base the schemes.

6. Banks are reluctant to finance the agriculture sector because of the high perceived risk. It is unrealistic to expect banks to finance smallholders but agricultural trade can be financed.

Collateral management agreements, which allow banks to extend credit against stocks of grain, allows grain wholesalers to increase purchases, including purchases from smallholders.

7. Agricultural trade is unstructured, making Congolese agriculture uncompetitive.

Support to traders through training, networking events, infrastructure development and price transparency is key to developing the markets. ELAN brought in the East African Grain Council (EAGC) to focus on traders with a long-term, international approach to trade capacity building.

8. A more conducive policy environment for agriculture is needed. Agricultural policy-making has been haphazard at best, but a stronger private sector voice can help to improve this. A long-term approach to the business environment, such as TASAI’s seed industry platforms including GoDRC, NGOs and seed provider associations will allow the seed industry to avoid the pitfalls of fake seeds distribution and encourage investment in the sector.

ÉLAN RDC Lessons Learnt Grains and Horticulture

Primary Documents

A Quarter-Billion Dollar Industry: The DRC Seed Sector Investment Brief (2019)

Selling seed to farmers in the DRC. Experience from ELAN RDC (2019).

TASAI DRC Country Study (2017)

TASAI Top Ten Lessons (2017)

Additional Documents and Information

Good agricultural practice resource materials (French)

Good commercial practice resource materials (French)

ÉLAN RDC’s Women’s Economic Empowerment Learning Series - Case Study 1: Exploring empowerment outcomes for poor women participating in commercial maize production in Haut-Katanga

Launch of the Babungo seed distribution campaign in Kamina (French)

Assessment of DRC’s seed sector and ÉLAN seed interventions (2017)

Etude sur la commercialisation des produits horticoles: Katanga (French) (2015)

Bean consumption in Kinshasa - from east and west (French) (2016)

TASAI DRC country brief 2017 (English)

TASAI DRC country brief 2017 (French)

TASAI Data Appendix 2018

Renewable Energy The renewable energy interventions of ÉLAN RDC have been amongst its most successful, in terms of both impact and outreach. ÉLAN partners have grown their businesses across much of the territory of the DRC and support from the programme has helped to leverage financial support from international investors. A major challenge to the growth of the sector is the business environment:

a reduction in the tax burden (formal and informal) as well as a more predictable regulatory regime would greatly enhance the prospects for development and encourage investment. The key lessons from this sector include:

1. Pay as you go (PAYGO) is an essential requirement for large-scale market penetration, given the low purchasing power of the majority of consumers. The difficult business environment, high levels of poverty, and minimal availability of consumer loans makes it imperative to reduce the up-front costs of acquiring renewable energy systems. PAYGO technology has a key role for the development of the pico solar and Solar Home System (SHS) markets by providing consumer credit, utilizing mobile money.

2. Working capital is a major constraint on the operations of importers, distributors and retailers of solar systems (and, to a lesser extent, improved cook stove (ICS) suppliers). PAYGO puts even greater strain on working capital, hence the availability of credit, for both businesses and consumers, is a priority for the development of the sector.

3. Consumer purchasing power and aspiration: there is a threshold at around USD 20, below which many consumers are ready and willing to purchase a product for cash. This is insufficient for anything more than the smallest pico solar systems. Nevertheless the benefits to quality of life are such that even very low-income households aspire to the acquisition of larger, more capable systems.

4. There is a need for better communication and marketing of renewable energy solutions: SMEs need to improve their communication to inform and educate consumers about the benefits of renewable energy products. This not only raises awareness amongst consumers of the benefits of the products but helps them to determine the most suitable products for their own needs.

5. Quality of product matters: customers who have used quality certified products express higher levels of satisfaction and are more likely to recommend the products. Low quality products undermine confidence in the entire sector. Maintenance of quality standards should therefore be a priority for any support programme.

6. The benefits to women of improved cookstoves go beyond lower running costs and reduced wood/charcoal consumption. ICS generate substantial time savings, providing the opportunity to engage in other activities, be they productive, domestic or recreational.

