Foundation for a

Sustainable Society

Empowering

Value Chains

for the Rural Poor

Foundation for a

Sustainable Society

• Non-government organization (NGO) that provides financing & development assistance to social enterprises of the marginalized sectors

• Focuses on assisting enterprises that adopts triple bottom line (3BL) principles: people, profit, planet

• Partners with other local resource institutions and

development-oriented organizations

Philippines Debt to the Swiss Government

50% Payment Cancelled

50% Counterpart Fund

Endowment Facility

Product of a debt-for-development swap

“Development requires debt relief”

Three-years completion

Our Roots

Our Bottom Lines: 3BL

• Convergence or focus areas where sustainable local economy development happens.

• Sustainable communities = confluence & interaction of people (& their culture), economic produce, and ecology

Economic Viability

Profitable Employment and

Value-adding at local level

Social equity

Small farmers Fishers IPs Women Agricultural workers

Environment

Production areas Water resources

Air and soil Coastal resources

Pathways & Approaches: From livelihood, pre-SE and 3BL Social

Entrepreneurship

Dev’t NGOs Civil Society

Social Entrepreneurs (individual)

CSR Social Businesses

“Opportunity Entrepreneurship” Beyond-the-backyard Clearer growth & expansion path

“Necessity Entrepreneurs” Production for consumption Petty trading for cash income Backyard businesses

3BL-SOCIAL ENTERPRISES

Are we a nation of petty traders?

• Sari-sari stores

• Charcoal (uling/firewood)

• Fresh fruits/vegetables

• Kakanin/delicacies

• Copra

• Alimango

• Dried fish

• Firecrakers

• Soap/detergents

• Karaokes Kiosks

• Cigarettes, e-load

• Vinegar

• House/cooking wares

• Brooms

“By 2016, we shall have contributed to the sustainability of local economies & ecosystems in 6 priority/focus areas in the country”

Commodities

Eco-system Social Sector

Food & derivatives Health Public utilities

Small farmers

Fishers

IPs

Women & Gender

Agricultural workers

Forests & protected areas

Production areas

Water resources

Air and soil

Coastal resources

Support services/ Ancillaries:

• Microfinance services (along VC)

• Market product and research

• Technology and innovation

• Renewable energy technologies

• Cooperative and enterprise

development services

“3BL enterprises in local communities, economies and ecosystems”

FSSI initiatives related to value

chain and enterprise development

• What are the reasons for starting the

program?

• How was the program developed?

• What client needs are being addressed by the program?

• How is it being implemented?

Evolution of Development

Interventions

Working towards alternative development paradigms:

• The early years 1995-2003: Sustainable livelihood & ecosystems start-up approach: Focus on beneficiary entitlement

• 2004 to 2010: Social enterprise and sub-sector development [value & supply chain]

• 2011 to 2016: Triple bottom line (3BL) SEs towards Local Economy Development (LED) and sustainable ecosystems [community-commodity-ecology]

Evolution of Development

Interventions

Start-up: Sustainable livelihood & ecosystems approach:

Pro-poor & people empowerment thrust of government thru asset reform & public entitlements

FSSI – “beneficiary or actor-focused” sustainable economic development of marginalized communities:

Emerging & “niche” enterprises of farmer-owners, microcredit and microfinance institutions and in diverse array of community enterprises (coco coir, indigenous crafts, sustainable crop production, organic farming, seaweeds, etc.)

First Eight Years

Actor & beneficiary focus

Beneficiary Public Entitlements

(Advocacy)

Economic/ Commodity

Social Environment

Small rice & corn

farmers

Land reform, Support

Services

Sustainable agri

& organic farming

Farmers organizing

into coops

Low input/low chemical

agri, organic farm

practices

Coconut farmers Land reform, coco

levy advocacy,

support services

Coco coir Husks gatherers, coir

workers, twinners

weavers

Use of coco wastes,

peat

Fishers Fisher code, access

to alternative

livelihood

Seaweeds

production

Organizing Coastal resource

management

Women Recognition in role in

development

Access to

microfinance

Women organizing Support to sustainable

production

Indigenous Peoples Rights-based

advocacy; anti-

mining; support

services

Crafts & other

products of IPs

Support to organizing Anti-mining, IEC

advocacy

Poorest of the Poor (Informal, unbanked &

w/out access to

finance)

Social welfare

programs

Self-employment

assistance

Microcredit Organization of Small

Self-Help Groups

(solidarity lending)

Indigenous and natural

agricultural production;

nurseries for refo

Economic Subsector Approach: 2004 - 2010

• Triple bottom line “eco-enterprises” through the following programs: • Coco coir business integration and development, • Microfinance (wholesale), • Sustainable waste, and • Sustainable partnerships along diverse start-up enterprises

(miscellany/niche enterprises)

Result: Dispersed impact; resources spread thinly across programs & communities

Evolution of Development

Interventions

Source: http://www.zeromillion.com/econ/how-the-market-system-works.html

SEs

Communities

Socially-prepared LED- & Social Enterprise ready LGU-supported

Market System and SEs

Rural Value Chain

Development

Rural Poverty

in the Philippines

• Poverty is most severe and most widespread in the rural areas and almost 80 % of the country’s poor people live there.

• Agriculture is the primary and often only source of income for poor rural people, most of whom depend on subsistence farming and fishing for their livelihood.

