Household Assest Building Programme, Final DRAFT, 27

Final Draft, 2009-07-27
Food Security Programme

2010-2014
HOUSEHOLD ASSET BUILDING

COMPONENT
Ministry of Agriculture
and Rural Development
June 2009
CONTENTS
CONTENTS ........................................................................................................................................................... i
ACRONYMS ......................................................................................................................................................... iv
1 Summary .................................................................................................................................................... 1
2 Background and Justification .............................................................................................................. 3
2.1 Government/Sector Policy most relevant to the component ........................................... 3
2.1.1 Rural finance .................................................................................................................................. 3
2.1.2 Cooperative promotion ............................................................................................................... 6
2.1.3 Pastoral policy .............................................................................................................................. 7
2.1.4 Women and youth packages and off-farm activity promotion ...................................... 8
2.2 Features of the Sector .................................................................................................................... 9
2.3 Expected Clients .............................................................................................................................. 9
2.4 Problems to be tackled ............................................................................................................... 10
2.5 Other relevant interventions and institutions involved .................................................. 11
2.5.1 The Extension System ........................................................................................................ 11
2.5.2 Cooperative development ................................................................................................. 13
2.5.3 Financial service providers .............................................................................................. 13
2.5.4 Agricultural Growth Programme (AGP) ....................................................................... 14
2.6 Policy, Strategy and Programme Gaps ........................................................................................ 14
2.7 Lessons learned from past programming .................................................................................. 15
1 3 Interventions ...................................................................................................................................... 16
3.1 Goal ................................................................................................................................................... 16
3.2 Outcome and Strategy ................................................................................................................. 16
3.3 Outputs ............................................................................................................................................ 19
3.3.1 Output 1: Access to viable on- and off-farm income-generating opportunities
improved. ................................................................................................................................................ 19
3.3.2 Output 2: Access to sustainable financial services enhanced. .................................. 21
3.3.3 Output 3: Sustainable input sourcing, production and delivery systems
enhanced. ..................................................................................................................................................... 22
3.3.4 Output 4: Access to effective product and labour markets increased. ................... 23
3.3.5 Output 5: Institutional capacity to manage and implement the HABP
strengthened............................................................................................................................................... 24
3.3.6 Output 6. Confidence, knowledge and skills of food insecure households in CFI
woredas built. ............................................................................................................................................. 25
3.4 Activities ........................................................................................................................................ 26
3.4.1 Output 1 Activities: Access to viable on- and off-farm income-generating
opportunities improved. .................................................................................................................... 26
Activity 1: Identify viable investment and income generating opportunities for food
insecure households ............................................................................................................................ 26
Activity 2: Provide advice and support to food insecure households in the development
of business plans .................................................................................................................................. 28
Activity 3: Support the implementation of business plans through technical assistance
on various technology options and monitoring of household investments ...................... 31
3.4.2 Output 2 Activities: Access to sustainable financial services enhanced. ............... 31
Activity 1: Build the institutional capacity of financial service providers (RUSACCOs
and MFIs) for sustained delivery of multiple financial products ......................................... 31
Activity 2: Provide a loan fund, community grant or seed capital to financial service
providers. ................................................................................................................................................ 34
Figure 3: Channelling modalities for Government contributions to HABP financial
services .................................................................................................................................................... 35
Activity 3: Support the implementation of an appropriate regulatory and supervisory

framework for grassroots financial institutions ........................................................................ 37
3.4.3 Output 3 Activities: Sustainable input sourcing, production and delivery systems
enhanced. ..................................................................................................................................................... 38
Activity 1: Build linkages between suppliers and users of inputs and technologies
necessary for the implementation of business plans ............................................................... 38
Activity 2: Promote multiplication or distribution of inputs/products by volunteers
from within client communities ...................................................................................................... 39
3.4.4 Output 4 Activities: Access to effective product and labour markets increased. 40
Activity 1: Improve storage, processing and quality control for increased value
addition according to business plans ............................................................................................ 40
Activity 2: Improve marketing transactions and access to higher-value markets for new
investments or wage employment .................................................................................................. 41
3.4.5 Output 5 Activities: Institutional capacity to manage and implement the HABP
strengthened............................................................................................................................................... 42
1.1.1 Activity 1: Strengthen management capacity of Government implementers .. 42
Activity 2: Strengthen technical capacity of Extension Service, Cooperative Promotion
Bureaus, SMEA and other relevant institutions to provide demand-driven extension
and training in market-oriented business planning and technological innovation ....... 43
Activity 3: Strengthen capacity of financial service providers to provide appropriate
financial services to food insecure households .......................................................................... 45
3.4.6 Output 6 Activities: Confidence, knowledge and skills of food insecure
households in CFI woredas built. ......................................................................................................... 45
Activity 1: Build skills, knowledge and confidence in business planning and
management........................................................................................................................................... 46
Activity 2: Build skills, knowledge and confidence in financial management .................. 46
Activity 3: Build skills, knowledge and confidence in input sourcing and production,
particularly for new technologies ................................................................................................... 46
Activity 4: Build skills, knowledge and confidence in marketing and value addition ... 46
4 Assumptions........................................................................................................................................... 47
4.1 Outcome-to-Goal assumptions ................................................................................................. 47
4.2 Output-to-Outcome assumptions ............................................................................................ 47
5 Implementation .................................................................................................................................... 49
5.1 Physical and non-physical means ........................................................................................... 49
5.2 Institutional arrangements ....................................................................................................... 50
5.2.1 Federal Level ......................................................................................................................... 56
5.2.2 Regional Level ....................................................................................................................... 58
5.2.3 Woreda Level ........................................................................................................................ 61
5.2.4 Kebele and Community ...................................................................................................... 63
5.3. Programme Planning................................................................................................................... 65
5.3.1 Woreda Integrated Planning ............................................................................................ 65
5.3.2. Planning for HABP ................................................................................................................ 66
5.4 Cost Estimate and Financing Plan ................................................................................................ 68
5.5. Special conditions and accompanying measures to be taken by Government ......... 69
2 6 Factors Ensuring Sustainability ................................................................................................... 70
6.1 Policy Support and Coordination ............................................................................................ 70
6.2 Economic and Financial Issues ................................................................................................ 70
6.3 Institutional and Management Capacity ............................................................................... 70
6.4 Technical Issues, including Regulatory and Operational ................................................ 71
6.4.1 Technical design elements ................................................................................................ 71
6.4.2 Levels of technologies ........................................................................................................ 71
6.4.3 Government regulatory role in use and development of technologies .............. 71

6.5 Environmental protection ......................................................................................................... 72
6.6 Socio-cultural and gender issues ............................................................................................ 72
6.6.1 Empowerment and confidence building of CFI households .................................. 72
6.6.2 Gender equality .................................................................................................................... 72
6.6.3 HIV/AIDS ................................................................................................................................ 72
7 Programme Performance: Monitoring and Evaluation and Accountability ...................... 73
7.1. Monitoring and Evaluation ............................................................................................................ 73
7.2. Accountability for performance ................................................................................................... 76
Annex 1: Overview of HABP Outputs, Activities and Steps .............................................................. 78
3 Annex 2: Integrated planning for HAB and other FSP components ..................................... 81
ACRONYMS
ACSI Amhara Credit and Saving Institute

AED Agricultural Extension Directorate
AEMFI Association of Ethiopian Microfinance Institutions
AGP Agricultural Growth Programme
ATVET Agricultural Technical Vocational Education and Training
BoARD Bureau of Agriculture and Rural Development
BoTI Bureau of Trade and Industry
CBE Commercial Bank of Ethiopia
CCI Complementary Community Investment
CFI Chronically Food Insecure
CFSTF Community Food Security Task Force
CIDA Canadian International Development Agency
DA Development Agent
DBE Development Bank of Ethiopia
DECSI Dedebit Credit and Saving Institute
DRMFSS Disaster Risk Management and Food Security Sector
ESE Ethiopian Seed Enterprise
ESMF Environmental and Social Management Framework
FREAC Farmer Research-Extension Advisory Council
FREG Farmer Research-Extension Group
FSP Food Security Programme
FSCD Food Security Coordination Directorate
FSS Food Security Strategy
FTC Farmer Training Centre
GOE Government of Ethiopia
HABP Household Asset Building Programme
HH Household
IGA Income Generating Activity
IPMS Improving Productivity and Market Successes
JCC Joint Coordination Committee
JICA Japan International Cooperation Agency
KAC Kebele Appeals Committee
KDC Kebele Development Committee
KFSTF Kebele Food Security Task Force
M&E Monitoring and Evaluation
MFI Microfinance Institution
MLVP Market-led Livelihoods for Vulnerable Populations
MoARD Ministry of Agriculture and Rural Development
MoFED Ministry of Finance and Economic Development
MOI Ministry of Information
NBE National Bank of Ethiopia
NGO Non-Governmental Organisation
OCSSCO Oromiya Credit and Saving Share Company
OFSP Other Food Security Programmes
PASDEP Plan for Accelerated and Sustained Development to End Poverty
PSNP Productive Safety Net Programme
QSAE Quality Standards Authority of Ethiopia
RCBP Rural Capacity Building Project
RDPS Rural Development Policy and Strategy

RFSCO Regional Disaster Prevention & Food Security Coordination Office
RFSSC Regional Food Security Steering Committee
RUFIP Rural Financial Intermediation Programme
RUSACCO Rural Savings and Credit Cooperative
SMS Subject Matter Specialist
SNNPR Southern Nations, Nationalities and Peoples Region
TC Technical Committee
USAID United States Agency for International Development
VSLA Village Savings and Lending Association
WARDO Woreda Agricultural and Rural Development Office
WDC Woreda Development Committee
WFSTF Woreda Food Security Task Force
WoFED Woreda Office of Finance and Economic Development
1 SUMMARY
The Household Asset Building Programme (HABP) is one of four components of the Government
of Ethiopia’s Food Security Programme. As such, it contributes to achievement of the FSP’s
expected Outcome of improved food security status of male and female members of chronically
and transitorily food insecure households in chronically food insecure woredas. The specific
targeted Outcome of the HABP: Income sources diversified and productive assets increased for
food insecure households in CFI woredas.
Six Outputs are planned in order to achieve this Outcome. Each Output includes a set of activities
designed to address the lessons learned and challenges encountered in the implementation of
the previous phase. A brief synopsis is provided below.
Output 1: Access to viable on- and off-farm income-generating opportunities increased. This
output uses a consultative approach that seeks to involve households in the identification of
investment opportunities as well as the development of tailored household or group business
plans. These business plans will include off-farm activities where appropriate and will provide
the foundation for programme financial and technical assistance under outputs 2-4.
Output 2: Access to sustainable financial services enhanced. This Output is designed to de-link
extension advice from credit provision and to begin establishing a sustainable financial service
provision system throughout chronically food insecure woredas. Key aspects of this Output
include financial literacy/savings promotion campaigns for CFI households, promotion of
RUSACCOs, and facilitation of MFI expansion into under-served areas. A variety of funding
mechanisms will be used, including a line of credit for RUSACCOs. Subject to availability of
additional financing from Development Partners, alternative financing arrangements will be
explored – specifically partial loan guarantees and matching seed capital, and a pilot on
insurance.
Output 3: Sustainable input sourcing, production and delivery systems enhanced. This Output is
directly linked to the business plans developed under Output 1 and seeks to overcome the
hurdles faced in the previous phase in the sourcing/procurement of investment assets and
inputs. It will entail linkages to private input suppliers and the promotion of seed and seedling
multiplication and input distribution as an income generating activity for participating
households.
Output 4: Access to effective product and labour markets increased. This Output will enable
households to maximize the profitability of their business plans by linking them to markets.
Market orientation will be a key characteristic of the technical assistance provided from the very
beginning of the programme.
Output 5: Institutional capacity to manage and implement the HABP strengthened. The
programme will be implemented primarily through the public extension system and financial
service institutions. For activities to be effective in achieving the intended Outputs, it is
necessary to build the capacity of implementing institutions to assess the needs of chronically
food insecure households, facilitate effective linkages, provide appropriate market-based
technical advice or appropriate financial products, and effectively manage a complex
programme involving a variety of stakeholders. The capacity building Output focuses on
achieving this.
1
Output 6: Knowledge, skills and confidence of food insecure people built. This Output is cross-
cutting to Outputs 1-4. It seeks to build households’ confidence for taking risks (particularly in
obtaining credit) and making investments in technological innovation, and is rooted in a process
that involves household-level stakeholder consultations and demand-driven service delivery.
The HABP will be implemented through two primary means: technical assistance (through the
Extension Service but in coordination with a variety of actors, including the Small and Medium
Enterprise Development Agency, programmes for women and youth, Off-Farm technical officers,
and others) and financial services (credit provided by the programme through MFIs and
RUSACCOs). The estimated cost of the HABP component is X of which Y amount is provided by
Government resources and will be mainly used to finance the credit lines.
2
2 BACKGROUND AND JUSTIFICATION

The Food Security Programme (2010-2014) has four major components: (i) the Productive
Safety Net Programme (PSNP), (ii) the Household Asset Building Programme (HABP), (iii) the
Complementary Community Investment (CCI) component, and (iv) the Resettlement component.
The FSP has its own programme document, within which each component is nested and to
which this component programme document makes regular reference.
This document presents a detailed description of the Household Asset Building Programme. It
begins with an overview of government policies and strategies relevant to the component,
followed by a description of objectives, outputs and activities. Implementation modalities are
described, followed by an analysis of factors affecting sustainability and a brief description of the
monitoring and evaluation framework.
2.1 GOVERNMENT/SECTOR POLICY MOST RELEVANT TO THE COMPONENT
The Government of Ethiopia has put in place policies and strategies that address both chronic
and transitory food insecurity. Chief amongst these are the Rural Development Policy and
Strategy (RDPS); the Food Security Strategy (FSS); the Plan for Accelerated and Sustained
Development to End Poverty (PASDEP) and the Pastoral Development Policy. There are other
programmes, and policies which intend to support youth and women.
These policies are described in detail in the overall FSP document. Elements of GoE policies and
strategies that are the most highly relevant to the Household Asset Building Programme are:
• Rural finance policy
• Cooperative proclamation
• Pastoral policy
• Women and youth-related policies
2.1.1 RURAL FINANCE
The RDPS recognises that appropriate and timely rural finance is the critical missing element in
rural development. Providing adequate, appropriate and timely credit is considered one of the
means to break the poverty cycle and bring about sustainable development, as illustrated in
Figure 1 below.
3
FIGURE 1: THE POVERTY CYCLE – RURAL FINANCE AS THE CRITICAL

MISSING ELEMENT 1
Limited
finance
Credit Provision
Little or no Limited use of inputs

surplus for
and technologies
markets
Low productivity
Attempts have been made to ensure the availability of rural credit through government and non-
governmental organisations. Regional governments have used their annual budget subsidies as
collateral to borrow money from the Commercial Bank of Ethiopia (CBE) and on-lend it to
farmers for the purchase of inputs through an in-kind credit transaction. Although this
mechanism has played an important role given the absence of financial service providers in
many rural areas, it has had its own complex problems.
First, Regional governments are not financial institutions that can provide comprehensive
financial services, including credit and savings. In many cases they were unable to collect the
loans and ended up repaying from their annual budgets on behalf of defaulters.
Second, the loan disbursement and collection process imposed considerable pressure on
administrators and extension workers. They became lenders and collectors of loans, which
affected their relationships with farmers and left little time for regular extension activities.
Third, farmers often considered the loan as a government grant or a right, which led to the
misuse of resources and a tendency not to repay the loans.
Hence the RDPS policy document states that the use of government agencies to provide loans is
not sustainable and highlights the urgency of developing proper rural finance mechanisms.
Today, Regional governments are increasingly moving away from providing in-kind input credit
1 Based on description in the RDPS (MOI, 2002:186-189)
4
to all but the neediest farmers, opting instead to provide fertilizer and seed on a cash basis for
the majority of farmers. This has the potential to effectively de-link Government input supply
with Government credit, thereby enabling the private sector to gain a foothold in input supply—
assuming that financial service providers are present to enable farmers to obtain the necessary
credit for their inputs.
NGOs have played an important role in injecting finance into rural communities through grants,
seed money and revolving funds for community groups. However, loan disbursement and
collection was declared to be incompatible with NGO development work.
In order to ensure a clear differentiation between grants and credit, the Government introduced
Proclamation No 40/1996, “A Proclamation to Provide for the Licensing and Supervision of the
Business of Microfinance Institutions”, as the major law to establish and regulate MFIs. Since
then, 29 MFIs have been established in all Regions of the country. Amongst these MFIs, a few are
in the process of transforming themselves into rural banks that provide comprehensive banking
services (not only loans) for rural households.
According to the Association of Ethiopian MFIs (AEMFI), MFIs have mobilised over Birr 2 billion
from various sources, of which Birr 820 million (41%) is in savings. They have issued nearly Birr
3 billion in loans to 2.4 million clients. Among the household investments for which loans were
issued, cattle fattening (16%) and sheep and goat rearing (11%) are the top two. The size of
loans per borrower range from Birr 150 to 5,000 (ACSI, DECSI); Birr 1,100 to 5,000 (OCSSCO)
and Birr 500 to 5,000 (Omo MFI).
The microfinance industry expects significant growth in potential demand for financial services,
most notably credit, over the next 10 years. In spite of the rapid expansion of the MFIs due to,
among other things, strong government and donor support, and strong national networks, there
are several challenges facing the industry. There are also opportunities that can be tapped.
These are summarised in Table 1 below.
Table 1: Challenges and opportunities for rural finance in Ethiopia2
Challenges Opportunities
• Shortage of loan capital – inadequate • Huge unmet demand – the MFIs meet 20%
donor funding, lack of equity capital, no of the potential demand for financial
access to foreign capital. services. There is high potential demand
which is an opportunity for rural financial
• Policy, legal and regulatory constraints – institutions to increase outreach and deliver
the involvement of government agencies in demand driven financial services.
loan disbursement contravening the NBE
regulations. Although NGOs do not directly • Development of infrastructure (roads,
provide loans since 1998, they still provide telecommunication and power services) –
seed money to groups, with little or no over the past 15 years, the GoE has invested
contract enforcement mechanism thereby in the expansion and improvement of
leading to non-repayment. This distorts the infrastructure. This is an opportunity for
microfinance market. rural financial providers to increase
outreach and improve their management
• Limited outreach particularly with respect information system.
to women. Women account for 38% of the
2Source: Wolday Amha. A Decade of Microfinance Institutions Development in Ethiopia (Occasional Paper
#21), January 2008.
5
clients partly due to the supply driven • Availability of loans from Commercial
financial products which are not tailored to Bank of Ethiopia (CBE) - notwithstanding
women’s needs. the point made earlier that rural finance
institutions face shortage of capital, recently
• Risk – among other factors drought, the CBE has provided loans that help MFIs to
seasonality of agricultural activities, and increase their outreach. It is expected that
local market failures affect the performance such facilities will also be available to
of rural finance. Absence of agricultural RUSACCOs.
insurance is a challenge. However, the
microfinance industry is protected from • Growing interest of private investors
foreign competition which has eliminated both domestic and foreign – if the financial
risk associated with foreign exchange sector becomes open to foreign competition,
fluctuations and financial crisis abroad. preliminary assessment shows that a
number of investors have shown interest in
• Exclusion of the poorest of the poor – the microfinance industry. Similarly, the
although the MFIs have made significant present weak involvement of the domestic
strides in serving the rural poor, they still private sector (only one out of 29 MFIs is
exclude the poorest of the poor to reduce private) is expected to change due to
risk and ensure their sustainability. increasing interest to invest in the sector.
• Limited capacity – weak management • Postal service – The postal service provides
information system has affected the money transfers. There is an untapped
efficiency of MFIs – lack of standard potential of transforming the postal service
software, skilled manpower, and into postal micro-banks.
infrastructure to support information
networks in remote areas.
Government policies strongly assert the need for developing a culture of savings and loan
repayment among rural communities. As a matter of fact, many rural communities have
traditional ways of saving for certain expenses, both in kind (livestock and grains) and in cash
(through small, communal savings/funeral groups such as equub and iddir). Yet these savings
are often small, and rural households frequently spend relatively large amounts of resources on
religious, cultural and social events.
Rural communities also have the traditional culture of honouring loan repayments to the extent
that they give priority to paying back money they owe someone “until they go hungry” (RDPS).
However, some of the inappropriate ways of disbursing loans described above have eroded this
culture. The HABP is therefore designed to introduce best practices in financial service provision
to ensure the sustainability of the services provided.
2.1.2 COOPERATIVE PROMOTION

