Assessing the impacts of Assessing the impacts of i l kill t i i ii l kill t i i imanagerial skill training in managerial skill training in

Ghana and KenyaGhana and KenyaGhana and KenyaGhana and KenyaMay 7, 2010

i STetsushi SonobeFASID/GRIPS

I t ti l D l t St di (IDS) PInternational Development Studies (IDS) Program

Enterprise Growth and Knowledgep g

• For every enterprise, whether large or small or micro, growth is a challenge.

• To grow, enterprises need to be equipped g , p q ppwith appropriate knowledge of how to manage business on a larger scale.g g

• Continual learning is the key to sustained growthgrowth.

Enterprise Growth and Knowledge ( ti d)(continued)

• It seems that it has been more difficult for AfricanIt seems that it has been more difficult for African entrepreneurs to learn than it was for their East Asian counterparts.p

• If difficulty in learning is an important constraint on y g penterprise growth, why not help entrepreneurs learn?

• Let’s carry out an experiment to examine the effects of such assistance. As a first step we focus on management training.

Experiments in Ghana and KenyaExperiments in Ghana and Kenya

• WB: Yutaka Yoshino, John PageWB: Yutaka Yoshino, John Page• Ghana: Alhassan Iddrisu, Abena Otu• Kenya: John Akoten Erastus KimuriKenya: John Akoten, Erastus Kimuri• FASID: Yukichi Mano, Keijiro Otsuka

• Later JICA Institute and JICA Kenya Office provided second round training programs Mutoprovided second round training programs. Muto Megumi, Shinobu Shimokoshi, Yessica Chung, Tomo Ishikawa, Keiichi Ishikawa, and others, ,

Outcomes in GhanaOutcomes in Ghana• From the sample of 113 enterprises, 47 are randomly selected to

be offered training participation.

In KenyaIn Kenya• The training program was offered to

metalworking entrepreneurs in Kariobangi Lightmetalworking entrepreneurs in Kariobangi Light Industries in Nairobi in April-May 2008.

Enterprise that had already moved to an Industrial Area

Enterprise remaining in Kariobangi

Contents of the training programg p g• For entrepreneurs (owner or persons making

important decisions)important decisions)• 2.5 hours/day, 5 days/wk, 3 weeks• KAIZEN training:KAIZEN training:

Module 1: entrepreneurship, business planning, marketing (Entrepreneurs see p g, g ( p

opportunities when others see problems. Entrepreneurs take initiative to transform these opportunities into profitable business situations.)p )Module 2: production management and

quality managementModule 3: book keeping and costing

Chaotic workshop Everything is set in orderChaotic workshop Everything is set in order

• Je ukipewa samaki na ndoano kipiJe, ukipewa samaki na ndoano, kipi utachagua?

If you are offered fish or fishing gear, which ld h ?would you choose?

• Training program was offered in Nov - Dec 200741 ti i t d d 6 ld t ti i t• 41 participated and 6 could not participate.

Annual gross profits (sales revenue – material cost – labor g p (cost) of manufacturers: Participants vs Non-participants

15

20

S

10

15

000G

HS

0

510

0

2000 2004 2008 Nearly one year

participants non-participants

yafter the training

InvestmentInvestment

MachinistsMachinists

Invited(1)

Control(2)

p-value for H (1) (2) 0(1) (2) H0: (1)-(2)=0

2006 197.3 487.2 0.386

2007 58.1 299.6 0.201

2008 905 0 174 4 0 047**2008 905.0 174.4 0.047**

Other findingsOther findings• Some participants started exporting products to p p p g p

neighboring countries.• Some participants moved from their congested

l f l i d i lcluster to formal-sector industrial areas or more spacious areas.

• Some non owner participants became owners• Some non-owner participants became owners.• Training had stronger effects on profit than on

sales revenues. KAIZEN saves material costs.sales revenues. KAIZEN saves material costs.• No non-participants complained that participants

took away their business.

Conclusions• The outcomes of the training programs in Ghana

and Kenya are encouraging.y g g– Long-run effects are to be examined.

• To see to what extent the experiment results can be generalized a number of further experimentsbe generalized, a number of further experiments have to be carried out.– Three similar programs were provided by JICA.

WB j i T i d E hi i i i– WB project in Tanzania and Ethiopia is in progress.• Other designs of experiments should be tried:Small firms / large firmsSmall firms / large firmsManagement training + technology training

+ microfinance + InfrastructureI thi ill fi t h t k ll i• In this way, we will figure out what works well in practice toward industrial development in Africa.

Thank you very much!

What about if they are provided with th i t k l d ?the appropriate knowledge?

• They will grow as long asThey will grow as long as– they are willing to learn– they are assured that the provided knowledgethey are assured that the provided knowledge

is appropriate for them• While both technological and managerial g g

knowledge should be learned, it is easy for us to provide managerial knowledge bbecause– technologies are more industry-specific than

managementmanagement

Why were they thirsty for k l d ?knowledge?

From the base line surveys, we knew the following:From the base line surveys, we knew the following:

• Profitability had been declining for two reasons:Profitability had been declining for two reasons:• the new entry of imitators had invited decline in

product priceproduct price• more recently markets were flooded with cheap

importspo ts• Some of them attempted to improve the quality of

products but failed to restore profits because …. p p

Adoption rate of useful practices

Manufacturers Machinists

ParticipantsNon

participantsParticipant

sNon

participants

Keeping business records

2004 16 7 12 5 39 1 29 22004 16.7 12.5 39.1 29.2

2008 66.7 25.0 65.2 35.4

KenyaMonthly sales revenues and gross profits of participantsMonthly sales revenues and gross profits of participants and non-participants

200

250participants sales

100

150

00KS

H non-participantssalesparticipants gross

50

100100 participants gross

profitnon participants

0

2000 2004 2008

p pgross profit

Just 6 months after the training