Ethiopian Institute of Agricultural Research (EIAR)

Holetta Agricultural Research Centre (HARC)

Project Title:-Creating Business Incubation Centre for Potato Technology

Commercialization Assistance in the West Shoa, Ethiopia

Introduction
Potato is a high yielding tuber crop with a short cropping cycle of about 3-4 months.

This coupled with high potential yield of about 40 t/ha, makes the potato a suitable

crop for places where land is limited and labor is abundant (FAO, 2008) such as in

Ethiopia. The highlands also offer favorable climatic and edaphic (soil) conditions.

Furthermore, it is one of the crops with the highest growth rates in the country as a

result of growing markets, especially in urban areas, as eating habits change (Tesfaye

et al., 2010).

Ethiopia officially produces potato on 160.000 ha with an average yield of 10 t/ha so

the national production is 1.6 million ton. Assuming that 1.5 t/ha is used as seed

(15% of the production) and another 15% is lost in storage and transport 1.12

Million is actually consumed by a population of 85 million .This mean that the

average Ethiopian consumes 13kg potato per year or 250g per week, or two modest

portion per week. Holeta researcher Geberemedin, however, concludes from a survey

that annual production area is about 250,000 ha with an average yield of 8t (2

million ton national production of which 70% consumed) leading to a consumption

of 316g/week.
Improvements in the potato production system can be a pathway out of poverty in

Sub Saharan Africa, including Ethiopia. It is an excellent smallholder farmer crop in

the highlands, with a short cropping cycle, potential for large yield per hectare, and

serves as both a cash and food security crop. In Ethiopia potato production can fill a

gap in food supply during the ‘hungry months’ of October to December before the

grain crops are being harvested. However, the potato sub-sector in Ethiopia is

relatively undeveloped and is faced with low productivity of less than 10 t/ha. There

is potential for yields of 35 t/ha, which are being attained by progressive farmers

using quality seed potato of improved varieties coupled with improved management

practices, under the same rain-fed conditions.

Ethiopia also faces are fairly weak public extension system. Most farmers lack proper

storage facilities (Diffuse Light Storage) for seed and cold storage (non-electric with

traditional materials) for ware. Storage determines the sprouting of seed potatoes

and the shelf life of harvested ware potatoes. Furthermore road infrastructure is

relatively poor (though improving) and there is a limited opportunity for processing

and value addition at present. Marketing systems are inefficient, characterized by ad-

hoc sales and farmers cite price instability and poor prices as major challenges other

activities involved encouraging value chain interactions among producers, buyers,

credit facilities, and other stakeholders and working towards a national potato

development plan.
Definition of business incubation
The concept of business incubation is one that is borrowed from the field of

medicine where incubation is described as ‘an environment of controlled

temperature, humidity and oxygen concentration in order to provide optimal

conditions for growth and development’. In line with this definition, a business

incubator helps entrepreneurs develop their ideas, from inception to

commercialization. Thus it is an initiative that systematizes the process of creating

successful new enterprises, by providing them with a comprehensive and integrated

range of services, which include floor-space made available on a flexible and

affordable, but temporary, basis; common services that include secretarial support

and shared use of office equipment; hands-on business counseling; access to

specialized assistance such as research and development support and venture

capital; and networking activities operating as a reference point inside the premises

among entrepreneurs and outside to the local community. (Margaret, Andre and

Len, 2014)

Business incubators are part of a larger value chain that connects businesses to a

vital support system such as local services providers (such as lawyers, corporate

service providers or accountants) and establish relationships that will last after the

firm leaves the incubator. Business incubation is a means by which visions of new

businesses are turned into reality with reduced risks. Incubators aspire to have a

positive impact on a community’s economic health, by maximizing the success of

emerging companies. (Margaret, Andre and Len, 2014)

Business incubation formally began in the US in the 1960s, and later developed in

the UK and Europe through various related forms (eg. Innovation centers, techno

poles / science parks).

Significance of the study

The PBIC will need to address the many challenges agribusiness entrepreneurs face.

Due to Technology limitation or Absence of suitable technology for post-harvesting

and processing. Technologies used for processing of agro-food, appropriate

technologies for simple post harvesting technologies, such as grading and

packaging, are lacking. There is a dearth of companies using good production

technologies and inadequate transfer of knowledge/skills for use of available

technologies. Market access due to limited access to markets, most often with no

direct contact with end users of the produce.Therfore the PBIC will meet the

challenges face potato business entrepreneurs.

