Rwanda Final BDS Diagnostics Report

FINAL REPORT
CONSULTANCY SERVICES FOR BUSINESS

DEVELOPMENT SERVICES (BDS) MARKET
DIAGNOSTIC IN RWANDA
CONDUCTED BY:
SUBMITTED TO:
EAST AFRICA DAIRY DEVELOPMENT (EADD) PROJECT
JANUARY 2009
REPORT FOR BDS DIAGNOSTIC IN RWANDA 1
FIT RESOURCES JANUARY 2009
CONTENTS
Background and introduction 3

Methodology and activities 3
Preplanning 4
Training 5
Field work 5
Sampling 6
Key challenges of fieldwork 7
Data processing 7
Presentations 8
Key conclusions of the methodology 8
Findings of fieldwork and data analysis 9
CONSUMER SURVEY by location 9
Locations covered and key informants interviewed 9
Targeted SME consumers interviewed 9
Market profiles 11
Key demand side constraints and opportunities 25
Business development services that address those constraints and opportunities 26
Specific policy constraints that are affecting MSE product markets 28
SUPPLIER DIAGNOSTIC by location 29
Existing providers/ services and their locations 29
A workable data base of the BDS actors 30
BDS suppliers interviewed 30
Types of services and price of services, how providers cover costs, profitability, existing 31
contractual arrangements and promotional/marketing strategies
Capacity gaps of interviewed suppliers 34
Priority supply side constraints, market failures, and market opportunities 34
Comparison of interviewed suppliers 36
The enabling environment for BDS 37
Conclusions 38
Characteristics of the market for BDS in each specific region in relation to existing supply, 38
demand and transactions
An insight into the potential of each target market location 39
Level of market distortion 40
Comparative information on the in-country sites and the 3 markets 41
Recommendations 42
Other current or proposed dairy sector interventions 42
Sustainable solutions to address priority market constraints and market failures 42
Illustrative market based interventions 51
Approaches and methodologies 55
Strategies which ensure effectiveness and efficiency 56
Strategies which ensure sustainability 59
Suggested BDS providers/delivery channels to target for future interventions 62
Selecting appropriate BDS providers 63
BDS performance measurements at the BDS market level 63
Annexes 67
Database of SME actors including persons interviewed
Database of BDS suppliers including persons interviewed
Database of targeted suppliers
Itinerary
FIT/RI scope of work
Final instruments
Data collected
BDS training report
Researcher training report
Background and Introduction
In a bid to improve life through poverty reduction, a consortium of organisations

comprising of Heifer International as lead, TechnoServe Inc, ILRI, ABS-TCM and ICRAF
launched a 4 year program dubbed EADD (East Africa Dairy Development) funded by Bill
and Melinda Gates Foundation. The programme aims to move smallholder farmers out of
poverty by delivering farmer-focused, value-chain activities that are implemented
simultaneously to stimulate dairy farm production, dairy-sector services, business
development and dairy market pull. The vision of success for the EADD is that the lives of
179,000 families—or approximately one million people—are transformed by doubling
household dairy income by 2018 through integrated interventions in dairy production,
market-access and knowledge application.
The consortium deemed it important to carry out a market assessment to understand the
characteristics of the BDS markets in relation to existing supply, demand and transactions
in the dairy sectors in some key sites in Kenya, Uganda and Rwanda. The information
would:
• Provide an insight into the potential of each market
• Clarify opportunities for interventions
• Define broad strategic approaches
FIT Resources Kenya (FIT) in collaboration with Research International East Africa Ltd
(RIEAL) were contracted to coordinate the market diagnostic in key locations in Kenya.
The findings and recommendations of this consultancy will contribute to the market
focused, sub sector approach of the EADD aimed at improving the functioning of BDS
markets. The final scope of work is attached to this report (Annexes/Final Revised
SOW).
FIT Resources act as the lead agency and contract holder, to provide strategic leadership
in devising and conducting the business development service consumer research and
supplier diagnostic. Research International conduct the field work as a sub contractor, to
collect primary and secondary qualitative and quantitative information, analyse, process
and present the data.
Methodology and activities
To achieve the above results the following activities were agreed on:
• Preplanning (planning meetings, research boundaries on the basis of project
resources, existing sub sector information, market assessment goal/
objectives/research hypothesis, developing and testing the tools, screening
interviewers, target locations in each country, preliminary key informants, other
current or proposed interventions)
• Training (training of EADD staff, field research teams and BDS training workshop)
• Field work (target groups, sample size, areas covered, team structure, consumer
survey and supplier diagnostic)
• Data processing (developing the data base of BDS actors, profiling the markets,
choose priority constraints, identifying and scoping out sustainable solutions,
defining ‘illustrative’ market based interventions and strategies, suggest appropriate
BDS providers, establishing comparative information, identifying BDS performance
measurements)
• Presentations (stakeholder workshops and final presentation)
Preplanning
Relevant background information was sourced via a series of planning meeting with
Technoserve and EADD consortium members. Meeting presentations and minutes are
attached to this report (Annexes/Process meetings). These meetings also included
setting the research boundaries on the basis of project resources, preliminary selection of
target locations and the agreed definition of ‘small holder farmer’.
The market assessment goal, objectives and research hypothesis were agreed as follows:
The market assessment goal is:

To understand the characteristics of the BDS markets in relation to existing supply,
demand and transactions in key sites in Rwanda.
The market assessment objectives are:

• To provide an insight into the potential of each market
• To clarify opportunities for interventions
• To define broad strategic approaches
The research hypothesis is:

If current BDS market dynamics are better understood then strategic approaches and
interventions can be devised to develop BDS markets in a sustainable manner and benefit
SMEs.
It was agreed that the FIT/RI team would build capacity of the project staff to undertake
future market assessments during the life of the project. Due to budget constraints a
targeted number of sites were discussed that affords the best opportunities to kick-off the
project and generate some ‘quick wins’. A training itinerary was also agreed upon to
capacitate EADD project staff in BDS and research skills. FIT Resources provided lead for
the overall assignment and liaison with Technoserve and the country offices on all the pre
planning activities. FIT Resources coordinated the field preparation with Research
International and Technoserve including: tool development and testing, researcher
selection and training and itinerary development. Different tools were developed to cover
the demand (consumer) side and supply (supplier) side of the market. The final
instruments and itinerary are attached to this report (Annexes/Final Instruments). The
following activities were undertaken prior to the commencement of fieldwork: screening of
team members, preparation and translation of questionnaires and preparation of reporting
tools and manuals. Research International personnel met field staff/counterparts and
finalised the selection of target locations and identification of key informants in each
country. Research International finalised the training of field researchers including EADD
project staff and preparations for field research.
No secondary information was used as the project is building on a baseline survey and
existing value chain assessments in each country. The comprehensive examination of
targeted BDS markets and value chains will assist EADD in designing systemic solutions
to key market problems. The two subsystems—BDS markets and value chains—are
complementary components of the larger market system into which MSEs must integrate.

Training
1. BDS training workshop - FIT Resources personnel implemented an indepth EADD

staff stakeholder training in Uganda (to include Uganda and Rwanda stakeholders).
This 2 day formal training in diagnostic skills covered the principles and practices of
BDS, BDS market development, BDS market assessment and BDS market
development programme design and performance measurement. The aim of this
training was to capacitate project staff and provide stakeholders with a contextual
framework for the research. The workshop presentations, training materials and
training reports are attached (Annexes/BDS Training).
2. Training of field research teams - teams including Technoserve and consortium

member staff, were subject to an in country briefing session prior to fieldwork
commencement. The training sessions covered methodology of the assessment
stages, sampling, tools and stimulus methods to use with market players and how
to complete reporting formats. The aim of this training was to capacitate project
staff to engage in further market diagnostics beyond the life of this collaboration.
The workshop presentation and training reports are attached (Annexes/Research
Training).
Field work
In order to complete this assignment within the defined period, a large teams of
interviewers, team-leaders and supervisors were assigned. Team members were recruited
from the RIEAL regional offices, according to specifications based on experience and
qualifications. The RIEAL Principle Researcher and a field coordinator coordinated the
research at all stages, and focused on ensuring that outputs were planned in advance so
time-schedules were met. They worked alongside the RIEAL existing field management
structure that forms the line management for the field departments. Daily reporting of
results and activities from each team was channeled back through this central
management team.
Research International led and implemented the field research in collaboration with EADD
project staff. Consultations and market observation were undertaken during the fieldwork
which included visiting identified target locations plus identifying and holding interviews
with key informants and targeted dairy sector stakeholders relevant to the selected sites.
Consumer survey - Consumer research was implemented with a selection of consumers

from the core market itself with a focus on farmers and chilling plant stakeholders.
However the definition regarding ‘small holder farmer’ was reviewed and altered during a
process meeting and the ceiling lifted of the number of cows as many farmers in Uganda
and Rwanda are large compared to Kenya’s extensive small holder population.
Constraints and opportunities were then identified in the areas of market access, input
supply, technology/product development, management and organisation, policy, finance
and infrastructure. The size and strength of the market in each specific area of the country
for those services was estimated broadly plus key sub sector constraints, market failures
and market opportunities defined from the demand side. Key business development
services were identified that address the specific constraints and opportunities.

Supplier diagnostic - Based on the identified priority services, relevant suppliers were
identified and a supplier survey implemented with service providers from the support
markets to determine who is supplying BDS and how. Constraints, market failures and
opportunities were then determined from the supply side. A comparison of suppliers was
also undertaken and the level of market distortion anticipated. Stakeholders from the
business environment such as local authorities, regulators/policy makers were contacted
as required to provide an overview of the business environment.
The BDS Market Assessment Survey took place in Rwanda from 14th - 25th November,
2008. The area of coverage of the survey research was Nyagatare and Gatsibo Districts
covering the following sectors and sampling points:
Nyagatare Nyagatare Gatsibo

BMN Mbare
• Bushoga • Karangazi • Kiramuruzi
• Tabagwe
New sites not included will be covered by Technoserve staff beyond the life of this
consultancy.
Sampling
The sample included 316 interviews spread across the 3 sites.
302 farmers were interviewed.
As per the briefing instructions, the teams covered a 20KM radius from the location
of the chilling plant. Depending on the number of locations located within the 20 KM
radius, an equal number of sampling points were picked in each location to ensure
spread of interviews.
For each location, the team leader picked the starting point randomly, and using the
random route method, farmers who fitted the set criteria were interviewed: Selection
criteria included:
• Dairy farmer
• Have mature milking cows
Interviews were conducted on farmers who possessed up to 20 cows either being
milked or dry currently. There was a shift from the earlier limit of 5 cows due to the
widespread ownership of traditional cows in the region. Again it was also realized
that even when farmers owned vast herds here, their milk production remained low
as they keep indigenous cows that produce an average of between 1 and 4 liters
each per day.
The team traveled as one and on reaching the research site (village) members were
dispatched in different directions. The left hand rule applied in selecting the dairy
farmer to interview starting from a given landmark. This meant that once an
interview took place, the interviewer moved 3 households keeping on the left hand
side then interviewed the 4th household.
However, the above rule was only applied where the population was dense and
where farms were relatively big (over 10 acres), the skipping was limited to 1
household. At the household, the interviewers first spoke to the adult member of the
family, mainly the husband or wife though at some instances, some other family
members who were directly responsible for dairy farming gave information.

In Rwanda, farmers are allocated grazing land by Government in accordance with
the size of cattle herd one has. A centralized area is then set aside where people
are allowed to build their homes and the farms are located at a considerable
distance away from their homes. This state of affairs meant that our interviewers in
most cases could not physically see the cows to ascertain some claims by farmers.
As for suppliers (14 were interviewed), the team picked supplier names from the
farmers, other suppliers and also those they came across in the trading centres.
From the list, a score was given to each and every supplier based on set criteria
(capacity to deliver services, closeness to SMEs e.g. in terms of understanding their
culture and geography, commercial focus e.g. level of profitability, focus on services,
SMEs or BDS, organizational independence- especially from donor funds, legally
registered and willingness/interest/ability to partner). This set of requirements not
withstanding, and because of their scarcity, all suppliers listed were sought for
interview, although a few could not be found.
Key challenges of the fieldwork

• Late start in Rwanda due to technical hitches and strict protocols e.g. Government
requirement of research license
• Accessibility of some sectors
o Transport – lack of efficient public transport. Tabagwe Sector is
approximately 20 kilometers away from Nyagatare Township and the only
available mode of public transport was motorbikes.
o Rains – the timing of the study coincided with rainy season and this affected
the movement.
• Special events – the arrest of a senior Rwanda Government official in Germany and
the visit to Gatsibo district by Kenya’s President Kibaki coincided and interrupted
fieldwork as farmers were called on to participate in the demonstrations and rallies
that were organized by the Government countrywide.
• Few/ uncooperative BDS suppliers. Some of the BDS suppliers were either
uncooperative or hard to find. There were very few BDS suppliers of dairy products
and services and as such farmers have limited choices.
• Research fatigue – a good number of farmers complained of having participated in
other recent agricultural and other types of surveys whose results and benefits they
had no idea of.
• Questionnaire duration. Some respondents complained it was taking too long to go
through a questionnaire. This was particularly so during the first few days when
most of the interviewers took over one and a half hours (90 minutes).
Data processing
Research International processed all the data collected on an ongoing basis. Research
International personnel have developed a database of actors (BDS providers in each of
the areas under study are listed, categorized by service provision and their location
recorded). A further database defines specific provider gaps and capacities including a
score against agreed selection criteria for determining target partner providers. A
database of the small and micro enterprises (SMEs) interviewed has also been
developed. The full data set is attached to this report (Annexes/Databases).
To understand the markets, RI examined three key issues - demand, supply and
transactions (the interaction between demand and supply) during the market assessment.
The outcome of analyzing this information forms a picture of each BDS market showing
how it works, where the opportunities for growth are, and where significant problems lie.
Data analysis was undertaken to profile the markets, establish comparative information on
the in-country sites and the 3 markets and draw conclusions from the data.
A round table meeting was held in early December 08 with stakeholders to overview the
methodology and process of data processing and analysis and reach consensus on the
priority constraints/opportunities and identify possible solutions. The meeting presentation
is attached to this report (Annexes/ Process meetings). Sustainable solutions that
address priority supply side and demand side constraints were discussed. Illustrative
market based interventions were also developed with a focus on potentially
sustainable/profitable services that are replicable in the private sector. Strategies which
ensure effectiveness, efficiency and sustainability were also discussed alongside
suggested BDS performance measurements. The data processing plan was then
circulated for stakeholder feedback during the analysis process and the data plan is
attached to this report (Annexes/Process meetings). Comparative information on the in-
country sites and 3 BDS markets was also produced.
Presentations
FIT Resources and Research International personnel collaboratively implemented a

presentation and action planning at a stakeholder workshops in Rwanda with staff,
consortium members and key informants on 9th January 09. This workshop included a
short training presentation on the basic principles and practices of BDS and the Market
Development Paradigm. All the research findings were presented and proposed illustrative
solutions and performance measurements discussed. Feedback was recorded and an
action plan developed.
FIT Resources then prepared this final draft report and will present the final report to
Technoserve with support from Research International in Nairobi, Kenya by FIT
Resources and Research International on January 30th 2009.
Key conclusions of the methodology
• Outsourcing the MA to a research company ensured a more effective and efficient

MA process.
• A combination of outsourcing and internal capacity building ensured the best
possible results. The likelihood of useful research results was ensured as EADD
stayed close to the MA process.
• The ability of EADD staff to remain consistent to the process was questionable.
Staff members were not always available for the trainings and meetings as required
plus EADD field staff were not available to partner on the field work in some
locations drawing into question the long term ability of field staff to implement
further diagnostics in new locations.
• Determining a clear hypotheses and outlined MA goal and objectives ensured a
more effective delivery of analysed data from Research International.
• The MA focused on a holistic picture of the market and incorporated both sides of
the market equation—demand and supply.

Findings of fieldwork and data analysis
CONSUMER SURVEY by location
Locations covered and key informants interviewed
Nyagatare BMN Nyagatare Mbare Gatsibo

Bushoga Karangazi Kiramuruzi
Tabagwe
Targeted SME consumers interviewed
The consumer survey in Rwanda covered 302 respondents. The respondents qualified to
be interviewed if they were small scale milk producers and specifically for Rwanda if they
had less than 20 traditional cows. For every site covered, a minimum of 100 farmers were
interviewed.
Of the 302 respondents interviewed, 80 percent (243) were males while 20 percent (59)
were females. A majority of the male respondents (26%) were aged between 36 – 45
years while for the females the majorities (32%) were aged 46 – 55 years. Only few
respondents (4%) were aged between 18 – 25 years and above 64 years.
Distribution of Respondents by age % of total sample interviewed

BASE=302
Males 80
Females 20
Most of the farmers practiced mixed farming –crop growing and cattle keeping. Expectedly
and as per the recruitment procedure all respondents were dairy farmers. This was
followed by food crop farming at 81%. Cash crop farming in the region is insignificant as
only 3% of the respondents reported growing cash crop.
As per the recruitment procedure all the respondents interviewed were the key decision
makers on dairy farming activities. Currently, a majority (88%) of the farmers milk between
1 – 5 cows despite most of them having more than 5 cows. In terms of herds kept, Majority
of the farmers in Nyagatare claimed to own more than 5 cows while in Gatsibo the
proportion of those who have more than five was small.
Farmers in the three sites were found to be keeping mixed breeds. However, a majority of
them (84%) keep indigenous breeds. About half of the farmers interviewed also keep
cross breeds 46% while those who keep pure breeds are less than 10%.
The findings also indicated that Nyagatare-BMN had more pure breeds (14%) compared
to Gatsibo and Nyagatare-Mbare where farmers claimed to own 8% and 4% of pure
breeds.