Cooperative promotion in Ethiopia is governed by Proclamation No. 147/98, which defines a
cooperative as “a society established by individuals on voluntary basis to collectively solve their
economic and social problems and democratically manage same”. This is major departure from
the Derg times when rural households were coerced to be members of cooperatives.
There are three levels of cooperative formation in Ethiopia: primary, union and federations.
Primary cooperatives are formed by ten or more persons living and working in a given area.
Unions are formed by two or more primary cooperatives. Similarly, federations are formed by
two or more unions and are formed at Federal level.
Government policy, the RDPS in particular, envisages that cooperatives could serve as a link
between banks or MFIs and rural households. Using cooperatives as an intermediary to borrow
6
money and on-lend it to rural communities provides financial institutions with the economies of
scale they need in order to keep administrative costs low. Lending directly to rural households is
administratively costly and generally unprofitable, as low population densities, remoteness of
areas, and risks associated with lending for agricultural production increase financial risks,
thereby requiring higher interest rates that rural households are not capable of paying.
In order to play this intermediary role, however, it is necessary for cooperatives or unions to
develop their creditworthiness by establishing strong financial management systems (including
financial discipline). Banks/MFIs are responsible for carrying out a thorough financial and
economic assessment before lending to cooperatives or unions.3
Financial services provided through agricultural/multipurpose cooperatives are generally

limited to input credit and occasionally marketing credit. For other financial services, savings
and credit cooperatives are important institutions in rural communities. These have been
promoted by the Cooperative Promotion Bureaus as well as (along with their less formal Village
Savings and Loan Association counterparts) by a variety of NGOs. In particular, the Rural
Financial Intermediation Programme (RUFIP) has played an important role in the creation of
RUSACCOs in Ethiopia. The programme estimates that over 1,500 RUSACCOs are now
operational in the country.
Proclamation 147/98 does not however address the important issue of financial cooperatives. It
does not provide the necessary guidance to regulate financial cooperatives as part of the
financial sector. The government is considering the introduction of a new law for financial
cooperatives and the establishment of appropriate systems for regulation and supervision.
2.1.3 PASTORAL POLICY
Both the RDPS (pp 137-147) and the FSS (page 18) indicate that, as livestock is the primary
source of livelihoods in pastoral areas, all pastoral development efforts should be livestock-
centred.
Key issues revolve around balances and imbalances in resource availability, most notably water,
pasture and livestock. Pastoralists move seasonally in order to strike a balance between these
resources. Natural resource management is therefore critical to both livestock and human
development in pastoral areas. Government policies and strategies call for an understanding of
indigenous resource management techniques and building on their strengths prior to planning
interventions for pastoral areas. They also stress the importance of animal health services
(vaccination and treatment), but state that these should be compatible with the mobility of
pastoral communities.
The Livestock Development Master Plan calls for improved livestock marketing systems in
Ethiopia, including enhanced access to market information and market facilities where surplus
livestock can be sold. The policy also encourages investment in value added activities such as
meat processing.
Finally, government policy encourages investment in irrigation schemes for pastoralists and
agro-pastoralists in order to increase food production and marketing in pastoral areas.
3 Lessons have been learned from the Derg times when banks were instructed to lend money to
cooperatives without proper assessment. The cooperatives had weak or no financial system which led to
embezzlement. Both the banks and cooperatives incurred considerable losses.
7
The pastoral interventions highlighted in these policies and strategies tend to be larger-scale
community investments rather than household-level investments. Indeed, the identification and
development of household investments for pastoralists is a challenging task, due to the nature of
the pastoralist livelihood as one characterized more by vulnerability than by chronic poverty.
This dilemma is addressed more fully in section 2.7 of the overall FSP document.
2.1.4 WOMEN AND YOUTH PACKAGES AND OFF-FARM ACTIVITY PROMOTION
The Small and Medium Enterprise Agency (in the Ministry of Trade and Industry) has developed
a programme facilitating the establishment of SMEs, focusing on urban areas as it is considered
as a component of the Government’s urban development programme. The Ministry of Women
Affairs and the Ministry of Youth and Sport have developed “developmental packages” for both
urban and rural youth and women. These are designed to ensure that women and youth benefit
from development programmes. The focus is on mobilisation and organisation of youth and
women and the involvement of other agencies such as the Small and Medium Enterprise Agency
in providing the necessary training on off-farm activities.
The key elements of the women and youth package seek to ensure that women and youth
maximize their returns from land and labour4. They are also designed to ensure that agricultural
development programmes and extension efforts, off-farm activity promotion programmes, and
market development programmes benefit women and youth. Finally, they include provisions to
encourage women and youth to form cooperatives of their choice and benefit from savings and
credit schemes.
The Ministry of Women Affairs and the Ministry of Youth and Sport have also initiated a process
of developing pastoral support measures for their respective clients. A background study is
complete and the design is expected to be completed before the end of Ethiopian financial year
(June 2009).
The MoARD has the specific responsibility of ensuring that women and youth benefit from
development programmes. In particular, the MoARD is expected to:
• Integrate youth developmental packages into rural development policies and strategies
and ensure rural youth benefit from interventions.
• Ensure that the youth have access to land (hilly land, resettlement) and are able to
engage in off-farm activities.
• Mobilise resources from local and/or international sources for the implementation of
programmes that directly benefit youth and women.
• Ensure that youth and women engaged in farm and off-farm activities obtain appropriate
loans.
As noted above the SME development programmes do not reach rural areas. To address this gap,
the Federal Food Security Directorate has now designated a group of professionals that is
responsible for promoting off-farm activities in rural areas. Guidelines from this team, issued in
2009, provide specific objectives as follows:
4 The RDPS recognises that most Ethiopian youth do not have land of their own. However, it suggests that
they can use their parents’ land (or part of it) to undertake investment in off-farm activities. They can also
increase access to land by renting from households with no labour to farm it.
8
• Generation of employment for rural youth and women, thereby reducing rural-urban
migration
• Engagement of landless and under-employed household members to make them
productive
• Value addition through agricultural processing
• Foundation building for the expansion of rural industries
• Strengthening of rural development centres through service delivery
• Development of commercialisation and introduction of modern technologies into rural
areas
• Income generation for people living with HIV/AIDS.
Through this group, the Food Security Programme will coordinate with the SME Agency and
other relevant agencies to ensure that off-farm activities are promoted and that the specific
needs of women and youth are met through the programme.
2.2 FEATURES OF THE SECTOR

Agriculture is the dominant economic sector in Ethiopia in more ways than one. According to the
latest census (CSA, 2008), 84% of the population lives in the rural areas and makes a living from
agriculture and related activities. Agriculture also generates 40% of the gross domestic product
and 80% of the foreign exchange earnings. However, despite these contributions to the
Ethiopian economy, agriculture remains rain-fed with a limited use of improved farm
technologies and inputs. Productivity is low and much of the reported production increase
comes from area expansion rather than increases in yields per hectare.
Pastoral and agro-pastoral areas represent over 40% of the land and 12% of the population of
Ethiopia. Although the economic value of pastoralism has never been properly assessed, it is
widely recognized by pastoralism and livestock experts as being significant.
Rural communities—whether are they agricultural, pastoral or agro-pastoral—are vulnerable to

a number of natural hazards such as drought, flooding, pests and crop and livestock diseases.
Due to low level of resilience, these hazards often lead to disasters and rural households
experience food shortages. The Government of Ethiopia has an emergency preparedness plan
that responds to disasters. In the past, the response was triggered by an annual appeal for food
assistance to which donors responded. However, the response has often been late partly due to
the time it takes to assess the emergency situation and come to an agreement on the number of
clients and the amount of food required. Households resort to coping mechanisms that involve
the consumption or sale of productive assets to feed the family.
In 2003 the government called upon donors to commit to a multi-year financing programme, as
opposed to annual appeals. The Food Security Programme was then launched, with the PSNP
designed to meet the needs of the chronically food insecure and with complementary
programmes (notably, the “package” programme under the Other Food Security Programme)
designed to place them on the path to food security.
2.3 EXPECTED CLIENTS
The clients of the Household Asset Building component are food insecure households in
chronically food insecure woredas. As in the previous phase of the food security programme,
households’ participation in asset building interventions is expected to speed up graduation
9
from PSNP and at a later stage, from the FSP. However, in this phase priority will be given to
expanding the coverage of the HABP component as rapidly as possible (though paying due
attention to sustainability), in order to ensure graduation at scale. PSNP clients and graduates
will be prioritised for support under HABP. Should additional financing become available, all
food insecure households in programme woredas will be eligible for credit provision.
Although male and female-headed chronically food insecure households will have equal
opportunities to participate in this component, the specific needs of women and female-headed
households will be taken into special account. Women will be key participants in the stakeholder
consultations from the inception of the programme. Programme interventions such as business
plan development and household confidence building activities will specifically address
women’s needs in terms of business skills and financial literacy training. The rural youth face
particular constraints as they seek to earn a livelihood due to their lack of access to land, which
has often limited their access to credit. Off-farm opportunities promoted by the programme are
likely to be particularly relevant for this group.
Direct support clients will not be excluded from participation in the HABP. Their participation
will be encouraged and facilitated through a variety of strategies, including: tailoring business
plans to each household’s capacity, and increasing the programme’s focus on off-farm activities
such as petty trading and service provision. In this way, even labour-poor households will have
opportunities to gradually build their household assets and move toward food security.
Although the rates of PSNP graduation for direct support clients are expected to be lower than
those for public works participants, the HABP is designed to enable them to participate as fully
as possible in the programme. However, the programme will ensure that no direct support client
is compelled to participate in the HABP if they do not believe that they have the capacity to do
so.
Pastoral and agro-pastoral populations will also be targeted by the HABP, as the programme
implementation areas will include the pastoral areas of Afar, Somali, Oromiya and SNNPR.
Indeed, building (or in many cases rebuilding) assets is critical in these areas, as they have
suffered frequent drought and other shocks that contributed to the depletion of their key
asset—livestock. In these areas, households that have dropped out of pastoralism can benefit
from household asset building as they are usually very poor and need options for diversifying
their livelihoods. Pastoralist households will participate as well, although the nature of their
livelihoods and the importance of risk management may require a slightly different approach (as
is outlined in section 2.7 of the FSP document). A full recommendation on proposed approaches
and interventions for the HABP in pastoral areas is expected from the Pastoralist Task Force
prior to the start of the programme.
2.4 PROBLEMS TO BE TACKLED

Broadly speaking, the overall problem which the HABP addresses is the issue of enhancing
income and assets and thereby enhancing livelihood status of chronically food insecure
households in agricultural, pastoral and agro-pastoral areas, once livelihood status has been
secured through the safety net provided by the PSNP. More specifically, the programme is
designed to tackle a variety of factors related to growth out of food insecurity in a way that is
more effective than its predecessor Other Food Security Programme (OFSP). These factors
include:
a) Poor financial practices combined with a lack of appropriate financial services in rural
communities. Particular problems include low rates of savings and low loan repayment
rates by rural households. The programme will tackle these problems by raising
10
awareness on the importance of saving, promoting financial service provision by

appropriate institutions and promoting a culture of contract enforcement.
b) The inability of local administrators and extension workers to perform their

extension tasks, as a result of their loan disbursement and collection duties (both under
the previous OFSP and as part of the annual credit-based input supply process). The
promotion of appropriate financial services will relieve them of some of these duties and
give them more time to focus on their regular works.
c) Weak linkages between the promotion of household investment and the provision of
complementary services such as technical follow-up, inputs and animal health services.
This was a particular constraint during the previous phase of the programme. The next
phase will have a particular emphasis on capacity building which ensures that the
necessary linkages between programmes and institutions are made. The Extension
Directorate will be encouraged, and resourced whenever appropriate, to design
investment activities that are linked to the Small and Micro Enterprise Agency, Rural
Technology Development Centres, Regional research institutions, etc.
d) The poor access of rural communities to markets. The majority of food insecure
communities lack physical access to effectively-functioning markets as well as market
information. The HAB component will coordinate with the PSNP to take advantage of
new feeder roads constructed through public works, maximizing the impact of the
physical infrastructure by providing training in market orientation and facilitating
market linkages.
Pastoral and agro-pastoral areas suffer from similar problems as those outlined above. They,
too, require household asset building opportunities through access to financial services and
markets. However the approaches to addressing these problems must take into account the
specific characteristics of these communities—such as their cohesive nature and particular
livelihood structures— and may not be the same as for the highlands. The HAB component will
build on best practices from NGOs and other development partners who have implemented
market-related interventions and piloted various investment modalities (individual, household,
group, community or clan-based) in pastoral areas. These lessons will be generated by the
Pastoralist Task Force.
2.5 OTHER RELEVANT INTERVENTIONS AND INSTITUTIONS INVOLVED
2.5.1 THE EXTENSION SYSTEM
The agriculture extension system will be responsible for demand-driven extension services
related to the implementation of the Household Asset Building component. In particular,
Development Agents—central to the Ethiopian extension system—will be central to HABP
implementation. At present the Government has reached its target of three Development Agents
per kebele in the majority of woredas, making a total of 69,000 DAs in the Ethiopian extension
system. These DAs are trained at one of the 25 Agricultural and Vocational Education and
Training (ATVET) Colleges throughout the country. They are also supported by woreda-level
experts (subject matter specialists) who provide advice on technical issues. DAs are specialized,
with each kebele having one crop science DA, one animal husbandry DA and one natural
resources management DA. These DAs disseminate “technology packages” developed by experts
in the extension system, providing technical advice on farm as well as in Farmer Training
Centres (FTCs) in each kebele. However, the quality of FTC facilities and the degree of their
utilisation varies from one kebele to another.
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There have been considerable improvements from the days when only three agro ecologies
were considered by the extension system: dega, woina-dega and kola. Today the MoARD
recognizes approximately 18 agro-ecological zones within three distinct environments—
moisture surplus, moisture deficit and pastoral. Moreover, within the DRMFSS the Livelihoods
Integration Unit (LIU) is in the process of completing a more detailed profiling of the whole
country in Livelihood Zones, based on the Household Economy Approach. This has potential for
development programming, which will be further explored.
Yet the agricultural/pastoral extension system faces considerable challenges in CFI areas. A
review conducted as part of the formulation process found that extension services had little
effect in helping households achieve food security. It also identified the following weaknesses in
the system:
• Inadequate training, advice and technical support for CFI households
• Limited awareness of upgrading opportunities and complementary services (additional

credit, input, markets, and off-farm activities)
• Ineffective operation of FTCs
• Involvement of extension staff—particularly DAs—in credit disbursement and collection
• Absence of gender considerations
• Lack of effective M&E
In addition to the general problems listed above, the Extension Service is widely recognized to
be much weaker in pastoral areas than in the highlands.
The Rural Capacity Building Project (RCBP) has been a key initiative working to strengthen
the Ethiopian extension system. Started in 2007, this five-year project is being implemented in
127 woredas across the country, of which 28 are safety net woredas. The project supports
ATVETs as well as agricultural extension and research.
Support to agricultural extension (including livestock-related extension) consists of capacity

building for subject matter specialists, support to FTCs, a farmer innovation fund and extension-
research-farmer linkage. At the request of farmers, the project is preparing to turn the currently
specialised DAs into generalists. It is also transforming some of the ATVETs into business-
oriented institutions, whereby they train DAs on cost sharing and also do other short term
training for other clients.
The project aims to transform FTCs into well equipped and furnished centres of learning and
information sharing for community members. Out of 2,500 FTCs selected from the 127 woredas,
only about 30% are fully equipped and furnished—a number which is expected to reach 100%
by the end of 2009. These FTCs will then be used as focal points for extension provision. The
project’s support to farmer innovation is very much in line with the HABP principle of demand
driven extension. Twenty woredas (and 100 FTCs) have been selected to serve as model
woredas. Farmers around the FTCs are trained to turn their ideas into proposals which are then
funded by the project. Thus the project creates demand for innovative technologies from the
farmers’ side and mobilises research centres, private traders, universities, cooperatives and
unions and associations (youth and women) to respond to the demand.
Many of these approaches will be replicated in non-RCBP woredas under the HABP, with an
additional focus on marketing and market linkages (not included in the RCBP).
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Other extension providers. Although government policy clearly defines a role for the private
sector in the provision of agricultural extension services, there has been little private sector
involvement to date. NGOs, however, have had significant involvement both in strengthening the
Government extension system and in introducing innovative farmer training methodologies.
Recent and current examples include the Participatory Forest Management approach
implemented by Farm Africa, the Integrated Pest Management/Farmers Field School
methodology employed by Save the Children UK and a variety of livestock related activities in
pastoral areas conducted by Save the Children USA.
2.5.2 COOPERATIVE DEVELOPMENT

The Federal Cooperative Agency, with its bureaus and offices at regional and woreda levels
provides support in the promotion, creation and management of agricultural marketing
cooperatives, multipurpose cooperatives, and savings and credit cooperatives. These bureaus
and offices will therefore be important counterparts of the Food Security bureaus and offices in
the implementation of the HAB programme, particularly with regards to support for RUSACCOs
and agricultural cooperatives. Details are provided in Chapter 5 of this document.
2.5.3 FINANCIAL SERVICE PROVIDERS

The significant role of financial institutions is one of the important features of the new HAB
component. Yet an inventory of available MFIs and RUSACCOs in the 290 safety net woredas
revealed wide regional disparities in coverage. Tigray has the widest coverage, with at least one
MFI branch present in all woredas in Tigray and a total of 318 RUSACCOs that cover all but one
woreda. Amhara has the next best coverage, with at least one MFI branch operating in 64
woredas and 24 woredas are covered by 99 RUSACCOs. Oromiya, SNNPR and the pastoral
regions of Afar and Somali have the least coverage.
TABLE 2: AVAILABILITY OF FINANCIAL SERVICE PROVIDERS 5
Region No. of woredas with No. of woredas with Total SACCOs in

one or more MFIs one or more SACCOs the region
Amhara 64 24 99
Oromiya 54 10 27
Tigray 31 30 318
SNNPR 76 19 228
Afar 0 2 5
Harari 0 1 18
Dire Dawa 0 1 96
Somali 0 0 0
Total 225 87 791
5 Source: Background paper prepared for the formulation of the FSP by Dr. Wolday Amha, 2009
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The creation of new RUSACCOs and the expansion of MFI coverage into chronically food
insecure communities will therefore be an important HABP intervention.
2.5.4 AGRICULTURAL GROWTH PROGRAMME (AGP)
As part of donor support to the Rural Economic Development/Food Security agenda of the
PASDEP, in April 2008 a group of donors expressed interest in financing a growth agenda with a
pooled or coordinated funding in order to harmonise efforts to promote agricultural growth in
Ethiopia. As a result, an Agricultural Growth Programme is currently under preparation. The
specific objectives are expected to include the following:
• Supporting farmers to intensify their production in order to increase productivity
• Strengthening local (woreda level) government capacity to provide public services for
increased agricultural productivity
• Developing both informal and larger private sector operations in the marketing and
value addition of agricultural products and linking them with smallholders.
The programme focuses on geographic areas that will most likely lead to high returns (as a
result of agro-ecological potential as well as administration commitment) and on selected
commodities whose production intensification and availability of markets is likely to be highly
profitable. This tends to exclude the safety net woredas. However, the HABP is designed to
demonstrate the growth potential of chronically food insecure areas by transforming
subsistence into small-scale commercialised farming in those areas. Linkages to markets
facilitated by the HABP will likely be done in coordination with “growth agenda” areas.
Moreover, lessons from the programme will be important for households that graduate from
PSNP and then into food security, as they will develop the capacity to participate in growth
interventions such as this.
The institutional arrangements for the overall FSP are designed to facilitate close links between
the FSP and the RED/FS agenda as a whole, including the AGP (see section 3.1 of the FSP
document).
2.6 POLICY, STRATEGY AND PROGRAMME GAPS