Project Description.
BIC is recognized as a way of meeting a variety of economic and socio-economic

policy needs which can include:

 Employment and wealth creation

 Support for small firms with high growth potential

 Transfer of technology

 Promoting innovation

 Enhancing links between universities, research institutions and the business

community

 Industry cluster development

Firm turnover is high in Ethiopia, especially among small firms. Small firms rarely ever

grow into a medium-sized segment, reflecting a lack of entrepreneurial and

managerial capability. This situation reflects that there is a big group of necessity

entrepreneurs who start own account activities without any clear business idea and

some firms are constrained in their access to credit, land, and product markets

(Altenburg, 2010). Moreover, most research findings of innovators couldn’t be

commercialized because of lack of supportive environment. Problems of financial

constraints, linkage and cooperation with industries and proper research facilities

including infrastructure, equipment and supplies are evident (MOST, 2010).

Promotion of competitive knowledge and technology based products for local

consumption and export is very crucial. As a result, the country has to provide

conducive environment for technology based entrepreneurs. One way of providing

assistant for early entrant to technology related business is through the

establishment of BI. In order to set up BI, it is important to be based on the priority

sector of the country. In this regard, the establishment of incubation centres for

basic potato sector plays a significant role. It assists the development of the sector

through innovative products, emerging new companies, import substituted products

and export of innovation. The total impact of such establishment hastens the

industrial development of Ethiopia.

Project Rationale
Subsistence agriculture with traditional farming practices predominates in Ethiopia,

resulting in widespread underemployment and poor use of resources. Agricultural

development is the foundation for food security and sustainable economic

development in Ethiopia, because it is the major source of income and employment

for most Ethiopians and because of the key role it plays in the economy. As such, the
government has made agricultural development a priority, recognizing the

importance of agricultural commercialization for economic development.

Objective of the Study

General Objective
 The general objective of the study is to analyze the prevailing situations

towards the establishment of potato technological business incubation centre

and designing a model of technological incubation centre with detailed

facilities for basic potato technology business incubation sector for youth and

rural women’s entrepreneurs.

Research Methodology and Design

Literature Survey:

The theoretical principles and foundations of technology incubation centre will be

reviewed from the literatures written by different authors. These literatures include

books, research papers, manuals, business plans and feasibility study papers.

Data Collection Methods

The research will do literature survey to find out what business incubation centre

means, the history of BIC, their development and the current status, experiences

globally and in Africa. In addition to these both primary and secondary data

necessary for the study to will be conducted.

Primary Data Collection: both quantitative and qualitative primary data will
be collected through in-depth interview in participatory manner with the

representatives of Universities BICs, Private BICs, NGO BIC; Government owned BICs

and with professionals related to the .study

Secondary Data Collection: BICs secondary data will be collected from electronic

documents and libraries. The BICs establishment document, operational manual,

strategic plan, broachers, catalogue, implementation manual and performance

report, Other sources like Private and Public Business Incubation Centres,

Universities surveys output will be considered

Data Analysis Method

The Data analysis and Interpretation will be done following Descriptive statstics

analysis techniques since the research is qualitative and exploratory due to the

newness of the concept. In the interpretation process quantifiable data are

represented using appropriate tables, graphs, charts and percentages. The

description of the tables, graphs, charts and percentages will be written to elaborate

the data. To create tables, graphs, charts and percentages necessary software SPSS

Version 23 is used. Non quantifiable data will be analyzed and interpreted through

narration.

Research Activity

Activity 1-The feasibility assessment and business planning for potato

Business incubation and commercialization.

The specific objectives of the study are:

 To assess the national policy toward science and technology innovation and

incentives.

 To identify the problems of basic potato business incubation sector from the

perspective of technological development.

 To assess the impacts of technological business incubation on the sector.

 To assess and take a bench mark of best practices of selected countries, for

the establishment of potato technology incubation centre.