ÉLAN RDC Lessons Learnt Renewable Energy

Primary Documents

The DRC Energy Opportunity

Renewable energy solutions in the DRC

Renewable Energy Study - Cook stoves and Pico - Kinshasa results (2017)

ÉLAN RDC’s Women’s Economic Empowerment Learning Series - Case Study 2: Exploring empowerment outcomes for poor female consumers using improved cook stoves in Lubumbashi

Additional Documents and Information

Evaluation de la demande en énergies renouvelables à Kananga, Kasaï Central (French)

Challenge Fund concept note presentation (2015)

Mini-grids scoping report

Mini-grids debriefing presentation

Micro-hydro sector overview (2014)

SME Finance SMEs in DRC have limited access to finance because banks perceive SMEs to be a high-risk market and have no financial products tailored to their needs. Banks typically require SMEs to pledge substantial collateral (often greater than the value of the loan), mostly residential real estate, to protect against the possibility of default. ELAN has worked with banks to develop alternative products matching SMEs’ needs. The key lessons from ÉLAN’s experience are presented below.

1. Collateral Management Agreements allow banks to lend against a stock of goods.

Agricultural processors can thus access credit against their stocks of maize – provided that the bank has a mechanism in place to control access to the stock during the loan term, through a collateral manager. ÉLAN RDC successfully piloted the collateral management agreement in Kivu. The model really took off, however, in Katanga, where Comexas and Equity bank operated in a successful partnership.

2. The challenge of the product is that it works only if a sizable volume of goods is pledged as collateral in order to amortize the cost of the warehouse facility, insurance coverage and other collateral management costs. Picking the right actors and context is key to demonstrating the viability of the service.

3. CMA has been hailed by evaluators as having deep systemic impact on agriculture lending, although its impact on smallholder farmers is limited. CMA is a good example of the need for MSD programmes to strike a balance between short-term impact and deeper systemic change.

4. ÉLAN has supported the development of leasing & insurance with major banks and insurance companies but implementation has faced significant delays. This demonstrates the importance of business environment and political economy constraints to the success of the market systems development approach. Regulatory reforms are urgently needed for these sectors to develop. ÉLAN and ESSOR have collaborated in this area but with limited success in generating movement by the government.

5. Joint initiatives are a promising way forward to deliver reform and systemic change.

Examples are the leasing roadmap facilitated by ÉLAN jointly with IFC, the Ministry of Finance, tax collection agency, the Central Bank and retail banks. Task forces can be a good tool to follow through with the implementation of activities beyond the life of a programme.

ÉLAN RDC Lessons Learnt SME Finance

Primary Documents

Insurance in the DRC: supply demand and regulation – ESSOR/ELAN study (French) (2017)

Challenges and opportunities for leasing and insurance in the DRC (2019)

Elan RDC Transport sector access to finance baseline report (2015)

Additional Documents and Information

Collateral Management Agreement Manual (2017)

Accounting Guide for Leasing in the DRC (French) (2018)

Study for the development of a leasing product in the DRC (French) (2016)

Mapping the Finance sector in DRC and identifying opportunities for access to finance (2014)

Access to finance strategy – ÉLAN RDC (2014)

Leasing Road Map (French) (2018)

Loan portfolio acceleration fund concept note (2017)

Collateral Finance Strategy (2017)

Branchless Banking Some 90% of the population of DRC does not participate in the formal financial system. Reflected by the inception study on consumer financial needs, there was clear potential for mobile money services to benefit a large number of poor households and microenterprises. ÉLAN RDC thus supported the development of Branchless Banking to improve access for poor Congolese people to financial services such money transfer, micro loans and micro saving. Key lessons include:

1. Trust and consumer education are key drivers of mobile money adoption. In late 2015, ÉLAN RDC worked with all three mobile money operators and the Central Bank on a campaign to promote mobile money. The success of this campaign and other joint initiatives (e.g. banks sponsored financial education IVR messages through the Viamo 155 platform) means that MNOs and banks now understand the importance of educating prospective customers about digital finance services and building their trust in the system. These successes have led to greater collaboration between MMOs and financial institutions in addressing the challenges faced by the sector.

2. The first integration of an MNO (Vodacom's M-Pesa) and a financial institution (FINCA) is now complete, allowing financial services such as savings and loans to be offered to millions of M-Pesa customers. Credit scoring algorithms can dramatically reduce the time and cost of extending credit, especially to those borrowing small amounts.