Nyagatare Nyagatare
TOTAL Mbare BMN Gatsibo
BASE: 302 101 100 101
%
Pure breed 9 4 14 8
Cross breed 46 47 54 39
Indigenous 84 88 88 76
On average, farmers with pure breeds reported to produce 17 liters of milk per day while
cross breeds produced 8.5 litres per day. Expectedly, the productivity for traditional breeds
was reported to be the lowest. In terms of regions, Nyagatare BMN and Mbare farmers
produce more milk per day with an average of about 10 litres per day compared to
Gatsibo where daily production average was reported to be around 6.6 liters.
Expectedly, the amount of milk sold per day on average within the three sites is less than
the amount produced as some milk is spared for domestic use. The table below indicated
the average amount of milk sold by farmers:
District Average liters Average Difference

produced per liters sold (unsold milk
day per farm per day - liters)
Nyagatare-Mbare 9.5 6.7 2.8
Gatsibo 6.6 5.5 1.1
Nyagatare-BMN 10.1 7.3 2.8
Across the three sites covered in the research, most of the farms were between 1 – 5
acres in size.
Market profiles
Awareness and affordability of services/ inputs

When respondents were asked the dairy inputs/ services they are aware of, AI, mineral
supplements, vet treatment services and veterinary vaccination were mentioned by more
than 90% of the farmers. Other inputs that were mentioned by more than 60% of the
respondents include insecticide and tick sprays and supplementary feeds. However,
despite AI ranking as the service majority of the farmers were aware of (98%), complete
familiarity of its benefit was rated below average. Across all services/ inputs in totality,
farmers were least aware of chaff cutters and hay balers. Expectedly, almost all farmers
were not familiar with the benefit of the two farm equipments.
In terms of affordability, of the 7 top most inputs/ services that farmer were aware of,
supplementary feeds, veterinary vaccination and AI were rated as highly unaffordable to
farmers. The table below summarises some key inputs/ services that farmers are aware of
in regard to familiarity with the benefits, availability, affordability and most important
overall.

Not affordable
Completely familiar even after Most
with benefit of Very strongly saving up overa
Aware Easily available
needed
Artificial Insemination (AI)
98 46 70 84 34
Mineral supplements 92
96 84 87 16
Vet Treatment Services 93 63 71 82 29
Veterinary vaccination 91 80 84 87 54
Insecticide and Tick

84 79 89 26
sprays 84
Supplementary feeds 63 24 30 74 56
Disinfectants for Cleaning 58 59 47 84 31
Information/training on 47 23 21 80 37
animal husbandry
On enquiring from the farmers the services/ inputs they have purchased or received in the
past for their dairy animals, supplementary feeds and disinfectants were ranked lowest
among the 7 top services farmers were aware of as shown in the figure below.
However, farmers expressed concerns on the adequacy of most inputs/ services that they
have received in the past 12 months.
In terms of services/ inputs that were being used nowadays, only three performed
averagely and above. These were mineral supplements 77%, insecticide and tick sprays
66% and veterinary treatment services 52%.

Inadequate
amount
Purchased in
Aware Ever purchased P12M Used nowadays
Artificial Insemination 98 77 62 40 52
(AI)
Mineral supplements 96 94 92 77 30
Vet Treatment Services 93 80 74 52 45
91 91 82 48 23
Veterinary vaccination
84 84 82 66 37
Insecticide and Tick
sprays
63 34 24 12 71
Supplementary feeds
58 46 45 33 39
Disinfectants for
Cleaning
47 7 4 1 67
Information/training on
animal husbandry
Services/inputs ever purchased or received

Generally, the 3 markets do not indicate any significant differentials in the demand for
services and inputs purchased or received. However, some slight differences were noted
in Nyagatare (BMN & Mbare) where almost all farmers claimed to have vaccinated their
animals and in Nyagatare Mbare where AI services were claimed to have been used by
over 80% of the farmers. This may mean that the drive to transform herds from indigenous
to cross breeds is at a higher level in Nyagatare which conforms to the breeds kept.
Services/Inputs ever
purchased or received Nyagatare Nyagatare
TOTAL Mbare Gatsibo BMN
BASE: Total Sample 302 101 101 100
%
Artificial Insemination (AI) 77 83 72 77
Veterinary treatment
services 80 82 82 76
Veterinary vaccination 91 88 87 97
Supplementary feeds 34 33 38 31
Mineral supplements 94 96 99 87
Disinfectants - for cleaning
and sterilizing 46 51 44 43
Insecticides & tick sprays 84 76 89 87
Although some farmers observed that through savings, they could purchase some of the
services or inputs, milk coolers, supplementary feeds and veterinary vaccination were
perceived to be out of reach by a majority. Those who said services/ inputs were not
affordable were asked why they thought so. The following table provides a breakdown of
some of the reasons advanced (sample: all who said not affordable):
Service/ product Total So expensive May be able to

sample could never use if saves
consider using up
%
Artificial Insemination (AI) 79 34 66
Veterinary treatment services 104 29 71
Veterinary vaccination 57 54 46
Supplementary feeds 140 56 44
Mineral supplements 90 16 84
Disinfectants - for cleaning and 85 31 69
sterilizing
Insecticides & tick sprays 126 26 74
Seeds to grow fodder 82 46 54
Milk testing kits 90 44 56
Hay bailers 87 47 53
Milk coolers 140 68 32
Metal milk churns 115 37 63
Information/training on animal 94 39 61
husbandry
For the services/ inputs that farmers have received in the past, a majority of the farmers
reported having paid something the last time to access certain services/ products. The
fees paid ranged depending on the type of service, distance from where the service
provider was coming from, among other things.
The table below provides an average cost of different products and services offered to the
farmers:
Disinfectants
Artificial Veterinary - for Insecticides
Insemination treatment Veterinary Supplementary Mineral cleaning and & tick
(AI) services vaccination feeds supplements sterilizing sprays
BASE: All
who ever
received.... 234 242 274 102 284 139 254
%
Yes 93 98 95 86 98 96 97
No 7 2 5 14 2 4 3
Amount
paid (mean
in Fr) 4100 8900 1900 19100 10800 14400 11300

Level of satisfaction with service/inputs received
The following table shows the level of satisfaction with services/inputs received:
- for cleaning
Supplementa
Disinfectants
Insemination
supplements
& tick sprays

Insecticides
Level of satisfaction
vaccination
Veterinary
Veterinary
with service received
treatment
sterilizing
Artificial
services
ry feeds
Mineral
last time
and
(AI)
BASE: All ever
purchased/received
service 234 242 274 102 284 139 254
Completely satisfied 42 74 94 54 87 77 85
Partly satisfied 34 21 6 34 12 22 13
Not at all satisfied 24 4 - 12 1 1 2
A majority of the farmers who accessed the seven most popular services/ inputs reported
being satisfied with the quality and nature of services provided. For those reporting
complete satisfaction, the lowest reported complete satisfaction was recorded among
farmers who received Artificial Insemination (42%) while the highest was registered
among farmers receiving veterinary vaccination at 94%. Other levels of satisfaction stood
at 74% for veterinary treatment services, 54% for supplementary feeds, 87% mineral
supplements, 85% for insecticides and tick sprays, and 77% for disinfectants for cleaning
and sterilizing.
While there is room for improvement among those reporting complete satisfaction,
particularly among those reporting lower than 90%, there is more to be done among those
reporting partial satisfaction and those claiming not satisfied at all.
Areas where milk could be sold
Respondents mentioned a number of possible areas where milk could be sold as
presented below:
Area
Nyagatare Nyagatare
Areas could sell milk TOTAL Mbare Gatsibo BMN
%
Bulking/ cooling center 75 88 60 75
Hawker/ brokers 57 70 29 72
Farmers cooperative /group /association 47 49 38 54
Direct to homes e.g. Neighbours or family
members 47 49 49 45
Direct to institutions e.g. school, hospital, food
kiosk 25 25 31 19
Milk bar 26 32 31 16
There were more farmers reporting milk bulking and collection centers as places where
they could sell their milk. This was reported by 75% of the farmers. It was followed by
hawkers/ brokers at 57%, and neighbors/ relatives and cooperatives/farmer groups tying
at 47%, milk bars 26%, institutions 25%.
However on being asked where they are selling milk currently a majority of them reported
selling to brokers/ hawkers (52%) followed by neighbours/ family members, milk bulking/
cooling centers or to farmers associations. Interestingly, hawkers are not a popular buyer
in Gatsibo district, while selling to neighbours and family members seem to be the most
preferred here.
Nyagatare Nyagatare
Types of customers TOTAL Mbare Gatsibo BMN

%
Hawker 52 62 26 67
Cooling plant 47 51 47 42
Direct to homes e.g. Neighbours or family
members 47 49 49 45
Farmers cooperative/group/association 47 49 38 54
Milk bar 26 32 31 16
Direct to institutions e.g. school, hospital,
food kiosk 25 25 31 19
Bulking center 11 12 8 12
Processor 10 11 4 15
Broker at farm gate 5 8 3 5
However, in terms of preference among those who sell to more than 1 channel, ‘direct to
homes’ and ‘farmers co-operatives’ emerged as the preferred buyers.
Adequacy of information received on where could sell milk

Asked to explain what they felt about the information they received regarding where they
could sell their milk, a majority of the farmers indicated they received just enough
information (72%). Only a paltry 2% reported receiving what they considered as a lot of
information. However, farmers in Nyagatare BMN seem to be divided almost equally
among those claiming to receive just enough information (52%) and those saying they
received very little information (46%).
Nyagatare Nyagatare
Info received TOTAL Mbare BMN Gatsibo
BASE 302 101 100 101
%
Very little 26 23 46 11
Just enough 72 75 52 87
A lot 2 2 2 2
Asked to indicate the other services they enjoyed from their main buyers besides buying
their milk, the majority of farmers (57%) reported receiving no other services at all. The
table below shows some of the services received by farmers from some milk buyers:

Nyagatare Nyagatare
TOTAL Gatsibo
Services received Mbare BMN
%
Advance on milk payments 20 22 19 20
Farm inputs - seeds, fertilizer 5 2 6 8
Animal feeds/ supplements 7 6 6 8
Milk collection from the farm or near
6 5 4 10
farm
AI services 7 4 4 12
Animal health services- treatment,
19 21 16 20
vaccination and drugs
Training on animal husbandry 12 4 18 14
Information on market prices 8 11 5 9
Delivery/ transport of farm inputs
and animal feeds 3 3 3 4
None 57 53 63 55
Of the services received, some farmers claimed to have paid for them while some were
either not sure or did not pay anything. The main mode of payments for these services
was the check-off system with only 28% claiming to pay in cash.
Services paid for (%)

Advance on milk payments 30
Farm inputs - seeds, fertilizer 31
Animal feeds/ supplements 50
Milk collection from the farm or near farm 26
AI services 50
Animal health services- treatment, vaccination and
drugs 65
Training on animal husbandry 14
Information on market prices 8
Delivery/ transport of farm inputs and animal feeds 10
Extra services required from milk buyers

When asked if they would require extra services from the milk buyers, majority of the
farmers responded positively. Below is the list of services they would expect to get from
the milk buyers:
Nyagatare Nyagatare
TOTAL Gatsibo
Services/ inputs required Mbare BMN
%
Advance on milk payments 37 30 37 46
Animal feeds/ supplements 30 23 36 33
farm 25 23 25 27
Animal health services- treatment,
vaccination / drugs 29 28 35 26
Delivery/ transport of farm inputs and
animal feeds 18 16 19 18
None 33 31 41 29
In regard to payments for milk, 2/3 of the farmers indicated they are paid in cash after a
specified period as shown in the table below. However, in Gatsibo, a significant number of
farmers confirmed to receive money through their bank accounts. Two modes of payments
also emerged as the most preferred means of receiving payments by farmers:
Nyagatare Nyagatare
Mode of payment for sold milk TOTAL Mbare BMN Gatsibo

%
Paid cash on delivery 8 4 9 11
Paid in cash after a specified
period 62 73 64 50
Cash deposited to a financial
institution 14 9 14 18
Barter - exchange milk for other
services 0 - - 1
Farmers who deliver milk to the formal market were asked how they deliver milk to the
market. ¾ of the respondents claimed to deliver milk on their own to the market. However,
in terms of the preferred mode, over ¾ of the farmers would prefer their milk to be picked
up at farm gate. This pattern was similar in all the 3 markets:
Nyagatare Nyagatare
Current milk delivery system TOTAL Mbare Gatsibo BMN
Base 181 60 58 63
%
The buyer provides for transport
from the farm or near farm 25 33 12 29
Use your own means to transport
(bike, walk) etc 75 67 88 71
Overall, among the farmers whose milk is collected by the buyer, slightly less than half felt
it was either reliable or very reliable. However, in Gatsibo (though the base was small) the
majority of the farmers rated the transport to be unreliable.
Nyagatare Nyagatare
Buyer reliability TOTAL Mbare BMN Gatsibo
BASE: All provided transport
by the buyer 45 20 18 7
%
[wt=5] Very reliable 24 15 44 -
[wt=4] Reliable 20 15 28 14
[wt=3] average 16 15 11 29
[wt=2] Poor unreliable 13 20 6 14
[wt=1] Very unreliable 27 35 11 43

Frequency of milk collection
Milk is collected generally once a day across the three regions:
Nyagatare Nyagatare
Milk collection TOTAL Mbare BMN Gatsibo
BASE: All provided transport by the
buyer 45 20 18 7
%
Once in a day 93 95 89 100
Two times a day 4 - 11 -
Three times 2 5 - -
Asked to express their feeling on whether they thought this was adequate or inadequate, a
majority (62%) felt it was inadequate. However, in Nyagatare BMN, 56% of the
respondents felt it was adequate.
Adequacy of Milk Nyagatare Nyagatare

collection TOTAL Mbare BMN Gatsibo
BASE: All provided transport
by the buyer 45 20 18 7
%
Adequate 38 30 56 14
Inadequate 62 70 44 86
Awareness of cooling plant

Almost all respondents were aware of a cooling plant near them. Some of the cooling
plants mentioned include:
• Mudakos
• Nyagatare cooling plant
• Mbare
• Terimbere mworozi (Karangazi)
• Rwabiharamba dairy
• Musenyi
• Bashumbambeza
• Karama
• Mubyatarama
• Kirebe
• Cyangarama
• Kamate
A majority of the farmers (90%) also claimed that the cooling plants were owned by
farmers’ cooperative groups in the region. Farmers stated they would expect to get the
following services from the cooling plants:
Nyagatare Nyagatare
Cooling plant services Total Mbare Gatsibo BMN
Credit facility 74 69 72 81
Animal feeds 62 51 67 67
farm 54 55 44 62
Animal health services - treatment
and prevention 74 70 78 72
Vaccination and drugs 71 64 69 80
Credit facility, animal health services – treatment and prevention and information on
market prices emerged as the key services farmers need, although most of the other
services and inputs are also needed at varying levels which reflects a very high demand.
Asked if they would be happy with check-off as mode of payment for their milk, nearly all
farmers (93%) said that they would be very happy.
Reaction to check-off Nyagatare Nyagatare

payment system TOTAL Mbare Gatsibo BMN
%
Happy 93 92 92 95
Not sure 4 2 7 3
Unhappy 3 6 1 2
Skills/ information needed by farmers

Majority of the farmers (83%) indicated they do not have the skills needed for good dairy
farming across the 3 regions. When asked to mention the areas they needed more
information on, the following emerged:
Nyagatare Nyagatare
Skills/info required TOTAL Mbare Gatsibo BMN
Disease id, treatment & prevention 72 76 77 63
Improvement of milk production 66 71 61 66
Drug administration 61 62 60 59
New animal feeds 60 64 55 59
Milk prices 55 53 55 57
Cattle breeding 54 57 41 64
Dairy farm record keeping 30 34 25 31
Record keeping 25 21 26 28
Public health issues and requirements 22 19 27 21
Awareness of government policies 19 17 20 21
Buyers 13 11 14 13
Whether ever received any useful information

Farmers were asked whether they had ever received any useful information about dairy
farming. About 69% reported not to have received any. The same trend was recorded
from the three regions. Those reporting having received useful information were then
asked to indicate what services they had received. The advice/ information were mainly
stated to be from government extension workers and to some extent, the NGO’s. The
following Table shows the breakdown:
Nyagatare Nyagatare
Info received TOTAL Mbare Gatsibo BMN
BASE: All ever received information 93 24 36 33
%
Improvement of milk production 54 50 56 55
Awareness of government policies 33 25 28 45
Cattle breeding 32 33 25 39
New animal feeds 24 25 25 21
Disease identification, treatment and
prevention 19 17 25 15
Drug administration 18 8 28 15
Dairy farm record keeping 10 13 8 9
Record keeping 2 - 3 3
Public health issues and requirements 1 - 3 -
Milk prices 1 - - 3
Whether plans to change anything

