Business Incubation for Agribusiness SMEs: Findings from infoDev's Global Assessment

IGNITE Presentation

May 31, 2012

Michael Ehst, infoDev

www.infodev.org

What is infoDev? A multi-donor trust fund hosted by the Financial and

Private Sector Development VP of the World Bank Enabling the growth of innovative enterprises

Information and communication technologies Climate technologies Agro-industry (inputs and value addition)

Supports a network of 400 business incubators in 100+ countries

Goals Increase incomes, create jobs, promote innovative products and services that increase quality of life Contribute to inclusive & sustainable economic growth

infoDev supports an organically growing community focused on agribusiness incubation: 62 incubators supporting agribusinesses in 20 countries benefiting 4,300 enterprises

Can infoDev’s experience, approach and networks be leveraged to promote the growth of agribusiness enterprises?

Why a Global Assessment on Agribusiness Incubation?

Agribusiness Incubation Assessment Published October 2011

Available at: www.infodev.org/agribusiness

Agribusiness Incubation Assessment: Purpose and Approach

Approach: • Literature review

• There is a limited amount of literature on the best practices, lessons, and impact of business incubation in the agriculture sector

• 10 case studies in 9 countries: Brazil, Chile, India, Indonesia, Malaysia, Mexico, Mozambique, South Africa and Uganda

TIMBALI

Has agribusiness incubation worked? What lessons can be learned? Purpose

Target Point • Increased competitiveness • Efficient Farm-to-Market linkages • Rapid Technology Absorption • Incentives to Invest

Facilitate Large-scale Agribusiness Investment

Starting Point • Low Productivity • Low Value Addition • Inefficient Farm-to-Market linkages • Slow Technology Absorption • Very limited Incentives to Invest

Incubation is just one possible approach to agribusinesses development

Incubation of Agribusiness

SMEs

Invest in Farm-level Organizations

Value Chain Development

Incubator Cases: Varied Ages, Sizes and Models Ages:

• 5-35 years of operation

Scale: • Initial investment of USD 50k-50m • Operating budgets of USD 20k – 40m

Models:

• Fundacion Chile - salmon industry • Technoserve Mozambique – cashew value chain • Fundacion Jalisco - blueberry

Sub-sector/value chain development

• ICRISAT – ABI – biotech (seeds, fertilizer) • CENTEV – UVF – biotech (pesticide)

Research commercialization

• Villgro – rural low-tech • Malaysia Life Sciences Capital Fund – international joint

high-tech ventures Technology transfer

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

Annual operating budget from $20k to $40m % operating budget funded by earned revenues (brokerage fees, franchise fees, consulting services, profit sharing, capital gains)

Impact of the Incubators • 300+ new businesses created or scaled

• total revenue of 512 million • several thousand jobs

• Catalytic impact – “copycats” • Average sales of the businesses from USD 30K to 5m

• Rough public “ROI” from 1:0 to 1:8 to 1:21++

• Policy/access to finance changes

Much More Information in the Report and Online:

Report: Strategic Approaches to Agribusiness Incubator Development

and Management Good Practices and Lessons Learned Measuring Impact of Agribusiness Incubation

infoDev’s Agribusiness Incubation Website:

Agribusiness Incubator Training and Outreach Materials In-Depth Case Studies Entrepreneur interview videos

www.infodev.org/agribusiness

Thank you!

Ellen Olafsen – eolafsen@worldbank.org Julia Brethenoux – jbrethenoux@worldbank.org Michael Ehst- mehst@worldbank.org www.infodev.org/agribusiness