This brief overview of the policy, strategy and programme environment highlights some
strength as well as critical gaps that might impede the implementation of the new FSP in general
and the HAB component in particular. Areas that need particular attention and strengthening
are as follows:
1. The development of a flexible regulatory environment that enables RUSACCOs and MFIs to
operate effectively in CFI areas is a critical step as the new FSP embarks on developing a
sustainable financial service provision system for CFI households.
2. The food security strategy has been designed to promote off-farm income generating
activities since its inception. However, clear guidance is lacking on how the various agencies
responsible—the Small and Medium Enterprise Agency within the Ministry of Trade and
Industry and the Ministries of Women and Youth—can work together to promote off-farm
activities in rural areas. This is an area that HABP will have to address in order to ensure
14
that these activities—which are particularly important for landless youth (both men and
women)—are adequately promoted.
3. The extension of the HAB to pastoral areas is critical, as these areas have suffered
considerable asset depletion over the past decades due to recurrent drought. Prior to the
roll-out, however, a strategy will need to be developed to tailor the component’s activities to
the specific circumstances of pastoral populations. In particular, this strategy development
will need to take into account the following: (i) the importance of the community—as
opposed to the household—among pastoralists; (ii) the importance of risk management and
additional asset protection schemes in support of the pastoral livelihood; and (iii) potential
pathways for graduation that may or may not be based on asset levels as they are in the
highlands.
2.7 LESSONS LEARNED FROM PAST PROGRAMMING

For much of the 1990s and early 2000s, the Extension Service was mobilized to implement a
strategy based on supply-side constraints to agricultural growth, including the distribution of
inputs and collection of credit at the end of the season. The strategy was implemented by a
centralized promotion of technological packages mainly combining fertilizer, seed and technical
advice.
Whilst there was a modest growth in food supply, it was increasingly recognized there was a
need for generating more diversified, efficient and sustainable baskets of farm investment and
income generating opportunities, as well as a stronger focus on the demand side through rural
markets. Government is now placing emphasis on supporting producers to be successful
decision-makers, to improve incentives to market produce and to make production investments
and to reduce unmanaged risks and shocks such as drought. This change in course has been
articulated in the second Poverty Reduction Strategy (PASDEP).
The Household Asset Building Component will build on the implementation experience of the
World Bank-funded RCB, the CIDA-funded IPMS and the USAID supported PSNP Plus projects
and the lessons learnt from the implementation of the Other Food Security Programme. This
experience clearly demonstrates the success of adopting a demand driven approach to extension
that empowers and builds rural households' confidence to embark on investments and income
generating enterprises appropriate to their needs and capacity. This experience has also clearly
demonstrated the necessity of linking production to markets, increasing value addition and
accessing a diversified range of inputs sources and distributors.
However, past experience has also identified significant gaps in the capacity of the key
stakeholders that must be addressed if this radical change in direction is to be achieved. Whilst
there has been a dramatic increase in the number of DAs and functioning FTCs, there remains a
need for a comprehensive capacity building programme to address woreda experts’ and DAs’
gaps in technical skills, facilitation skills and management capacity. Rural financial service
provision is also an area which requires significant investment.
There is now an increasing realization that investments on on-farm income generating and asset
building only will be insufficient for many poor rural families to achieve food security. The
expansion of opportunities in both agricultural and non-agricultural off-farm investment and
income generating opportunities is an essential element of the HABP. This requires
implementers and coordinators of the programme to establish linkages with ongoing SME
development programmes that hitherto have largely focused on urban households.
15
In pastoral areas, past programming has demonstrated the critical need for income
diversification support to ex-pastoralists and agro-pastoralists and for risk management
activities for pastoral communities. The FSP will support these activities, with the HABP focusing
in particular on income diversification and asset building among the poorer segments of the
population.
3 INTERVENTIONS
3.1 GOAL
The overarching goal to which the Food Security Programme as a whole contributes is to achieve
food security for chronic and transitory food insecure households in rural Ethiopia. In turn, the
Goal of the Household Asset Building Programme, as a component of the FSP, is the Outcome (or
specific objective) of the FSP:
Food security status for male and female members of food insecure households in CFI
woredas improved.
The objectively verifiable indicators for this Goal outline the expectations of what will be
achieved and are as follows:
1. Percentage of targeted population (male and female food insecure people) in food insecure
woredas who access sufficient food at all times for an active and healthy life in the absence of
PSNP transfers (food security).
2. Percentage of targeted population (male and female food insecure people) in food insecure
woredas who have not achieved food security but have sufficient food for 12 months and can
resist moderate shocks in the absence of PSNP transfers (food sufficiency).
Food security is defined as: “access by all people at all times to sufficient food for an active and
healthy life” (New Coalition for Food Security).
Food sufficiency is an intermediate step toward food security and is directly related to the ability
to graduate from the PSNP: “A household has graduated when, in the absence of receiving PSNP
transfers, it can meet its food needs for all 12 months and is able to withstand modest shocks.”
This state is described as being ‘food sufficient’ (PSNP Graduation Guidance Note).
3.2 OUTCOME AND STRATEGY

The expected Outcome of the Household Asset Building Programme – the specific objective that
the HABP is expected to achieve – is:
Income sources diversified and productive assets increased for food insecure
households in CFI woredas.
The objectively verifiable indicators for this Outcome are:
1. Average real value of assets
2. Percentage of food insecure households report new sources of income
3. Average number of households with 3, 6 and 9 months food gap using the Livelihoods
Integration Unit's model.
16
The review of the previous food security programme highlighted the need for a more consistent
and timely approach to household investment and income generating interventions and a more
diversified approach to provision of financial products for asset accumulation and protection
(including transfers, savings, multiple arrangements for credit). The household asset building
component responds to these demands.
The review also indicated that there is need to take cognizance of variations in households'
capacity to undertake investments, assume risks, adopt innovative practices, and to take on and
repay credit. The approach on which interventions under this component are based recognizes
these differences. One must bear in mind that all food insecure households’ capacity to take
credit, innovate and assume risk is limited, although the capacity of some is better than others.
However, both international and Ethiopian experience shows that household level investments
incorporating all these elements are important if households are to achieve food security.6 The
intention is to place households that are currently chronically food insecure on a pathway
whereby their capacity improves over time and they are able to generate sufficient and
sustained incomes that cover basic food needs and resist shocks.
In broad terms, food insecure households can be categorized into three broad groups:
• Chronically food insecure households, with few productive assets, low and insecure
income sources; have little ability or self confidence to take on the responsibilities of
loan conditionalities and, in all likelihood have no credit history so that commercial
credit providers are unwilling to lend to them; and, who depend on transfers for a
significant proportion of their food needs.
• Chronically food insecure households, with a better asset base and confidence to take on
a loan, but rely on transfers to meet the household’s food needs and who may not have a
credit history or sufficient savings to generate confidence among commercial credit
providers.
• Food insecure households who have some productive assets, more substantial and
secure income sources and have the capacity and self-confidence to take on investment
loans, but nevertheless have fragile livelihoods and are therefore not very attractive
customers for commercial credit providers.
For such households to move towards food security requires the transformation of fragile
production systems involving both asset accumulation and innovation. Although poor, food
insecure households have knowledge, skills and potential to transform their livelihoods, they
need confidence building support. Clearly, households in all three categories require support to
understand returns to investments, to develop viable and appropriate business plans and to
receive advice on new technologies, improved practices and managing credit. In this way they
will be able to identify investment and income generating opportunities that will place them on
a pathway to food security. The content of the support will differ according to the type of
household. This is illustrated in Figure 2 below7, which also reflects the complementary support
provided through the other components of the Food Security Programme.
6 Important but not sufficient; needs to be complemented by PSNP and CCI.

7 This is the same figure as the “Vision for graduation” diagram in the FSP document
17
Figure 2. Pathway to Graduation from PSNP and overall FSP
Food
Secure
Extension services, including Mainstream credit
(including
Asset accumulation
Graduates business planning, input linkages and service

and market advice provision
of FSP)
Graduation
from FSP
Food
Insecure
(including
graduates
from PSNP)
Graduation
PSNP
from PSNP
Transfers
Chronically
Asset stabilisation
Food
Insecure Repeat Community
access to assets
FSP credit
(CCI &
PSNP PW)
Ultra Poor Intensive support and
tailored products
Village savings & credit and

financial literacy
For the first group of households (‘ultra-poor’ in the diagram), safety net transfers, savings and
micro-credit with intensive support and tailored products are seen as prerequisites to enable
them to gain a foothold on the pathway to food security. Such households will need to focus on
rebuilding their productive systems and are unlikely to assume large risks, adopt new
technologies or diversify into unfamiliar activities. As they rebuild their asset base, they will
start generating a surplus that will allow them to take on more innovative investments at a later
stage. Small appropriate and well-planned and supported loans as well as the discipline of
saving will allow them to build a credit history for more formal engagement in credit markets.
The second group of households (‘Chronically Food Insecure’) would continue to require safety
net transfers, but they would be likely to have larger and more innovative/sophisticated
business plans. The third group of households (food insecure, including graduates from PSNP)
would not/no longer require safety net transfers and would be in a position to take credit on
commercial terms but would be looking for support in market development and investment
opportunities.
Another important element in helping food insecure households embark on a pathway whereby
they gradually develop a capacity to generate sufficient and sustained incomes that cover basic
food needs and resist shocks, is the development of market linkages both for input supply and
sale of outputs and/or delivery of services. The latter is especially important for the relatively
better off households and those diversifying into non-farm activities.
Figure 2 above illustrates the sequential nature of these interventions.
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3.3 OUTPUTS
In order to address the needs of the various types of households in food insecure communities
along the continuum described in Figure 2 and thus to achieve the intended Outcome for this
component, the following six Outputs will be delivered:
Output 1: Access to viable on- and off-farm income-generating opportunities improved.
Output 2: Access to sustainable financial services enhanced.
Output 3: Sustainable input sourcing, production and delivery systems enhanced.
Output 4: Access to effective product and labour markets increased.
Output 5: Institutional capacity to manage and implement the HABP strengthened.
Output 6: Knowledge, skills and confidence of food insecure people built.
3.3.1 OUTPUT 1: ACCESS TO VIABLE ON- AND OFF-FARM INCOME-GENERATING

OPPORTUNITIES IMPROVED.
Background: Moving along a pathway out of food insecurity requires that households invest in
improving existing production systems and/or developing new income generating enterprises,
or that they gain better earnings from wage employment. Yet food insecure households face
limited opportunities in this regard, because they operate in risky environments, their resource
base is low and therefore their investment capability is weak, and also because their access to
services (particularly credit) and markets tend to be very limited. While the specific needs of
individual households differ, they all require support in identifying viable investments
(including seeking wage employment) and understanding returns and risks for different types of
investments. They then need support in developing viable and appropriate business plans to
implement the investments, as well as advice on new technologies, improved production
practices and credit management (if loans are used to finance the investments).
The public extension system and the micro and small enterprise development programmes
provide some support to rural households in the areas outlined above. Indeed, they will continue
to provide the bulk of the support in this area. However, significant investment is needed to
strengthen on going reforms and reorient these interventions to ensure that they are able to
better respond to the needs of food insecure households and thereby help improve food
insecure households’ access to investment/IGA opportunities. The HABP is designed to build the
capacity of the extension system to achieve this, and this is discussed further under HABP
Output 5.
Strengthening existing reforms and reorientation of these programmes will be based on the
following principles:
• Consultation—to identify investment and IGA opportunities appropriate for food

insecure households by building on local knowledge and experience as well as research
and development.
19
• Livelihood zone approach—although consultations will be at woreda and community
levels, in order to be relevant the identification of opportunities must be based on
livelihood zones.
• Simplicity of business plans—these should be easily understandable, demand driven and

based on households’ technical capacity, market opportunities and appropriate choice of
technologies.
• Dynamism—opportunities identified and technological innovation must remain
dynamic and responsive to market changes and generation of new knowledge.
Summary: To achieve reorientation of these programmes along the above principles, the HABP
will focus on the following interventions:
• Facilitate a stakeholder consultation process in all programme woredas to identify

investment opportunities
• Provide technical input for the identification of investment/IGA opportunities (market

and technical analyses)
• Build technical and facilitation skills (including TA, training and development of relevant
curricula and training modalities) within relevant institutions at the woreda level and
among DAs at the kebele level to ensure that advice to business plans is appropriate in
terms of (i) financial viability, (ii) agro-ecological suitability, (iii) acceptance by the
community and individual households, (iv) input supply, and (v) marketability of
products/services at woreda and kebele levels; and, that there is effective technology
dissemination for households interested in innovation.
• Undertake a transformation process at all levels (Federal, Regional and Woreda) to

reorient the extension service in food insecure areas towards a more demand driven
approach. This will broadly entail analysis and agreement on why change is needed;
what needs to change; a plan for how changes will be achieved, and a plan of roles and
responsibilities.
• Supervise the business planning process.
• Develop training curricula and provide training-of-trainers on new technologies and

practices.
• Promote adaptive research activities and linkages with new sources of technology.
• Support the capacity of both woreda staff and DAs to follow up and monitor client
households’ investments, through the provision of necessary equipment, transport, etc.
as appropriate
The HABP will thus implement three sets of Activities under Output 1. The first set of Activities
will be a consultative process designed to identify, assess and summarise technical advice on on-
and off-farm household investments and income generating enterprises appropriate for CFI
households. Under Activity 2, the programme will then support technical assistance to
households in the development of business plans for the investments and activities selected
(including support for the adoption of improved practices and the development of innovative
technologies), and refer these households to financial institutions for the financing of their plans.
Finally, under Activity 3 the programme will support continued monitoring of investment
activities by participating households.
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3.3.2 OUTPUT 2: ACCESS TO SUSTAINABLE FINANCIAL SERVICES ENHANCED.
Background: In conjunction with the identification of opportunities, development of business
plans, technology transfer and input supply, financial services are required to strengthen the
livelihoods of food insecure households. Previously, credit was provided through the Extension
Service, but this led to confusion about the terms under which the funds were given, low
repayment rates, and friction between communities and DAs who were responsible for loan
collection. It also often involved the Extension Service in the direct supply of assets to CFI
households, thereby forfeiting an opportunity to link these households more directly to markets.
Microfinance institutions are present in most of the programme woredas—with the notable
exception of pastoral areas— but their outreach to chronically food insecure households is often
poor. This is due to two primary factors: the lack of available loan capital and the increased risk
of lending to CFI households. The programme is therefore designed to mitigate these factors and
provide incentives to MFIs to lend to programme participants.
RUSACCOs are the other type of financial institution available in the programme woredas. They
are member-owned and as such they are more likely to reach CFI households—but their number
and scope is limited, and their capacity is generally weak.
The programme will support the provision of financial services to food insecure households in
accordance with the following basic principles:
• Appropriate institutions: Financial services should be delivered through sustainable

and appropriate financial providers. RUSACCOs are well placed to promote savings and
manage credit that is revolved within a community. MFIs are better placed to mobilize
external funds and provide credit on a larger scale. They can also provide money transfer
services for migrant labour.
• Appropriate products: The financial requirements of CFI households will differ.

Therefore multiple products will be developed and appropriate service providers will be
used for the different products.
• Sustainable interest rate: The level of interest should not distort the financial market.
Service providers will set interest rates that are sustainable. Nevertheless, since the
poorest households are often unable to take on loans, special measures will be
considered.
• Centrality of savings: While multiple financial products are required, savings must form
the basis of the financial system. Savings mobilization will therefore precede credit
provision as this produces financial discipline and experience in managing cash.
• Learning and knowledge management. Exposure visits, regular monitoring and

evaluation, and period workshops will all be critical to increase learning by financial
sector stakeholders of best practices in the provision of services to vulnerable
households.
Summary: In order to establish a system of sustainable financial service provision to CFI

households, the programme will provide a range of incentives and funding streams through a
variety of financial institutions, with MFIs and RUSACCOs as the primary providers to
households. The programme will implement three major activities designed to make sustainable
financial services available to CFI and other households according to their capacities and needs.
21
The planned activities are the following: (1) building the institutional capacity of financial
service providers, (2) providing a line of credit to financial service providers and, pending
additional financing, a credit guarantee to encourage continued provision of loans to clients who
are in transition to graduation or have recently graduated, and (3) supporting the
implementation of an appropriate regulatory and supervisory framework for grassroots
financial institutions.
In this Output, the focus will not only be on providing credit to chronically food insecure
households but in the establishment of sustainable financial services that can manage capital
and continue to provide financial services long into the future. These services will be delivered
through sustainable finance providers, which will provide more diversified and flexible services
to food insecure households even after completion of the programme.
3.3.3 OUTPUT 3: SUSTAINABLE INPUT SOURCING, PRODUCTION AND

DELIVERY SYSTEMS ENHANCED.
Background: Assisting the implementation of households’ business plans will require support
to the entire value chain for the selected asset or enterprise, from input supply to production to
value addition to various phases of marketing. This Output is concerned with ensuring that the
first step—input supply—is adequately supported, as access to high-quality, appropriate inputs
is critical to promoting innovation and thereby transforming the livelihoods of food insecure
households. The Government has traditionally been very involved in input supply in Ethiopia,
but the lack of coverage underscores the need for increased involvement of the private sector in
both the production and the distribution of inputs. Although input distribution is officially
liberalized, the private sector has traditionally been crowded out as a result of the in-kind credit
system established by Regional governments. This system was developed to ensure that rural
households would gain access to the necessary seed and fertilizer for each production season.
Inputs were provided on credit through agricultural cooperatives at the beginning of the season,
and paid back in cash after the harvest. Recently, however, low repayment rates have led
Regional governments to begin requiring that farmers pay cash for seed and fertiliser, reserving
the credit provision for only the neediest households. This development is effectively de-linking
input supply with credit provision, thereby opening up space for the private sector to enter the
input markets. It also has the potential to increase demand for input credit from financial
institutions such as MFIs.
The lack of basic seed is a critical constraint to productivity in Ethiopia. The Ethiopian Seed
Enterprise (ESE) has traditionally been the primary basic seed producer in the country (together
with research institutions), but it does not have the capacity to meet the needs of Ethiopian
producers. Currently a handful of private companies are also involved in seed multiplication and
Regional Seed Enterprises are being established for basic seed and seed multiplication.
Becoming an official seed multiplication company requires registration with the Animal and
Plant Health Directorate of MOARD and certification from the Quality Standards Authority of
Ethiopia (QSAE), but more informal participation is now becoming possible. The ESE, for
instance, grows seed on subcontract with farmers. Similarly, regional governments are
beginning to provide technical and organizational support to farmers to multiply basic seed.
Seed and fertiliser are not the only inputs required by poor rural households. In order for them
to diversify their incomes and increase their asset bases, they require access to larger, more
expensive inputs such as irrigation equipment, processing technology or livestock. Procuring
these inputs is often difficult in remote woredas where private suppliers are few and far
between. To address this problem, government and NGOs have typically undertaken the task of
22
procuring, transporting and distributing productive assets to food insecure households. The
advantage of this process is that it tends to be rapid, but it entails several significant risks. The
items procured may not be appropriate to clients’ needs—for instance, the wrong breed of
livestock, or a too sophisticated water pump. More fundamentally, no contact is established
between buyer and seller, thereby limiting any opportunity for repeat purchases, technical
advice or maintenance from the supplier, or other transactions. Such a system ultimately limits
the profitability and sustainability of the asset or input.
Summary. To achieve output 3, the programme will take advantage of the current trends to
support households’ access to the inputs required to implement their business plans. For inputs
that are not readily available within the woredas themselves, the programme will:
• Reorient the role of Government as a facilitator, rather than a provider, of inputs—

including larger inputs such as productive assets. The Extension Service will therefore
act as a source of the basic product (foundation seed for multiplication, artificial
insemination, etc), an identifier of new technology sources, and a quality controller.
• Support private businesses in the delivery of inputs
• Where appropriate, promote input multiplication and distribution by and within the
targeted communities.
It is expected that the main thrust of facilitating and provision of input sourcing will continue as
per the current system, wherein Regional governments and cooperatives are main source of
inputs for many households.
The programme will thus undertake two main activities in selected woredas. The first activity
will entail the facilitation of linkages between suppliers and users of inputs, particularly as
related to the implementation of households’ business plans. Capacity building—particularly in
the area of facilitation—will be a major focus of this activity. The second activity will entail
support to client communities in the production and distribution of inputs such as improved
seed, seedlings and agricultural equipment.
3.3.4 OUTPUT 4: ACCESS TO EFFECTIVE PRODUCT AND LABOUR MARKETS