Asked whether they planned to change anything about their dairy farming in the next 1
year, nearly all farmers indicated they have some plans in mind. However, 85% of the
farmers highlighted breed improvement as the key change they would like to implement.
The figure below shows areas farmers mentioned they would like or plan to improve on in
the next 1 year.
Planned changes for farm and dairy improvement:

Improve the quality of my milk / improve my milk
handling skills 11%
Improve feed storage methods 12%
Buy farm equipments 15%
Grouping with other farmers to get cheaper inputs 15%
Improve the management of my dairy as a business

23%
Group together with other farmers / join association
23%
/ join coop / join producer group
Improve feed by buying supplements 23%
Improve my knowledge about dairy farming 28%
Improve the veterinary treatment / drugs used on

30%
cattle
Enlarge size of herd / Buy more cattle 30%
Improve feed through growing better / more feed 31%
Change
REPORT FOR BDS DIAGNOSTIC feeding to zero grazing
IN RWANDA 32% 24
Improve building 33%
Improve breeding / breed of cattle through breeding

85%
methods / use AI
To achieve the above desired changes farmers mentioned the following measures as
drivers they are definitely likely to adopt:
• Grouping together with other farmers or joining co-operative to benefit from

economies of scale - e.g. cheap farm inputs
• Use of AI services
• Growing of more and quality feed
• Enlarging size of herd
• Adopting zero grazing methods
Keeping records
Overall, only a small number of farmers reported keeping records which were mainly on
milk production and sales.
Nyagatare Nyagatare
Record keeping TOTAL Mbare Gatsibo BMN
BASE: All who keep records 37 7 16 14
Milk sales 95 100 94 93
Milk production 81 57 94 79
Record on animal births 59 57 56 64
AI services records 38 29 38 43
Treatment and vaccination records 35 29 38 36
Feeds record 11 - 25 -
Milk sales
Milk production
Record on animal births
AI services records
Treatment and vaccination

records
Feeds record
Profitability
Despite not having any farm records, a majority of the farmers claimed to know the
profitability of their dairy farm. About two thirds of the farmers indicated knowing the level
of profitability of their dairy farms. Males (68%) were more likely to know the profitability of
their dairy farming business than their female counterparts (56%). Farmers in Gatsibo
70%, followed by those in Nyagatare Mbare (69%) seem more knowledgeable about the
profitability of their farms than their counterparts in Nyagatare BMN (57%). Given that
Gatsibo has more of zero grazing practices than the other two markets, it may be easier to
monitor levels of expenditure viz avis incomes and thus keep a tab on profitability.
Nyagatare BMN, which has bigger herds of the indigenous cattle, may still have more
farmers who keep cattle for traditional values rather than as business.
Nyagatare Nyagatare
Awareness on farm profitability TOTAL Mbare Gatsibo BMN
Yes 66 69 70 57
No 34 31 30 43
Technology (mobile phones)

Penetration of mobile phone within the three areas is high as attested by the table below.
Generally, about 82% of the farmers reported owning/ having access to a mobile phone.
This was almost uniformly distributed across all segments.
Nyagatare Nyagatare
Mobile phone access TOTAL Mbare Gatsibo BMN
%
Yes 82 80 84 82
No 18 20 16 18
Asked which services they would like to access via the mobile phone sms service, cow
disease alerts, milk prices, and market for breeds, availability of new products, and
training/ field days/ dairy farming workshops emerged as the five leading pieces of
information they would require.
Nyagatare Nyagatare
Info required by phone TOTAL Mbare Gatsibo BMN
BASE: All with/ have access to a
mobile phone 248 81 85 82
Cow disease alerts 75 73 73 78
Milk prices 72 70 64 83
Market for breeds 71 69 69 74
Availability of new products and
services 62 63 64 60
Trainings/ field days/ dairy farming
workshops 61 58 64 61
Availability of milk payments 50 47 44 60
New markets 50 48 39 65
Sale of cows 50 57 41 52
Quantity of milk supplied 48 51 45 49
New market opportunities 48 44 40 60
Access to loans 38 32 41 39
Farmers indicated high willingness to pay fees ranging from Fr 1000- 2100 to be able to
access these services. See the figure below:

Info would be ready
to pay for
Info would like to access

via mobile phone
Milk rejected at processor level to inform farmer 33

37
Access to loans 35
38
New market opportunities 41
48
Quantity of milk supplied 40
48
Sale of cows 44
50
New markets 45
50
Availability of milk payments 42
50
Trainings/field days/dairy farming workshops 57
61
Availability of new products and services 54
62
Market for breeds 65
71
Milk prices 67
72
Cow disease alerts 68
75
Capital
Almost all farmers indicated that they require capital to develop their dairy farming
business. Most of the farmers (61%) say they would seek credit from banks. See table
below:
Nyagatare Nyagatare
Credit options TOTAL Mbare Gatsibo Bmn
BASE: All need lump sum/ capital 278 90 99 89
Banks 61 61 64 58
Micro finance institutions 13 12 12 16
Cooperative SACCO 8 6 8 11
Cooling plant 6 7 7 4
No source 4 4 4 4
NGOs 3 4 4 1
Family/ friends 3 4 1 2
Suppliers 1 1 - 1
Government 0 - - 1
Awareness of farmer lobby organization

Only a few farmers were aware of an organisation that looks after their needs apart from
Gatsibo where 45% claimed to be aware:

Awareness of Nyagatare Nyagatare
organization TOTAL Mbare Gatsibo Bmn
%
Yes 38 30 45 39
No 62 70 55 61
In regard to membership to a farmer’s co-operative majority of the farmers belongs to

none. However, in Nyagatare BMN slightly over half claimed to be members of a
cooperative.
Whether member of a Nyagatare Nyagatare

Cooperative TOTAL Mbare Gatsibo Bmn
Yes 45 34 49 53
No 55 66 51 47
Challenges faced by farmers

Low and fluctuating milk prices coupled with delayed payments, inadequate and low
quality foliage for feeding cattle – e.g. grass and Napier grass, irregularity and
unaffordability of AI services and unaffordable/ unreliable animal treatment services were
some of the key challenges farmers highlighted as major constraints to their dairy farming.
Low milk prices combined with fluctuating milk prices and delayed milk payments
accounted for the highest single challenge at 67%.
In terms of gender, there were no significant variations although the findings seem to
indicate that male farmers were significantly (74%) more likely to complain about low /
fluctuating milk prices/ delayed payments compared to their female counterparts (37%),
while female farmers were significantly (82%) more inclined to complain about inadequate/
low quality animal foliage than their male colleagues (58%). The same trend was noticed
for irregular/ unaffordable AI services.
Age wise, there were no significant differentials across except that farmers aged less than
35 years were significantly less likely to complaint about the adequacy/ quality of foliage
than their counterparts in higher age groups.
As per the markets, Gatsibo records the lowest complaint about low milk prices (51%) as
compared to the 2 Nyagatare Sectors – BMN 82%, and Mbare 68%. Perhaps this can be
explained by the fact that Gatsibo reports the lowest milk output, (and thus higher prices)
and less dependence on milk brokers unlike the other two. However, Gatsibo reports the
highest complaint (72%) regarding adequacy/ quality of foliage available in the region –
reflecting its bigger dependency on zero grazing for its dairy farming. BMN records the
lowest at 55% mirroring its larger grazing fields.
Other challenges mentioned are as per the table below:
Gender Age Region

Main

challenges/
18- 36-
constraints TOTAL 56+ Nyagatare Nyagatare
Male Female 35 55 Gatsibo
facing farmers Mbare BMN
BASE: Total
Sample 302 243 59 76 143 83 101 101 100
Low/fluctuating
milk prices/
delayed
payments 67 74 37 71 60 74 68 51 82
Inadequate/ low
quality foliage -
e.g. grass, napier
grass etc 63 58 82 38 68 70 62 72 55
Irregular/
unaffordable AI
services 55 58 41 58 47 66 61 45 59
Unreliable/
unaffordable
animal health
services 46 46 46 46 44 53 38 45 56
Unreliable
source/
unaffordable
supplementary
feeds 43 44 37 46 37 48 45 33 52
Inaccessible loan
facilities (high
interest etc) 37 38 32 41 35 31 30 42 40
Poor climatic
conditions 32 34 24 33 37 27 38 26 33
Lack of various
dairy
management
skills 19 20 16 9 20 27 19 13 26
Disease
outbreaks 13 14 8 13 15 12 12 10 18
Insecurity 10 10 10 3 13 12 5 23 3
Exploitation by
middle men 8 9 3 10 6 11 11 1 12
Unavailability of
quality seed for
growing feed on
farm 7 7 7 7 6 8 9 5 6
Unavailability of
milk cooling
facility 5 5 5 6 4 8 6 5 4
High transport
cost 4 5 3 2 5 7 4 5 4
Inaccessible
roads 2 2 - 1 2 3 2 - 3
Key demand side constraints and opportunities
The following are the constraints and potential opportunities.
Constraint Opportunity
Inadequate foliage and grass to feed • Provide seed to grow fodder to selected
animals due to poor climatic conditions farmers who have larger farms. They can
– draught. thus sell to others at competitive prices
• Introduce supplementary feeds
Irregular and unaffordable AI services • More AI providers needed at main trading
centres at village level
• Establish scheduled visits by AI providers to
all villages
• Train farmers on basic procedures of
conducting AI
Inaccessible/ unaffordable loans to • Provide easily accessible/ affordable
promote dairy farming. financial products that are developed/
tailored to meet farmer needs
Low and fluctuating milk prices • Establish more strategic milk collection/
hindering farmers from planning their cooling centres
future • Improve on roads to facilitate easy/ cheaper
milk transport
• Establish a local dairy processing plant
Poor/ unreliable animal treatment and • Additional veterinary doctors needed at
vaccination services village level
• Further training for skill upgrading for vet
technicians
Unaffordable supplementary feeds • More suppliers needed
beyond the reach of many small scale • Use of locally available raw materials need to
farmers be explored to make them affordable
Unreliable source of supplementary • More farmers should be trained on how to
feeds prepare them
Disease outbreaks • Modern lab testing facility established in the
region
• Vaccination of cattle strengthened
Business development services that address those constraints and opportunities
The following table outlines the BDS that address these constraints and opportunities:
Constraint Opportunity BDS that address those

constraints & opportunities
Inadequate foliage and • Provide seed to grow INPUT SUPPLY such as creating
grass to feed animals due fodder links between farmers and
to poor climatic conditions • Supplementary feeds suppliers and enabling suppliers to
– draught. reach more farmers and develop
their capacity to offer better quality
inputs.
Irregular and unaffordable • More AI providers INPUT SUPPLY such as
AI services needed at main trading facilitating links between farmers
centres at cell level and AI suppliers and enabling
• Scheduled visits by AI suppliers to reach more farmers
providers to all villages and develop their capacity to offer
better, less expensive inputs.
Inaccessible/ • Easily accessible/ FINANCE such as helping farmers
unaffordable loans to affordable financial identify and access funds through
promote dairy farming. products developed formal and alternative channels
tailored to meet farmer that include supplier or buyer
needs by banks and credits, factoring companies,
MFIs equity financing, venture capital,
• Major milk buyers e.g. credit unions and commercial
dairy cooperatives banks (letters of credit, etc.)
consider introducing
simple financial
products that are
affordable by the
farmers
Low and fluctuating milk • Establish more milk MARKET ACCESS such as
prices hindering farmers collection /cooling identifying and establishing new
from planning their future centres markets for products plus the
• Improve on road creation of links between all the
networks actors and helping buyers to
• Establish locally a dairy expand their outreach to, and
processing plant to take purchases from, farmers. This may
advantage of the also include helping farmers to
excess milk. produce to buyer specifications.
INFRASTRUCTURE such as
establishing sustainable
infrastructures that enable farmers
to increase sales and income e.g.
refrigeration, processing facilities,
transport systems, communication
centers, and improved roads.
Poor /unreliable animal • Additional INPUT SUPPLY as above
treatment and vaccination veterinary/vaccination
services doctors needed at TRAINING & TECHNICAL
village level ASSISTANCE such as workshops
• Further training for skill to develop the capacity of farmers
upgrading and suppliers to better plan and
• Scheduled visits to manage their operations and
villages to attend to improve their technical expertise.
farmer needs This may also include fostering
links between service providers
and farmers.
Unaffordable • More suppliers needed INPUT SUPPLY as above. This
supplementary feeds • Use of locally available may also include encouraging
beyond the reach of many raw materials need to more potential suppliers to meet
small scale farmers be explored to make the market demand.
Unreliable source of them affordable TECHNOLOGY & PRODUCT
supplementary feeds. DEVELOPMENT such as
identifying new technologies.
Disease outbreaks • Modern lab testing INFRASTRUCTURE as above
facility established in
region
• Vaccination of cattle
strengthened
Poor transport/ road • Improved road INFRASTRUCTURE as above
networks that slows networks in the deep
growth of the dairy sector rural areas
• improvement of the
transport systems e.g.
introduction of
minibuses to compete
with the motor bikes
and help farmers to
market their milk
cheaply
Specific policy constraints that are affecting MSE product markets
The following are some of the policy constraints that are affecting the MSE product
markets:
1. Locating households away from dairy farm
The Government of Rwanda has introduced a land development and resettlement

policy in this region where farmers are settled in centralised areas while the grazing
farms are allocated a considerable distance away. Managing the farm becomes
tricky and there are added costs of travelling and a worker to keep watch and graze
the animals. Milking may also not be properly done and accounted for in the
absence of the farm owner and there could be cases of cheating about the milk
output.
2. Strict legal and public health regulatory requirements
The strict enforcement of minimum regulatory standards for suppliers particularly

milk handling/ collection, may be responsible for keeping very few suppliers
engaged in this business. As a result, farmers cannot access certain services easily
and affordably as the supply competition is limited.
In order for the BDS market to be stimulated for faster growth, the strict legal/
health requirements may need to be relaxed a bit until such a time suppliers have
grown and the need for strict enforcement is really needed.
3. Government continued involvement in service provision
Government policy of providing subsidised AI and veterinary treatment and

vaccinations, though positive in its intentions can only serve to establish the sector
from infancy. However, sustained growth can only be achieved where market
forces of supply and demand are left free to operate.
The government should reduce its involvement to regulating and creating an

enabling environment. Its continued presence and active participation in service
provision only serves to discourage and choke private sector competition.
This situation where effective competition is lacking, has led to poor services being
dispensed judging by some of the complaints received during fieldwork. For
instance there were reports of poor quality semen which led to farmers getting
poorer grade calves in contrast to what was promised during insemination. The
tragedy of this is that farmers only discover the problem after nine months when
birth takes place. Again farmers reported waiting for days before a veterinary doctor
arrives in their village to treat their cattle.

SUPPLIER DIAGNOSTIC by location
Existing providers/ services and their locations
The following breakdown shows how suppliers were distributed across this region. A total
of seven suppliers were identified in Nyagatare/ Tabagwe sectors. However, only six were
found/ interviewed. In Karangazi sector, six suppliers were listed but only five were found/
interviewed. In Kiramuruzi sector four suppliers were identified but only three were found
and interviewed.
A workable data base of the BDS actors
A workable data base of these BDS providers is attached to this report

(Annexes/Databases).
BDS suppliers interviewed
List of suppliers interviewed as attached above.
Types of services and price of services, how providers cover costs, profitability,
existing contractual arrangements/relationships and promotional/marketing
strategies
Types of services
The common services/ inputs provided in this area include veterinary treatment and
vaccination services, mineral supplements, insecticide and tick sprays, and disinfectants
for cleaning and sterilizing, and supplementary feeds. Others are information/ training in
animal husbandry and artificial insemination (AI). Across the two districts, it appears that
the services provided are similar although Nyagatare District could be defined as more of
a cattle keeping district while Gatsibo would qualify more as an area of mixed farming
practices with less land for cattle rearing. Grazing fields are therefore bigger in Nyagatare
than in Gatsibo.
Services/ inputs provided Nyagatare BMN Nyagatare Mbare Gatsibo

(No of suppliers – (No of suppliers (No of suppliers
BASE=6) BASE=5) BASE=3)
Vet treatment services 6 5 3

Disinfectants - for cleaning 6 5 3
and sterilizing
Mineral supplements 3 5 3
Info/training in animal 5 4 2
husbandry
Insecticides & tick sprays 6 2 2
Supplementary feeds 2 1 2
Milk testing kits 2 3 1
Seeds to grow feed 2 2 2
Vet vaccination 2 1
Milk collection/ bulking 2 2
Milk advance payments or 2
credit services
Artificial Insemination 2 2
Information on dairy 1 1 1
markets
Metal milk churns 2 1
Price of services and how providers cover costs/ profitability

Across the 3 sites, suppliers interviewed indicated that they do not charge their customers
for any information they dispense concerning dairy farming. They make their money and
profits by selling/ charging for the conventional products and services provided like selling
drugs, AI provision or treatment of cows. When pricing services and inputs suppliers
considered several factors to arrive at a given price, as follows:
• Wholesale price of input from source

• Transport cost/ distance covered if it is an outreach service
• Taxes payable on service/ input
• Rent
• Whether demand for input/ service is high or low
• Competition
• Profit margin
• Big suppliers like Agrotech Nyagatare who is associated with Agrotech chain of
animal drug shops, explained that they do not determine prices, but that the prices
are dictated from the head office in Kigali.
• For instance, some AI providers reported buying semen to fertilize one cow at 500
fr from the Government agents only to sell this at 1500 fr to the dairy farmer.
Besides, the farmer pays transport cost separately. Usually, this will be the cost of
hiring a motor bike by the AI provider.
One of the AI providers told of cases where they are sometimes forced to forego
payments when they come across needy farmers who are unable to pay for services.
Such costs are absorbed through government subsidiaries like ERAGIC – an institution
that promotes modern dairy development through easy access to AI services.
The commonest form of payment for services/ inputs rendered was cash after service,
across all types of service providers. When the service provider is a Cooperative or an
Association of farmers, members enjoy the check-off system facility which allows them to
pay later through deductions from their weekly/ monthly payment for milk deliveries. Other
forms of payment options are delayed/ staggered payment and payment by cheque.
Staggered payment is normally allowed for instance where a cow is either dry or sick until
it heals and resumes being milked. Should it die, then the charges are written off - if it is
only one. The following table shows the common modes of payments for services and the
associated challenges.