Such clients would normally turn to the informal financial sector or loan sharks for credit. In a very competitive market, other MNOs and banks have already shown interest in replicating the move. This will provide access to financial services for millions of unbanked people.

3. Mobile money stakeholders are now working together to improve the quality of their networks and the liquidity and profitability of their agents. This also allows them to expand into rural areas. A collaborative mindset and focus on agent network quality are now key features of the industry.

4. Interoperability is a critical element in creating a comprehensive digital financial system. It allows transactions between users on different systems, analogous to an interbank clearing system. This raises transaction volumes, allows MNOs to share agents and increases the sustainability of mobile money services. Achievement of interoperability is now a key strategic milestone for the digital finance ecosystem in DRC, though there remains some debate over the mechanism for its implementation. The interoperability effort has also spawned a mobile money sector platform that allows MNOs to voice concerns about the regulatory and compliance framework. Following ÉLAN RDC’s initial facilitation, however, the GSMA has taken over the facilitation role and is maintaining momentum for implementation.

5. The most significant systemic change catalysed by ÉLAN is stakeholder collaboration. Fierce competition has long been the rule in this sector, both between MNOs and banks and within these two groups. ÉLAN RDC spent much time and effort to bring all three mobile money operators (Vodacom, Orange and Airtel) around the same table for the education campaign in 2015. However, ÉLAN achieved major breakthroughs, first by having a bank (FINCA) and an MNO (Vodacom M-Pesa) collaborate, then by fostering collaboration between stakeholders for studies and joint actions such as campaigns, which finally led to an agreement to develop interoperability. This behaviour change is critical in an environment such as the DRC, where individual actors have struggled to achieve profitability – both at MNO/bank and agent level.

ÉLAN RDC Lessons Learnt Branchless Banking

Glossary of Terms

BCC Banque Centrale du Congo (Central Bank of the Congo) GSM Global System for Mobile Communications GSMA GSM Association IVR Interactive Voice Response MMO Mobile Money Operator MNO Mobile Network Operator

Primary Documents

Agent network accelerator research

Consumer Financial needs in DRC (2014)

Financial inclusion for Kinshasa street vendors (French) (2017)

Mobile Money for Financial institutions (French) (2016)

Additional Documents and Information

Savings Groups in the Democratic Republic of Congo (2018)

Prospects for digital credit in the DRC (French) (2018)

Towards a long-term role for the private sector in financial inclusion for vulnerable groups in the DRC (French) (2018)

Transport Transport proved to be the most difficult of the sectors in which ELAN RDC worked, with market failures in almost every aspect of the operations of the sector. A number of these constraints were addressed by ELAN, with varying degrees of success. One of the limiting factors was the difficulty of access to the northern parts of the DRC for the intervention teams. Amongst the key lessons were the following:

1. Interventions supporting the advocacy work done by transporters and traders helped change their behaviour and become more engaged with local authorities in order to improve the business environment (most notably by reducing the tax burden). The weakness and fragmentation of the private sector associations mitigated against the sustainability of these interventions and the results were inconsistent.

2. The interventions aimed at supporting banks in providing better and more suitable financial products to transport actors produced mixed results, mainly because of the complexity of the sector and the slow administrative processes at the financial institutions involved. Provision of more intensive technical assistance to the financial institutions (possibly an embedded consultant to manage the projects from the inside) might have helped them streamline the process and adopt a more comprehensive approach to ensure scalable and sustainable changes.

3. A major challenge for smallholder farmers is access to market for their produce. Aggregation of agricultural output into larger batches reduces unit transport costs, thus helping to increase access. For the interventions promoting aggregation, conducting a more in-depth analysis of stakeholders’ behaviour and habits would have provided better insight into the bigger picture and identified additional constraints that affected pre-existing shipment systems. These included traditional relationships and cultural considerations that hindered commercial interactions.

4. In the intervention with GTM and CRAFOD, aimed at facilitating the evacuation of agricultural products from Kongo Central to Kinshasa, greater collaboration with other sectors (non-perennial agriculture for example) could have helped to address additional constraints, including the poor quality of the cassava in some regions and the links between warehouses in Kongo Central and specific markets in Kinshasa, which are based on personal habits and cultural/family ties.