INCREASED.
Background: Access to markets is critical for households to increase their incomes and build
their assets. Past projects such as MLVP have demonstrated the importance of a market-driven
approach to livelihoods strengthening, even when working with food insecure households.
However, the capacity of the Extension Service to provide market-oriented advice to households
remains weak, as the primary training of DAs is in production techniques. This has too often led
to households being supported in production—through distribution of assets and inputs and
through technical assistance—and then being unable to find a profitable market for their
product. Such an experience leaves households more risk averse and hesitant to adopt
innovative technologies.
A programme of capacity building is therefore required to build the skills of the Extension
Service, the Agricultural Marketing Department and the Cooperative Promotion Bureaus at the
Regional and woreda levels in providing sound market-oriented advice. This capacity building
will start with the market/value chain analyses as described in Output 1, but will continue
throughout the programme to enable woreda experts and DAs to supply households with up-to-
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date information on recent market trends, local and more distant market opportunities,
competition, and evolving supporting market services.
Summary: In Output 4, the programme will increase clients’ access to product and labour
markets. For product markets, this will entail increasing value addition through quality,
processing and storage; and improving market transactions through bulk sales, contracts and
increased market knowledge. For labour markets, this will entail building households’
understanding of opportunities and requirements through awareness raising and potential
employer-employee linkages.
3.3.5 OUTPUT 5: INSTITUTIONAL CAPACITY TO MANAGE AND IMPLEMENT

THE HABP STRENGTHENED.
Background: The strengthening the ongoing shift in approach to demand-driven extension and
to strengthened market linkages and input supply systems will require a substantial programme
of capacity building and technical support. Capacity building will be required in the technical,
financial and livelihood aspects of the potential investments and income generating enterprises
for the DAs at the kebele level and their technical support subject matter specialists at the
woreda level. New areas of expertise required for Extension, Cooperatives and Input and
Marketing specialists and DAs will include facilitation techniques, market analysis, and business
development skills. SME and Labour agencies’ personnel may also require capacity building as
well as familiarisation with the programme. In addition, strengthened management capacity and
systems are required for this multifaceted programme which is bringing in a new set of
institutions: financial service providers.
The successful implementation of outputs 1-4 outlined above will therefore require a substantial
investment in capacity building along the following principles:
• High-quality training methodologies. It will be important that all programme trainers

and providers of technical assistance be specialists not only in their respective fields—
e.g. crop production, animal production, animal health, cooperative development, input
sourcing, production and distribution, market development and value chain analysis—
but also that they be trained in new and effective extension techniques consistent with
the proposed transformation of approach.
• Demand-driven approach. Understanding the characteristics and requirements of

chronically food insecure households is a challenging task, but one which is necessary for
effective technical assistance. The shift to demand-driven extension is already underway
in the Extension Service, but the capacity to implement it is largely lacking, as it will
require changing the working modality not only of DAs and woreda Subject Matter
Specialists, but of the entire extension service. The programme will therefore undertake
sensitization and training activities at all levels (Federal, Regional and Woreda) to
reorient the way in which extension services are developed and provided. This process,
and the broader vision for how extension services will work in the future and how this
will be achieved, will be outlined in detail in the HABP Technical Implementation
Manual.
• Long-term vision. Building the capacity of the Extension Service and other departments
to implement the HABP in a way that effectively enables households to build their assets
and diversify their incomes will not happen overnight. Such a programme of capacity
building will start with adjustments to the curricula of the Agricultural Technical and
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Vocational Training (ATVET) centres and be incorporated into the long-term training
programme for all specialists involved in the Asset Building Programme.
Summary: Building the capacity of the programme implementers (Government bureaux, offices
and individuals as well as financial institutions) will be the first order of business under HABP,
as the success of the various interventions rests on the degree to which they possess three
specific skill sets:
• Programme management capacity
• Technical capacity (this includes facilitation skills)
• Financial service provision capacity (for financial institutions)
For each of these three areas, the programme will therefore start by undertaking a
comprehensive review and assessment of capacity building and training and skill needs. This
will be followed by training curriculum development, after which the capacity building of the
programme’s key on-the-ground implementers (particularly DAs) will be done.
Pastoral areas will receive special attention in all capacity building activities, as they have less
experience with FSP implementation and require significant support.
3.3.6 OUTPUT 6. CONFIDENCE, KNOWLEDGE AND SKILLS OF FOOD

INSECURE HOUSEHOLDS IN CFI WOREDAS BUILT.
Background: Chronically food insecure households have justifiably high levels of risk aversion
and low confidence in their ability to build their assets and achieve food security. Yet the HABP
recognises that building household confidence to make investments, adopt innovative
technologies and try new income generating activities is crucial to the programme’s success. The
HABP approach therefore incorporates household-level involvement from the very beginning, in
an effort to gradually build knowledge and skills and ultimately confidence.
Throughout the implementation of outputs 1-4 above, the programme will complement
institutional capacity building interventions with household-level confidence building activities.
The activities described under this Output are therefore part and parcel of the implementation
of outputs 1-4, but are highlighted here for extra emphasis. Specific principles of implementation
include:
• Responsiveness to the specific needs of women, youth and the ultra-poor. The
programme will take special care to ensure that household-level consultations don’t
become de facto male head-of-household consultations. The specific needs of youth and
the ultra-poor, often landless and/or with limited labour capacity, will be taken into
account from the consultation stage to the provision of technical assistance and financial
services. Consulting women, youth and the ultra-poor will be considered by the
programme as the first step toward building their confidence and skills.
• Consultative, demand-driven approach. Consultation informed by analysis will ensure

that households are not at the receiving end of advice, but rather that they are part of the
knowledge process. A demand driven approach will then be adopted with respect to
developing household investments and income generating activities that will provide
poor households with access to interventions that are tailored to their needs. On-farm
investment and income generating activities promoted for very poor and poor
households will need to be appropriate in terms of their technical and labour capacity, be
25
of relatively low risk, be capable of building up assets in a relatively short period of time,
be financially viable and provide returns sufficient to cover loan repayments within the
specified time.
Summary: This output highlights the household skills, knowledge and confidence building
elements of outputs 1-4 outlined above. Confidence-building activities will be based on
assessments of household capacity done during the Stakeholder Consultation as described under
Output 1.
3.4 ACTIVITIES
3.4.1 OUTPUT 1 ACTIVITIES: ACCESS TO VIABLE ON- AND OFF-FARM INCOME-

GENERATING OPPORTUNITIES IMPROVED.
ACTIVITY 1: IDENTIFY VIABLE INVESTMENT AND INCOME GENERATING

OPPORTUNITIES FOR FOOD INSECURE HOUSEHOLDS
The identification of household investment and income generating opportunities will be done
through a four-step iterative process.
Step 1: Conduct market/value chain analyses within the target area
Market opportunities tend to be less well researched than agricultural or livestock production
opportunities, and there are few skills within support institutions to conduct market
assessments or value chain analyses. Yet in order for food insecure households’ businesses to be
profitable, advice on these business plans must be embedded in an understanding of market
trends and opportunities. It is therefore imperative that market assessments be undertaken—at
the woreda level for livelihood zones—and be updated regularly. These market assessments
should cover but not be limited to market share, recent market trends, local and more distant
market opportunities, competition, supporting market services, value chains (e.g. processing,
local input production), market enabling environment (wet and dry season road access, financial
infrastructure and standardised weights and measures). The assessment will include the
capacity of local markets to absorb additional marketable surplus.
Much of this knowledge is readily available from local traders and some knowledgeable farmers,
but needs to be to recorded and understood by Regional and woreda experts and DAs. The
programme will therefore build Regional and woreda level capacity in market and value chain
analysis. Groups of woredas in one livelihood zone—as defined by data from the Livelihoods
Integration Unit (LIU)—will collaborate in this activity in order to reduce individual woreda
work loads and expand their knowledge base beyond the woreda. This will also help to ensure
that the activities identified are tailored to livelihood types—not only pastoral/agricultural, but
distinctions based on cash crops, food crops, livestock and milk sales, labour, etc. Regional and
woreda experts will in turn provide regular training of DAs to help them understand market
opportunities. Curricula and training modalities will be developed by ATVETs, regional
universities or local consulting firms as part of the programme.
Whilst there is experience within the Extension Service in the identification and development of
on-farm investment and IGA opportunities, this is not the case for off-farm income
opportunities. Where these do not yet exist, the Regional and woreda Food Security Bureaux will
establish Off-Farm Case Teams following the Federal model. These teams will coordinate with
the Small and Medium Enterprise Offices of the Bureaus of Trade and Industry and the Youth
and Women Development programmes of the Ministry of Youth, Sports and Culture, and
26
strengthen collaboration between these institutions and the extension service, to conduct
assessments of viable off-farm activities and the absorptive capacity of local markets for non-
agricultural services or products.
Step 2: Conduct technical analyses
The programme will also build woreda level capacity to institutionalise regular technical
analyses covering both on- and off-farm enterprises. These analyses will be comprised of the
following elements:
• Assessing the production potential related to the specific agro-ecological zone,

traditional skills of the population, etc. This will entail a process of resource mapping.
• Undertaking feasibility studies for various types of enterprise.
• Developing technological options for production and processing.
The programme will make use of existing technical and value chain analyses where possible,
updating them when necessary.
Income from migratory and non farm employment comprises a substantial and critical element
in households’ livelihoods and has considerable potential to contribute to graduation to food
security. The expanding commercial agricultural sector and the increasing use of labour-
intensive methods of maintenance of public infrastructure (e.g. medium/large scale irrigation,
main and secondary roads) as well as local processing and trading activities provide potential
income generating opportunities. The programme’s analysis of income generating activities will
therefore include an assessment of these potential employment opportunities.
Capacity building to institutionalize market and technical analyses as described above will be
mostly in the form of training managed through a service contract with appropriate institutions
at the Regional level.
Step 3: Engage in a consultative process at the community, woreda and Regional levels
The analyses discussed under steps 1 and 2 will feed into an Investment Opportunity
Stakeholder Consultation. At the community level, the stakeholder consultation will be a critical
step in household awareness creation and knowledge acquisition with respect to potential
investment and income generating opportunities for food insecure households. Using PRA
techniques, DAs together with the kebele administration and with support from the woreda
offices of agriculture and the small and medium enterprise agencies will identify stakeholders
and bring them together into investment assessment sessions undertaken at FTCs. The
stakeholder consultation will pay particular attention to identifying suitable investment
opportunities for specific chronically food insecure households such as female headed
households, landless youths and extremely asset poor households. This will ensure that the
identification of opportunities is informed by local experience. Woreda and Regional-level
experts will participate in this consultation process as well as in the market and technical
analyses outlined in steps 1 and 2 above.
Such a consultation process is not part of the mainstream extension or micro/small enterprise
development support programmes, and will therefore require significant facilitation through the
FSP under the HABP. The programme will establish a Household Asset Building Programme
Joint Technical Committee (HABP TC) at Federal, Regional and woreda levels. Led by the
Extension Service and closely involving other agencies such as the SME Agency and Women’s
Affairs as members, this committee will coordinate the stakeholder consultation process. The
27
object of the process will be to identify, assess and develop the knowledge base of households
regarding investment and income generating enterprises. The on-going CIDA funded Improving
Productivity and Marketing Successes (IPMS) and the Rural Capacity Building (RCBP) projects
have developed considerable experience in promoting this approach and can serve as useful
models.
The Stakeholder Consultation will also include grassroots financial service providers, although a
much more thorough capacity assessment will be conducted under Output 2, as described
below.
Step 4: Prepare recommendations for investment and IGA options.
Steps 1 through 3 described above will feed information into the development of
recommendations for potential investment and IGA options for each livelihood zone. These
recommendations, compiled by woreda experts, will present viable on/off-farm investment and
income generating enterprises in terms of financial viability, agro-ecological suitability,
appropriateness to livelihood systems, input supply and marketability of products/services. For
each potential investment and income generating enterprise identified, detailed household
(and/or group) investment requirements in terms of finance, technology, skills, labour, draught
power, harvesting, storage, processing and marketing will be addressed.
An illustrative list of these recommendations will be detailed in the HABP Technical

Implementation Manual. However, in order to avoid reverting to a package-based “menu” of pre-
set options, these recommendations will not be considered as an exhaustive list of the
opportunities to be funded under the HABP. If households can demonstrate the viability of
business plans for activities other than those identified through the analyses and stakeholder
consultation, they will be included alongside the “recommended” activities and for training and
credit provision.
Recommendations will be dynamic as they will be informed by a constant feedback loop through
annual updating of steps 1-3 and monitoring of investments.
ACTIVITY 2: PROVIDE ADVICE AND SUPPORT TO FOOD INSECURE HOUSEHOLDS IN

THE DEVELOPMENT OF BUSINESS PLANS
Following the identification of viable investment opportunities, the HABP will support the
transfer of this knowledge—via the extension service—to client households to help them
develop business plans appropriate to their particular technical, labour and financial capacity.
This will be accomplished through a three-step process:
Step 1: Conduct awareness-raising of different options.
This step will provide information to households on the viability of different options, with a focus on
diversifying livelihoods and mitigating risks through combinations of different investments and
activities. The programme will provide sound technical advice to households on how to choose the
most appropriate option for their circumstances. This will entail a presentation of the various elements
identified in Activity 1 above.
Step 2: Provide technical assistance in the preparation of business plans
This will entail group discussions around potential investment options including:
28
• Initial and ongoing investment needs as well as recurrent costs (such as animal feed, drugs and
veterinary services in the case of a livestock investment, maintenance of equipment and water
sources in the case of irrigation, working capital for inventory and transport costs for
marketing activities, etc.)
• Labour, land and other input needs
• Potential risks (for instance, bee colony absconding or animal mortality)
• Potential returns on investment
Technical assistance will be provided by DAs with support from relevant woreda offices (mobilised as
noted above, through the Joint TC and the integration of the HAB planning process with the woreda
planning process) to groups of farmers/entrepreneurs at FTCs. In areas such as Tigray that have
specialised DAs in irrigation, beekeeping, etc., in addition to the minimum 3 per kebele, these will be
heavily involved in programme implementation. For more sophisticated on-farm investments, and for
most off-farm investments (e.g., small scale processing, trade, wage employment), woreda experts
may be substituted for DAs and provide training directly. The involvement of experts from the SME
Agency in providing training will be particularly critical, as DAs generally have no background in off-
farm activities. Coordination of the various agencies and their contribution to HABP training will be
done by the HABP Technical Committee at the woreda level. Though these trainings will be group-
based, the majority of households will develop individual business plans, as illustrated in Figure 3
below.
29
Figure 3. Developing business plans, group training and matching financial products to
households for investments and income generating enterprises
F P F P F P F P
INVESTMENT HH 1 HH2 HH 3 HH 4
Poultry X X
Ox fattening: Short cycle X X
Ox fattening: Long cycle
Sheep fattening
Sheep production X X
Goat fattening
Goat production
Bee keeping X X
Micro scale irrigation X
Petty trade
FP
Financial product Business plan Group training
It is expected that the majority of households will select this individual model. However, in cases
where several households are interested in a collective investment, programme support will be
provided for the development and implementation of joint business plans. The financing of these
business plans will depend on the creation of an appropriate financial product for groups (currently,
MFIs provide financing to legally registered cooperatives but not to informal groups). The
programme’s support for the development of such a product is outlined in Output 2.
Step 3: Refer households to financial institutions for financing of their business plans.
Following the preparation of a viable business plan, households will be referred to potential
financial service providers to enable the various investments to be matched with specific
financial products. Specific technical assistance provided by the programme to enable the
provision of these services is described in detail under Output 2: Access to sustainable financial
services (credit, savings and money transfers) enhanced.
30
ACTIVITY 3: SUPPORT THE IMPLEMENTATION OF BUSINESS PLANS THROUGH
TECHNICAL ASSISTANCE ON VARIOUS TECHNOLOGY OPTIONS AND MONITORING OF
HOUSEHOLD INVESTMENTS
Step 1: Support training on new technologies and improved agricultural practices.
Once households have developed their business plans, they will be provided with training and
demonstration (as per their selected investments in newly constituted groups) on relevant
technologies. Where properly analysed and found to be appropriate some business plans will
need to include new technology, innovation, and/or improved agricultural practices (e.g., stall
feeding instead of free grazing, row planting, conservation tillage, small scale irrigation). Where
this is the case the programme will ensure that the new approach to demand-driven appropriate
and enabling extension is effectively applied and does not drift into a ‘business as usual’ mode of
encouraging inappropriate technological approaches when simpler technologies would do.
Where business plans require technologies that are not available locally, the programme will help
woreda level institutions identify new sources of technologies, support the development of training
curricula and provide training-of-trainers on new technologies/practices. It will also promote on-farm
adaptive research through the establishment of Farmer-Research-Extension Groups (FREGs). The
RCBP and JICA have developed some experience in promoting FREGs and will serve as models for
implementation under the FSP. Also, since the adoption of improved technologies implies the
availability of associated inputs, the FSP will also support activities to develop new sources, producers
and distributors of inputs required for households’ on- and off-farm investments and income
generating activities. This is discussed further under Output 3.
Step 2: Provide monitoring and follow-up support on household investments
The programme will support the monitoring of household investments to ensure that they are
profitable and successful in raising household income and to address constraints as they arise.
This will require close collaboration with specialists in the Animal Health, Cooperative
Promotion and Agricultural Marketing departments of the BoARD, the Small and Micro
Enterprise Office within the Bureaus of Trade and Industry, and with other relevant
stakeholders such as financial service providers and market actors. Again, it will be one of the
roles of the HABP Joint TC to make sure that joint monitoring occurs.
3.4.2 OUTPUT 2 ACTIVITIES: ACCESS TO SUSTAINABLE FINANCIAL SERVICES