Nature/ type of Common Challenges Supplier
business payment modes associated with preferred modes
payment modes of payment
Cooperatives Check off, cash, Follow ups expensive/ Check-off, cash
delayed/ time consuming
staggered
Private firm/ proprietor Cash, cheque Bouncing cheques Cash
Government/ NGOs Cash (subsidized), Expensive & time Cash/free

delayed/free consuming follow ups
However, suppliers reported that they face some challenges using the check-off system.
Some suppliers complained that there were occasions when farmers called them for
treatment emergencies on their cows only to be informed after the treatment that there
was no money for payment until later. The biggest complaints with the various forms of
payments were associated with cheques due to dishonesty and staggered/ delayed
payments as it was both time consuming and expensive to make a follow-up on the
farmer.
Suppliers prefer to deal in cash with their customers as it is easy and efficient. Check-off is
preferred only where members of associations or cooperatives are involved.
Contracts
In terms of contractual arrangements for supply of goods and services, a good number of
the suppliers had ever entered into such arrangements. Of the 14 suppliers interviewed, 7
reported being in some form of contractual arrangements with Nyagatare Sector having 5
and Gatsibo 2. In Nyagatare BMN one supplier reported having entered into contractual
arrangements with 10 groups of farmers and another with 300 individuals. In Nyagatare
Mbare, a supplier had entered into a contractual arrangement with one group of farmers,
while another had entered with 4 individual farmers while yet another had entered with
both a group of farmers and individual farmers. In Gastibo, 2 suppliers reported having
entered into contractual arrangements with individual farmers.
One of these agreements was for the supply of semen/ hormones to fertilize cows.
Another one was simply an Agrotech branch in Nyagatare getting supplies from Agrotech
head office in Kigali. The contracts were both written and verbal and were entered mostly
with farmer groups and individuals as well.
In terms of Contractual arrangements we can say that Nyagatare BMN is more advanced
than the other two markets.
The following table provides an outline of the suppliers and the various aspects of
contractual arrangements:
Number in contracts in each
Who entered Contracts with market
Nyagatare Nyagatare
BMN Mbare Gatsibo
With a group 10 1 None
With an individual 300 4 2
Both individuals & groups None 2 None
NA 4 2 1
Nature of Contracts
Written 1 2 1
Verbal 1 1 2
None 4 2 -
Reasons for signing Contracts
For better/ easier follow-up & auditing Yes Yes -
Encourage farmers to buy our products Yes - -
To reach small scale farmers in deep rural
Yes - -
areas
To ensure farmers can pay us later - Yes -
To be able to advance loan facilities - - Yes
Promotional strategies
The commonest marketing strategies in the 3 sites include public meetings, use of
satisfied customers (word of mouth) signboards and posters. In Gatsibo and BMN
suppliers said they ensure their shops are located in strategic points for maximum visibility
and access. In Nyagatare BMN, radio adverts, outreach services and use of regional
representatives are also used in addition.
How suppliers create awareness Nyagatare Nyagatare Gatsibo

BMN Mbare
Public meetings Yes Yes Yes
Signboards/ posters Yes Yes Yes
Satisfied customer/ word of mouth Yes Yes Yes
Providing quality products/ services Yes Yes -
Strategic locations for business Yes - Yes
premises
Outreach visits Yes - -
Media adverts (Radio) Yes - -
Use regional reps to penetrate areas Yes - -
Capacity gaps of interviewed suppliers
The key capacity gaps identified among BDS suppliers include the following
• Lack of capital to improve and expand business. This is particularly acute in the
transport of milk to the market centers both locally and outside the region.

• Lack of training on how to do conduct certain services like AI. This means some
suppliers have to depend on others to do things they would have done – with some
training.
• Lack of proper/ sufficient equipment and facilities. For instance some suppliers
need basic lab equipment in order to diagnose animal diseases with some
accuracy and thereby provide the correct drugs.
• Identifying/ accessing the skilled experienced Vet Technicians to support the
suppliers is a major challenge.
• Lack of well trained staff to handle milk as required in accordance with public
health.
• Ignorance and lack of knowledge is also common among some suppliers. Suppliers
need to be knowledgeable enough in particular with the BDS sector they are
dealing in.
• Keeping to the required regulatory/ sectoral standards has become difficult for
some like premises, official documents, and mandatory training etc.
Priority supply side constraints, market failures, and market opportunities
Key supply side constraints/ market failures

• Long distances and bad roads that farmers have to cover to reach suppliers and
vice versa.
• Lack of an efficient public means of transport.
• Limited demand of dairy services and products owing to a depressed farmer
income due to low milk sales/ price.
• Lack of stock of highly demanded products services.
• Farmers lack efficient communication tools like mobile phones that can ease
communication between them and their suppliers.
• Few qualified technical staff hence sometimes delayed response to farmers’
requests.
• Government and NGO interference in service/ input provision at subsidized rates
hence creating an artificial market environment. The price levels existing are not
sustainable if subsidies are removed.
• Some of the AI providers have not been trustworthy and on many occasions they
have promised farmers certain type of crossbreed/ pure breed and charged them
accordingly, only for the farmers to get poor quality calves. In other words, what AI
providers promise is not what farmers always receive.
• Lack of access to affordable capital was also mentioned by many suppliers as a
key constraint. This became an issue when they wanted to expand their
businesses. The situation is made worse by local banks who demand security for
any credit advanced.
• Limited laboratory services that can boost accuracy in diagnosis of animal diseases
and proper drug administration.
• Meeting the mandatory minimum legal requirements is sometimes a big challenge
for suppliers to set up or expand their businesses.
• Lack of adequate back-up power/ maintenance skills to assure good milk even
when there was power failure. Sometimes power goes off and the back-up
generators fail to work due to poor maintenance practices. When this happens, all
milk collected goes to waste. Farmers cannot also sell their next days milk until the
problem is sorted out.
Market opportunities
In view of the foregoing discussion, the following were found to be potential market
opportunities:
• Need to enhance milk collection/ bulking: The survey established that in each of the
three markets there existed one or two cooling plants/ milk collection points. None of
these cooling plants had the capacity to collect all the milk coming in from farmers in
their catchment areas. As a result, some milk is returned to farmers when the tanks get
filled up to capacity. This, coupled with the national campaign to transform cows to
higher milk producing grades among farmers, means that the need for more storage
and transport facilities is very urgent. More cooling plants will need to be established to
cater for the increased milk in a site far away from the current cooling plant. This would
reduce distances traveled to access the milk collection centers by dairy farmers.
Reduced distances may also encourage farmers to deliver their milk instead of relying
on middlemen and thereby increase their earnings.
• There is need for improved milk transportation from farms to the collection centers in
additional to milk tankers being added to assist in efficient transporting of milk to the
markets in Kigali and other parts of Rwanda. This may call upon local investors to
introduce pick-up trucks to transport the milk efficiently and thus do away with the
numerous exploitative milk middlemen.
• Efficient supply of affordable supplementary feeds, foliage and mineral supplements:
This is an area that has the potential to grow very fast in the next few years. This is
particularly so given the government drive to have farmers adopt modern dairy farming
techniques. As farmers discard the traditional cows in favour of the higher grade cows,
there will be a commensurate demand for appropriate feeds/ fodder and mineral
supplements. This is also strengthened by the fact that land for grazing is getting
smaller and zero grazing is being seen as the solution for the future.
• Improved AI services: With the shift to modern dairy farming in top gear in the region,
there is need to enhance the provision of reliable AI services to assist in the
transformation of local herds.
• Under the same assumption, another potential opportunity is the provision of seed to
grow fodder. This would provide feed to the higher grade cows with zero grazing being
encouraged.

Comparison of interviewed suppliers
The following table provides a summarized synthesis of the comparison of the interviewed
providers:
Aspect being rated Nyagatare BMN Nyagatare Mbare Gatsibo TOTA

L
Capacity to deliver 4 5 3 5 5 3 4 4 4 5 5 4 5 56
services
Closeness to SMEs 5 5 3 5 4 3 4 2 4 5 4 4 4 52
(In terms of
understanding their
culture and geography
Commercial focus e.g. 4 3 3 4 5 4 5 5 4 4 3 4 4 52
level of profitability
Focus on services, 4 4 3 3 4 3 5 3 4 4 4 4 4 49
SMEs or BDS
Organizational 5 3 4 4 5 4 5 5 4 4 4 4 4 55
independence-
especially from donor
funds
Legally registered 5 5 4 5 5 1 5 1 5 5 5 5 5 56
Willingness/interest/a 3 5 3 5 5 2 5 2 5 5 3 5 5 53
bility to partner
TOTAL 30 30 23 31 33 20 33 22 30 32 28 30 31 373
Mean 4. 4. 3. 4. 4. 2. 4. 3. 4. 4. 0 4 4.2 4.42 28.69
28 28 28 42 71 85 71 14 28 57 8
27.8 3.97 29.25 4.17 29.66 4.23
Interviewers/ moderators were asked to rate their perceptions of services rendered by the
suppliers whom they had just interviewed, using a rating of 1-5 where 1 was lowest and 5
the highest. From this scale it has emerged that most suppliers were rated highly in
various aspects of service provision.
The following points illustrate this.

• Suppliers scored a total of 373 out of an overall score of 455. This is a high
score.
• Most of the aspects of business measurement scored impressively –
between 49 and 56 marks out of a possible 65 points.
• Individually, most providers scored a mean of 3.97 (BMN), 4.17 (Mbare) and
4.23 for Gatsibo out of a possible 5 points.
• Gatsibo based suppliers seem to be doing slightly better than their
counterparts in the other markets according to these ratings.
• NB: these ratings are subjective and likely to change if done by a different
interviewer.

The enabling environment for BDS
An enabling environment for BDS will require the support of all stakeholders in each
market in Rwanda. This will be in terms of policy framework that fit the scenarios existing
in the local markets. The following will need to be done in order to create an enabling
environment for BDS development in the three markets.
• There is need to improve on the market for milk. This would act as the stimulus for
other BDS services to grow.
• Improve on roads to create efficiency in milk transportation.
• Train BDS staff/ farmers in dairy farming service provision/ client service.
• Remove on a gradual basis government participation and visibility and facilitate for
private sector competition.
• Reduce government/ stakeholder financial support to sector to create real market
driven forces for long term sustainability.
• Establish systems by which affordable credit is accessible to farmers who need it.
• The mandatory minimum requirements for setting up BDS businesses for dairy
farming need to be relaxed particularly during the infancy stages of BDS
development. Such requirements can be re-evaluated later for reintroduction when
the time is ripe.

Conclusions
Characteristics of the market for BDS in each specific region in relation to existing
supply, demand and transactions
Although there are no set criteria for plotting a location on the matrix, a form of
benchmarking has been used that compares the quality (productivity and practices) of one
BDS market against another within the country and between locations across the 3
countries. Supply and demand have been evaluated as a one off event during the
assessment process in relation to best practice which forms the basis of this informal
comparison exercise. The exercise was undertaken during a group discussion between
the team leaders of the research teams for each country.
STRONG SUPPLY STRONG SUPPLY

LOW DEMAND STRONG DEMAND
LOW SUPPLY STRONG DEMAND

LOW DEMAND LOW SUPPLY
Nyagatare BMN/Mbare
Gatsibo
Each of the areas has been plotted on the above matrix and the region as a whole is
characterised by a low supply, and low demand situation. It is however moving towards a
situation of strong demand against low supply scenario.
For this reason, it recommended that strong educational campaigns are launched, with a
view of raising both demand and supply. The survey established that most farmers in this
region keep livestock as a fulfilment of local cultural values and thus do not see it as a
business – thus education will help them see economic potential in dairy farming.
The common characteristics of the BDS market are presented in table below:
Supply Demand Transactions

Key • Low supply of BDS • Demand for BDS • Low value
Characteristics services and inputs services/ inputs is low. transactions that have
• The commonest BDS This correlates with the been affected by the
services are basically low supply regime of prevalent low
about animal health and the same. incomes in the area.
AI • The most popular • Again, as in demand
• The biggest BDS services demanded by and supply, most
providers are farmers are on animal BDS transactions
cooperatives and private health generally. Milk revolve around the
sector operators – firms transportation to purchase of drugs,
and individuals markets/ cooling plants curative services and
• The BDS market price is also in high demand. vaccinations.
for various services is • The major hindrance to • The transactions are
distorted due to high demand is the low done mainly by cash
government and NGO incomes prevalent in payments. However
interventions which the 3 markets. members of
subsidizes and • Lack of affordable cooperatives and
sometimes provides credit facilities for farmer associations
services free. farmers is also a major can use check-off
• The BDS services here problem system to make
are strong in milk • Farmers also lack dairy payments.
production support but farming information
weak in marketing of the and education that • Some few farmers
milk which is essential would not only also use delayed
to stimulate further enhance their skills but /staggered payments
growth. also help them see the when unable to make
• Capital is limited, hence importance of using cash payments, but
slowed or stagnated BDS services for their with good reasons
growth dairy development. like a dry / sick cow.
• Transportation of milk • Poor transport network
within the local markets/ and high cost of travel • Generally there is
cooling plants also affect the demand poor access to credit
dominated by the for BDS especially with facilities among
unpopular milk brokers. regard to milk farmers and
transportation from cooperatives. This
farm gate to collection has tended to limit the
centres and other transactions they can
markets. execute to benefit
them.
CONSUMERS – DEMAND SIDE CONCLUSIONS
• Local breeds (84%) are predominant across all the locations however farmers (85%)
specifically want to improve breeds to enlarge herd size via adopting zero grazing
methods, growing feed, AI services and grouping together to benefit from
economies of scale.
• Key problems for farmers include low milk prices and irregularity of AI services.
• The services farmers are most aware of are basic veterinary treatment services,
vaccination and products such as mineral supplements, sprays and disinfectants.
Generally the demand for services is low.
• Although farmers are aware of many services and do acquire some services they
are not clear as to the benefits they should expect from the services.
• Consumers shy away from purchasing services due to the expense involved and the
poor quality/unreliability of many products.
• Farmers sell predominantly to homes, hawkers and cooling plant. Sales to cooling
plants are preferred.
• Information on dairy markets is considered to be ‘just enough’ across all sites.
• Buyers currently provide few required services to farmers yet the opportunity for
such embedded services is apparent.
• Farmers currently deliver milk but would prefer it to be collected (more than once a
day) however milk collection is unreliable.

• Farmers are aware of the local cooling plants and would like to receive such
services as health services, market prices and credit via a check off payment
system. Cooling plants have limited capacity to store milk so milk is turned away.
• Dairying skills are inadequate especially in regards to disease identification,
treatment and prevention plus improvements in milk production.
• Information and training on dairy farming is currently non existent for most farmers
with extension workers and NGOs being a key source of assistance.
• Farmers keep few records and cannot determine the true profitability of their
business activities despite claims to do so.
• Most farmers have access to a mobile phone and are willing to pay for important
information via SMS such as disease alerts and milk prices.
• Farmers struggle to self fund their operations and few acquire loans or other
financial services (despite a desire to do) so due to inaccessible or unaffordable
loans.
• Few farmers are aware of organisations that can support them and few belong to
formal groups, cooperatives and associations.
• There is very little knowledge among farmers regarding policy issues and the legal
and regulatory authorities and standards/regulations that concern their operations.
• Nyagatare District is more of a cattle keeping district and grazing fields are bigger
requiring a slightly different range of services.
SERVICE PROVIDERS – SUPPLY SIDE CONCLUSIONS
• Poor roads and lack of public transport hinder service delivery.