 Stakeholder
Consultation
Gap
Stakeholder Analysis
identification
•Data gathering
• Workshops •Feedback from
•Interviews to to create
and interviews local stakeholders
map existing business model,
•Review of •Identification • Review and
-to validate service evaluate
the agriculture of stakeholders inputs from
selection of offerings and locations,
& agribusiness affecting the international
value chains planned principal Stakehol
sectors and success of
and identify partners/hosts, ders expert group
initiatives Consultat
value chains agribusiness
barriers to SME etc ion
that offer entrepreneu start-up and
Business
Value
Modeling
chain
Partner
identificatio

Diagram 1-The feasibility assessment and business planning methodology will be outlined
in such diagram.
Activity 2- Potato Food product Business Incubation and Commercialization
centre development.
Specific objective-

 To develop a model for potato technological incubation centre with detailed

facility, financial requirement and governance for innovators focusing on

potato food processing sector.

One Food Innovation centre (potato food product incubation centre) will be

developed together with facility (Food product development Kitchen, chemistry lab,

microbiology lab.) at Holetta agricultural research centre.

Potato product development Kitchen
Potato product development kitchen Will be designed/used to conduct basic

research for product development or formulation to develop cost effective and

feasible product that can be manufactured with assurance of safety and quality. As

well as product development instructions will be prepared.

Sensory analysis
Sensory evaluation booth rooms will be prepared /used adjacent to HARC product

development room research kitchen. Taste panel facility will be available for food

processors to conduct unbiased evaluation of food product.

Food chemistry lab./Microbiology lab.
Will be designed /used to conduct abroad array of finished potato product routine

food chemistry testing and nutritional labelling, product safety, shelf life and efficacy

of facility sanitation such as moisture, protein, fat, carbohydrate, Fe, Zn…will be

needed during potato food product development and manufacture.

Focus group observation room
Focus group observation room will be designed so that clients can observe

professional conducted consumer research and focus group to create an opinion

seeking panel discussion in which consumers’ to enable and share their new

product concept or benefit. Groups consist of 8-12 people will be considered to join

in discussion led by trained moderator.

Conference room, office for clients and partners

Conference room, office for clients and partners will be used to give training,

distance learning to the rural clients linking with food innovation centre as well as to

train clients for good manufacturing practice, community meeting and conference.

Clients also will get access to telephone, print, copy and other services. This office

also used by partner agencies.

Product storage, commercialization and Food processing
Different preservation methods will be used for products such as frizzier, freeze

dryer, chillers and cooler for preservation of potato product to extend the shelf life

of the product.

Other Facility and Infrastructure Requirements

Access to Testing Facilities
Agribusiness entrepreneurs need access to testing facilities and laboratories, through

brokering relationships, rather than setting up dedicated facilities.

Access to Relevant Technology

Technology information, development, and transfer are other important elements of

the PBIC. In implementing this track, the AIC will need to address the needs of food

manufacturing and processing companies in any databases and services that broker

access to appropriate technology.

Access to Packaging
Access to packaging is an impediment for food processors, Advocacy for the

development of the packaging industry and brokering relationships in Ethiopia and

abroad is needed. Establishing and working with a solid network of copackers, who

will package a manufacturer's product in the manufacturer's brand, is a priority as a

part of implementation. The specialist staff referred to earlier, especially the one with

international experience, should have adequate knowledge as to what is required

and about the networks. Specialist consultants can provide this information.
Pre-incubation
To develop a pipeline of future clients, the PBIC needs to develop pre-incubation

programs with universities and other incubators and training institutions, enhancing

existing entrepreneurship development activity. The PBIC has a budget for working

in this area with universities and chambers of commerce.

Activity 3 -Selection of locations and Clients for Potato business incubation

and commercialization support
Specific objective-
 To help target clients for Potato business incubation and commercialization

through PBIC selection

The PBIC hub will be located in HARC with three?? satellites sites in Addis Ababa,

( west shewa (Holeta town); North Shewa (DebreBrhan).The PBIC will not offer

processing facilities for clients to use. Instead it will work with clients in their own

facilities, help clients develop their own facilities, and broker relationships to make

use of any existing facilities. The PBIC hub will primarily offer offices, meeting rooms,

hot disking, showcasing facilities, and communication facilities. It needs to be in a

good commercial location in Addis Ababa appropriate for showcasing to

international clients. The budget allows for renting appropriate facilities. Virtual
services will be provided to client companies located beyond hub and satellite

facilities, for which communications and travel will be needed and budgeted.

Activity 4- Potato business incubation and commercialization business

model Development
Specific objective-
 To select business model for Potato business incubation and

commercialization.
Selecting Clients
The highest impact and likelihood of sustainability of the PBIC can be achieved by

targeting enterprises that demonstrate some understanding of market demand,

target the local and regional markets, and have access to a minimum level of

equipment. The enterprises, thus, have a foundation that positions them for growth

into new markets or products.