ENHANCED.
ACTIVITY 1: BUILD THE INSTITUTIONAL CAPACITY OF FINANCIAL SERVICE

PROVIDERS (RUSACCOS AND MFIS) FOR SUSTAINED DELIVERY OF MULTIPLE
FINANCIAL PRODUCTS
Step 1: Undertake a detailed (woreda- and kebele-level) mapping and capacity
assessment of existing financial service providers.
The programme will hire consultants to conduct consultative discussions with financial
institutions to assess their capacity and explore the feasibility of matching financial
requirements for HABP investments with specific financial products. A particular emphasis will
be placed on assessing financial service requirements for programme clients in pastoral areas.
This assessment will conclude with recommendations on the most appropriate financial service
providers for each target area and each segment of the client population, keeping in mind that
31
RUSACCOs tend to be better suited to the needs of vulnerable households (although their
capacity is often weak), while MFIs tend to be the more appropriate institutions for disbursing
larger loans. However, the first priority will be coverage—in every woreda that has no MFI
branch, the programme will work with nearby MFIs to extend their coverage.
Step 2: Capacity building of MFIs, RUSACCOs and facilitators
Training financial service providers to provide the appropriate services and products is a critical
element of the credit activity. This will be facilitated by an international training expert who will
be hired to develop training modules and provide training to Government and MFIs.
RUSACCOs. For RUSACCOs, training modules have been already developed by the Federal
Cooperative Agency through the support of RUFIP. The HABP will therefore provide financial
training according to the existing modules, including: (a) sensitization workshop before
commencement of operation; (b) training of committee members in their respective functions,
good governance, leadership and management issues, bookkeeping and refresher training every
year; (c) training on the rights and responsibilities of RUSACCOs and their members; and (d)
training on financial management so that they develop and improve their capacity to collect
loans and provide loans from their own funds or other (external) funds as well. Limited support
to build the capacity of RUSACCO unions and to support the planned establishment of a
federation of SACCOs will also be provided.
The programme will work through the Cooperative Promotion Agency to provide technical
assistance to RUSACCOs. This will require significant capacity building of cooperative promotion
staff at the woreda as well as the Regional and Federal levels. This is described in further detail
in Output 5.
MFIs. Through the programme’s line of credit and partial credit guarantee, MFIs will be given
the incentive to increase their coverage to target credit services to food insecure areas. However,
MFIs will also require training to ensure that their staff at the woreda (sub-branch) level have
the capacity to deliver the types of financial services required by CFI households.
The programme will support the development of a comprehensive training plan and training
packages to build staff capacity to review the business plans and assess the creditworthiness of
CFI households and to provide the appropriate financial products. Training will focus on the
delivery of appropriate credit and other financial services as well as risk management
techniques. With support from the programme, AEMFI will coordinate the implementation of the
training in collaboration with the participating MFIs.
Step 3: Promote the expansion of MFI coverage and the creation of new Village Savings
and Lending Associations (VSLAs) and RUSACCOs where these do not exist.
The absence of RUSACCOs in many target kebeles and the lack of MFI coverage in much of
Oromiya and SNNPR underscores the need for the creation of new financial service providers or
branches in the target areas. GOE policy calls for one SACCO per kebele, but with thousands of
kebeles participating in the programme this goal appears unattainable within a five-year
timeframe.8 Given this reality, the programme will simultaneously implement a variety of
interventions designed to increase financial service coverage in the target areas. These will
8As a point of comparison, RUFIP created approximately 1,500 functional RUSACCOs over a seven-year
period. RUFIP experience indicates that while establishing RUSACCOs is relatively easy, developing their
management capacity is time-consuming and challenging.
32
include expanding MFI coverage and creating new grassroots financial service providers, such as
VSLAs and RUSACCOs.
In order to prepare communities to receive and manage credit, the programme will support a
financial literacy campaign. This campaign will educate clients on the importance of savings,
how to manage finance (savings and loans) and cash flows, etc. AEMFI in collaboration with the
Federal Cooperative Agency will implement the financial literacy activities with the participation
of other stakeholders including regulators (National Bank of Ethiopia), finance providers, the
media, educators and extension agents.
VSLAs and RUSACCOs. The programme will conduct community mobilization among PSNP
clients to generate awareness and interest in RUSACCOs, provide technical assistance to help
establish RUSACCOs including developing by-laws, and give systematic capacity building to
members, office bearers and bookkeepers of primary RUSACCOs and their unions. It will also
provide minimal establishment support for RUSACCOs, including office furniture, filing cabinets
and ledgers/books of accounts.
The programme will also provide support to NGOs developing innovative lending methodologies
through grassroots institutions. Exposure visits to successful programmes supporting rural
savings and credit within Ethiopia will be conducted.
MFIs. The programme will facilitate the establishment of new sub-branches in safety net
woredas. MFIs such as DECSI and ACSI have sub-branch offices in all the safety net woredas in
Tigray and Amhara regions respectively. It is only in 26 safety net woredas (23 in Oromiya and 3
in SNNPR) that MFIs have not yet opened a sub-branch—as well as the 32 safety net woredas in
Afar region. Subject to the availability of financing from development partners, the Programme
will provide financial support for the opening of new branch offices in each of the safety net
woredas that currently have no coverage as well as pastoral woredas wherever possible. This
financing will cover office and transport costs as well as training of new staff.
Step 4: Work with financial service providers to develop appropriate financial products
A range of financial services will be made available to programme clients, including savings
services and differentiated credit products that meet the needs of households at various levels of
food insecurity and with different types of business plans, as well as money transfer services
where possible. The financial services will be provided by the service provider best positioned
(in terms of coverage and product offering) to deliver the required product. The HABP will hire a
technical provider who will work with financial institutions to develop these various products,
as appropriate to each regional context.
Savings. Programme clients will have access to savings through VSLAs, RUSACCOs, and MFIs.
RUSACCOs will likely require members to save before taking loans, as specified in their by-laws.
MFIs will provide savings by requiring that a small percentage of the loan amount be placed in a
savings account, as is currently practiced.
Credit. The programme will work with both RUSACCOs and MFIs to develop appropriate credit
products for food insecure households according to their business plans, ensuring that loan
sizes, eligibility criteria, terms and repayment schedules are appropriate to households’ capacity
and selected asset/enterprise. This will include group guarantee mechanisms for CFI households
without collateral, as is currently practiced by most MFIs, and possibly individual mechanisms if
appropriate alternative guarantees can be developed. The programme will also ensure that
financial products are appropriate to each cultural context. This will include loan products
without interest but with appropriate mechanisms of service charge for Muslim communities
33
and, as determined by the mapping/capacity assessment exercise, appropriate financial
products for pastoral communities.
The majority of households will likely start with relatively small loans, building up to larger
loans as they increase their business capacity and improve their creditworthiness. The
programme will work with financial institutions—particularly MFIs—to ensure that 2nd and 3rd
cycle loans are available to households in order to enable effective asset building.
As noted in Output 1, some households will likely be interested in group loans—not individual
loans with group guarantees, but rather group loans for the financing of joint business plans.
Currently, no mechanism exists for such groups to obtain collective financing unless they
register as a cooperative. To support these groups in obtaining financing for the plans, the
programme will work with financial service providers to develop appropriate credit products
that match the needs of groups while being financially sustainable and contractually sound.
Where appropriate, it will also support the creation of cooperatives.
Insurance. The HABP will work with financial service providers to explore the viability of an
insurance scheme for household investments, supporting the development of a regulatory
framework for MFIs to provide asset insurance products, working with insurance companies to
expand coverage to CFI areas, and supporting product development. This will draw on
international experience, and will likely be done through a pilot at first, with potential for scaling
up if the pilot proves successful.
Money transfers. Finally, the programme will support the development of money transfer
services through MFIs or other appropriate institutions, where possible. These services will
support labour employment by facilitating the transfer of funds by migrant workers back to
their families.
ACTIVITY 2: PROVIDE A LOAN FUND, COMMUNITY GRANT OR SEED CAPITAL TO

FINANCIAL SERVICE PROVIDERS.
Step 1: Establish HABP financial services funds
HABP will establish transfers with the following distinct features:
a) loan fund
b) seed capital fund
c) community grant
Loan fund. This fund will flow following the financial management procedure of the
government i.e. MOFED, BOFED, WOFED then to RUSACCOs and MFIs to be channelled to the
clients.
Community fund. HABP will provide grants to communities through the Kebele Development
Committee. This Committee will channel these resources to clients of the Programme through
RUSACCOs. The RUSACCOs will manage these funds on behalf of the community to ensure sound
financial principles are followed.
Seed capital fund. The seed capital for RUSACCOs will be channelled through Government
institutions all the way down to the woreda level. The MOFED will channel funds to the Regional
BOFED, which will then allocate them to WOFEDs. WOFEDs will then transfer the funds to
RUSACCOs on a matching basis to their savings. These funds—which will be used in their
entirety as loan capital—are designed to complement the limited capacity of RUSACCOs in
34
mobilizing funds for lending and will be preceded by the institutions’ own capitalization through
fees and savings.
Partial loan guarantee. HABP will consider providing partial loan guarantees. These will be
placed within commercial banks in order to reduce their risk in lending to MFIs. Credit lines
through the Development Bank of Ethiopia may also be explored.
FIGURE 3: CHANNELLING MODALITIES FOR GOVERNMENT CONTRIBUTIONS TO HABP

FINANCIAL SERVICES
HABP
BOFED
WOFED
MFIs
RUSACCOs VSLAs
CFI HH CFI HH CFI HH CFI HH CFI HH
Flow of HABP funds

Flow of financial institutions' own funds
Future flow of funds if appropriate lending products can be developed
Step 2: Develop operating rules and procedures for capitalising RUSACCOs and MFIs.
RUSACCOs. In order to access the HABP line of credit, community fund or seed capital, a
RUSACCO will be required to meet a specific set of criteria related to financial management,
performance and accountability. Specific benchmarks will be developed prior to the start of the
programme and outlined in the HABP Programme Implementation Manual, but will include at a
minimum:
35
(a) The Woreda Agriculture and Rural Development Office provides written assurance that
the RUSACCO is operationally viable.
(b) The RUSACCO demonstrates that it will attain financial sustainability in three to four
years.
(c) The Woreda provides written assurance that the management of a RUSACCO is
satisfactory.
(d) The RUSACCO has been fully operational and started mobilizing savings and providing
loans from its own source for at least 12 months.
(e) The RUSACCO charges a lending interest rate that is estimated on the basis of covering
its operational expenses, and is consistent with wider HABP approaches to interest rates.
(f) The RUSACCO has at least 50 members and is actively working to increase its
membership within and outside the kebele to attain operational and financial
sustainability.
The lending conditions for RUSACCOs will be as follows:
• The members of the RUSACCOs may include both clients and non-clients of the
programme. However, funds from the line of credit will be reserved for HABP clients.
In addition to managing community grants, some RUSACCOs will be eligible for seed capital and
a line of credit. The seed capital is designed to encourage RUSACCOs to save (since the funds will
be provided on a matching basis) and to increase their own capital, thereby developing a sense
of ownership rather than a sense of only channelling programme funds. To ensure that this
sense of ownership is instilled, the programme will not require that all of the funds be
channelled to HABP clients. However, in order to be eligible to receive seed capital, the RUSACCO
must have a minimum number (to be determined) of PSNP clients. They must also agree that the
seed capital will be used in its entirety as loan capital to be revolved among its members and
must assume responsibility for all aspects of loan management following basic financial
principles.
MFIs. Prior to accessing the line of credit, MFIs who are interested in participating in the
programme will be required to:
a) Obtain a letter of commitment from their board indicating that the MFI is willing to
provide financial services to the clients of the programme in specific woredas.
b) Sign a clear contract agreement with the programme indicating the commitment of their
management and board to providing loans and other financial services for a specific
number of clients in a specific woreda.
c) Work with the programme to develop financial products that match the needs of
chronically food insecure households.
d) Agree to provide special mentoring and training on financial management to the clients
of the programme.
e) Submit a business plan which shows the detailed implementation arrangement.
f) Provide an audited annual financial report.
36
g) Have a repayment rate of at least 90% in the previous year.
h) Provide savings products that increase the savings of clients and develop their saving
culture.
i) Charge a lending interest rate which is estimated on the basis of covering the operational
expenses of the MFIs.
The lending conditions for MFIs will be as follows:
• The lending interest rate will cover the full cost of the loans as incurred by the MFI. This
will ensure sustainability and viability of their service provision to CFI households.
• MFIs will provide loans and other financial services to clients who are in the process of
graduation or who have graduated from the PSNP
Step 3: Disburse funds
Following the establishment of the financial services funds, the finalization of operating rules
and procedures for MFIs and RUSACCOs, and the development of appropriate financial products,
the programme will disburse funds through the channels described in Step 1 above.
Funds will be allocated on an annual basis per the programme budget. For RUSACCOs, the
provision of matching funds will be done gradually, perhaps on an increasing basis over the
years, as they develop their capacity to effectively manage funds through savings mobilization.
Step 4: Monitor loan funds, community grants and credit guarantee
The actual performance in the implementation of the agreements between the stakeholders in
Figure 3 above will be monitored through the HABP M&E system (discussed in section 7.1
below). Appropriate indicators will be developed to monitor flows of funds and use of funds in
ways that are in line with the regulatory and institutional framework for the financial sector and,
where appropriate, the cooperative sectors. The line of credit will be monitored to ensure that
targeted clients are receiving the loans given through the programme according to the
guidelines outlined above and in the PIM. The use of seed capital will be assessed to ensure that
it is being used as loan capital and is being revolved among the RUSACCO’s members.
In addition to the institutions responsible for monitoring the progress of the financial services
component per the agreements, an important monitoring role for RUSACCOs and MFIs will be
played by cooperative promoters and AEMFI, respectively.
ACTIVITY 3: SUPPORT THE IMPLEMENTATION OF AN APPROPRIATE REGULATORY

AND SUPERVISORY FRAMEWORK FOR GRASSROOTS FINANCIAL INSTITUTIONS
Step 1: Develop regulatory framework for RUSACCOs
The programme will work with Government stakeholders to support the development—
currently at the planning stage—of a regulatory framework in order to enable RUSACCOs to
operate effectively and sustainably. RUSACCOs will operate within the legal framework and be
supervised by the Federal Cooperative Agency and its counterparts at the Regional and woreda
levels, as well as other oversight institutions—possibly the National Bank of Ethiopia. As
cooperatives they will follow cooperative principles and work for the benefit of their
members—but as financial institutions they must also closely follow financial regulations. The
programme will build capacity within the new support structure and the cooperative movement
37
to effectively audit and supervise RUSACCO activities as per the legal framework governing
them.
Step 2: Build strategic partnerships
The programme will build strategic partnerships with the international network of financial
cooperatives for strategic advice on federation and regulatory frameworks.
3.4.3 OUTPUT 3 ACTIVITIES: SUSTAINABLE INPUT SOURCING, PRODUCTION

AND DELIVERY SYSTEMS ENHANCED.
ACTIVITY 1: BUILD LINKAGES BETWEEN SUPPLIERS AND USERS OF INPUTS AND
TECHNOLOGIES NECESSARY FOR THE IMPLEMENTATION OF BUSINESS PLANS
Step 1: Identify potential producers and distributors of required inputs and assess their
capacity requirements
Business plans developed under Output 1 will detail the input requirements for selected on- and
off-farm investment and income generating enterprises. These may include:
• Improved seeds or seedlings
• Livestock
• Animal feed
• Water pumps and other irrigation equipment
• Fertiliser
• Beehives
• Non-agricultural inputs such as construction materials, transportation equipment

(donkey carts, etc.)
Here the role of the extension and inputs & marketing9 services will primarily be to control
quality, ensure that technology is appropriate and identify gaps in the provision of inputs. Where
possible, the programme will prioritize local suppliers in order to ensure that the inputs (or the
spare parts, repair services, etc.) are easily accessible to the buyers on a sustainable basis. This
will help to increase the sustainability of the input—for instance, water pumps that can be
repaired easily, open-pollinated seeds that can be sourced locally, etc.
Analytical work done at the woreda and regional levels—particularly the value chain analyses
conducted under Output 1—will provide a solid foundation for input linkage activities. These
analyses will identify constraints and opportunities at every stage of the value chain, starting
from input supply.
Step 2: Establish contacts between suppliers and programme participants.
9At federal level there is an Agriculture Marketing Directorate under which there is an Input unit. At
regional level arrangements vary, but usually include separate functions for marketing and inputs. At
woreda level this most often is not the case and inputs and marketing are often one and the same sub-unit
of the ARD office.
38
In order to strengthen the value chains targeted by household business plans, extension and
inputs and marketing services will support the input linkages necessary for households to
implement their plans. Woreda experts within the Inputs Service of the Agricultural Marketing
Department and SME Office, where present, will work with DAs to provide households with
market information on the availability of inputs in adjacent woredas. It may entail calling on a
local multi-purpose cooperative to supply the required input. Alternatively, in some instances,
facilitating linkages may entail providing indirect incentives/support for private suppliers
depending on the local condition. Or it may entail organizing households into groups according
to their planned investments—for example, groups of 10-20 households whose business plans
include the same equipment or livestock type—to arrange transport for the purchase of their
assets from a more distant location. The key difference between this programme and the way
input supply for household packages has been implemented in the past is that the Extension
Service will not be involved in purchasing, transporting or distributing assets.
Facilitating—rather than providing—linkages to input suppliers will help to ensure that

households have a way to access additional assets and inputs on a continual basis, thereby
strengthening linkages within the value chain. The programme will have a significant capacity
building component to ensure that DAs and other WOARD officials are able to effectively
facilitate timely access to high-quality, appropriate inputs.10 The programme will monitor the
quality and appropriateness of the input as well as the service(s) provided.
ACTIVITY 2: PROMOTE MULTIPLICATION OR DISTRIBUTION OF INPUTS/PRODUCTS

BY VOLUNTEERS FROM WITHIN CLIENT COMMUNITIES
When input gaps are identified, the Extension Service will both facilitate linkages as described
above and stimulate local production of inputs. The latter process is described below.
Step 1: Demonstrate new technologies
For new technologies that are unfamiliar to farmers, the programme may support
representative volunteers to establish its productivity or effectiveness. Demonstrations will be
carried out in FTCs where available. For agricultural technologies such as improved seed and
seedlings, this will entail obtaining certified foundation seed from research centres and
providing it to representative volunteers for use on a demonstration plot. The same could apply
for a new type of irrigation equipment obtained from a private supplier. The programme will
provide training and supervision, where possible supported directly by the supplier (whether
public or private) of the input.
This process will be undertaken in ways consistent with the continued transformation in
extension approach described in Outputs 1 and 5, in which appropriateness of new ideas in the
context of livelihood risk, and recognition of differences in clients’ interests and capabilities are
paramount.
Step 2: Promote input production and distribution as a viable investment/income

generating opportunity
The demonstrations described in Step 1 above are designed to encourage households to

consider input supply as a viable opportunity for investment or income generation, both as
individual households and as groups, even cooperatives. This will not be limited to agricultural
or on-farm inputs. Possible activities include seed and seedling multiplication, but also
10 The HABP’s focus on building capacity in facilitation recognizes that projects that have had success in
linking producers to improved input supply (e.g. IPMS) are those that have had highly skilled facilitators.
39
distribution/retailing of equipment (particularly for youth or landless households), provision of
animal drugs, etc. Where appropriate, the programme will support interested households in
incorporating these investments or income generating activities in their business plans as
described under Output 1. It will also support groups in marketing their inputs through the
processes described under Output 4 below. During the preparation phase of the programme, an
assessment will be conducted to identify possible constraints to these activities, notably
regulatory constraints that may affect activities such as seed multiplication, and these will be
addressed through the relevant channels.
3.4.4 OUTPUT 4 ACTIVITIES: ACCESS TO EFFECTIVE PRODUCT AND LABOUR