• General services such as basic health treatment services and products
(disinfectants and supplements) are on offer but more specialised services are
scarce. Services offered across all locations are similar. Demand appears generally
low.
• Fee based stand alone services are the norm and limited embedded services are
apparent. Cash payments are the norm but check off systems exist for those
engaged with coops and associations. Defaults are high and payment recovery is
often staggered.
• A few Government subsidies exist in the market undermining existing provider’s
ability to deliver services profitably.
• The business acumen of existing service providers is relatively but with some
entering into contractual arrangements. Few are formalized or understand the
process. Few are implementing clear pricing strategies or focused marketing
strategies.
• Capital is very limited for business development. Stock levels remain constantly low.
Access to affordable finance is limited.
• Lack of technical knowledge and abilities to delivery more specialised services.
Limited access to appropriate equipment (lab equipment).
• Lack of knowledge relating to public health issues, regulations and standards.
• All evident services are focused on production support and non on market support.
An insight into the potential of each target market location
As the drive to transform herds here is in high gear, the demand and supply for BDS will
definitely pick up and grow. Farmers are learning the advantages of keeping higher grade
cows and as more farmers appreciate this a variety of BDS services will be needed to

support this transformation. Thus the potential for growth here is very high. This applies to
all 3 markets.
Road/ infrastructural development: Feeder roads connecting farmers to the trading centres
are in bad shape. When it rains, it becomes almost impossible to transport milk to the
cooling plants. Even transport to take farmers to the trading centres become scarce and
expensive. Thus, this situation limits the consumption of the dairy services and inputs.
Although the Government of Rwanda has done a commendable job in creating good
roads, there are still more roads to be improved and made all weather away from the main
highways.
Given that Nyagatare BMN is the most potential of all in terms of milk production and with
Nyagatare Township located here, a local dairy processing plant would probably be best
suited if located in this township. The Board to run the plant should draw membership from
all stakeholders within the three markets in order to ensure the interests of all farmers are
catered for. Such a facility would encourage more farmers to increase their milk output to
take advantage of the new market channel. With more income farmers are likely to want to
improve the care, health and nutrition of their animals leading to high demand of the BDS
services/ inputs.
While policies to promote dairy farming in the 3 markets are being developed/ enhanced, it
is important to consider the local market dynamics. For instance, while BMN and Mbare
could easily expand their dairy farming by extensive farming processes due to their larger
farms, Gatsibo has to contend with intensive farming techniques like zero grazing and
would thus demand more of supplementary feeds, etc than farmers in the other two
regions – who may need more of seeds to grow fodder. This is because Gatsibo is more
densely populated and farmers have smaller grazing land.
Given the scarcity of BDS suppliers in Gatsibo and even in the other two markets, it would
appear that more private providers are needed here. Demand should be demonstrated to
potential suppliers and technical assistance provided for start ups. Once established, they
should conduct promotional campaigns among the farmers in the villages so that the
services/ inputs they are offering are popularised. The providers should then strive to
provide quality services and inputs for them to remain competitive.
The survey found that an overall dairy farmer union has been established in Nyagatare
Township to oversee existing dairy cooperatives. It is felt that this union should
encompass all local dairy cooperatives in the 3 markets and play the pivotal role of
regulating quality among member cooperatives. It should also be involved in seeking
bigger markets and lobbying for policies to stimulate and enhance dairy development and
growth. This would ensure that milk produced is readily marketed with the balance going
to the dairy processing plant, which is an initiative of the union. This is likely to enhance
the capacity of each market to produce more milk.
Level of market distortion
Government and other stakeholders have been providing support in the form of subsidized
services/ inputs in order to grow the dairy sector from infancy and encompass all farmers
including the very poor. This has succeeded and it is now time for the sector to grow in a
sustainable manner.
To grow in a sustainable manner, the government role and other stakeholders would have
to be reduced to a facilitative one. Government presence is currently felt in the provision of
extension services for vaccination and treatment and AI services.
The government needs to wean itself out of this and leave the private sector and
cooperative movements to do the job. It should instead focus on creating conducive
policies and an environment for BDS development and growth. It should address issues of
infrastructure, policy formulation and strengthening institutions to coordinate all efforts in
dairy development.
The survey established that some farmers depend on the government to access certain
services as it is common knowledge here that the government provides subsidies on
certain essential services. Even when they can afford, some farmers claim they cannot so
as to benefit from the subsidized services. This undermines any private providers ability to
compete.
Due to the high demand for government sponsored services, some farmers wait for so
long to access a government vet technician that they sometimes expose their cows to the
danger of dying if they are sick as they await free services.
Comparative information on the in-country sites and the 3 markets
Nyagatare BMN, according to the findings, is leading in size and number of dairy farmers
who belong to groups. The cooling plant in Nyagatare BMN covers a bigger catchment
area which includes Nyagatare Mbare, and some parts of Gatsibo and Kayonza districts.
All three sites suffer from similar problems and challenges, particularly regarding milk
transportation, collection, and marketing. Although Nyagatare Township is located in
Nyagatare BMN, this market is the most remote, with bigger grazing farms and has bigger
herds of the indigenous cows than the other two markets.
Given that Gatsibo District is more densely populated than the other two markets; it has
fewer cows for milking (1-5) while the rest have more. Gatsibo also has less milk spared
for domestic consumption about one litre while Nyagatare BMN/Mbare have the most milk
kept for domestic consumption (about 3 liters) each.
All the three sites are actually on the main Nyagatare – Kigali highway, with Nyagatare
BMN being the farthest (about 150 km) while Gatsibo is closest to Kigali (about 90 Km).
Nyagatare Mbare occupies a central position in this linear arrangement. A dairy farmers
union for Nyagatare district as a whole is at an advanced stage of setting up a processor
to take advantage of the plentiful milk produced. By so doing, farmers will be able to sell
all their milk locally plus the dairy products to be manufactured would fetch the farmers
more income.
In terms of credit/banking facilities, Nyagatare BMN farmers are at an advantage as they

enjoy these facilities nearby at Nyagatare Township, (largest/ upcoming town in the
region) while other farmers in the other sites do not have such easy access and have to
travel longer distances.

However, in comparison to Uganda and Rwanda, the dairy market in the surveyed sites
was relatively developed in Kenya. The table below shows some comparison between the
three markets.

Uganda Rwanda Kenya
Breeds kept Mainly exotic Mainly exotic Mainly cross breeds

Use of BDS services Low Low Average
Dairy as business At infant stage At infant stage At development stage
Market linkages Poor poor Average
Market distortion Exist (few compared Exist Minimal
to Rwanda)
Number of Suppliers Very few Very few Relatively high
Milk delivery channels Mainly informal Mainly informal Shared almost equally
between formal &
informal
Milk market - formal Low Low High
channels
Marketing/promotional Very few Very few Relatively high
activities by suppliers

Recommendations1
Other current or proposed dairy sector interventions
It is very important to coordinate INGO/donor efforts. It is very difficult, and not at all
effective, for one INGO donor funded project to pursue a market development approach if
others continue to subsidize transactions and offer publicly-funded services in the same
market. Suppliers will almost always choose to work with a donor who will subsidize
transactions rather than one advocating market development. Free services also dampen
SME willingness to pay. Even if all donors pursue a market development approach,
coordination across projects and programmes is critical. In markets with relatively few
suppliers, these suppliers can be overloaded or lose their commercial focus if they receive
significant financial resources from several donors. EADD must be aware of the other
projects supporting the sector and liaise with the facilitators to ensure that efforts are
appropriately coordinated.
Sustainable solutions to address priority market constraints and market failures
The project must ensure that all interventions have a market focus (private sector
domination with numerous competitive BDS suppliers selling commercially to large
numbers and types of SMEs). It is possible to ensure impact and outreach of BDS if the
interventions focus on profitable services, focus on services that are replicable in the
private sector and build on what is already being offered by the private sector. Always ask:
“What problems do businesses have and why isn’t the market environment providing
solutions to these?” The end result of a market focused programme is numerous SME’s
buying BDS of their choice from a wide selection of products offered from unsubsidized
private sector suppliers in a competitive and evolving market. Remember that the
provision of subsidies to particular suppliers may crowd out other, private sector suppliers
who do not receive subsidies. Supplier costs must ultimately be appropriate for the SME
market and not skewed by donor funding. It is important to promote as many suppliers as
the market will bear. That is not to say that subsidies are a bad thing. Subsidies can be
used to stimulate demand and supply for a finite period of time with an explicit reason and
exit strategy.
The project should group services as per the following recognised categories:
MARKET ACCESS - These services identify/ establish new markets for SME products.
They facilitate the creation of links between all the actors in the market and enable buyers
to expand their outreach to, and purchases from, SMEs. They also enable SMEs to
develop new products and produce them to buyer specifications. Key dairy sector
examples include:
• Linkages to processors and informal markets
• Linkages to cooling plants and setting up chilling plants
• Linkages to traders for inputs and access to quality requirements
1
Some of the narrative and ideas in this section have been drawn from various papers and presentations placed in the public domain
by BDS practitioners and sourced from the following website: www.mmw4p.org

• Creating access to market information
• Facilitating milk supply contractual agreements with processors
• Linking farmers to steady markets
• Creating awareness of available markets
• Ensuring stable and reasonable milk prices to farmers
• Creating milk collection centers
• Forming milk cooperatives
• Improving access to reliable and affordable transport
INPUT SUPPLY - These services help SMEs improve their access to raw materials and
production inputs. They facilitate the creation of links between SMEs and suppliers and
enable the suppliers to both expand their outreach to SMEs and develop their capacity to
offer better, less expensive inputs. Key dairy sector examples include:
• Create awareness regarding Agrovet shops selling farm inputs
• Facilitate access to Agro-Vet Shops, AI service, Feeds, Livestock Health/Veterinary
(quality, credit services , payment systems, bulk purchase, efficiency, distribution
systems, negotiate delivery contracts)
• Avail vet kits to farmers
• Facilitate access to quality inputs through CP check off system
• Group people together to bring down inputs costs
• Increase access of milk cans and coolers
• Enhance skills and knowledge about feed and fodder to farmers
• Encourage farmers to set up their agro-shops
• Facilitate water drilling services
TECHNOLOGY & PRODUCT DEVELOPMENT - These services research and identify
new technologies for SMEs and look at the capacity of local resource people to produce,
market, and service those technologies on a sustainable basis. They also develop new
and improved SME products that respond to market demand. Key dairy sector examples
include:
• Facilitate access to Biogas installers,
• Facilitate feed formulation enterprises
• Raise awareness to feed conservation techniques
• Facilitate provision of new milk handling containers/equipments
• Improving cooling plant MIS through training and computerization
• Facilitate simple milk testing equipment
• Development of market information services
• Enhance farmers ability to identify enterprises and engage in value addition
• Advise processors on how to improve on the product packaging.
• Promotion and adoption of new technology
• Access and training in adoption of relevant ICT e.g. accounting soft-wares
• Raise awareness regarding feeding and feeding systems, housing systems, fodder
production/agronomic practices, milk handling, milk quality testing, milk
preservation, water harvesting, milk transportation and milk storage
• Training and equipping AI experts
• Use ICT to disseminate information
TRAINING AND TECHNICAL ASSISTANCE - These services develop the capacity of
enterprises to better plan and manage their operations and improve their technical
expertise. They develop sustainable training and technical assistance products that SMEs
are willing to pay for and they foster links between service providers and enterprises.
Training and technical assistance may be delivered on any topic. Key dairy sector
examples include:
• Cattle registration and milk recording services
• Training on feed conservation and fodder crops
• Business advisory services on chilling plant management
• Technical assistance on improving milk quality
• Research on new milk market opportunities
• Capacity building for farmers, staff and chilling plan management, BOD plus
management and staff of the Coop societies
• Exposure visits and farmer study tours
• Dairy cows registration to the Stud book
• Training on animal husbandry (feeding, pasture production and conservation, health
management) and milk hygiene/handling, storage and transportation
• Group formation
• Capacity building on business development
• Facilitate access to consultancy services in strategic plans, feasibility studies,
business management training, marketing, auditing and book keeping, record
keeping, financial management, governance and group dynamics
• Facilitate TOTs and the development of training manuals
• Training on how to advocate for change
• Facilitate disease surveillance
INFRASTRUCTURE - These services establish sustainable infrastructures that enable
SMEs to increase sales and income. Examples include refrigeration, storage, processing
facilities, transport systems, loading equipment, communication centers, and improved
roads and market places. Key dairy sector examples include:
• Facilitate access to improved road network, water supply, communication facilities
and electricity
• Liaise with Government and private contractors for improvement of road networks,
power and water supply
• Organizational management of the dairy hub
• Facilitate access to improved storage facilities, milk bulking and cooling and milk
transport,
• Building cooling plants
• Agro dealer networks
• Access to feed analysis facilities and milk testing facilities
• Social services
• Assist farmers to acquire chilling plants, transport facilities and laboratory equipment
• CP start-up and setting up a hub of business services; feed shops, Agro-Vet shops;
hardware shops; transport and village banks
POLICY/ADVOCACY - These services carry out sub-sector analyses and research to
identify policy constraints and opportunities for SMEs. They also facilitate the organization
of coalitions, trade organizations, or associations of business people, donors, government
officials, academics, etc. to effect policies that promote the interests of SMEs. Key dairy
sector examples include:
• Awareness creation on environmental degradation and traceability
• Facilitate business registration
• Lobbying for policy change (e.g. milk payment based on milk quality, semen
importation in Uganda governance of operations of CAHWs in Rwanda and Uganda)
• Expose farmers to KEDAPO
• Facilitate stakeholder collaboration
• Facilitate research and disseminate to policy makers
• Facilitate engagement of legal services

• Facilitate policy makers partnerships
• Formation and affiliation to lobby groups to champion farmers interests
• Lobbying through regulatory bodies and developing advocacy strategies for farmers
• Address disagreements on use of community based animal health workers between
NGOs and Gov
• Create awareness of dairy standards/laws and regulations (national and regional)
• Production of IEC materials
• Lobby to influence road and utilities infrastructure in the areas where new CPs are
sited
• Advocate for improvement of Cooperative laws and regulations
FINANCE - These services help SMEs identify and access funds through formal and
alternative channels that include supplier or buyer credits, factoring companies, equity
financing, venture capital, credit unions, banks, etc. They also assist buyers in
establishing links with commercial banks (letters of credit, etc.) to help them finance SME
production directly. Key dairy sector examples include:
• Facilitate access to affordable loans, equity funding, credit and capital for Coops and
individual farmers
• Linking farmer groups to MFI’s, FSAs, banks and SACCOs
• Facilitate CP banking facilities
• Auditing books of accounts
• Facilitate access to check-off systems for input supplies
• Facilitate saving systems and milk payment systems
• Train farmers on financial management
• Facilitate establishment of microfinance institutions
• Facilitate business plan development
• Provide chilling plant part-financing
‘Service’ should be interpreted broadly, to include basic, ‘bundled’, ‘embedded’ and other
‘hidden’ services.
It is important to focus first on services that will contribute to high-impact, are in high-
demand and are the most feasible to deliver. The EADD should combine the prioritization
of services that offer SMEs the greatest potential for stabilization or growth with those that
appear to have the greatest unmet demand from SMEs. This involves incorporating both
impact-driven ideas with demand-driven ideas:
• Impact driven ideas incorporate the ideas of field staff and other informants - without
an overview of the business systems in which they operate, SMEs, especially those
that are marginalized, do not know which services are most likely to benefit them.
Demand for services may need to be stimulated, or services can simply be
embedded in market chains.
• Demand driven ideas starts with the consumer research to identify the services or
business benefits SMEs want as they often know best what assistance they want
from others.
An example of supply-side problems and opportunities:
Service products lack the benefits and features consumers want

• Assist suppliers in developing and commercializing new products
• Bring in suppliers from other countries to adapt and franchise appropriate
products
Suppliers are risk averse to targeting new consumer segments, such as women or
micro enterprises
• Provide suppliers with information on the viability of selling to SMEs
• Subsidize cost of targeting new consumer segments, e.g., market testing
• Use market research to identify promising opportunities to serve new consumer
segments
Suppliers lack market information
• Develop or improve marketing research services/suppliers
• Provide suppliers with market information
• Teach suppliers how to gather market information
Suppliers lack business or technical skills
• Provide training and technical assistance to suppliers
• Assist training suppliers in developing and selling appropriate products to other
BDS suppliers
There is insufficient supply in the market
• Provide venture capital to suppliers to expand
• Design a programme to assist start-up suppliers
Variable service quality harms supplier reputation
• Provide quality assurance services
• Assist supplier to improve consistency in service provision
• Help suppliers form associations with certification processes
Supplier cannot manage supplier credit or other purchasing mechanisms
• Build capacity of suppliers to manage supplier credit
• Link SMEs with MFIs or other financial services providers
Key solutions that address supply side constraints and increase demand include:
o market research
o provision of information for consumers/social marketing
o new product development
o identifying market niches
o supplier training
o service demonstrations
o improving marketing strategies
o monitoring and evaluation of services
An example of demand-side problems and opportunities:
Consumers lack information about services