A detailed selection process will need to be prepared in order to select the

enterprises; a number of points will be required: 1. Enterprises need to have a

growth focus.

2. Entrepreneurs need to demonstrate strong entrepreneurial traits that can be

accessed through psychological testing.

3. Enterprises have a track record indicating success and will demonstrate

competitive advantages in some ways.

4. The market potential of enterprises will need to be good to allow growth activities.

Selection will follow a process of application, assessment, review, and capacity

building. Finally, a selection panel will assess the merits of each enterprise. This panel

will include representation from a financial institution, as well as a professional with

sufficient market knowledge in the specific product market to assess the product’s

market potential.
The services revolve around the following:
1. Potato business market development

 Market access and information

 Branding and labelling

 Certification and compliance (nutritional analysis plus)

 High-value niche markets

2. Technology

 Suitable technology for post harvesting and processing

 Product design and testing o Packaging technology

3. Finance

 Assessing readiness

 Seed capital / matching grants

 Finance for growth

4. Management support

 Infrastructure—office space, product showcasing, and early processing

 Human resources management

 Accounting, legal, compliance, and networking

The PBIC will provide support to incubate in partnership with relevant stakeholders,

avoiding duplication by complementing and levering their services and addressing

service level gaps. It will focus its support services toward expanding domestic and

international market opportunities for youth and rural women’s operating in value

chains with potential. It will emphasize supporting the activities of PBIC and its

clients (the primary sponsor of the PBIC). The PBI will work with similar organizations

and their clients, such as the PBIC, the PBI, donor programs, and micro-enterprise

development providers.
 The potato business incubation centre will offer the following service

Technical Advisory Services Innovation Access to Facilities

Knowledge Networking Acceleration  Compliance &
 Market  Advisory and Platform Certification
Research and Coaching  Competitions  Early
Intelligence Mentors  Ideation and Processing
 Business  Value Chain Prototyping Space
Training Partner Events  Working
 Technical Facilitation  Acceleration Space / Hot
Training  Networking Events Desking
 Industry Events Collaboration  Product
Project Beneficiaries

The potato business incubation Centre will have three groups of beneficiaries.

 The direct beneficiaries include high growth potential agribusiness

entrepreneurs and small businesses.

 The indirect beneficiaries are smallholder potato growers’ farmers that supply

potato to enterprises.

 Unemployed Rural youth and women’s

 Associated beneficiaries include PBIC and other agencies supporting the

commercialization of agriculture, whose clients involved in agro-processing

will receive additional support from the PBIC.

Expected output

The PBIC aims to advance the competitiveness of the potato businesses incubation

sector in order to increase growth, and thereby increase jobs and incomes for youth

and rural women’s.

Broadly, the impacts of the PBIC will be measured using the following indicators:

 The number of enterprises reached

 The revenue growth of client enterprises

 The number of jobs created by client enterprises

 The number of indirect jobs created

 The number of farmers impacted

 The increase in farmers’ income

Persons Responsible
 Mamaru Tesfaye and Liyusew Ayalew ( Technology Transfer and

Commercialization Research Department)

 Biadge Kefale (Food Science and Nutrition Research Department) and

 (Potato breeding Research Department)

Location- Holeta
Duration - 5 years
Budget -----???
 Study program

2018/2019 2019/2020 2020/2023

Activity description
1 2n 3r 4t 1 2n 3r 4t 1 2n 3r 4th
st d d h st d d h st d d

Proposal refinement and X X

adaptation to the working
environment

Questionnaire preparetion X X

Site and participant X X

selection

Survey and Data X X X

collection

PBIC development X X X X X X X

Client selection X X X

Data entry X X X

Data analysis X X

Report write up X X X
Reference

(Tesfaye et al., 2010). Creating wealth with seed potatoes in Ethiopia.

(Margaret, Andre and Len, 2014).

(Steffen Schulz, Gebremedhin Woldegiorgis, Gebrehiwot Hailemariam, Abdulwahab

Aliyi, J. van de Haar, W. Shiferaw.,2014) Sustainable Seed Potato Production in
Ethiopia: from Farm-Saved to Quality Declared Seed

FAO, 2010. Quality declared planting material. Protocols and standards for vegetatively
propagated crops. FAO plant production and protection paper 195.