MARKETS INCREASED.
ACTIVITY 1: IMPROVE STORAGE, PROCESSING AND QUALITY CONTROL FOR
INCREASED VALUE ADDITION ACCORDING TO BUSINESS PLANS
This activity will support households and groups in making product-level improvements in
order to increase the prices obtained.
Step 1: Incorporate training and technical assistance on value addition into extension
support provided to CFI households.
The training curriculum will be developed by ATVET colleges, Regional universities or private
sector agricultural curriculum developers. It will emphasize skills-based learning rather than
theory, thereby complementing the theoretical training that is the background of most DAs. The
training will be designed to enable woreda experts and DAs to identify and analyse capacity
requirements to strengthen critical parts of value-added chains. These requirements will be
based on market demands in terms of products, quality and timing of delivery, and market
segments (local/regional, urban/rural, bulk/niche, etc.). Trainers will impart this curriculum to
woreda experts, who will supervise DAs in providing technical assistance to groups of
programme participants in cost-effective value addition techniques. Specific training topics will
include, but not be limited to:
• Proper storage techniques to minimize pest infestation, mould, etc. and to increase
bargaining power by enabling producers to sell when prices are higher.
• Post-harvest quality control, including sorting and grading.
• Processing, particularly small-scale processing such as drying, honey processing, small-

scale dairy activities, etc. to prolong shelf life or reach new market segments.
Under RCBP these training curricula for ATVETs have largely been developed. The Programme
will adopt these for training of DAs from CFI woredas.
Step 2: Where appropriate, assist in the preparation of business plans and link to sources
of credit for group investments.
A significant number of households may be interested in collective investments, either to

support their existing household business plan (to add value to their product) or to add another
revenue stream from service provision. The programme will provide technical assistance to
groups in the preparation of joint business plans so that they can access financing from MFIs,
with complementary support to MFIs for the development of products tailored for such groups
as described under Output 2 above. These plans may include investment in processing
technologies or construction of storage facilities. Alternatively, individual households may select
small-scale processing investments for their household business plan.
40
ACTIVITY 2: IMPROVE MARKETING TRANSACTIONS AND ACCESS TO HIGHER-VALUE
MARKETS FOR NEW INVESTMENTS OR WAGE EMPLOYMENT
This activity will support households and groups in marketing transaction level improvements.
The aim will be to reduce market transfer costs in order to increase returns for producers as
well as small-scale traders. This activity will require the Extension Service and cooperative
promoters to have knowledge of market dynamics and key market players such as brokers,
middlemen, wholesalers and retailers, as well as labour opportunities such as those offered by
commercial farms or large construction and maintenance programmes. It will also require skills
in information dissemination and market linkage facilitation. Building these skills will be a core
part of the market facilitation training curriculum given to extension staff, cooperative
promoters, and woreda-level SMEA experts.
Step 1: Support the creation of groups for bulk marketing
For households that have chosen similar investments, the programme will provide support for
the creation of marketing groups or cooperatives where appropriate. This will be done through
the Extension Service as well as the Cooperative Promotion Bureaus, whose agents will provide
technical assistance in cooperative principles such as member ownership as well as important
business management and accounting skills. Linkages between the two departments—Extension
and Cooperative Promotion—will be strengthened through regular HABP Technical Committee
meetings.
Step 2: Incorporate market orientation and business skills into the extension package
provided to CFI households. The programme will identify gaps in woreda experts’ and DAs’
understanding of markets and business skills and will support the development of a curriculum
to address these gaps through ATVETs and other institutions. This training will then be
institutionalised and provided to woreda experts and DAs on a regular basis through a refresher
programme.
The programme will then provide training to marketing groups in order to help them
understand the markets for their products in terms of quality requirements, timing, prices, etc.
Where appropriate, improved marketing technologies (such as the use of scales for weight-
based marketing) will be promoted.
For all marketing training and support, linkages between the extension service and other
departments—particularly the Agricultural Marketing Department and the Cooperative
Promotion Offices—will be critical. For instance, DAs may be linked to cooperative promotion
officers for additional support, as these often have a stronger understanding of marketing.
Step 3: Link suppliers (of products as well as services) to markets
The programme will help link groups/cooperatives to markets by facilitating contacts with
potential buyers. Where appropriate, sales contracts and/or outgrower schemes will be
explored.
This activity will place particular emphasis in supporting non-farm enterprises and labour
opportunities through facilitation of the flow of information between labour surplus and deficit
areas. This will promote both government-related employment—such as government-financed
construction and maintenance schemes—and private sector employment—such as privately
funded construction, commercial farms, or industrial/agro-industrial processing. Linkages with
the Roads Authority and the Micro and Small Scale Enterprise Development Agency will be
41
critical. In addition, the woreda labour & social affairs office will be strengthened to perform
labour office functions of linking job seekers with the right job opportunity and ensuring
streamlined technical support to households, in collaboration with Trade & Industry office
where appropriate. Improved financial service provision (as described under Output 2), and
particularly money transfer services, may help support labour migration where appropriate.
Similarly to the group business plan support for investments in value addition described above,
the programme will support the development of group business plans for labour-based
activities. For instance, a youth group formed with the purpose of providing small-scale
construction/maintenance activities may require support in obtaining an initial loan for the
purchase of equipment, etc. The HABP will link with existing youth programmes to support such
initiatives and the development of further off-farm opportunities for youth and other landless
households. Special care will be taken to identify opportunities for female youth, as they are
often neglected by the women development programmes (which target older women, female-
headed households, etc.) and youth development programmes (which generally target male
youth).
3.4.5 OUTPUT 5 ACTIVITIES: INSTITUTIONAL CAPACITY TO MANAGE AND

IMPLEMENT THE HABP STRENGTHENED.
ACTIVITY 1: STRENGTHEN MANAGEMENT CAPACITY OF GOVERNMENT
IMPLEMENTERS
Step 1: Assess management and M&E capacity
This assessment will look at the systems in place for managing the OFSP and determine their
skills and weaknesses in order to design a more effective system for managing the HABP.
Management aspects considered will include:
• Programme planning and staffing
• Adequacy of policy and strategy
• Financial management and reporting
• Monitoring and evaluation of activities
• Activity reporting
Step 2: Build financial management systems
This step will ensure that Government departments and offices down to the woreda level have
the necessary financial management systems in place to track HABP-related expenditures.
Overall, the programme is expected to ease the burden of financial management at the local
level, as the Extension Service will no longer be involved in loan disbursement and collection.
Step 3: Strengthen M&E and reporting systems
In order to ensure that the programme’s targeted Outputs, Outcome and Goal are met, a rigorous
system of monitoring, evaluation and reporting will be required. The programme’s M&E system
will be based on the logframe but will also include a step-by-step plan for programme planning
and tracking of activities. An overview of the HABP monitoring and evaluation system and how it
is integrated in the M&E framework for the broader Food Security Programme is provided in
Chapter 7. As for the FSP as a whole, further work will be undertaken during the final stage of
preparation for the programme (second half of 2009), in order to develop a more detailed
42
system. This will then be reflected in the development of the HAB Programme Implementation
Manual. Following the design, training will be given to build the capacity of relevant HABP
stakeholders to effectively implement the system by monitoring not only the accomplishment of
programme activities but also their effectiveness, by following up on household investments and
identifying remaining needs.
ACTIVITY 2: STRENGTHEN TECHNICAL CAPACITY OF EXTENSION SERVICE,

COOPERATIVE PROMOTION BUREAUS, SMEA AND OTHER RELEVANT
INSTITUTIONS TO PROVIDE DEMAND-DRIVEN EXTENSION AND TRAINING IN
MARKET-ORIENTED BUSINESS PLANNING AND TECHNOLOGICAL INNOVATION
Step 1: Assess technical capacity
This assessment will be highly consultative and participatory and will study the capacity at
different levels of Government in terms of:
• Business skills
• Market knowledge and understanding
• Analytical skills
• Facilitation and mentoring skills, and
• The adequacy of existing vision, strategy and plans for transformation of extension
approach
The proposed shift toward demand-driven extension is a major undertaking and will require
significant changes in attitudes, behaviors and practices. Like all processes of change, this will
not happen overnight and therefore needs to be managed adequately. During the lifetime of the
programme, continuous efforts will be made to build a common understanding across the
extension service as a whole (from Federal level to DAs at the kebele level) of what ‘demand-
driven’ extension means. In effect, the programme envisages extension as a key means of
empowering households to make well-informed decisions. This puts a high premium on
facilitation and mentoring skills, which will feature as a priority in terms of capacity
development.
Also, there will be a particular focus in the capacity assessments on assessing the knowledge and
capacity of the kebele and woreda agents (i.e. woreda SMSs and DAs), as they are closest to the
food insecure households who are the target group of the programme. This will help to inform
the development of an appropriate support structure for DAs—from other members of the
Extension Service as well as other departments such as Agricultural Marketing and Cooperative
Promotion—to provide technical guidance and support in their HABP activities.
In addition the programme will, in its pre-implementation phase, conduct a review of DAs’
workload and working modalities in order to identify the implications of the HABP approach at
that level. HABP activities must be integrated in the DAs’ job descriptions. The purpose of the DA
workload assessment will be to outline practical modalities which will make this possible,
considering the wide range of areas in which DAs will be expected to orient households. Options
will be considered such as the deployment of specialised DAs for groups of kebeles in which a
number of households wish to engage in a specific activity (such as DAs specialised in irrigation
deployed in Tigray) as well as the more direct involvement of woreda experts in actual
extension provision. Guidance will be provided to DAs in terms of work programming, team
organisation etc.
43
For pastoral areas where there are often few DAs, the programme will explore innovative
mechanisms of bringing together all relevant stakeholders—governmental (from various
agencies and departments) and non-governmental—to provide the necessary support to
participating households.
Step 2: Prepare HABP Technical Implementation Manual
Following the assessment outlined above, a Technical Implementation Manual for the HAB
component will be prepared. This manual will be the HABP’s counterpart to the Community-Based
Participatory Watershed Management guidelines for the PSNP. It will outline the technical roles and
responsibilities of all key actors, including DAs and woreda experts from various departments;
technical aspects of programme implementation—particularly as related to the skills sets outlined in
Step 3 below—and arrangements for skills development/training.
Step 3: Develop training curricula and a technical support network for DAs
The Technical Implementation Manual will set the agenda for the development of HABP training
curricula. In each of the following curricula, a high level of emphasis will be placed on
consultation skills and facilitation techniques, in order to ensure that the extension advice
provided is demand driven and appropriate to food insecure households.
Business skills. The programme will strengthen the business skills of DAs who will be
supporting households in the preparation of business plans, and of Cooperative Promotion office
staff who will be providing training to marketing groups. The programme will link with woreda-
level offices of other agencies, such as the Micro and Small Enterprise Agency and the woreda
Labour and Social Affairs office, to extend their outreach and build their capacity to work with
rural, food insecure populations. These agencies will be critical to supporting off-farm activities
and linking job seekers with skills training.
Off-farm investments. Particular attention will be given to the promotion of off-farm

investments, as these are currently a weak point for extension services. The Micro and Small
Enterprise Agency is responsible for promoting these investments, but it currently does not
reach rural areas. The Regional and woreda Food Security Bureaus will establish Off-Farm Case
Teams, following the Federal model. These will develop linkages and coordinate the promotion
of off-farm investment and income generating opportunities, working with existing programmes
such as Small and Medium Enterprise development supported by Bureaus of Trade and
Industry, and with the Youth and Women Development programmes of the Ministry of Youth,
Sports and Culture. The role of the HABP Joint TC will be critical in operationalising these
linkages and organising collaboration between the various agencies.
Input supply facilitation. The programme will provide training to farmers in seed and seedling
multiplication in order to increase the diversity of input suppliers. Research station experts will
play a key role in this activity. The programme will also help input suppliers understand their
market (producers) by linking them with programme participants through input fairs. Finally,
the programme will provide training to Input Teams, Extension Service, and cooperative
promotion officers to build their capacity to deliver improved input sourcing and delivery
systems. This training will focus on identifying appropriate inputs, monitoring quality, and
building analytical and facilitation skills.
44
Marketing facilitation. The programme will develop capacity within the Woreda WOARD (for
agricultural products) and Woreda Offices of Trade and Industry or Small and Medium Enterprise
Development Desks (for non farm products and services) for periodic analysis of market opportunities
related to potential investments by food insecure households and provide initial technical assistance to
undertake such analysis. Curricula and participatory training modalities will be developed as part of
the programme by ATVETs, universities and private sector providers funded by the programme. A
series of trainings will then be organized for DAs and woreda specialists to improve their
understanding of market opportunities, to enhance their analytical/consultation/facilitation skills and
deepen their technical know-how.
Step 4: Provide logistical support
FTCs. As farmer training centres will serve as the focal point for extension activities conducted
under the HABP, it is important that these centres be equipped with the necessary materials to
facilitate learning, consultation and demonstration. The programme will therefore provide
logistical support to FTCs in the 216 CFI woredas not covered by the RCB project. This support
will include the cost of selected furniture, equipment, training and reference materials and
means of transport (bicycles, mules) to enable the effective operation of the FTC.
Woreda staff and DAs. DAs will benefit from logistical support to the FTCs, as these centres are
where they will provide much of their training. The programme will also support the capacity of
both woreda staff and DAs to follow up and monitor client households’ investments, through the
provision of necessary equipment, vehicles, motorcycles, bicycles, etc. as appropriate.
ACTIVITY 3: STRENGTHEN CAPACITY OF FINANCIAL SERVICE PROVIDERS TO PROVIDE

APPROPRIATE FINANCIAL SERVICES TO FOOD INSECURE HOUSEHOLDS
Step 1: Assess financial management and service provision capacity
This assessment will be done with two types of financial service providers: MFIs and RUSACCOs.
MFIs will be assessed in terms of their credit management skills, their understanding of the
needs of chronically food insecure households and groups, and their ability to tailor financial
products and packages to them. RUSACCOs will be assessed in terms of their ability to mobilize
savings, their credit management skills, and their overall management and accountability
systems. An assessment will also be conducted of the training provided to RUSACCOs by
Cooperative Promotion staff in order to determine any gaps or weaknesses.
Step 2: Address capacity gaps through training
According to the results of the assessments done under Step 1, the programme will provide
training and capacity building to MFIs, RUSACCOs and Cooperative Promotion staff. This training
may be provided by private consultants or, for RUSACCOs, by MFIs. For all financial institutions,
the training will focus on building their capacity to sustainably provide financial services and
products that meet the needs and capacities of food insecure households.
In addition, to ensure that RUSACCO staff can operate effectively, the programme will provide
office equipment and logistical support.
3.4.6 OUTPUT 6 ACTIVITIES: CONFIDENCE, KNOWLEDGE AND SKILLS OF

FOOD INSECURE HOUSEHOLDS IN CFI WOREDAS BUILT.
45
ACTIVITY 1: BUILD SKILLS, KNOWLEDGE AND CONFIDENCE IN BUSINESS PLANNING
AND MANAGEMENT
The Investment Opportunity Stakeholder Consultation process outlined under Output 1 will the
first step in household awareness creation and knowledge acquisition with respect to potential
investment and income generating enterprises for food insecure households. Group and
individual household consultations conducted at FTCs will enable households to assess the
appropriateness of a specific investment for a particular household's technical, labour, financial
capacity. Involvement in savings activities provides an opportunity for developing financial
awareness. Significant investment in consultations, awareness raising and business plan training
will move the programme away from a “package” approach and empower households to make
decisions for themselves.
ACTIVITY 2: BUILD SKILLS, KNOWLEDGE AND CONFIDENCE IN FINANCIAL

MANAGEMENT
The HABP’s new approach to self selection of household investments and supporting credit
requires an initial awareness and knowledge of the technical and financial aspects involved in
undertaking the investment and the supporting credit. The programme will therefore devote
significant time to building households’ financial literacy, providing training to increase
households’ confidence in financial management (savings and credit) and managing cash flows.
Female-headed households and women groups will receive special attention for these activities.
The programme staff will also work to encourage a savings culture, particularly through support
to RUSACCOs and VSLAs.
ACTIVITY 3: BUILD SKILLS, KNOWLEDGE AND CONFIDENCE IN INPUT SOURCING AND

PRODUCTION, PARTICULARLY FOR NEW TECHNOLOGIES
The programme will develop farmers’ knowledge and skills in producing and selling inputs (as
described under Output 3) and will use participatory demonstration techniques to increase their
understanding of new technologies. These activities will be critical to enabling households to
invest in the appropriate inputs to increase their production and asset base.
ACTIVITY 4: BUILD SKILLS, KNOWLEDGE AND CONFIDENCE IN MARKETING AND

VALUE ADDITION
Households’ skills and confidence in undertaking value addition activities will be built through
the demonstration of innovative technologies (as described under Output 1) and training
provided under Output 4. Similarly, households’ understanding of markets will be increased
through a variety of activities, particularly those under Output 1 (particularly the stakeholder
consultation process, the presentation of viable investment and IGA options, and the
participatory development of household business plans) and Output 4 (training in market
orientation and linkages to higher-value markets). This is relevant both for product and labour
markets. Participation in marketing groups and cooperatives will also be critical to developing
marketing skills and confidence.
46
4 ASSUMPTIONS
4.1 OUTCOME-TO-GOAL ASSUMPTIONS
The Goal of the Food Security Programme is to achieve food security or food sufficiency for male
and female members of food insecure households in FSP woredas. The Outcome of the HAB
component is to see household income and assets diversified and raised for food insecure
households in FSP woredas. Several key Outcome-to-Goal assumptions underlie the ability of the
HABP Outcome to enable the achievement of the FSP Goal:
1. Markets in or near CFI woredas provide sufficient livelihood opportunities for food
insecure households. Market promotion interventions such as the Growth Agenda will be
critical for this.
2. Sustainable support services exist in CFI woredas to enable assets to continue to be

productive. Complementary institutions and programmes providing animal health services,
technical advice and maintenance/spare parts where necessary will be important actors in
ensuring the sustainability of asset building progress made by households.
3. Protection from transitory shocks through the PSNP is sufficient to prevent significant
asset depletion. The PSNP is a critical foundation to the household asset building activities
proposed under the HAB component.
4. The enabling environment—including infrastructure and Government policy—allows

assets to be productive and generate sufficient returns for households to make
additional investments. For instance, the CCI component will be critical to the success of
the HABP in woredas that have a moisture deficit.
5. FSP budget and organisation of implementation allows operation at sufficient scale,

quality and coverage. The success of the HABP in helping significant numbers of
households achieve food security and food sufficiency depends on the overall FSP budget,
coordination between the four components, and quality of overall programme
implementation and management.
4.2 OUTPUT-TO-OUTCOME ASSUMPTIONS

In order for the HABP to achieve its Outcome, six Outputs are proposed, as described in detail in
this document. But this will only happen if Output-to-Outcome Assumptions hold true, and so
these need to be carefully monitored and managed where necessary during programme life. Key
Output-to-Outcome Assumptions are outlined below:
1. Financial institutions respond to FSP incentives. The HABP is built upon the assumption
that given the right incentives, MFIs will be willing to expand their geographic coverage and
clientele to lend to chronically food insecure households and/or RUSACCOs. The programme
has been designed to address financial institutions’ legitimate concerns in terms of
profitability and the creditworthiness of chronically food insecure households. In response
to these concerns, a range of incentives, including capacity building, logistical support and a
line of credit, will be provided. These will be coupled with training to households in financial
literacy and business management in order to increase their creditworthiness.
2. The creation of RUSACCOs occurs at the necessary pace. This will require substantial
involvement from the Cooperative Promotion Bureaus/Offices, as they have the mandate to
support the creation and capacity building of all types of cooperatives, including savings and
credit cooperatives. Many woredas of SNNPR, Oromiya and Afar in particular lack such local-
47
level savings and lending institutions (be they RUSACCOs or their small-scale, more informal
VSLA counterparts), which will be critical in linking chronically food insecure households
with sources of credit (including MFI lines of credit) for household investments. The success
of the programme therefore rests in part on how quickly such institutions can be created,
supported and scaled up.
3. Sufficient attractive investments can be identified, and these prove to be profitable.