5. The impact of the intervention with Pay Web Phone, which aimed to develop a MIS to facilitate communication between boat operators and traders/farmers – hence reducing operational costs

– was hindered by the poor marketing of the service by the partner. Additional support to the partner, including both technical assistance on marketing and financial subsidy in the early stages of the project, could have helped to increase the attractiveness of the service to the target market and served to demonstrate the benefits to their businesses.

6. Despite the operational difficulties experienced at the beginning the intervention, the partnership with freight forwarder Action Plus to facilitate the shipment of agricultural products from the former Equateur province to Kinshasa enjoyed relative success thanks to the high level of interest and motivation of the partner. Nevertheless, the results could have been more conclusive if additional its network to surrounding villages and exploit the momentum of their first shipments.

ÉLAN RDC Lessons Learnt Transport

Primary Documents

Choppy Waters: business environment reform in the transport sector

Presentation of the river transport sector to financial institutions (French) (2018)

Tricycle transport - Presentation to banks (French) (2017)

Additional Documents and Information

Elan RDC baseline report – access to finance in the transport sector (French) (2015)

Baseline report for pilot aggregation project in Basankusu (French) (2014)

Baseline report – payment of taxes in the river transport sector (French) (2015)

Road transport study on the Kinshasa-Matadi route (French) (2017)

Filière haricot consommé à Kinshasa (De l'Est à l'Ouest) (French) (2016)

Impact de la fiscalité sur le transport fluvial en RDC (French) (2015)

Scoping study Transport Katanga (French) (2017)

The Effect of illegal taxes in South Ubangi (2017)

Business Enabling Environment The experience of ÉLAN has confirmed that a practical, pragmatic and politically astute approach to the business environment can yield results, even in the most challenging of contexts. It is also worth noting that achieving these reforms has not for the most part involved significant “technical” inputs in the sense of drafting new laws, policies or regulations. The great majority of the work has concerned the implementation of existing measures or information dissemination to increase transparency and accountability. Indeed, ÉLAN has consciously concentrated on questions of policy implementation rather than policy change. The most important reason for this is that effecting policy change is more complex and slower than implementing an existing policy. Key lessons are highlighted below.

1. BE reform is primarily a political, rather than a technical, process. The solutions to shortcomings are often not technically complex. They do, however, require political will to enact and enforce. Political economy analysis is therefore central to assessing the feasibility of a BE reform intervention. Be politically savvy. Aim for a result that is feasible rather than a “perfect” solution.

2. Following on from above, there are no “one size fits all” solutions in business environment reform. An understanding of what has worked elsewhere, why it worked and thus what might work in a slightly different context, provides a starting point from which to explore solutions.

3. BE reform is a journey rather than a destination. There may be powerful stakeholders who benefit from the status quo and who will try to reverse any reforms. Local actors need the capacity to defend any reforms achieved during the lifetime of the programme against attempts to undo them. For an extended treatise on this, see Sailboats, not Trains2.

4. The timing of reform attempts can be of critical importance in determining the prospects for success. This issue can manifest itself in different ways, some of which may be anticipated but not all. A programme such as ÉLAN RDC needs, therefore, to be positioned to take advantage of opportunities as and when they arise.

5. BE reform takes time and treasure. Reform can be a slow process and even a facilitative approach requires significant resource commitment. All MSD interventions take time to realise change; changes in BE policy-making and implementation typically take longer than most.

Evidence in support of reform may not be readily available so the programme may have to pay to gather it. Local actors will likely need extensive hand-holding over an extended period before they are able to work independently. Be prepared for the long haul.

6. Selective direct intervention can help to support a more facilitative, market systems approach to achieve reform more rapidly. Care must be taken, however, as excessive direct action may undermine local ownership of change, thereby reducing its robustness and sustainability. The experience of ÉLAN has shown that selective direct intervention can accelerate the progress of reform without sacrificing resilience. In a context of fragility such as that found in the DRC, this combination of approaches has been effective.