• Develop a BDS yellow pages
• Open a BDS consumers’ bureau or information center
• Help suppliers improve their marketing
• Implement a voucher scheme
Consumers are unable to effectively identify their business problems
• Develop an awareness-raising campaign about typical business problems and
BDS that can help
• Help suppliers create marketing campaigns that help SMEs identify business
problems
Consumers do not have the capacity to pay for services up front
• Assist suppliers in developing payment options
• Promote embedded services
• Promote services financed by large firms
• Help consumers form clusters to purchase services in groups
Consumers are risk averse to trying services
• Provide suppliers with technical assistance to improve trial inducing strategies
• Implement a voucher scheme
• Promote business linkages for embedded services
Consumers do not see the value of services
• Help suppliers test, demonstrate, and gather information about the quality of
services
• Assist suppliers in improving advertising
• Assist suppliers in developing customer referral programmes
• Conduct general advertising for the service
Consumers want services packaged together
• Broker agreements among suppliers to develop service packages
• Provide venture capital and technical assistance for suppliers to diversify
Key solutions that address demand side constraints and improve supply include:
o awareness raising
o provide information about services
o linking SMEs with BDS suppliers
o forming SME clusters/associations to access services
o temporary incentives and financing
o temporarily discounting services
An example of transaction problems and opportunities:
Consumers cannot afford to purchase services

• Develop a business model with third party payment such as advertising, or with
embedded services
There is a lack of trust between suppliers and consumers; suppliers insist on up-front
payment; consumers insist on delivery before payment
• Support entrepreneurs or social enterprises to establish a guarantee or
wholesale system
• Establish a temporary guarantee system until there is stronger trust in the market
There is no mechanism for exchanging payment or collecting payment due to distance,
lack of technology, or banking system
• Help SMEs and others in the supply chain to form an intermediary who is
sophisticated enough to access the formal banking system or an international
banking system that is functioning
• Promote Smart Cards — electronic banking cards
• Develop money transfer services
Consumers are geographically and/or socially isolated from service markets
• Help SMEs form clusters, associations, or cooperatives that can act as
intermediaries to reach distant services providers
• Form a social enterprise to provide services

An example of market environment problems and opportunities
Free services are distorting the BDS market

• Advocate with government and/or other donors to rationalize BDS subsidies
Regulations adversely affect the BDS market
• Advocate for changes in the regulations
• Organize SME suppliers to advocate for changes in regulations affecting the
BDS market
Solutions that specifically address policy constraints and remove macro-economic

constraints to BDS market development include:
o policy research
o building the capacity of advocacy groups
o helping SMEs engage in advocacy activities
o building the capacity of local governments
The programme must focus on facilitative activities such as market research, provision of
information for consumers, new product development, supplier training, monitoring and
evaluation. These activities are aimed at “facilitating” market improvement by increasing
demand and/or improving supply. The main activity of the programme must not be direct
service provision.
Country specific suggestions that address priority market constraints/ market

failures
Market constraints Opportunities

Market distortion due to too much Government/ NGO presence and visibility as
government/ stakeholder involvement critical service providers will need to be
in service provision. minimized to reduce market distortion. Their role
should be left at the level of facilitators and policy
makers. This would ensure that forces of supply
and demand are operating in a perfect market.
Markets not easily accessible due to The government will also have to ensure that
bad roads infrastructure particularly roads are addressed
conclusively in order to facilitate dairy sector
growth within the dairy farming communities.
Support or instigation of lobbying and advocacy
initiatives to address these issues is required.
Over reliance of farmers on milk Given the adverse publicity associated with milk
brokers/ hawkers to transport and hawkers /brokers and their exploitative
market their milk exposes farmers to operations, it is recommended that farmers be
cheating and reduced income. encouraged to join cooperatives and farmer
associations in order to avoid over reliance on the
brokers. Incentives should be developed in the
short and long run to attract such reluctant
farmers. The government/ stakeholders should be
responsible for this.
Lack of capacity by farmer groups/ Cooperatives and other farmer producer groups
associations/ cooperatives due to the or associations should be strengthened and the
limited size of membership and lack of small ones encouraged joining forces with others
resources. in order to enjoy economies of large scale
operations. Such outfits should be encouraged to
seek credit so that they can invest in milk
transport vehicles and equipment. They should
then take over milk transportation from the
brokers at a small fee.
Earlier interventions seem to have While Nyagatare has larger farms for grazing,
been generalized to solve problems Gatsibo’s options for expanding dairy farming lies
affecting the region as a whole rather on increased uptake of zero grazing. Thus future
than targeting specific markets. supplies of BDS should strongly be hinged on
prevailing market specific scenarios.
Everything considered, all 3 markets Both farmers and suppliers will need educating
in this region are still in their infancy on the usefulness of BDS for dairy development.
and therefore are seen more as low Education should thus be the lead intervention by
supply against low demand situations. stakeholders.
Little value /erratic transactions which Strengthen farmer groups/ associations and
reflect the nature of incomes existing cooperatives particularly in order to improve in
in the area. the marketing of farmers milk, and diversify the
milk market.
Prevalent shortages of highly The government needs to wean itself from
demanded services & inputs/ products service provision, while at the same time
encouraging private sector providers to join the
market. If possible market research could be
conducted – facilitated by stakeholders, to
highlight the areas with high demand. This
information would then be shared with potential
providers in a workshop situation.
Poor quality services sometimes and With the government role reduced to regulation, it
lack of integrity among some suppliers would be easy to control quality, which would
promote mutual satisfaction for all parties
involved.
Insufficient milk collection/ cooling The government needs to facilitate the erection of
infrastructure which limits growth and more cooling plants through local investors or
depresses price of milk outsource them from outside the region.
Country specific suggestions that address supply side constraints
Supply side constraints Opportunities

Long distances and bad roads that farmers
The government of Rwanda is called upon to
have to cover to reach suppliers/ Lack of
improve on the rural feeder roads in the 3
an efficient public means of transport markets to make them all weather and thus
encourage BDS growth, among others.
Limited demand of dairy services and There is need to establish a local dairy
products owing to a depressed farmer processing plant in the region to mop up
income due to low milk sales /price. excess milk, stimulate more production and
thus improve on farmer income
Lack of sufficient stock of the highly Conduct a market research survey to establish
demanded products/services what is needed where when so that supply is
equal to demand. The government/
stakeholders should facilitate the survey and
share findings.
Some farmers lack efficient Through training farmers can be encouraged to
communication tools like mobile phones buy simple phones or talk to their closest
that can ease communication between neighbours through whom they may access
them and their suppliers. their mobile phones. This need can also be
taken up as a BDS and some farmers
encouraged setting up their telephone bureau
services that can serve those without mobile
phones.
Few qualified technical staff hence Government/ Stakeholders need to ensure
sometimes delayed response to farmers’ there is sufficient trained technical staff to
requests. attend to the needs of all farmers without delay.
Government and NGO interference in Service provision should be left to private
service / input provision at subsidized sector for sustainability, while government/
rates hence creating an artificial market stakeholders facilitate and set conducive
environment. The price levels existing are policies for sector to grow.
not sustainable if subsidies are removed.
Some of the government AI providers have Quality control should be made a priority issue
not been trustworthy and on many and the government should step in to ensure
occasions they have promised farmers there is some integrity in the sector.
certain type of crossbreed/ pure breed and
charged them accordingly, only for the
farmers to get poor quality calves. In other
words, what AI providers promise is not
what farmers always receive
Lack of access to affordable capital was Providers need to be facilitated with access to
also mentioned by many suppliers as a affordable credit. Again there is need for the
key constraint. This became an issue development of appropriate financial products.
when they wanted to expand their
businesses. The situation is made worse
by local banks who demand security for
any credit advanced.
Limited laboratory services that can boost Need to establish locally available laboratory
accuracy in diagnosis of animal diseases facilities to boost the treatment of cattle in the
and proper drug administration. region. The GOR/ stakeholders need to
facilitate this.
Meeting the mandatory minimum legal The GoR needs to relax these requirements
requirements is sometimes a big challenge until such a time the sector has grown enough
for suppliers to set up or expand their to be regulated to ensure quality.
businesses
Lack of adequate back-up power / Power interruptions need to be checked and
maintenance skills to assure good milk controlled. Alternatively, milk cooling plants
even when there was power failure. need to have an in-house engineer who can
Sometimes power goes off and the back- attend to generator repairs urgently when the
up generators fail to work due to poor need arises.
maintenance practices. When this
happens, all milk collected goes to waste.
Farmers cannot also sell their next days
milk until the problem is sorted out.
There is a shortage of BDS suppliers in It is recommended that more private providers

the 3 markets. be encouraged to enter into the market as the
government reduces its role as a provider of
services. Once established, they should
conduct promotional campaigns among the
farmers in the villages.
SERVICE PROVIDERS – SUPPLY SIDE RECOMMENDATIONS
• Support all existing service providers to better source and offer quality, affordable
and consistent seeds and feed products.
• Support new providers to enter the market competitively with products/services
based on market demand (with a focus on currently unavailable specialist services
such as AI). Support can include the identification of, development of, testing of,
rolling out of, marketing of and monitoring of the new services/products. Use market
research to highlight business opportunities. Support as many as the market will
bear. Cost share where possible.
• Support existing service providers to source and offer quality, affordable and
consistent (transparent) breeding services and animal health products with a view to
increasing the herd sizes and milk production. Support existing providers to improve
outreach of their services via new outlets and sales teams. Support service
demonstrations.
• Promote quality stable services via bulking centres, cooling plans and processing
facilities. Help build the reputation of such facilities to offer reputable and
transparent fee-based services.
• Support advocacy efforts to improve roads and electricity supply and support
regulation and outreach of veterinary support services.
• Partner with the private sector to facilitate establishment of sustainable
infrastructures such as cooling plants, testing facilities and storage/processing
facilities in underserved locations.
• Facilitate expansion of existing infrastructures such as cooling plants and transport
services.
• Improve access to broader veterinary services by facilitating new and existing
veterinary input suppliers to better respond to consumer demand and reach under
served customers. Support suppliers to offer advice in the appropriate use of
products as an embedded service.
• Offer support to service providers to increase their own technical ability via training,
counseling and mentoring programmes. Organise study tours between service
providers.
• Identify and introduce new appropriate technologies and link providers to suppliers.
• Increase knowledge among service providers regarding policy issues and the legal
and regulatory issues that concern their operations such as public health issues.
This may include research to identify policy constraints and opportunities or support
to effect policies.
• Increase awareness or loan acquisition and use for service providers. Assist them to
identify and access funds through formal and alternative channels.
• Support service providers to develop their capacity to better plan and manage their
businesses. Assistance is required in strategic/business planning, pricing and
marketing. Offer support to service providers to implement appropriate marketing
activities to create awareness of their products and services. Facilitate this via the
private sector where possible.
• Assist providers to legalise and formalize their operations.
• Facilitate training providers to develop and offer fee-based technical assistance in
order to develop farmer’s ability to better plan and manage their operations and
promote ‘farming as a business’.
• Promote ‘farming as a business’ via social media campaigns, radio programmes,
field days, brochures and exchange visits.
• Facilitate private sector providers such as value add companies who handle closed
user groups for SMS services to Interactive Voice Response (IVR) companies who
can establish and run call-up voice services. Demand led information such as
disease alerts and milk prices can be delivered via mobile phones on a sponsored
or user pays basis. Information on quack products and providers may also be useful.
This may have to be supported with basic knowledge on phone use.
• Promote the sustainable role of the private sector in service delivery and highlighting
opportunities and necessity for reduced/removal of subsidies among NGOs and
Government institutions.
• Work with buyers and input suppliers to develop new embedded and fee based
services such as health services, milk bulking, input delivery, information on herd
management/improvement and animal husbandry. Subsidize the cost of the new
products/services in the short term with vouchers for farmers.
• Offer support to service providers to develop appropriate and transparent pricing
and payment mechanisms for clients such as installments and discounts for group
purchasing.
• Facilitate training providers to develop and offer/market fee-based technical
assistance and advice in order to improve knowledge among farmers on dairy
farming. Such providers new and existing may include local training institutions,
NGOs, individual consultants and local media/print houses.
• Few providers exist to support sales. Promote new providers who can perform the
role of identifying and establishing markets for milk and milk based products. Fees
can be charged for services such as business linkages, research information and
organising exhibitions.
• Assist existing financial service providers to promote their services. Work with the
suppliers to facilitate new user friendly services such as preferential loans, factoring,
equity financing and venture capital.
• Partner with the private sector to facilitate establishment of new business support
infrastructure such as communication centers, courier services and money transfer
services.
Country specific suggestions that address demand side constraints
Demand side constraints Opportunities

Inadequate foliage and grass to feed Provide seed to grow fodder to selected
animals due to poor climatic conditions – farmers who have larger farms. They can thus
draught. sell to others at competitive prices. Also
providers be encouraged / empowered to sell
supplementary feeds at affordable prices
Irregular and unaffordable AI services More AI providers needed at main trading
centres and village level. Also encourage
scheduled visits by AI providers to all villages.
It would also be necessary train farmers on
basic procedures of conducting AI
Inaccessible/ unaffordable loans to Provide easily accessible/ affordable financial
promote dairy farming. products that are developed/ tailored to meet
farmer needs
Low and fluctuating milk prices hindering Establish more strategic milk collection/ cooling
farmers from planning their future centres and improve on roads to facilitate easy/
cheaper milk transport. Consider also
establishing a local dairy processing plant
Poor/ unreliable animal treatment and Additional veterinary doctors needed at village
vaccination services level and
further training for skill upgrading for vet
technicians
Unaffordable supplementary feeds More suppliers needed in order to meet
beyond the reach of many small scale demand and lower prices. It would also be
farmers important to consider exploring using locally
Unreliable source of supplementary feeds available raw materials to make them
affordable. More farmers should be trained on
how to prepare them
Disease outbreaks Modern lab testing facility established in the
region and
vaccination of cattle strengthened
CONSUMERS – DEMAND SIDE RECOMMENDATIONS
• Promote existing embedded and fee based services via milk buyers and input
suppliers such as health services, milk collection, advances on payments and
information on animal husbandry.
• Bring farmers together to access training via local providers on dairy farming and
business management issues. This can be subsidized in the short term. Some key
areas of concern for farmers are disease identification, milk production, drug
administration and business planning and management. Training and technical
assistance should include information relating to the expected benefits of BDS
services – this will also help increase demand for services. Increase opportunities
for farmer to farmer forums/exchanges and study tours.
• Increase farmer’s strength to actively participate in and influence the dairy chain.
Bring farmers together to bulk purchase and access other services such as training
and finance. Promote the concept of formal groups, cooperatives and associations.
• Facilitate access for farmers to input suppliers in order to improve of breeds through
cross breeding and artificial insemination.
• Facilitate access to markets by linking actors in the chain especially new buyers to
small scale farmers. Also support farmers to produce to different buyer
specifications.
• Facilitate access to sustainable infrastructures for increased sales such as cooling
plants and storage/processing facilities.
• Increase access to information for farmers via print, radio and TV. Improve
awareness of Internet access and telecommunication opportunities.
• Increase awareness or loan acquisition and use for farmers, buyers and input
suppliers. Assist them to better identify and access funds through formal and
alternative channels such as credit unions and banks.
• Increase knowledge among farmers regarding policy issues and the legal and
regulatory authorities and environment that concern their operations. This may
include research to identify policy constraints and opportunities or support to effect
policies and regulations.
• Promote existing services that support business such as communication centers,
courier services and money transfer services.
Country specific suggestions that address policy constraints

