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This tool seeks to help you address common shortcomings in value chain development (VCD) assessment by (1) Applying an asset-based approach; (2) Using impact pathways; (3) Harnessing the insights from multiscale and multidimensional analysis; (4) Promoting organizational learning. The tool has been tested in 20+ countries in South Asia, Africa, and Latin America and the Caribbean (LAC).
What is it good for?
5Capitals facilitates learning about the potential of value chain development (VCD) to strengthen rural livelihoods and improve business performance. Learning is derived from measuring and observing changes in various assets managed by smallholder households and the enterprises with which they have direct contact. These smallholder-linked enterprises play a critical role in linking smallholders to markets. Underpinning 5Capitals is the belief that the greater a household’s access to livelihood assets, such as human, social, natural, physical and financial capitals, the higher its well-being and resilience. Likewise, the greater a linked enterprise’s access to business assets, including human, social, physical and financial capitals, the greater its economic viability and performance. The tool helps users understand critical development issues, such as the extent to which preexisting asset endowments determine the outcomes of VCD, the relationship between asset building at the enterprise and household levels, and the role of market, political and institutional factors in facilitating or hindering favorable outcomes. The methodological framework underlying 5Capitals helps users separate the changes caused by interactions and interventions in value chains from those induced by the overall context.
Who is it for?
5Capitals aims to support the following types of organizations involved in VCD:
- Funding agencies looking for more effective and efficient programs to reduce rural poverty through VCD
- NGOs, consultants, government agencies and other organizations providing services to smallholders and businesses that want to deliver more impactful VCD interventions
- Businesses engaged with smallholders that want to determine their contribution to poverty reduction and improve their social and environmental credentials
- Certification bodies that seek to understand the contribution of voluntary standard systems to building more resilient smallholder production and livelihood systems
What are its salient features?
5Capitals stimulates learning among stakeholders and facilitates continuous improvement toward higher-impact interactions and interventions in value chains through the following:
- An asset-based approach that considers changes in livelihood and business assets resulting from VCD, which in turn provide important insights into advances in poverty reduction and improved business performance
- Impact pathways that provide a practical framework for selecting indicators and developing a theory of change related to asset building by smallholders and their enterprises
- Multiscale and multidimensional analysis that considers the effects of multiple-source interventions on asset building at household and enterprise levels
- Field-tested and validated methodological framework that incorporates lessons learned from 23 case studies from Africa, Asia, Latin America and North America
- Focus on organizational learning that involves VCD stakeholders throughout the process and uses the findings to redesign VCD initiatives and reallocate resources accordingly
Publications
The following publications are based on the design or implementation of 5Capitals:
- Donovan, J. and N. Poole. 2011. Value chain development and rural poverty reduction: Asset building by smallholder coffee producers in Nicaragua. ICRAF working paper 138. Nairobi: ICRAF;
- Donovan, J. and N. Poole. 2013. Asset building in response to value chain development: Lessons from taro producers in Nicaragua. International Journal of Agricultural Sustainability 88 (1): 23-37;
- Gaming, H., S. Guardia, L. Pocasangre, and C. Staver. Farmers' community enterprise for marketing organic bananas from Alto Beni, Bolivia: Impacts and threats. Enterprise Development and Microfinance 22(3): 210-224;
- Katerberg, L., A. Khan, and S. Ruddick. 2011. Evaluating value chain pact using a sustainable livelihoods approach: A case study of horticulture in Afghanistan. Enterprise Development and Microfinance 22(3): 225-240;
- Stoian, D., J. Donovan, J. Fisk, and M. Muldoon. 2012. Value chain development for rural poverty reduction: A reality check and a warning. Enterprise Development and Microfinance 23(1): 54-69.
Photo credit: FAO