2 Kleinfeld, Rachel, Improving Development Aid Design and Evaluation: Plan for Sailboats, not Trains, Carnegie Endowment for Peace, 2015 https://carnegieendowment.org/files/devt_design_implementation.pdf

ÉLAN RDC Lessons Learnt Business Enabling Environment

7. United we stand, divided we fall. This is never more true than in advocacy. Coalitions increase the power of a group exponentially; coalitions of public and private sector actors can be especially powerful. Where local rivalries prevent this from happening, advocacy may stall.

8. Be ready to support the formation of associations – but ensure local ownership. A consequence of a weak private sector is that business associations are also weak or non-existent.

ÉLAN supported the formation of business associations as vehicles to organise the private sector.

Support must, however be conditional on the associations taking control of their agenda and working towards financial self-sufficiency. If this commitment is not forthcoming, walk away.

9. Recognise the importance of information dissemination – knowledge is power. If people do not know the rules, how can they abide by them? If they do not know their rights, how can they defend them? Communicate in the local vernacular, not necessarily the official language.

10. BE reform efforts are most effective when both private and public sectors are fully engaged by the programme. Having separate programmes focusing on the government and business (ESSOR and ELAN) has severely limited the effectiveness of BE reform interventions.

Future interventions would be improved by a clear mandate to work simultaneously with the public and private sectors and to include other stakeholder groups from civil society. This should be incorporated at the project design stage.

11. Spontaneous “crowding-in” in BE reform is the exception, not the rule, for three reasons.

a) The sheer size of the DRC mitigates against copying.

b) Success or failure in BE reform depends greatly on the political economy, which is different from one jurisdiction to another.

c) Even when other actors see successful reforms, their limited capacity means that they are still unable to copy the process without substantial support.

Replication of BE reforms is, nevertheless, possible but will need facilitation, often at a similar level to that of the original pilot intervention.

12. Promotion of dialogue has long-term benefits after the original rationale has gone. The increased level of understanding and possibly trust that results from constructive discussions facilitated by the programme carries forward into the resolution of other issues as they arise.

13. Although most support is required by the private sector to enable it to advocate effectively, the public sector is frequently also in need of aid to maintain its side of the dialogue. The attempt to foster dialogue on illegal taxes in Equateur province foundered on the instability of government and the resulting difficulty in identifying a reliable interlocutor with which the private sector could engage.

ÉLAN RDC Lessons Learnt Business Enabling Environment

Primary Documents

BEE: The art of the possible (2019) and French Executive Summary

Building a national coffee industry in DRC: the role of key players and institutions (2019)

Choppy Waters: BE reform in the transport sector (2018)

Additional Documents and Information

The Effect of illegal taxes in South Ubangi (2017)

Inter-Ministerial Decree abolishing 38 illegal taxes (French) (2014)

Identification of roadblocks along the main coffee transport routes in the Kivus (2016)

Final Consultancy Report on Taxes in Equateur and Sud-Ubangi (French) (2018)

Illegal Taxes in Grand Equateur (2017)

Support to fiscal reform in the river and lake transport sector in Equateur (French) (2015)

Baseline report on payment of river transport taxes (French) (2015)

Impact of the tax regime on river transport in the DRC (French) (2014)

Business Development Services The BDS intervention stream was started late in the ÉLAN RDC programme, when it became clear that some of the partners might not have the capacity to continue on their trajectory without ÉLAN RDC support and that competitors might not have the capacity for crowding in. Lessons from this experience are:

1. In thin and underdeveloped markets, such as are found in the DRC, the capacity weakness might have been anticipated. In future programmes, inclusion of a BDS component from a much earlier stage would help to maximise the effectiveness of other, more conventional interventions.

2. Linked to the point above it would have helped to undertake some kind of business scan (diagnostic) of partners before finalising partnership agreements. This would allow a more holistic approach to partner development from the outset (and the findings could be incorporated into the partnership agreement and its deliverables).

3. The financing implications of the growth that we aim to stimulate in partners needs to be taken into account and included as an integral part of the intervention programme.

Without it, we are left with partners that want to grow but which are not investment ready or able to obtain external financing such as bank loans.

4. The level of understanding of start-up entrepreneurship is really quite low in DRC.

Continuing and coordinated donor involvement will be required to raise this level (within start-ups and incubators as well as amongst local investors).