The survey has revealed that certain policies may impact negatively on farmer operations
including:
• Policy on location of farm from household – leads to poor management by owner
and possible cheating by workers
• Strict regulatory requirements may also discourage entry into the business by those
without enough capital to meet all requirements.
• Government continued involvement in service provision leads to market distortion
and creates an artificial environment.
Since this is a young sector, the government/ other stakeholders are called upon to create
an enabling environment for growth. This would include relaxing some of these regulations
such that more providers are encouraged to join the business. Once interest has been
created and sufficient numbers of providers’ established, minimum regulations can be
reintroduced on a gradual basis. The providers would also require to be trained on how to
maintain quality services and customer care and thereby help in sustaining the BDS
growth. Besides, government policy of providing subsidised AI and veterinary treatment
and vaccinations, though positive in its intentions, can only serve to establish the sector
from infancy. However, sustained growth can only be achieved where market forces of
supply and demand are left free to operate
‘Illustrative’ market based interventions to develop the market for key identified
services that are in demand or offer the greatest potential for stabilization or growth
Interventions must “fit” the market and be designed to improve a particular market problem
or take advantage of a market opportunity. A key principle for choosing and designing
interventions is that the intervention should not be any more intensive than required to
address the market issue. Interventions have the capacity to both distort and develop the
market. By targeting a specific problem and intervening only to address that problem,
programmes run the least risk of distorting the market.
It is recommended that all interventions follow the best practice and principles of BDS
market development. They must facilitate market development rather than providing
services. Programmes should be designed to be flexible and responsive to the market and
efforts should be made to coordinate with other development actors. It is vitally important
to fit interventions to market issues in such a way that employs subsidies primarily for pre
and post service delivery activities only. All interventions activities must be aimed at

facilitating market improvement by increasing demand and/or improving supply. The
EADD project must clearly separate the roles of provider and facilitator.
Providers take care of on-going service delivery the costs of which should be covered by
the markets. The provider is an integral part of the system.
The facilitator performs the temporary function of developing markets (these activities are
considered appropriate to subsidize). The facilitator is external to the market system.
Interventions must promote competition and efficiency in the market and work toward a
clear picture of a sustainable market. As defined by best practice it is important that the
interventions:
Engage the private sector in devising and developing viable businesses and market
models that are likely to be copied and to take off in the wider market.
Involve little financial support to market players and lots of cost sharing
opportunities. The project should develop a transactional relationship with suppliers.
Are flexible, responsive and multi faceted. The project must tread lightly in markets.
Employ an overarching strategy of ‘crowding in’ or ‘getting others to do things’.
A variety of interventions have been used by other BDS programmes and each aims to
address one or several weaknesses in a BDS market such as:
• Voucher programmes address SMEs lack of information about services and

reluctance to try a service. It expands demand by providing information and
temporary subsidies to SMEs that do not commonly use BDS, and link them with
BDS suppliers who do not normally serve SMEs. This increases awareness and
demand among SMEs which stimulates suppliers to develop and improve services.
However vouchers may distort a market more than necessary by fostering SMEs
dependence on subsidies.
• Information to consumers addresses SMEs lack of information about services and

suppliers. The aim is to expand demand for BDS by making SMEs aware of
available services and their potential benefits. Some programmes have
commercialized the information dissemination role, which increases the potential for
sustainability.
• Collective action through clusters, networks and associations addresses SMEs

inability to pay for services and supplier unwillingness (or inability) to sell services in
small enough quantities. The aim is to help SMEs overcome dis-economies of scale
by enabling them to purchase services in groups. A major challenge of this
approach is how labor-intensive it is to form groups and identify services common to
everyone in the group. In general, SMEs do not perceive “group organizing” as a
service and are not willing to pay for it.
• Business linkages and promoting embedded services address SME isolation

and inability to pay for services up front. Business linkages also address suppliers’
lack of knowledge about SMEs. The aim is to create or expand BDS embedded
within business relationships between SMEs and other firms. Facilitation to foster
links focuses on disseminating information about players or promoting sub
contracting. Examples include:
o Promoting sub-contracting from large firms to SMEs
o Providing opportunities for large firms and SMEs to interact
o Supporting SMEs participation in trade shows and trade associations
o Developing business associations that include SMEs and larger businesses
o Building supplier capacity for enterprises that provide embedded services to
SMEs
• Technical assistance (TA) to suppliers addresses suppliers’ lack of technical or

managerial skills. The aim is to address a range of supply-side constraints and build
the capacity of new or existing BDS suppliers to profitably serve SMEs. TA lessens
supplier risk in diversifying by absorbing the costs of innovation. Suppliers also need
help to learn how to profitably meet demand. A key advantage of TA is that it allows
facilitators to target specific problems in supply. A disadvantage is it may be difficult
for a facilitator to offer equal access to assistance to many providers. Providing TA to
only a few may give them an unfair advantage however, the market could be
developed if other suppliers copy those business strategies. It is also wise to
develop the capacity of the private sector itself to provide technical assistance to
suppliers.
• Social enterprise addresses a lack of supply in the market. The aim is to increase
the supply of services by helping new suppliers to enter the market. Developing
business service markets when “there is no market,” is a challenge. The BDS market
development approach encourages not-for-profit institutions to understand and build
on the capacity of the existing private sector market. There is some evidence that
social enterprises have the potential to contribute to the development of a
competitive, vibrant BDS market but key market development principles must apply.
• Product Development and commercialization addresses a lack of appropriate

service products for SMEs in the market and supplier reluctance to target new
consumer segments. Suppliers may not be skilled innovators, lacking the knowledge
and experience to develop new service products. The aim is to commercialize new
products through existing suppliers by assisting with product development, market
testing, and initial marketing. New product commercialization can also be undertaken
by promoting franchising of appropriate products. But product development costs
can be high and sustainability is a key challenge (some programmes have found that
they must also provide on-going support services, such as advertising and branding,
quality control, remedial service support, and upgrades).
• Offer matching grants to private sector players for strategic technical assistance to
associations, lead firms, service providers, or for pilot programmes to develop new
ways of doing business.
• Support BDS policy and advocacy such as developing appropriate SME policies,
ensuring a supportive business environment, and helping SMEs engage in advocacy
activities can be an important part of both economic and democratic development.
Try building the capacity of advocacy groups, developing mechanisms for public-
private dialogue, building the capacity of local governments and developing business
environment (BE) reform support functions.
• Promote access to Information and Communication Technologies (ICTs):
physically and economically isolated SMEs are gaining better access to information
and to communication technologies that put them in touch with markets. SMEs use
ICTs to communicate with suppliers, customers, workers, transporters, membership
associations, BDS suppliers, and policy makers. However it is challenging to find
viable ICT business models that target SMEs. Often the information seems like a
public good and commercialization can be problematic. Some charge SMEs for
services, others embed the information into existing transactions between SMEs and
buyers or suppliers, while some information suppliers generate revenue from
advertising or sponsorship deals.
Many of these above strategies are effective ways to stimulate markets or launch a
systemic process, but without a strategy for sustainability and market replication, they tend
to end with the project. The EADD is not designed as a systemic market project but should
be aware of the challenges involved with implementing non systemic interventions such as
the ones described above:
• Beware of matching grants to selected private-sector firms, with no clear link to

employment creation or backward linkages to small-scale farmers or other poverty-
reducing mechanisms.
• Beware of “challenge” grants to individual lead firms that do create jobs and/or link
to small-scale farmers, but that are one-off investments, not replicable to other firms
and not generating or stimulating other economic development.
• Beware of grants to service providers on a short-term, subsidized, and small-scale
basis, rather than stimulating purchasing power of SMEs through vouchers.
• Beware of facilitating business linkages between individual firms and buyers, firms
and service providers, firms and suppliers without an over-arching industry
competitiveness strategy or a sustainability strategy for the linkage service.
• Beware of direct value chain development: directly enhancing value chain
competitiveness by training value-chain businesses and directly facilitating linkages,
rather than stimulating associations, business support markets and other learning
systems to strengthen multiple businesses in the value chain on a sustainable basis.
• Beware of targeting all assistance directly to SMEs, ignoring the power of larger
firms to generate growth that benefits SMEs and the poor.
Approaches and methodologies
EADD should focus on the market system not individual enterprises and view the BDS
market from an external and objective position with the goal of benefiting as many SMEs
as possible. As a market facilitator the project should plan for a viable and independent
market structure that continues to exist after EADD have exited. This includes visualizing
the functions of a sustainable market (offering more benefits to SMEs) and the various
types of players who do or might perform those functions. The facilitator should promote
competition among suppliers in the market. Business-like relationship between the
facilitator and suppliers are more effective in developing markets plus this business-like
approach has a number of advantages:
• Requiring investment from private sector suppliers means that the financial scale of
the initiative will generally fit the capacity of the market.
• Business-like relationships foster business-like incentives, behavior and attitudes
• It is possible to link support to suppliers’ achievement of agreed upon objectives
• The approach attaches a value to support
• It builds ownership without being overwhelmed by external funds and advice.
It is recommended that the EADD adopt a facilitative approach to implementation which

includes employing a light touch to catalyse, initiate, motivate and link. It is less about
‘what a project does’ and more about ‘why’ and ‘how’. Such as approach focuses on using
indirect interventions such as networking, player alignment, intelligence and awareness
building.
BDS best practice defines the facilitator’s role in the following ways:
• NOT playing a direct role in the market system

• Demonstrate the business case, benefits and vision to market players via press
conferences, study trips and seminars.
• Share information publicly about opportunities/ lessons learnt in open workshops,
on the internet and in the media.
• Implement calls to select service provider partners and engage dynamic
commercial service providers where ever possible.
• Mentor partners to develop/ test viable models, strategies and approaches.
• Facilitate advice and assistance to capacitate service providers.
• Cost share to develop, test/ demonstrate, monitor and evaluate approaches and
services.
• Facilitate business linkages, partnerships and contracts.
• Capture lessons learnt with analysis of the market system and developed models.
• Measure systems change and broader market response.
• Undertake impact assessment and examination of causal chain.
• Replicate successful interventions.
• Implement strategies to promote market-driven replication and scale up.
EADD must:
• Be aware of the entire BDS market using both the value chain and BDS survey
results: In a market system, service markets are complementary subsystems to
value chains. Researching BDS markets provides information that is not readily
available through value chain analysis alone. Although a BDS market can exist
completely within a value chain a service provider may also be outside the value
chain making a case for cross-cutting services.
• Develop a clear offer: a description of what EADD is bringing to the situation will
support the development of a sustainable system.
• Define an exit strategy upfront: the BDS markets and transactions must be
sustainable when facilitation activities end and certain facilitation activities may need
to continue on a commercial basis. EADD can prepare for this by training BDS
providers to conduct these activities themselves.
• Manage expectations and establish credibility: communicating the vision for the
BDS market and the part the EADD will play in achieving it is critical. Managing
expectations will help EADD establish its credibility.

It is strongly recommended that the project pilot interventions early. Some aspects of
markets can be understood only after piloting starts and commencing interventions
highlights information gaps. An effective programme pilot is an iterative process in which a
facilitator tries an intervention on a small scale, learns from the intervention, gathers more
information, and adjusts the intervention.
Strategies which ensure effectiveness and efficiency
The EADD has adopted a sub sector BDS strategy to support the provision of BDS
services to SME players in the dairy sub-sector chains to help them take advantage of
market opportunities and earn more profits within the sub-sector. However it is important
to recognise that the programme will also promote some “cross-sector” business services.
Accounting, computer services, basic legal services, technical training, marketing, and
telecommunications services are “cross-sector” services that help firms increase
productivity, reduce costs, and access markets. When assessing the performance of the
project it will be important to acknowledge how facilitating these services may have
impacted on other sub sectors also.
It is recommended that the BDS component of the EADD combine all the following key
effectiveness strategies. However as the Rwanda locations have been plotted in the low
supply and demand quadrant, the strategy of ‘EDUCATING’ should lead:
INFORMING FACILITATING
STRONG SUPPLY STRONG SUPPLY
LOW DEMAND STRONG DEMAND
EDUCATING STIMULATING
LOW SUPPLY STRONG DEMAND
LOW DEMAND LOW SUPPLY
“Educating” is advised in the weakest markets (low demand and low supply), in the
“marginal” BDS markets where there are few enterprises or where there are extremely
exploitative trade relationships. These markets may have been disrupted or have yet to
develop and there are few community organizations or private firms with the potential for
delivering services. Interventions in these very weak markets should strive to influence the
business culture by helping potential clients understand what business development
services are and how they help people start, stabilize, and grow businesses. Activities
might include:
• Basic business education
• Skills training for self-employment
• Business awareness creation and opportunity identification to help people identify
viable businesses
• Identification and capacity building of potential service suppliers
• Tours to other areas where business is more vibrant and BDS markets exist
• Conduct service demonstrations and seminars
• Promote farming as a business via radio programs, field days, brochures and
exchange visits
• Promote model farmers/consumers and success stories
• Implement and disseminate market studies
• Social media campaigns e.g. dramas and road shows for awareness creation
“Facilitating” (strong demand and strong supply) is advised in the markets that have
large numbers of small- to medium-sized firms and some active suppliers. BDS
programmes operating here conform best to the ideal BDS market development approach
of facilitating BDS markets with lighter interventions, helping service providers:
• Identify market niches and provide market research information
• Develop and commercialize new services plus promote use of new technology
• Improve their marketing strategies and facilitate market linkages and expansion to
new markets
• Link SMEs with BDS suppliers
• Remove macro-economic constraints to BDS market development
• Developing new business models and differentiated high quality services
• Develop check off systems
• Develop and test ICT potential
• Networking between suppliers
• Capacity building to increase operational efficiency
• Facilitate hubs to improve transactional efficiency
• Promote provision of embedded services
• Match supply and demand via trade shows, farmer field days, creation of a national
trading platform
“Stimulating” (strong demand and low supply). Interventions in the BDS markets with
very weak supply should focus on stimulating supply. In order to convince private sector
suppliers to enter the market, the facilitator may take on the role of supplier by:
• Developing and testing viable business models for service delivery to demonstrate
BDS market opportunities
• Researching demand for BDS and publishing the results or holding investor
conferences/forums and business opportunity seminars
• Building the capacity of existing and new suppliers
• Linking existing suppliers to financiers and markets
• Linking SMEs with distant service providers
• Helping SMEs work together (clusters, associations, etc.) to access services
• Conducting policy research to identify barriers to entry for suppliers
• Offering suppliers temporary incentives such as matching grants
• Assisting BDS providers with their initial promotion
• Assisting BDS providers with improving their products and marketing
• Advocacy for favourable investment climate
• Create incentives for service providers
“Informing” (strong supply and low demand) is advised in the markets with very low
demand. Where there are some BDS suppliers, there may be a fairly large gap between
the services the supplier offers and SME understanding of their own need for them. In the
BDS markets with very low demand, such as those in rural areas, the EADD should aim at
“informing” SMEs about the potential benefits of particular BDS by:
o Devising a social marketing campaign
o Improving supplier marketing capabilities
o Assisting suppliers to develop a customer referral system
o Conducting service demonstrations and product trials for target enterprises -
explain the benefits of services and illustrate to “first-time users” their need
for the services and encourage them to purchase the service at full cost in
the future
o Provide direct stimulation - use free samples and vouchers as a direct
stimulation strategy
o Improve the level of interaction between SMEs and BDS providers – this can
encourage SMEs to purchase BDS. Facilitate fairs, trade shows, exhibitions,
meetings, and technical clinics plus initiate advertising in print and mass
media.
o Introduce links between BDS providers and potential users - providers who
are unfamiliar to SME communities have difficulty promoting their services.
These links can also assist providers with increasing their outreach or
penetrating new markets
This demand stimulation should be coupled with the capacity building of service providers
to help them respond better to SME wants and needs.
It is recommended that after the existing and potential commercial providers are agreed in
each location, EADD must firstly persuade them that a market opportunity exists to serve
dairy business customers. It is important to share market assessment findings with
targeted providers and show providers the demand in the market. Market assessment
data can show that SMEs purchase services and are willing and able to pay for services
that benefit them. EADD can highlight the percentage of potential customers who
expressed interest in the service, provide an estimation of potential revenues, and
describe the various features customers expect from the service, including modes of
payments for services and delivery mechanisms.
Maybe in the future the project can involve BDS providers in the market assessment
process by having them perform their own market assessments under supervision - this
strategy encourages BDS providers to be committed to entering the market.
EADD must also educate the providers on the benefits of commercialized BDS, for
example, embedded service providers may not realize that they offer services. They may
not have consciously thought about improving their services or offering them on a larger
scale. The project must be cogniscent of the fact that providers will not enter a new market
unless they are reasonably confident that they will make money. Market information can
provide much of the data needed to analyze the viability of a new business model or
serving a new consumer segment. Market information is useful, and in many cases
essential, to assist providers in developing viable business models and a business plan.
When considering which business models might work for the delivery of a particular
service, the project needs to think broadly and build on existing businesses, business
models, or business relationships. The following examples of business models might be
viable:
• Independent small service providers

• Bigger service businesses subcontracting to small, independent providers
• Existing service businesses extending their services to new types of customers
• Franchises
• Business linkages with embedded services
• Previously noncommercial BDS providers, such as vocational training institutions,
government parastatals, and NGOs entering the commercial market
Even when providers are willing to enter a new market, they may not have sufficient
capacity. In particular, providers often need assistance with developing appropriate
service products for new types of customers, designing workable payment mechanisms,
and promoting their services to new customers. No amount of persuasion will attract
commercial BDS providers if no demonstrable demand exists for the service. Indeed, if
providers do not see early revenues, they will quickly drop out of the market. Particularly
for new or unfamiliar services, demand creation is an essential part of attracting
commercial service providers to the market. Service demonstrations and sales agents are
two useful strategies for stimulating demand.
Strategies which ensure sustainability
It is recommended that the following key sustainability strategies be considered within the
business models adopted:
Fee for services - suppliers offer services that are low-cost and often have a short-term
payback period. Costs are reduced by dividing activities — the facilitator performs much of
the service development and testing, and suppliers provide standard services on a regular
basis. Suppliers become expert at serving SMEs and the facilitator specializes in
negotiating and managing funds and developing supplier capacity. Market research costs
may be subsidized by the facilitator who helps with technical assistance or conducts
research for many suppliers such as in this BDS market assessment. BDS marketing
costs may be subsidized by the facilitator who promotes awareness of services. Suppliers
are primarily private sector businesses — donor funding is not used to subsidize direct
transactions and the presence of donor funding is not publicized, thus minimizing SME
expectations of subsidies. Full prices are charged when service design is complete. Many
suppliers may use the following promotional, packaging, and payment mechanisms to
reach low-income markets:
• Lower costs by delivering services through other SMEs.