This is a necessary condition for the HABP to achieve its stated outcome of increasing
household assets. Although viable investment opportunities are more difficult to identify in
rural, chronically food insecure areas, they do exist, both for on- and for off-farm activities. A
comprehensive consultative process of assessment of these will be undertaken to identify
viable investments as well as their potential risks and returns. Households will receive
technical and financial training appropriate to the technology they are adopting as well as
other technical services (e.g. animal health, crop protection) as may be required.
Complementary support to input and output marketing will also ensure profitability of
household investments.
4. Other factors do not cause loss of investment profits. Provision of technical training and
linkages with complementary services will reduce the risk of loss of investment profits
resulting from natural events such as plant and animal disease. The feasibility of crop and
livestock insurance for food insecure households will be researched.
5. The extension service has the capacity to deliver demand-driven support services on
scale required. Much of the responsibility for implementing the HABP will rest with the
extension service, particularly DAs and woreda experts. The programme’s focus on demand-
driven service delivery and market responsiveness will require a reorientation of the way
most extension services are currently provided. In order for this to happen, the programme
has incorporated a comprehensive capacity building element, which is specifically designed
to ensure that the Extension Service will have the capacity to deliver information, knowledge
and skills at the scale required. The FTCs will provide the focal point for delivery of demand-
driven support to its clients and the programme will support the building of their material
capacity.
6. Effective linkages between various programmes and departments translate to

effective, joined up, coordinated support. This will be particularly critical for the success
of off-farm investments, as these will require coordinated support from the Small and Micro
Enterprise offices, the Women and Youth Development programmes, and the extension
service.
7. The risk aversion of chronically food insecure people is able to be overcome. To

encourage this, the programme will develop a flexible range of financial products
appropriate to resource poor and risk-averse households. An introduction to financial
knowledge will be inculcated through the encouragement of a savings culture supported by
financial and business awareness and knowledge raising programmes.
48
5 IMPLEMENTATION
5.1 PHYSICAL AND NON-PHYSICAL MEANS

The inputs related to Output 1 (identification of investment opportunities and business plan
development) include (i) skilled manpower to undertake market and technical analysis (ii)
skilled community facilitators (iii) skilled workshop facilitators at woreda and Regional levels
and (iv) funds to finance the consultative process. Human and financial resources are required
to undertake detailed feasibility studies to ensure the functionality and cost effectiveness of the
household investments. Special emphasis will be given to off-farm investment opportunities, as
less work has been done in this area to date.
Limited financial inputs will also be required to undertake an environmental risk assessment for
some of the enterprises to ensure that potential negative environmental impacts are mitigated.
In this regard, special emphasis will be given to livestock related enterprises because of
implications for carrying capacity, pasture and water availability.
The major inputs related to Output 2 (provision of financial services) concern the capitalisation
and capacity building of financial service providers. Supervisory and regulatory agencies may
also need capacity building support. This will include technical support to improve service
delivery and diversify the products provided, as well as material support to enable them to fulfil
their responsibilities.
Investments in Output 3 (improved input delivery system) will largely involve expenses related
to supervision and support.
Output 4 (support to market linkages) will largely involve the development of technical skills
with regard to market identification and the development of value chains and investment in
functioning systems.
Output 5 (institutional capacity building) requires substantial support to the extension

department as well as the development of new extension approaches (supported through
technical assistance). Rolling out the communication strategy will require the design, writing
and printing of posters and newsletters as well as the preparation of broadcast materials for
both radio and television. A communication specialist has already been seconded to the FSPD to
support this process.
The HABP requires regular supervision and follow up on how household investments are doing.
Output 5 will therefore have three main areas of investment: investment in human resources
(both increased staffing and the training of existing and new staff), systems (including the
development and revision of manuals) and physical capacity (computers, vehicles etc.)
A major input for Output 6 will be a planned and systematic sensitisation programme (not
campaign approach). Skilled trainers and sensitizers will be required. Posters, pocket sized
sensitisation materials will be developed and disseminated. Funds will be required to finance
experience sharing exchange programme for selected households or their representatives
locally and if possible abroad where similar programmes have succeeded.
These measures and the associated inputs will raise the confidence of the households on the
programme and the feasibility of the investment options they have chosen.
49
5.2 INSTITUTIONAL ARRANGEMENTS
The Household Asset Building Programme is a component of the Government of Ethiopia’s
larger Food Security Programme. As explained in the FSP document (in section 3.1), the Minister
for MOARD and Heads of Regional BOARD and woreda OARD are the programme managers for
the FSP. A number of inter-sectoral coordination bodies chaired at senior level (MOARD
Minister, Regional President and woreda Administrator) ensure coordination internally in the
sector as well as with non-ARD agencies involved in the FSP implementation (Federal FSP Inter-
Ministerial Management Committee, Regional/woreda FSP Steering Committee11). At Federal
level there is also an FSP Joint Strategic Oversight Committee for Government-Development
Partners dialogue and joint oversight of the FSP implementation. At Regional and woreda levels,
under the strategic guidance of the Regional/Woreda Steering Committee the Regional/woreda
FS Task Force, chaired by the Head of BOARD/Woreda ARDO respectively, ensures operational
coordination among and within the FSP components.
Thus with regard to HABP these bodies have important roles in ensuring its integration with
other FSP programmes. For instance at Federal level, the State Minister for Agriculture,
overseeing the Extension Directorate, will report on progress with the HABP at the regular
MOARD management meetings. This will be an opportunity to assess plans and progress with
HABP in relation to plans and progress of other FSP components, e.g. the development of
enabling infrastructure through PSNP PW and CCI, and to assess how well HABP manages to
cover the PSNP target population. The State Minister will also attend the FSP Inter-Ministerial
Management Committee, as well as the State Minister in charge of SME Development in the
Ministry of Trade and Industry, so that this Committee will be in a position to ensure joint and
coordinated guidance with regard to the promotion of off-farm activities under the HABP, to all
agencies concerned. Similarly, the Head of BOTI and of the woreda Trade and Industry Office
will be members of the Regional/woreda FSP Steering Committee and will be represented at the
appropriate level (Heads of SME Agencies) on the Regional/Woreda FSTFs.
The Federal FSP Joint Strategic Oversight Committee and Regional and woreda FSP Steering
Committee and FS Task Force will be supported by a number of Joint Technical Committees, one
of which will be the HABP Joint Technical Committee. At all levels the HABP Joint TC will be
chaired by the Extension Service Head (e.g. the Extension Director at MOARD), who will be the
‘manager’ of the HABP. The HABP Joint TC will be accountable to the Minister MOARD, Regional
President and Woreda Administrator through the FSP overall coordination bodies. At all levels
the Food Security bodies will have a key role of facilitating the management and coordination of
the FSP and of each of its components. With regard to the HABP Food Security bodies will be the
Secretariat of the HABP Joint TC Committee chaired by the Extension agencies.
This is represented in the diagrams below.
11The Regional/woreda FSP Steering Committees function like sub-committees of the Regional/woreda
Cabinet.
50
Figure 3: HABP within federal level management and coordination arrangements for the
FSP
FSP INTER-MINISTERIAL MANAGEMENT COMMITTEE
State Minister DRMFSS

FSCD
CHAIR
MOARD
Trade & Industry
MOFED MoWR Roads Authority
State Ministers State Minister for
State Minister State Minister State Minister
SME
Agricultural
Development
NRM
M&I
MOARD MANAGEMENT ARRANGEMENTS

(FSP to be a standing item on agenda of management team)
Minister of Agriculture & Rural

Development
Chair
Agricultural NRM Market & Input

DRMFSS
Development
State Minister
State Minister State Minister
State Minister
51
FSP COORDINATION MECHANISM (JOINT GOE-DONORS)
Minister
MOARD
Overall
FSP Joint Strategic Oversight Committee
FS
FSCD Chair: MoARD DRMFSS State Minister
Committee
JOINT TC 3
JOINT TC JOINT TC 2
PW/CC
Early Warning & HAB
Response/Transfers
Co-Chairs:
Chair:
Director Natural
Co-Chairs: EWR & Director
Resource (ARD)
FSC Directors Extensio
MoWR Director
Cash Food Extension Fin Services

Working Working Working Working
Group Group Group Group
52
Figure 4: HABP within Regional level FSP coordination and management arrangements
REGIONAL FSP COORDINATION AND MANAGEMENT MECHANISM
FSP Steering Committee

Chair: Regional President
Regional Food Security Task Force

Chair: BOARD Head
Relevant Directors of other (non-ARD)
agencies
Food
Security(Secretariat)
JOINT TC 2 JOINT TC 3
JOINT TC 1
HABP PW/CCI
Early Warning &
Response/Transfers
Chair: Chair:
Extension Natural
Chair: EWRFS Head
Head Resource Head
Figure 5: HABP within woreda level FSP coordination and management arrangements
WOREDA FSP COORDINATION AND MANAGEMENT MECHANISM
Woreda FSP Steering Committee

Chair: Woreda Administrator
Woreda Food Security Task Force

Chair: ARDO Head
Relevant Heads of other (non-ARD)
agencies
Food
Security(Secretariat)
JOINT TC 2 JOINT TC 3
JOINT TC 1
HABP PW/CCI
Early Warning &
Response/Transfers
Chair: Chair:
Extension Natural
Chair: EWRFS Head
Head Resource Head
53
In terms of day-to-day management and coordination, the Extension bodies will take the lead for
the HAB programme, with the support of the HABP Joint Technical Committee that they chair. In
order to ensure coordination between and mobilisation of the relevant expertise from all
concerned agencies, the HABP Joint TC will comprise the following agencies (in addition to
Extension as chair, and Food Security as Secretariat—specifically, the Household Asset Building
case team in the Food Security bodies):
5. Inputs and Marketing (involved in particular in Output 1 and 3, key role in relation to
facilitating links with markets)
6. Cooperative Promotion (involved in Outputs 1, 2 as overseeing RUSACCOs, and 3 and 4 as

supporting cooperatives in facilitating linkages with input and output markets)
7. Small and Micro-Enterprise Development (involved in Outputs 1, 3 and 4 with regard to off-
farm activities and ensuring links with SME development package programmes)
8. MFI representative(s) (lead role in Output 2)
9. Women Affairs (cross-cutting, and ensuring links with Women package programmes)
10. Youth, Sport and Culture (cross-cutting, and ensuring links with Youth package
programmes)
11. Labour and Social Affairs (facilitating links with labour markets for both on- and off-farm
activities in Output 4 and integration of such opportunities in Output 1)
12. Donors, NGOs and other relevant non-government stakeholders.
This is illustrated in the diagram below.
54
Figure 6: HABP Joint Technical Committee (Federal, Regional and woreda level)
Agriculture & Rural

Development
Food Security (Coordinating Joint Technical

Secretariat) - Household Committee (chaired by
Asset Building Case Team Extension)
Inputs & Marketing
SME
Coop promotion
MFIs
Women Affairs
Youth Affairs
Labour & SA
NGOs & Donors
Other relevant
stakeholders
The HABP Joint Technical Committees will report to the Heads of Agriculture and Rural
Development (ARD) and the broader FSP coordination bodies that these Heads chair. The HABP
Joint TCs at Federal, Regional and woreda level will have similar compositions, as shown above.
At Federal level the HABP Joint TC will include representatives of donor agencies who have a
particular expertise and/or interest in the HABP field of activity and who will represent the
donor group on the TC. Regions and woredas will ensure that all relevant stakeholders are
represented on the HABP Joint TC. Considering the importance of engaging with the private
sector (input suppliers, investors in value chains and agricultural processing etc.) and with the
cooperative sector at large, the Regional and woreda Joint TCs could, for instance, include
representatives from Regional Chambers of Commerce or private sector associations or
umbrella organisations where these exist, as well as representatives from cooperative unions.
At Regional and woreda level in particular, the HABP Joint TC will have a critical role in ensuring
that the planning for HABP activities is integrated with the planning of other FSP activities in the
woreda and Region and with other activities in the overall woreda and Regional plans. This is
further elaborated in section 5.3 below. This is critical as the woreda plan, including HABP
activities, will then be the basis for each agency involved in the HABP implementation to carry
out its activities accordingly.
Financial service providers will be represented on the HABP Technical Committees at each level,
as appropriate. In addition, there will be a set of specific arrangements ensuring the
55
management and coordination of the different types of activities supported by the Programme in
relation to provision of financial services, as showed in the diagram above.
The arrangements described in this section will be cemented in a Memorandum of

Understanding (MOU) between Government and development partners, as well as MOUs
between ARD agencies and other agencies involved in the FSP implementation at the same level.
Within the context of these arrangements the roles and responsibilities of implementing
partners are summarized below. They will be described in detail in the HABP PIM.
5.2.1 FEDERAL LEVEL
The Ministry of Agriculture and Rural Development (MoARD) is responsible for the
oversight and coordination of the Food Security Programme in general, including the HAB
component. It sets the policy direction to which the HABP contributes. It ensures that the FSP
components are closely coordinated through a number of coordination bodies (including the FSP
Joint Strategic Oversight Committee) and through the regular management meetings of the
Ministry. It approves the programme budget and resource allocation to the various programme
implementers, based on the consolidated resource allocation proposal prepared by the FSCD,
and it resolves implementation issues requiring senior engagement, especially relating to
coordination issues. The Disaster Risk Management and Food Security Sector (DRMFSS) and
its Food Security Coordination Directorate provide technical support for the HAB component
planning and implementation. The State Ministry for DRMFSS also leads an FSP Inter-Ministerial
Management Committee which mobilises the support of other sectors that must be involved in
the FSP implementation.
The Agricultural Extension Directorate (AED) is the manager of the HAB programme. As such,
the Directorate takes the technical lead in managing, coordinating and overseeing the
implementation of the HABP activities to ensure that the HABP meets its objectives, supported
by the HABP Joint Technical Committee (chaired by the Director AED). The Director reports to
the State Minister for Agriculture who informs the Minister and the FSP Inter-Ministerial
Management Committee about progress with HAB and raises any issue that would demand
higher level, coordinated guidance or decision making. In this coordination leading role the
Directorate is responsible for i) providing guidance to implementing partners; ii) ensuring
appropriate linkages of the HABP with the other components of the Food Security Programme
and other development interventions; and iii) ensuring effective coordination across
departments and ministries for the successful implementation of the programme.
One key responsibility of the AED is to implement the reorientation of the Extension Service
toward a demand-driven approach making the service more responsive to CFI households’
needs and interests. The Directorate will (i) re-orient its system and staff towards a demand-
driven extension approach; (ii) chair the special multi-agency technical committee (HABP Joint
TC) that will provide technical back up to the various implementing agencies concerned; (iii)
issue explicit guidelines that its staff at all levels and particularly woreda extension staff and
Development Agents will not be involved in loan disbursement and collection.
The Food Security Coordination Directorate (FSCD) has day-to-day responsibility for
facilitating the management and coordination of the HABP along with other components of the
FSP. Its key responsibilities related to the HABP include : i) providing technical support to
Regional food security offices; ii) monitoring overall capacity to implement the HAB; iii)
assisting the AED in the management and coordination of the HABP, including in leading the
transition from supply-driven to demand-driven extension; iv) together with the AED,
monitoring and evaluating the efficiency, effectiveness and impact of the HAB and documenting
56
and disseminating lessons; and v) based on annual work plans and budget proposals of
programme implementers, preparing consolidated resource allocation proposals for approval by
MOARD Minister.
The Ministry of Finance and Economic Development (MOFED) is responsible for disbursing
HABP resources to Regions in line with requests submitted by FSCD, based on MOARD-approved
programme work plan and budget. MOFED is accountable for the overall financial management
of the programme, including management of the special and pooled Birr accounts and reporting
on the HABP.
The Federal Cooperative Agency will play a larger role in the FSP than previously. The Agency
will collaborate with the FSCD, AED and other relevant institutions to strengthen existing rural
saving and credit cooperatives (RUSACCOs) and establish new RUSACCOs where they do not
exist. The Agency will work with relevant institutions to make the regulatory environment
conducive for RUSACCOs to operate and flourish in CFI areas. The Federal Cooperative Agency
will also be responsible for providing guidance to Regional and woreda Cooperative Promotion
bureaus and offices in the implementation of the HAB more generally, notably in the
establishment and strengthening of production, marketing and other cooperatives that will
strengthen the integration of households with the market.
The Agricultural Marketing Directorate (under the State Minister for Inputs & Marketing) will
have an important role too as it will lead the adjustment in the role of government agencies at all
levels with regard to agricultural markets. The HABP envisages that government agencies will
have a role primarily of facilitation of the establishment of market linkages (including through
collection, analysis and timely dissemination of market analysis), quality control, and promotion
of investment by the private sector. This will require strong leadership from the Federal level to
steer Inputs and Marketing entities at all levels to undertake this adjustment. The Agricultural
Marketing Directorate will also be responsible for identifying the type of incentives that the
programme could support in order to facilitate private sector investment in the more remote CFI
areas (examples may be capacity building, exposure, introduction to technology innovations,
creating market share etc.).
The Association of Ethiopian Microfinance Institutions (AEMFI) will advise on matters

related to the channelling of financial services through MFIs and RUSACCOs. It will participate in
the capacity building of financial institutions at woreda and kebele levels.
The Rural Finance Intermediation Programme (RUFIP) will advise on technical issues related
to the creation and rapid scale up of large numbers of RUSACCOs.
With regard to HABP, the FSP Joint Strategic Oversight Committee is responsible to: (i) assess
programme performance and progress toward overall objectives; (ii) based on the analysis of
the HABP Joint Technical Committee, make recommendations to the Minister of MOARD on the
appropriate responses to issues emerging during the implementation of the programme; (iii)
make recommendations to the Minister on strategic decisions concerning programme
implementation, linkages with emergency interventions, other food security interventions and
agricultural growth programme, and related policies; and (iv) engage in policy and strategy
dialogue on issues that are of direct relevance to the HABP.
The Federal HABP Joint Technical Committee will guide the implementation of the HABP and
report regularly to the FSP Joint Strategic Oversight Committee. It will be responsible to: (i)
assess performance and progress at operational level, toward achievement of agreed
benchmarks; (ii) recommend to the FSP Joint Strategic Oversight Committee appropriate
responses to issues emerging during the implementation of the programme; (iii) promote
57
linkages with other food security programmes (notably, reviewing regional FSP plans to check
HABP coverage in relation to the PSNP clients and the synergy between HABP plans and plans
for the development of enabling infrastructures through PW and CCI, and recommending any
action necessary to strengthen this to the FSP Joint Strategic Oversight Committee), agricultural
growth initiatives and emergency interventions, and (iv) identify, manage and oversee ad hoc
measures to support of Regional or Federal authorities to implement specific aspects of the
programme. The Committee will in particular be responsible for accelerating the transition to
demand driven service delivery that provides linkages with input and output markets as well as
professional financial services.
5.2.2 REGIONAL LEVEL
There may be some variation in the structure at Regional level depending on the outcome of the
business process re-engineering (BPR) process and other Regional specificities. During the
development of the PIM, complete structures and descriptions will be provided. For the purpose
of this document, the most common structures are described below.
The Bureau of Agriculture and Rural Development (BoARD) (in predominantly pastoral
regions it is the Bureau of Pastoral and Rural Development), as manager of the FSP in the
Region, oversees the implementation of the HABP at the Regional level. With the support of the
Regional HABP Joint TC and the overall Regional FSP Steering Committee and FS Task Force, the
BoARD oversees the integration of household asset building activities into the Food Security
Programme and the Regional Rural Development Strategy. It (i) provides overall guidance to the
Extension Core Process, the Regional Food Security Core Process and other Bureaux/Processes
to ensure coordination on planning and implementation of the Regional HABP; (ii) ensures
efficient procurement where applicable; (iii) reviews and provides feedback on reports
submitted by the Regional HABP Joint Technical Committee (led by Extension Core Process) on
implementation of programme interventions; (iv) coordinates the links with the federal level for
the FSP as a whole (including reporting lines), including for the HABP based on the reports and
suggestions from the Regional Extension Directorate and the Regional HABP Joint TC.
The Regional Cabinet is responsible for the review and approval of HABP annual plans and
budgets submitted by woredas through the Regional Bureau of Agriculture and Rural
Development (BOARD) and the annual and biannual progress reports on implementation of the
regional HABP and budget utilization. The Regional Cabinet ensures that the Regional Council is
regularly informed on the implementation of the FSP as a whole, including the HABP, and that
the Regional Council’s decisions with regard to broader regional development are reflected in
the FSP regional plans and those for the HABP component.
The Regional FSP Steering Committee (RFSSC) and the Regional FS Task Force12 support the
Regional Cabinet and provide guidance at the strategic level and coordination at the operational
level, to ensure the proper implementation of the Food Security Programme in the Region. These
12As outlined in the main FSP document, the Regional FSP Steering Committee chaired by the Regional
President involves the Heads of BOARD, BOFED and Bureaus/Agencies in charge of Roads,
Water/Irrigation, SME (Trade & Industry), Cooperative Promotion, Labour & Social Affairs, Women
Affairs, and Youth and Sports. The FS Task Force, chaired by BOARD Head delegated by the Regional
President, comprises of the relevant Directors of ARD and other Bureaus/ Agencies involved in the
implementation of the programme, mirroring the composition of the FSP Steering Committee.
58
coordination bodies support BOARD in ensuring the effective integration of the HABP with the
other FSP components so as to achieve graduation at scale.
Regional institutions briefly described below have direct bearing on the implementation of the
HAB component. Detailed roles and responsibilities will be outlined in the HABP PIM.
The Regional Agricultural Extension Directorate is the HABP manager, accountable to