• The poor remain marginalized: Bonded to age-old economic

& financial relationships (landlords, patrons, traders, informal lenders)

Unorganized suppliers of raw materials/produce of agri-corporations, middlemen

Failure of Traditional Economic Model

and the Rise of social Entrepreneurship

Government strategy is: • Investment promotion from the conglomerates or large

corporations (foreign and local) • Multinationals locating in eco-zones/industrial estates (malls,

BPOs/call centers, EPZs, power plants, etc) Employment generation of large investors/ enterprises • Overseas employment Trickle down to the poor “maambunan” LGUs encouraged (with incentives) to host IEs, malls,

BPOs/call centers, mining corps, coal-fired power plants, agri-processing

Policy environment has to failed to sustainably reduce poverty through its MSME policy & programs

While microfinance has contributed to poverty alleviation – studies show that:

• Only 3% of microcredit beneficiaries graduate from “necessity entrepreneurs” (informal / petty trading) to near-small or small enterprises or regular businesses

• The poor are still treated as clients or transactional recipients of services (not as participants in their own poverty reduction)

Failure of Traditional Economic Model

and the Rise of social Entrepreneurship

Policies, laws and issuances governing MSMEs have not adequately served the MSME sector & the marginalized sectors– the missing middle is still missing:

• The country’s industry has not change for the past 2

decades (despite the Magna Carta for MSME)

• BMBE & Agri-Agra laws – enforcement have been problematic; intended goals have failed miserably

Failure of Traditional Economic Model

and the Rise of social Entrepreneurship

The business headline

just this week

Limitations of

Microfinance in Agriculture

• Microcredit for small-scale production of raw / semi-processed products/materials: • Consumption • Generation of petty cash income • Prone to household shocks • Very rarely asset forming

• Omnibus or general purpose MF does not address economic & market potentials of processed products at a quality & quantity demanded by commerce

Allow small producers to seize new opportunities in agriculture by: • Increase producers knowledge of market

demand and pricing • Increase investments from farmers and

the other private sector • Increase access of small farmers to

knowledge, finance, inputs and technology

• Reduce transactions costs of the producer-processor/marketing interface

• Increase the share of value added captured by primary producers

Empowering Rural

Value Chains

Basic Value Chain

Primary Production

Processing &

Higher Value Adding

Marketing Consumption

Production Distribution Consumption

• Who are the actors & financiers in the VC? • What is the scale of influence of the actors & financiers in the VC? • Who controls (owns) & dominates the VC? • Can fair cooperation between actors & financiers be forged? • What economic / financial relationships should be dismantled?

Suppliers of raw materials

Labor supply in processing

Processor Consolida

tor/Trader Retailer

Consu

mer

Marketing & Distribution

Assessing the VC: 3BL Qtns 1. Where are the poor in the value chain?

2. Where in the VC is the profit margin highest? 3. Where in the value chain is the environmental impact (+/-) created?

Production

EXPORT

DOMESTIC

SUPPORT MECHANISMS

Developing SEs in VCs of

Strategic Economic Subsectors

• Single social enterprise interventions limited in terms of impact and sustainability

• Importance of interventions at the level of economic subsectors network of related actors and enterprises performing various functions in competing value chains; may be identified by major raw material source, finished product or final service provided

Strategic Economic Subsectors

• have a potential for growth

• large numbers of the poor are players or could become players

Examples of strategic economic subsectors where SEPPS are already playing key roles:

coco coir, muscovado sugar, organic rice, essential oils, bamboo, educational toys , school chairs, brewed coffee, dairy, organic fertilizer, etc. PLUS

combination of these subsectors:

(ex. organic rice & corn + organic fertilizer + dairy +

free range chicken + organic sillage | in a contiguous ecosystem)

Developing SEs in VCs of

Strategic Economic Subsectors

On-ground demonstration of 3BL-LED in Mallig, Isabela

MF-ASKI

Malaya Devt Coop 1,289 farmers (657 women, 632

men)

Organic Rice & Corn

Dairy production

Organic Sillage

DA-NDA DAR LGU(s)

Kapatagan MPC Organic fertilizer

Implications of the shift

for FSSI

• Allocate budget for BDS and other “matching or conditional” grants

• Loan-BDS grant combination

• Ensure grants perform to desired project outcomes

• Innovative financing: Social enterprise incubation soft loans

• Enterprise Incubation or “Valley of death”: Between livelihood and commercial start-up business

• Commodity/product, social and environmental scanning

• Entrepreneurial entities (cooperatives, farmer social entrepreneur-led enterprises, etc.)

• Presence of commercial winners or niche product

• Environmentally sustainable practices

• Enable on-ground convergence of community actors who matter

URBAN CORE ZONE

URBAN CENTER ZONE

GENERAL URBAN ZONE

SUB-URBAN ZONE

RURAL ZONE

NATURAL ZONE

3BL SEs+Communities Social & Solidarity

Economies

Protection & conservation advocacy + access of upland to livelihood

Sustainable & organic agriculture, common service facilities, cooperatives & SE consortia

Strong National cooperatives & sector

consortiums poised to access PPP

Stakes in power & utilities, small infra/econ facilities, health & medical, finance (micro/meso), food, education sectors

Thank you! For more info: www.fssi.com.ph