• Package services in small pieces or “sachets”.
• Offer introductory services with immediate value-added for a small fee.
• Offer gradual payment mechanisms such as installment payments.
• Offer financing to allow the poor to pay for services.
• Collect payments “on commission” if services help the business make a profit.
• Help SMEs purchase as a group and receive a discount.
Benefits of stand alone services Risks of stand alone services
Provides SMEs with more choice Lead firms have limitations on quality and
Increased competition leads to lower standardization
prices and improved service delivery Financing constraints may inhibit service
Maximizes outreach delivery
Levels power relationships amongst Difficult to kick-start in an immature market
value chain businesses
A combination of fee-based and embedded service provision is crucial in creating a

dynamic, competitive market.
Embedded services - many SMEs are reluctant or unable to pay up-front for valuable
services. However, they can produce commodities or manufacture products if a buyer
supplies raw material, market information, product specifications, or other services. Small
enterprises may not be able to afford BDS in any form that requires direct payment and
embedded services have excellent potential to reach the poor because they are not fee-
based. Services provided by buyers of SME products are more likely to reach the poor as
are services embedded in essential inputs that the poor already purchase. Embedded
services can act as a natural driving force of market transactions and thus provide
programmes with an advantage in developing markets. Such services are well tailored to
improving transactions between SMEs and other businesses. Services embedded with
another service may stimulate the demand for stand-alone services.
Benefits of embedded services Risks of embedded services
Enables lead firms to produce per market Heavy investment may over-expose lead firms
specification May inhibit development of stand-alone
Overcomes financing constraints among services
SMEs Potential to “over-service” leading to market
Useful when support market is immature distortions
or non-existent
Cross-subsidies - in cases where services are demand-driven and valuable, but not
financially viable, some providers choose to cross-subsidize them with other revenue
generating activities. Such as supplying BDS to larger businesses that can pay profitable
rates and then using profits to supply smaller businesses with services; or operating a
completely unrelated business and using those profits to subsidize BDS activities; or using
income from a viable BDS to cover the cost of a non-viable BDS.
Third party payment - another strategy is to identify and deliver services that are
mutually beneficial to both small and large firms, and charge only the large firms. Another
example would be harnessing advertising or sponsorship revenue to provide a service
which is seen as a public good such as information delivered by radio, print or mobile
telephony.
Piggy-backing on microfinance and disseminating a BDS through a microfinance

institution - successful programmes use credit meetings to disseminate information about
a BDS, but offer it as a separate, non-required, fee-based activity. Usually, loan officers
and BDS staff are separate as well. The advantages of this approach is that promotional
costs are minimal because there is a captive audience in credit meetings, clients have
access to finance to pay the fee for a BDS and training costs can be kept to a minimum
and overheads minimized. The disadvantages of this approach are that clients may feel
compelled to purchase the service for fear of not receiving a loan, primary clients may not
be the same as microfinance clients, staff may have too many activities and skills could be
diluted. Plus there is a danger of cross-subsidizing low-demand services with lucrative
microfinance services, thus compromising institutional profitability.
The following strategies are recommended and focus on the preferences and limitations of
SMEs:
• Use installments (or hire purchase, renting, leasing) so clients pay a predetermined
fee every week/ month or facilitate bulk purchasing.
• Facilitate a guaranteed payment system (a revolving fund or a check off system via
a service hub).
• Collect a commission on products sold by the client to recover costs.
• Embed the cost of the services into fees for services or products that clients are
known to value.
• Educate BDS providers on cost analysis to promote fair and consistent pricing.
• Keep the price of the service within the affordability limits of the clients.
• Clearly link the services to increased profits for SMEs.
• Offer the service over the same time period as the payments.
• Determine the installments by assessing the client’s capacity to pay.
• Ensure high-quality demand driven services based on market awareness resulting in
concrete benefits for the client.
• Ensure continuous improvement of services.
• Develop a trusting relationship. Full cost recovery can also depend on the strength
of the existing relationship between the provider and the client. When a trusting
relationship exists, greater flexibility in the payment schedule may be possible.
• Monitor payments and follow up with the clients.
It is recommended that the project share financial risk only when the market development
effects would outweigh the market distortion effects. The facilitator should analyze the
potential impact of risk sharing on the market. Will risk sharing distort the BDS market,
limiting the entry of potential providers, or expand the market, facilitating the entry of other
providers in the market? In the following situations, sharing financial risks is likely to be
both essential and beneficial:
o When no or very few existing providers are in the market
o When developing new services
o In very weak markets
o In markets with subsidized providers
To develop a sustainable commercial market for BDS alongside subsidized BDS -

commercial services must offer something different, better, or beyond what subsidized
services offer; and SMEs must be aware of what these added benefits from commercial
services are. The project can use the following methods to meet these conditions:
• Develop unique selling features of a commercial service by understanding the

clients’ needs and the gaps in the subsidized services.
• Assist providers with customizing services.
• Enable BDS providers to address SMEs’ problems that are not addressed by
existing subsidized services.
• Teach commercial providers how to promote their services.
It is recommended that on the demand side, the facilitator may need to realize the
following objectives: lessen SMEs’ distrust of middlemen and service providers, increase
SMEs’ understanding of how services add value to products, and promote a culture of
payment for intangible services.
It is recommended that on the supply side, the facilitator may need to realize the following
objectives: increase BDS providers’ capacities to price services logically, fairly, and
consistently; explain to SMEs how services are priced to increase trust; and develop
payment options with input from client SMEs. For SMEs to be comfortable paying for
services, some transparency on how those services are priced must exist. Value chain
workshops can assist with developing this transparency.
Always ask “who would/ should perform this role if the project was not there? The vision is
that functions performed by facilitators will either not be needed in sustainably growing
markets, or they will be commercialized.
Suggested BDS providers/delivery channels to target for future interventions
The EADD should ideally work with private sector providers who are business like and
willing to invest. This may not be possible in all locations and the project may partner with
some of the following types of suppliers: private BDS businesses and individual
consultants, informal networks, companies offering other products, farmers’ associations
and Coops, religious institutions, employers or business associations, Chambers of
Commerce, NGOs, CBOs, research institutions, educational institutions, financial
institutions, media houses, publicly funded enterprise development agencies and
Government institutions and departments. The project may also partner with members of
the supply chain such as input providers who provide embedded services that can be
promoted and replicated. The important questions to ask include:
o Who can deliver BDS sustainably and how can the services be paid for?
o Which kinds of institutions make highly sustainable providers and how can
services be paid for through commercial channels over the long run and still
reach the poor?
o What is the capacity of existing suppliers to expand and/or improve service
delivery and potential providers to transform into viable private sector
providers?
If the target population is isolated, low-income SMEs, informal sector business may be
more appropriate options. In some situations, the dearth of suppliers may require the
facilitator to work with community-based entrepreneurs and groups to launch new supplier
businesses. But be aware of national level NGOs struggling to define their role. Some
NGOs who support the BDS market development approach choose to remain BDS
providers, but register as a private company or social enterprise. Others opt to become
facilitators. The facilitator may have to support these organisations to define their role
clearly.

Selecting appropriate BDS providers
In order to assist EADD staff in selecting appropriate providers for future interventions a
set of criteria has been developed as follows:
• Capacity to deliver services - e.g. existing contracts, marketing strategy &
accounting and management systems
• Close to SMEs - in culture, operating environment & geography
• Focus on services, SMEs or BDS
• Commercial focus - business like with a business vision, profitability (pricing strategy
& pricing mechanisms) & business culture
• Organizational independence - especially from donor funds
• Legally registered
• Willingness/interest/ability to partner – use information, provide minimum investment
capital & expand capacity
During the supplier diagnostic interviews each supplier was given a rating against these
criteria to enable staff to select partners with the best ability to develop and deliver
appropriate services. A workable data base of these BDS providers is attached to this
report (Annexes/Databases).
BDS performance measurements at the BDS market level
It is recommended that the causal chain is firstly made implicit: What does the project
expect to happen, and how can the project show that each effect is causally linked back to
the original inputs?
This describes the overall SME development strategy — the causality between
programme inputs, activities, outputs, outcomes, and ultimate impacts. A recommended
clear causal link is defined below:
Better business practices contribute to SME growth and

profitability and, eventually, increased employment and income
BDS market development leads to large numbers of SMES

using and applying business services to improve their business
Strengthening the demand for, and supply of, services leads to

a vibrant, competitive BDS market
It is further recommended that the EADD adopts the Performance Measurement

Framework (PMF). PMF is a common system for measuring the performance of BDS
programmes or components of programmes. The goal of PMF is to help improve
performance in the BDS field by helping identify best practices and programmes improve
their performance. The PMF focuses on assessing changes in supply and demand for

services, the development of BDS markets, and how SMEs use services to change
business practices. It proposes to monitor results in 3 categories:
1. Household level (measuring impact on SMEs2)

2. BDS market level (measuring the development of vibrant competitive
markets for BDS)
3. Programme level (measuring programme performance and costs
effectiveness)
It is designed to be used in conjunction with occasional impact assessment and more

frequent tracking of efficiency indictors by suppliers.
Remember a performance evaluation is not the same as an impact assessment.

• Inputs are used to undertake project activities
• Project activities produce outputs
• Outputs can be evaluated to see if a project achieved its immediate purpose
(performance evaluation)
• Outputs lead to outcomes. Outcomes are the final results to show that the project
has contributed towards its overall objective
• Outcomes lead to impacts
• Impact assessment measures the final results of a project once it has had time to
produce an impact
The PMF is structured to measure common objectives: impact-changes in SMEs,

outreach-market development, sustainability and cost effectiveness. The framework
proposes objectives that the BDS component of the programme might be trying to
achieve:
o Impact on SME BDS customers and the wider economic/social environment – to
increase consumer acquisition of BDS, increase customer application of BDS in the
business and increase business benefits from BDS
o Outreach, meaning both the number of SMEs reached (scale) and the effort to provide
services to people not served by existing markets (access) – to expand the market for
BDS, develop a high quality, diverse, competitive market and increase access to BDS
by under-served groups
o Sustainability of business service delivery and supplier institutions – to promote
sustainable access to services
o Cost-effectiveness of programme activities – to maximize programme cost
effectiveness
Goal 1: Increase Impact
Assessing BDS Customer, SMES
Objective Indicators
Strengthen demand for Total number of firms acquiring BDS by service type
2
SMEs refer to small holder farmers however the definition of what this term to the EADD means must be clear from the onset.
services and increase (programme level)
customer acquisition of BDS Percentage/number of women and youth acquiring
services
Total number of SMEs acquiring BDS from programme
supported providers by service
% of total BDS purchases subsidized
Customer satisfaction with a business development
service and willingness to purchase (percentage
satisfied)
Repeat customers (percentage of customers who buy
more than once)
Reasons for satisfaction and repeat purchase
(supplemental)
Increase customer application Percentage of customers who applied the services —
of BDS as intended by the programme and reported by the
client such as:
• Improved productivity/yield on-farm
• Improved in sales
• Reduction in bacterial counts
• Improved efficiency
• Increased number of functioning fodder
multiplication plots
• Increased number of business plans/FS
Increase customer benefits Percentage of customers who experienced business
from BDS benefits as a result of the service — as defined by the
programme and reported by the client such as:
• Increase of productivity/yield on-farm
• Increase in sales/business volume
• Improved purchasing power
Goal 2: Increase Outreach (Scale and Access)
Assessing BDS Markets
Objective Indicators (Reported for the Overall Market and for the
BDS Programme)
Expand the market for BDS Number of SMES acquiring a service through any method
and purchasing a service through commercial transactions
Amount of sales by BDS suppliers (programme only)
Market penetration: percentage of potential SME market
acquiring a service through any method and purchasing a
service
A programmes market share of all services acquired
through any method and all services purchased
(programme only)
Awareness: percentage of SMES aware of a service
Reach: percentage of SMES who are aware and have
purchased a service at least once
Develop a high-quality, Total number of BDS providers in the market by service
diverse, competitive market (market and programme level)
% of private, for private (no donor funds/contracts) sector
BDS providers
Number of BDS products (programme only)
% of high quality, differentiated and appropriate services
Retention: percentage of multiple purchasers out of all
purchasers (not relevant for some programmes)
Satisfaction with last service purchase (supplemental)
Reasons for purchase, non-purchase, and choice of
supplier (supplemental)
Increase access of Extent of access: percentage of SME customers
underserved groups to BDS purchasing a service that represents targeted populations
(women, micro enterprises, and so on)
Target market penetration: percentage of potential SME
targeted markets (women, micro enterprises, etc.)
acquiring a service through any method and purchasing a
service
Goal 3: Achieving Sustainability and Cost Effectiveness
Assessing BDS Suppliers and Facilitators
Objective Indicators
Achieve supplier Price for each BDS service
sustainability/profitability % of profitable BDS providers
Percentage supplier revenue from SMES
Breakdown of sources of supplier revenue (supplemental)
BDS supplier financial sustainability (non-donor revenues
/total expenses) (supplemental)
BDS contribution margin (SME revenues from a service-
direct expenses for the service / total expenses)
(supplemental)
BDS viability (SME revenues from a service / direct
expenses for the service) (supplemental)
Improve programme cost- Ratio of annual programme expenses to annual
effectiveness programme sales to SMES
Annual programme expenses per customer served
Total programme costs per SME (rural households) served
Long term outreach growth of programme
The programme must aim to deliver a greater number of differentiated suppliers earning
profits from fees (or other commercial sources) with a range of service products available
in the market and a gradually increasing numbers of transactions between private
suppliers and SMEs. It is expected that service quality and appropriateness will improve
with increased competition.
Information gathering:
• Much of the information required can be sourced for partner suppliers. However the
partners must be clear from the outset as to the information to be collected and at
what time intervals.
• Data from consumers must be collected via sample surveys. Depending on the
budget available quantitative information should be collected during face to face
interviews using a questionnaire plus qualitative case studies and testimonies via
client interviews. To reduce costs it is recommended that the project also run a
number of tele research panels using the phone numbers in the databases compiled
during the market assessment. This would involve developing a short questionnaire
to collect targeted information over the telephone from a sample of consumers and
suppliers.
• Internal quantitative sample surveys using questionnaires
The project should aim to:

• CREATE VALUE: Provide information on what’s working/not working and why
• BE SCALEABLE: Provide evidence/potential to serve larger number of poor people
• BE SUSTAINABLE: Provide evidence/potential of market capacity to sustain
improvements over time without continued support
It is important that the project capture lessons learnt and provide an analysis of developed
business or market models incorporating new and improved business linkages and
practices that embody a market development strategy. Specific strategies should be
identified for market replication and resilience and systems defined for disseminating
information, promoting learning and adaptation and catalyzing market change.
Annexes
Database of SME actors including persons interviewed

Database of BDS suppliers including persons interviewed
Database of targeted suppliers
Itinerary
FIT/RI scope of work
Final instruments
BDS training report
Researcher training report


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FINAL REPORT

CONSULTANCY SERVICES FOR BUSINESS

Background and introduction 3

Background and Introduction

In a bid to improve life through poverty reduction, a consortium of organisations

Methodology and activities

The market assessment goal is:

The market assessment objectives are:

The research hypothesis is:

REPORT FOR BDS DIAGNOSTIC IN RWANDA 6

1. BDS training workshop - FIT Resources personnel implemented an indepth EADD

2. Training of field research teams - teams including Technoserve and consortium

Consumer survey - Consumer research was implemented with a selection of consumers

REPORT FOR BDS DIAGNOSTIC IN RWANDA 7

Nyagatare Nyagatare Gatsibo

REPORT FOR BDS DIAGNOSTIC IN RWANDA 8

Key challenges of the fieldwork

FIT Resources and Research International personnel collaboratively implemented a

Key conclusions of the methodology

• Outsourcing the MA to a research company ensured a more effective and efficient

REPORT FOR BDS DIAGNOSTIC IN RWANDA 10

CONSUMER SURVEY by location

Locations covered and key informants interviewed

Nyagatare BMN Nyagatare Mbare Gatsibo

Targeted SME consumers interviewed

Distribution of Respondents by age % of total sample interviewed

REPORT FOR BDS DIAGNOSTIC IN RWANDA 11

District Average liters Average Difference

Awareness and affordability of services/ inputs

REPORT FOR BDS DIAGNOSTIC IN RWANDA 13

Vet Treatment Services 93 63 71 82 29

Insecticide and Tick

Disinfectants for Cleaning 58 59 47 84 31

REPORT FOR BDS DIAGNOSTIC IN RWANDA 14

Vet Treatment Services 93 80 74 52 45

Services/inputs ever purchased or received

Service/ product Total So expensive May be able to

REPORT FOR BDS DIAGNOSTIC IN RWANDA 16

& tick sprays

BASE: Total Sample 302 101 101 100

Adequacy of information received on where could sell milk

REPORT FOR BDS DIAGNOSTIC IN RWANDA 18

Services paid for (%)

Extra services required from milk buyers

BASE: Total Sample 302 101 100 101

REPORT FOR BDS DIAGNOSTIC IN RWANDA 21

Adequacy of Milk Nyagatare Nyagatare

Awareness of cooling plant

Reaction to check-off Nyagatare Nyagatare

Skills/ information needed by farmers

Whether ever received any useful information

Whether plans to change anything

Planned changes for farm and dairy improvement:

Improve feed storage methods 12%

Buy farm equipments 15%

Grouping with other farmers to get cheaper inputs 15%

Improve the management of my dairy as a business

Improve feed by buying supplements 23%

Improve my knowledge about dairy farming 28%

Improve the veterinary treatment / drugs used on

Enlarge size of herd / Buy more cattle 30%

Improve feed through growing better / more feed 31%

Improve breeding / breed of cattle through breeding