Leading the Way in Being S.M.A.R.T.: Introducing the Smarter Market Analysis Risk Tool!

The Limiting Factor: Access to information

Working in extremely remote communities throughout Uganda and western Kenya, it’s obvious that there are very critical factors keeping people in extreme poverty. Lack of infrastructure, including roads and electricity grids, lack of access to land and food, and lack of healthcare systems are a common focus of the international donor community. We at Village Enterprise, however, discovered another critical factor that we’ve dedicated our resources to mitigating. That factor is access to information.

Our business owners have extremely limited access to knowledge and information that keeps them from accessing opportunities. Without access to new information and technologies, our business owners are trapped in a vicious cycle of poverty. They are forced to rely on traditional agricultural practices passed down through generations. After being sheltered from outside influences, they are extremely reluctant to take up new technologies and agricultural practices–ultimately limiting themselves to the success level of their family members before them.

graph showing high profit and low riskThe SMARTer Solution

Village Enterprise’s innovative solution is S.M.A.R.T. (Smarter Market Analysis Risk Tool), an extensive market analysis at the village level–focusing on capturing seasonal pricing, risk, demand, and price vulnerability of the various microenterprises available to our clientele. The results are a powerful risk/reward matrix that gives our clientele a competitive advantage and more certainty when making business decisions. Thus, giving rural African entrepreneurs a smarter tool for a smarter future!

S.M.A.R.T. and Our Program: What being SMART Looks Like

The best way to explain the tool is by putting it into context of the Village Enterprise program.

Village Enterprise starts businesses three times a year–February, June, and October. In the beginning of these months, our business mentors walk our business groups through an extensive business selection and planning process. Since the majority of businesses started by our entrepreneurs are agricultural (either crops and/or livestock), their products are not ready for market until after a minimum of three months. S.M.A.R.T. allows the group to use facts instead of hearsay when making this decision.

To create S.M.A.R.T., we collected price, risk, demand, and other information from the local village markets during the months in which our business owners would be selling their commodities (May/June for businesses starting in February, etc.). Enumerators collect this information using Android phones. By harnessing mobile technology for data collection, it eliminates the need for data entry and streamlines the analytical process.  This market information gets put through extensive calculations to produce the following price/risk/demand matrix:

Brief Synopsis: The x-axis is risk. The y-axis measures the profitability of the commodity. The size of the circle represents the demand for the commodity in the market. Farmers are directed to crops located in quadrant I since the crops are extremely profitable in their market with little assumed risk. Farmers should never select crops located in quadrant IV. When selecting between the crops remaining in quadrants II and III, farmers must consider other factors like experience in order to decide how much risk they are willing to take on.

Brief Synopsis: The x-axis is risk. The y-axis measures the profitability of the commodity. The size of the circle represents the demand for the commodity in the market. Farmers are directed to crops located in quadrant I since the crops are extremely profitable in their market with little assumed risk. Farmers should never select crops located in quadrant IV. When selecting between the crops remaining in quadrants II and III, farmers must consider other factors like experience in order to decide how much risk they are willing to take on.

Business Mentors use this matrix when guiding their groups through the business selection process by emphasizing the importance of looking at different factors besides profitability when choosing a business.

Last October, I observed this process being done in Kenya. With the guidance from the S.M.A.R.T. results, many business owners selected chicken rearing as all short-term crops (3 month maturation period) fell in quadrants III and IV in their local markets. Come February and March, these businesses reported great success from their chicken businesses and thanked the S.M.A.R.T. for helping them make the smart decision.

One major distinguishing factor between Village Enterprise’s S.M.A.R.T. and other market-to-farmer pricing communication tools being created by other NGO’s is the depth and breadth to which our S.M.A.R.T. operates. True to our mission, Village Enterprise targets a clientele underserved by 99% of NGOs. Most farmer-to-market price tools take price data from larger, more lucrative town centers and broadcast this information to farmers throughout the region. Even our closest business are located several kilometers away and do not have the means to transport themselves or their products to these towns. We collect market prices at a village-market level, the markets that our clientele can reliably access.

S.M.A.R.T. is already being recognized by the international community for its innovativeness and its ability to be used as a resource to alleviate poverty! Rockefeller Foundation recognized it as one of the top 100 Next Century Innovators!

Read more here: http://centennial.rockefellerfoundation.org/innovators/profile/giving-rural-african-entrepreneurs-a-smarter-tool-for-a-smarter-future

 

Ellen Metzger
Fellow

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