5. It has proved to be very difficult to get donors to engage with the start-up ecosystem in the DRC, which is quite the opposite situation to that in many other African countries. This is possibly because of the humanitarian focus of many of the donors that are active here.

6. A relatively short programme like ÉLAN RDC is not well suited to long-term improvement goals such as entrepreneurship ecosystem development, as results take much longer to achieve than the project lifespan. This does not, though, make them any less important (in fact one could argue quite the opposite). Any targets, especially for impact, need to reflect the long-term nature of the change process.

7. Providing linkages to people and information is a crucial part of ÉLAN RDC’s programme.

This could have been facilitated more effectively with the implementation of a proper CRM system from the start of the programme, where interactions are recorded for future reference.

Such a system should be an integral element of all large MSD programmes.

8. Similarly to the point above, a knowledge management system across DFID programmes could greatly assist in spreading good practices to new programmes and their staff.

ÉLAN RDC Lessons Learnt Business Development Services

Primary Documents

The DRC entrepreneurial eco-system

ELAN RDC BDS - Lead firm interventions

Schoolap write up: How donors can add value to entrepreneurs in DRC

BDS Typology

BDS Strategy 2017

BDS overview 2018

BDS Strategy 2019

Bootcamp – Why and how we did it, methodology, post-training impressions

Ensemble pour la Difference – The impact of our technical assistance

Ingenious City – Report

Using voice and SMS messages to provide access to basic management skills tips

DRC ecosystem canvas 2018

SME small cap financing in DRC lessons, challenges, solutions

Additional Documents and Information

Angel Investing in the DRC article and presentations in English and French

BDS Bootcamp module 1. Purchasing and stock control

BDS Bootcamp module 2. Marketing

BDS Bootcamp module 3. Record keeping

BDS Bootcamp module 4. Business planning

SME marketplace – a central resource assisting SMEs in DRC to find information and contacts (www.congobizup.com)

Solvay – market analysis as a result of their visit to Kinshasa during the digital week

UX – market analysis for a USSD stack based solution in DRC

Seedstars 2018 (YouTube video)

Markets in Crisis The experience of ÉLAN has confirmed that a Market Systems Development (MSD) approach to humanitarian assistance can increase the efficiency, sustainability and ultimately impact of aid delivery. Humanitarian responses need to be quick and cost-effective, alleviating suffering and safeguarding dignity and lives. Innovation however requires resources (time and money) and capacity for researching and piloting new models. In the DRC, the cost and risk of innovation for humanitarian actors is exacerbated by the protracted crisis cycle and recurrent funding and capacity gaps. The private sector, on the other hand often drives innovation and its risk is mostly commercial.

ÉLAN RDC’s Markets in Crisis (MIC) interventions have focused on working within market systems and with market actors to pilot innovative models for humanitarian actors and foster their replication, with the goal of saving more lives and accelerating economic recovery. To achieve this, ÉLAN used a three-pronged approach centred around:

a) Piloting new models with specific private and humanitarian actors;

b) Engaging with industry bodies to gain legitimacy and foster mutual understanding of each industry’s constraints and opportunities; and

c) Organising cross-industry events to share lessons learnt and identify strategic priorities to foster more effective cooperation.

Through nearly two years of targeted support, research and cross-industry consultations, ÉLAN RDC’s MIC programme identified the following lessons learnt.

1. In a sector where the market systems approach is novel, providing proof of concept is critical – humanitarian organisations will not take a leap of faith on an unproven idea.

2. One of the most critical roles that ÉLAN RDC played was to provide an interface between the humanitarian sector and the private sector, facilitating interaction and “translating” between two groups with different incentives and terminologies.

3. Trade and business missions delivered high impact for partners with limited investment from the ÉLAN RDC programme. Post-mission support is vital, however, to capitalize on the missions by facilitating the development of relationships between private and humanitarian actors.

4. Engaging with industry bodies builds credibility and facilitates replication – Involvement with industry bodies (e.g. UN working groups, associations) ensures consideration for the priorities and capacities of each sector, facilitating buy-in and replication.

