In recent years, there has been growing interest and funding dedicated to technical assistance (TA) designed to strengthen the commercial and development impact of businesses in developing markets. However, relatively little is known about the nature and effectiveness of these initiatives. To help address that knowledge gap, the CASA TAF interviewed 11 development finance institutions (DFIs) that provide TA to agribusinesses. The results of the review have recently been published in this report.
We found, despite comprising only a small share of overall DFI investment portfolios, agribusinesses receive 30% of all TA. However, the participants in the research predominantly provide core business support to agribusinesses, rather than inclusive TA. An analysis of TA project portfolios found that an average of 58% of the TA projects were dedicated to core business support, compared to 42% for inclusive projects.
Simplified Technical Assistance Types
Adapted from: Understanding models of Technical Assistance, (TechnoServe, 2019, p.3)
Delving deeper into the reasons for this, we found the constraints to more inclusive TA to be threefold. First, competing business priorities mean that companies and investment managers often put a stronger focus on company financial performance due to the high-risk nature of investments in the agriculture sector. Second, limited DFI and company bandwidth for project ideation and design as fund manager teams are often less development impact oriented and thus less inclined to design inclusive projects. Third, the (perceived) burden of impact measurement holds back inclusive TA projects as they are associated with more management, measurement, and reporting requirements due to the complexity and challenges associated with creating Bottom of the Pyramid impact.
Despite these findings, the feedback from DFIs was that they expect the provision of inclusive TA in agriculture to rise, citing increasing focus on agriculture investments, increasingly ambitious targets for development impact from these investments and growing recognition of the significance of TA to achieving impact potential as the key drivers of the change. However to catalyze greater resource allocation towards inclusive TA, respondents agreed the evidence case needs to be clear both in terms of commercial and development impact. Three opportunities were identified in the paper to address the evidence gap and advance the case for inclusive business support:
- The use of consistent ‘outcome level’ economic indicators, so that development institutions can compare across approaches and learn from different models;
- Rapid and cost-effective impact assessments, coupled with training to improve clients’ capacity to work with data and analytics;
- Harmonizing TA typology to enable industry practitioners and DFIs to document, compare and evaluate approaches to inclusive TA.
Over its five-year life cycle, the CASA Technical Assistance Facility (TAF) will collect data on the impact of inclusive TA, not only at the farmer-level, but also at the portfolio company and investment fund level. The objective is to learn from and to influence DFIs, impact investors, commercial investors, and TA providers with compelling evidence and commercial and development impact metrics that demonstrate the value of inclusive TA. We invite you to get in touch if you’d like to hear more or sign up to the CASA TAF mailing list for quarterly updates on our insights and research.