Case Studies on Policy-Constrained Value Chain Initiatives

The expectation that policy reforms that address policy constraints positively influence private sector investment is a fundamental link or assumption in many market systems development and policy reform efforts. Critically, private sector investment is typically the key mechanism by which policy reform can achieve the development objectives (e.g., poverty reduction) of bilateral donors. Yet the existing evidence for this link is weak globally. In particular, it has not been well-documented within the context of USAID’s Bureau of Food Security (BFS)’s Feed the Future (FTF) programming. In response, the Leveraging Economic Opportunities (LEO) project financed a Review of Policy-Constrained Value Chain Initiatives conducted by MarketShare Associates (MSA) that outlined a theoretical framework for the link between policy change and private sector investment, summarized recent evidence for this link and articulated the related measurement challenges. In recognition of the limited empirical evidence available, the review also recommended several Feed the Future projects that could serve as case studies. Drawing from those recommendations, LEO and BFS agreed to conduct the three case studies that are presented in this paper:

• The Agricultural Development and Value Chain Enhancement (ADVANCE) and ADVANCE II projects, implemented in Ghana from 2009 to 2018. This case study focuses on these projects’ efforts to improve quality standards of maize, and resulting changes in investment by maize growers and traders.
• The Agricultural Growth Project-Agricultural Market Development (AGP-AMDe) project, implemented in Ethiopia from 2011 to 2016. The AGP-AMDe case study focuses on the project’s efforts to address three main policy constraints: poor coordination among government entities involved in the coffee sector, challenges in the functioning of the coffee auction system, and the lack of a warehouse receipts system.
• The NAFAKA Staple Value Chain Activity, implemented in Tanzania from 2011 to 2016 alongside the SERA project. This case study examines the projects’ efforts to address the lack of an organized entity to push back on government policies and enforcement mechanisms resulting in policies and enforcement regimes that impede value chain growth and competitiveness and deter private sector investments in agriculture. It focuses specifically on activities in the rice value chain.

This audience for this research is BFS’ Office of Agricultural Research & Policy (BFS/ARP), as well as other donors and practitioners seeking to facilitate business enabling environment reform and measure the benefits of that work for target beneficiaries.