5. Go beyond industry bodies – Cross-industry events and specific tools (like checklists and case studies) can be used to help share and replicate pilots, achieve a common understanding of each industry’s procedures, incentives and constraints, and identify shared strategic priorities.

6. Identify Champions – Champions can lead innovation and stimulate buy-in. Dual mandate organisations (humanitarian and development) have more flexibility to test new solutions. Some donors (e.g. SIDA, Norway) have more flexible implementation procedures.

7. Pick the right sector – Target sectors in which demonstrating innovation can be done in a timely, cost-effective and replicable fashion. For instance, while innovation in agriculture is lengthy due to seasons, piloting the use of a new distribution mechanism for cash transfer programmes (such as Mobile Money) can demonstrate more rapid results.

8. Pick the right place. Humanitarian actors often work in very difficult environments, so pilots may be more practical in an “intermediate” environment (e.g. supporting urban IDPs) before

ÉLAN RDC Lessons Learnt Markets in Crisis scale-up. This can help to build trust and understanding between humanitarian and private actors, leading to the development of solutions which can be replicated in or adapted to more complex environments.

9. Hire the right people – Speaking to very different industries, it is important to hire people who understand the needs and capacities of both market and humanitarian actors, to develop and test solutions that can be adopted by both industries.

10. Collect the right data – Humanitarian actors collect vast amounts of data before, during and after interventions, but this data is rarely shared with (let alone usable by) the private sector to inform investment and decision-making. Different organisations use distinct terms, tools and metrics; identifying formats that are useful to private actors is therefore crucial.

11. Understand your timeframes – MSD programmes operate on different time scales to humanitarian programmes. MSD programmes should not aim to respond to a specific crisis but should test solutions which can ease responses for humanitarian actors in protracted or recurrent crises.

12. Be conscious of the fragmentation of markets – Markets in the DRC are fragmented (e.g.

the situation and the actors in the Kivus differ from those in the Kasaïs) as is the aid community (humanitarian vs. development actors; different sectors of operation, etc.). It is important to anticipate this in choosing partners and pilots. Some solutions may require multiple pilots in different environments to achieve buy-in from key stakeholders.

13. Disseminate information efficiently – Industry bodies are often imperfect information-sharing channels. Platforms, tools and procedures to ease the dissemination of “relatable information” – like interactive mapping and exchange platforms using technologies and terminologies accessible to all actors – are therefore key supporting functions for effective, flexible and sustainable private-humanitarian coordination.

14. Engage with donors – as they define the framework within which other aid actors operate.

Primary Documents

Markets in Crisis: Changing aid industry norms Case study: humanitarian cash transfers using mobile money After the Storm: The Impact of Emergency Humanitarian Assistance on Market Systems in

Kasaï Central

Additional Documents and Information

Roadmap for private sector-humanitarian engagement in DRC (2019) Mobile money tool (2019) Field Report – Kananga Field Report – Mbuji Mayi Field Report – Tanganyika Assessment of the demand for renewable energy in Kananga, Kasaï Central (French) Renewable energy solutions in the DRC A long-term role for the private sector in financial inclusion for vulnerable groups in the DRC

(French)

Gender Equality and Social Inclusion Over the programme’s five years, ÉLAN RDC has piloted and scaled a broad range of business innovations designed to increase poor men’s and women’s ability to access and benefit from functioning market systems. Certain of these business models have proven to be particularly effective for women. Lessons from this experience include:

1. Gender-inclusive policies and practices are an important element of increasing female participation in the workforce. These include female mentorship programmes;

strategies to build a female talent pipeline from school-level up; and flexible working arrangements for new mother employees.

2. Ensuring senior leadership’s buy-in is critical to the success of companies’ gender diversity initiatives and the ability for firms to effectively engage women in their workforce, broader supply chain, and the economic returns they can realise from a well-structure engagement.

3. Social norms play a central role in driving women’s underrepresentation in Kinshasa’s formal sector. Women’s disproportionate care burden places a particular constraint on women’s time, restricting the hours they are able to work and their ability to network after work. Women are often lacking in confidence and may self-exclude from particular roles because of perceptions of what is appropriate for women to do.

4. It is important to establish an intentional gender-diversity strategy rather than waiting for gender imbalances to 'self-correct'.