BOARD Head, and leading the coordination of other agencies through the HABP Joint TC. In this
coordination leading role, it is responsible for: i) developing and consolidating annual
implementation plans and budgets for HABP in the Region in line with proposals from woredas
and line Bureaus; ii) ensuring close collaboration with and coordination between implementing
agencies both within and outside the ARD sector; iii) ensuring that NGO plans with household
asset building activities contribute to the overall objectives of the FSP; (iv) ensuring appropriate
integration of the HABP plans and activities with plans and activities of other FSP programmes
in the Region (including, notably, ensuring synergy between the HABP household-level activity
and the development of enabling community infrastructure through the PSNP PW and CCI), and
with other development interventions).
Moreover, the Regional AED is directly responsible for implementing the envisaged demand-
driven extension service to CFI households in each Region. In broad terms, it will re-orient its
system and staff towards a demand-driven extension approach; lead the special multi-agency
technical committee (the HABP Joint TC) that will provide technical back up to implementers on
the ground; and issue explicit guidelines that its staff, particularly woreda extension staff and
DAs, will not be involved in loan disbursement and collection. Its responsibilities include: (i)
preparing and reviewing the consultative stakeholder process and providing technical inputs
into the market analysis; (ii) consolidating plans and budgets for HABP technical services
developed in the woredas; (iii) overseeing integration of market analysis and other HABP-
related plans into woreda plans; (iv) overseeing woreda supervision of the HABP technical
services, and providing technical backstopping; (v) ensuring effective training related to HABP
technical services, market analysis, and marketing; (vi) creating linkages for the dissemination
of technological innovations; (vii) supporting the implementation of the FSP M&E system
especially on the HABP; and (viii) facilitating knowledge management including identifying and
disseminating best practices.
The Regional Disaster Prevention and Food Security Coordination Office (RFSCO) reports
to the Regional BoARD while it is technically accountable to the Federal FSPD. Its
responsibilities include: i) supporting the AED in managing and coordinating the HABP in the
Region and in linking up with the Federal level through the Head of BOARD; ii) identifying and
monitoring capacity to implement HAB activities at Regional, woreda and kebele levels; (iii)
facilitating the Regional HABP Joint TC meetings and any other meetings with government and
non-governmental agencies involved in the implementation of the HAB; iv) mobilizing technical
assistance as needed; v) coordinating monitoring and evaluation activities and preparing
progress reports; and vi) assisting the Regional Agricultural Extension Service in its transition to
demand-driven extension. The RFSCO acts as secretary of the Regional FSP Steering Committee,
the Regional FS Task Force and the Joint TCs including the HABP Joint TC.
This new phase of the FSP gives particular attention to off-farm activities. It is expected that all
Regions will establish an Off-Farm Case Team within the Food Security Office at Regional
level13 and within the WOARD at woreda level. These Case Teams will (i) support assessments of
13Amhara Region has already established Off-Farm Case Team within the Disaster Prevention & Food
Security Coordination Office.
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the local market for non-agricultural services or products and (ii) develop linkages and
coordinate the promotion of off-farm investment and income generating opportunities, working
with existing programmes in other sectors such as the Small and Medium Enterprise
development programme supported by Bureaus of Trade and Industry, and with the Youth and
Women Development programmes of the Bureaus of Women Affairs, and Youth, Sports and
Culture.
The Regional Bureau of Cooperative Promotion will have an enhanced role in the new FSP, in
relation to the increased role given to RUSACCOs in providing financial services to CFI household
and the greater attention paid to cooperatives in linking households to input and output
markets. The Bureau (Commission in Oromiya) will collaborate with the Regional Food Security
Coordination Office, Regional Agricultural Extension Department and other relevant institutions
to strengthen existing RUSACCOs and establish new RUSACCOs where they do not exist. The
Bureau/Commission will provide guidance to the woreda Cooperative Promotion Offices in the
support that they should give to cooperatives in linking households to the market and assist
them for instance in facilitating the establishment of cooperative unions.
Inputs and Marketing agencies14 will be responsible for guidance and support to the woreda
ARDOs to facilitate the development of a strong woreda level market facilitation function (in
relation to Outputs 3 and 4 of the HABP)—developing existing Inputs & Marketing woreda
agencies (see below). The Regional level will facilitate links among woredas and between
woredas and Regional government and non-government agencies with regard to market
facilitation (such as Regional Chambers of Commerce, professional associations etc.). It will
contribute to technical analyses and value chain analyses for opportunities that may be of
interest for groups of woredas. It will assist woreda agencies in identifying and quality
controlling input providers, identifying market outlets, linking up with research institutions etc.
The SME Development Agency in the Bureau of Trade and Industry, and the Women Affairs
Bureau and Bureau of Youth, Sports and Culture, will support the HAB through: i) fully
participating in the Stakeholder Consultation Process and ii) identifying practical ways in which
the expertise in their sector and the programmes that they manage can contribute to the HABP
activities.
Microfinance Institutions will play multiple roles: i) support the FSP’s efforts to build financial
management capacity of existing RUSACCOs; ii) in some cases, provide credit directly to
programme clients or informal groups such as VSLAs.
The Regional HABP Joint Technical Committee, composed of key experts from the institutions
represented in the Regional FSP Steering Committee and FS Task Force and most directly
involved in the HABP component of the FSP (see figure 6 above) will be chaired by the Regional
Agricultural Extension Directorate and assist it in its coordination role. It will provide technical
backup to grassroots implementers of the HAB component, ensuring that guidance emanating
from the different Regional sectors involved in implementing the HABP is coordinated and
consistent (e.g. guidance on involvement of SME agencies at woreda level etc.). The Committee
will assist the Regional Extension Directorate in checking the synergy between HABP plans and
activities and the plans and activities of other FSP components and of other development
interventions in the Region, so as to raise any issue at the Regional FS Task Force/Regional FSP
Steering Committee as required.
14Regions have different arrangements for these two functions. The roles and responsibilities for the
HABP will be adapted by the Regions to their own set-up.
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Relevant Zonal Offices are expected to play a significant role in supporting the implementation
of the FSP in general and HAB in particular. Amhara, Oromiya and SNNPR in particular have a
large number of FSP woredas and are geographically large making it impossible for the Regions
alone to provide adequate technical backstopping to woredas. Zones are administratively part of
the Regional structure and as such Zonal departments will have the same responsibilities as the
Regional bureaus outlined above.
5.2.3 WOREDA LEVEL
The Woreda is the level of government that determines needs, undertakes integrated planning
(see section 5.3 below) and implements the HAB component of the FSP. As the highest decision-
making bodies at woreda level, the Woreda Council and Cabinet are responsible for the
allocation of HABP resources to kebeles based on the recommendations of the Woreda Food
Security Task Force. These bodies, among other things i) approve woreda PSNP/HAB clients
based on the recommendations of the WFSTF; and ii) ensure that HAB activities are in line with
the woreda development agenda and the woreda integrated plan.
The Woreda Development Committee (WDC) is a sub-committee of the Cabinet, established in

all woredas to oversee the planning and implementation of development programmes. As one of
the major development activities in the woreda, the FSP will also be supervised by the WDC with
particular emphasis on integration and harmonisation of development efforts so as to maximise
effectiveness in the use of all resources available to the woreda. It is chaired by the Woreda
Administrator and includes heads of all sector offices (Agriculture, Education, Health, Capacity
Building, Women, Youth, and others). It may be merged with the woreda FSP Steering
Committee showed in the diagram above, or the latter will function as another specialised sub-
committee of the woreda Cabinet, as the woreda sees fit best.
The Woreda Food Security Task Force (WFSTF), chaired by the Agriculture and Rural
Development Office is the body responsible for overseeing the day-to-day implementation of the
HAB component as well as of the other FSP components15. The WFSTF oversees the targeting
and sensitisation of clients as well as the planning and implementation of HAB activities,
delegating the day-to-day management and coordination of the HABP to the Extension Unit
supported by the woreda HABP Joint Technical Committee. In this phase of the FSP, the WFSTF
and, in particular, the HABP Joint TC on behalf of the WFSTF, will be responsible for the
successful conduct of the Investment Opportunity Stakeholder Consultation at the woreda level,
including the facilitation of linkages with important stakeholders such as local and Regional
investors and other private sector agents.
Upon analysis and recommendations by the HABP Joint TC the WFSTF also
(i) reviews and recommends kebele annual HABP plans for approval;
15In the past in some regions or woredas, WARDO chaired the WFSTF; in other regions, it was chaired by
the Woreda Administrator. In this phase it is proposed that the Woreda Administrator chair a Woreda FSP
Steering Committee that makes more strategic decisions and has authority to direct all woreda agencies to
implement the FSP activities which they are responsible for, whilst the WFSTF chaired by the Head of
ARDO then makes decisions at a more operational level and guides day-to-day implementation by all
agencies, including those outside of the ARD sector, as mandated by the woreda FSP Steering Committee.
The woreda FS Task Force membership comprises the Food Security Desk (which acts as secretary),
Finance and Economic Development, Natural Resource Desk, Capacity Building, Extension, Inputs and
Marketing, Women’s Affairs, Youth, Sport and Culture, the Small and Medium Enterprise Agency, the
Cooperative Promotion Office, NGOs and MFIs, and Water & Road offices at woreda level.
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(ii) ensures coordination between the technical extension and financial service provision
dimensions of the woreda HABP plan;
(iii) ensures the integration of HABP plans and activities with plans and activities of other
FSP components (in particular, looking at issues of HABP coverage of the PSNP clients
and ensuring synergy between the HABP planned activities in terms of household
business plans and the development of enabling infrastructure through PSNP PW and
CCI) and more generally the integration of the HABP plans and activities with other
development activities in the woreda (see section 5.3 on integrated woreda planning);
(iv) consolidates annual woreda HABP plans and budget and prepares proposals for resource
allocation to be submitted to Woreda Cabinet and then Council;
(v) ensures regular information to and close collaboration with the Woreda Council;
(vi) participates in monitoring and evaluation of HAB activities;
(vii) provides assistance to kebeles in establishing and training KFSTFs;
(viii) holds quarterly progress review meetings on HAB activities; and
(ix) reviews monthly progress reports on HAB activities, also reporting on the same to the
regional level.
The following individual offices will play a leading role in the implementation of the HAB.
The Woreda Agriculture and Rural Development Office (WOARD) chairs the Woreda FSTF
and with its support and that of the HABP Joint TC oversees the integration of HAB activities
with the other components of the FSP and other development programmes. It will have
particular responsibility for ensuring that the shift from supply-driven to demand-driven service
delivery is institutionalised. It will ensure that woreda extension officers and DAs are not
involved, under any circumstance, in disbursing and collecting loans under the HAB.
Within the WOARD, the Extension Unit is the manager of the HABP in the woreda, with the
support of the HABP Joint TC. As such, it plays the leading and coordinating role in all activities
entrusted to the WFSTF (listed above) in relation to the HABP. The Extension Unit manages the
DAs and as such it is the prime entity responsible for making them adopt the new demand-
driven approach underpinning the HABP. It is also responsible for establishing close links with
other ARD expert units and expert teams in other sectors (such as SME, Youth and Women) in
order to coordinate the support that must be extended to DAs in the development, support to
and monitoring of households’ business plans integrating a potentially wide range of both on-
and off-farm activities. The HABP Joint TC, supporting the Extension Unit, will consider practical
modalities to ensure that DAs get appropriate support, for instance through allocating woreda
experts to specific kebeles, establishing multi-sectoral extension teams for specific kebeles, etc.
The Woreda Food Security Desk (FSD) facilitates all HABP activities (it reports to the Head of
WOARD and is technically accountable to the RFSCOs). Its functions include: i) mobilizing
technical assistance as needed; ii) undertaking monitoring and evaluation in coordination with
woreda sectoral offices; iii) facilitating the holding of WFSTF and HABP Joint TC meetings and of
quarterly technical review meetings with all implementing agencies; iv) supporting the
Extension Unit in preparing and submitting progress reports to the Woreda Rural Development
Office; v) maintaining accurate records of kebele HAB activities and list of clients; and vi)
providing information on target areas and clients to sectoral offices and other agencies involved
in planning and implementing FSP.
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The Woreda Office of Finance and Economic Development (WOFED) (i) ensures that the
budgets for the HABP are received in a timely manner at the woreda level to guarantee smooth
implementation of approved plans and activities; and (ii) exercises necessary fiduciary controls
and reports on fund utilization to Regional BOFEDs.
The Woreda Cooperative Promotion Office will support the programme’s ambition of
improving financial service delivery in CFI areas through a shift from woreda rural development
office to RUSACCOs for delivering financial services to CFI households. It will assist in
capacitating existing RUSACCOs and establishing new ones. It will implement any directive
issued from the Federal and Regional Cooperative Promotion Agency to improve the regulatory
environment within which RUSACCOs function. The Office will also assist the formation of
household groups and cooperatives and assist existing ones in their activities, as a way of
strengthening the linkage between households and the market for both input supply and
marketing of their products as well as for value addition activities.
The Inputs and Marketing unit will play a critical role in the HABP. It will develop a strong
market facilitation function and help ensure the integration of household business plans into
value chains through linkages with input suppliers, market outlets, and value addition activities
where appropriate. In particular, the Inputs and Marketing unit will be responsible (and its
capacity will be built accordingly) for: i) facilitating the Stakeholder Consultation process and
the development of business plans for households and groups through adequate information on
markets; ii) facilitating the establishment of business platforms to strengthen linkages between
groups of actors (farmers, traders, input suppliers, investors etc.) around particular value
chains; iii) identifying input providers and market outlets in relation to the households’ and
groups’ activities; iv) linking up with regional agricultural marketing promotion agencies,
Chambers of Commerce, and cooperatives; v) linking with research institutions; vi) identifying
training needs related to strengthening DAs’ and households’ understanding of market
functioning, and vii) facilitating the provision of such training.
All woreda Sector Offices have a common responsibility for (i) consolidating proposals of the
kebele Food Security Task Force for incorporation in the woreda Household Asset Building
plans; (ii) incorporating HABP activities in their yearly programmes/action plans, based on the
integrated woreda plan (see section 5.3 below); (iii) accordingly, preparing activity plans and
requesting budgets for implementation; (iv) implementing household asset building activities in
their field, at kebele and community levels; (v) providing technical assistance and training to
technical personnel and kebele staff; (vi) participating in monitoring and evaluation of the HAB
activities and of their effectiveness (including following up households’ progress in
implementing their business plans); and (vii) preparing quarterly progress and financial reports.
NGOs, with their expertise in implementing household asset building activities, have an
important role to play in HAB component of the FSP. As members of the Woreda and Regional
Food Security Task Forces, they will contribute their capacity and expertise to the programme
and also ensure integration of their food security activities to the overall FSP. Selected NGOs will
become members of the Technical Committee specially set up for HAB.
5.2.4 KEBELE AND COMMUNITY
The Kebele Council and Cabinet are the highest decision making bodies at kebele level,
approving the allocation of all resources available to the kebele. These bodies i) approve the
kebele PSNP/HAB clients based on the recommendations of the Kebele Food Security Task Force
and ii) ensure that FSP activities are in line with the kebele development agenda – integrated in
the overall woreda development plan (see section 5.3 below).
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The Kebele Development Committee (KDC), where it exists, oversees the planning and
implementation of development programmes in the Kebele including the FSP. Since the KDC has
an overview of development activities, it is well positioned to ensure integration and
harmonisation of development efforts so as to maximise the effectiveness of the use of all
resources available to the kebele. It is chaired by the Kebele Chairperson and includes kebele
focal persons for Agriculture (DA), Education (School Director), Health (Health Post Head), and
others.
The Kebele Food Security Task Force (KFSTF), which was established in all kebeles included
in the PSNP in the previous phase16, will have an extended mandate in this phase. It will oversee
the day-to-day planning and implementation of the FSP as a whole, including the HAB in the
kebele. In relation to the HABP, the KFSTF’s functions include: i) facilitating the Investment
Opportunity Stakeholder Consultation at the kebele level; ii) mobilizing communities to identify
and prioritize their needs; iii) supporting DAs in the households’ business planning process; (iv)
targeting clients for the cost-sharing component of the HABP; v) preparing the kebele HABP Plan
in consultation with WOARD and other woreda agencies involved in the HABP, MFIs and
RUSACCOs; vi) maintaining minutes of KFSTF meetings on HAB issues, lists of participants and
progress reports; vii) establishing and training Community Food Security Task Forces; and viii)
participating in monitoring and evaluation of HAB activities.
Kebele Appeals Committees (KACs) have also been established in all kebeles included in the
PSNP in the previous phase. In this phase, they will be further strengthened (as indicated in the
FSP document) and their mandate will extend to addressing grievances and appeals related to
all FSP activities. With regard to the HABP they will address appeals in relation to the targeting
for the cost sharing component of the HABP. Among other responsibilities the KACs will (i)
submit a complete listing of appeals cases, appeals resolutions, and unresolved appeals to the
Kebele Council, which will review them and forward them to the Woreda Council and the
WOARD every quarter; (ii) meet within one month of the establishment of a new annual listing
of clients to hear appeals submitted in their jurisdiction and to resolve a minimum of 95% of
these cases within the month; and (iii) provide the listing of the appeals and the associated
resolutions to the Kebele Council no later than 2 months after the announcement of the clients
listing.
In relation to the HABP the Community Food Security Task Force (CFSTF)17 is responsible
for: i) facilitating the Investment Opportunity Stakeholder Consultation at the community level;
ii) mobilizing households so that they engage fully in the HABP; iii) supporting the DAs in the
organisation of group training; iv) identifying those households that will benefit from the cost
sharing component of the household asset building, in line with the agreed targeting criteria;
and iv) monitoring the link between HAB and other components of the FSP in the community.
Rural Savings and Credit Cooperatives are the primary choice for delivery of financial services
to CFI households, primarily to improve financial service delivery but also to relieve extension
staff from disbursing and collecting loans. This is expected to improve relations between
16 The minimum composition of the KFSTF includes: a Chairperson of the Kebele council, a member from
the Kebele Council, Development Agents (DAs); three elected representatives of women’s groups; and two
elected representatives from elders and youth (one from each group).
17 It is composed of representatives from the Kebele FSTF; a Development Agent, two to three each of
women’s and men’s representatives (elected); a youth representative (elected); and an elders’
representative (elected).
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extension workers and farmers and significantly contribute to effectiveness of the extension
service.
The details of how RUSACCOs will provide financial services to the CFI households will be
provided in an agreement to be signed. Broadly speaking, RUSACCOs will mobilise savings;
ensure that financial services reach the right target CFI households; monitor and follow up loan
disbursement and timely repayment; and ensure funds revolve among the target community.
The Development Agents (DAs), employees of the Extension Department in the Office of
Agriculture and Rural Development but resident in the kebeles, play a key facilitation role in
HAB implementation. They i) are members of both the KFSTF and CFSTF; ii) support the CFSTF
in prioritising community needs and preparing annual HAB plans; iii) assist households in the
preparation and implementation of business plans, ensuring that the business plans are the
outcome of household decisions not a supply (package) driven approach of the past.
Clients and non-client households participate in public meetings on HABP that target clients
and determine multi-year annual plans. Community members participate in the consultative
meetings to identify viable household-level investment opportunities. They devise business
plans, seek support from local financial service providers and implement their business plans
over time. Client and non-clients alike also play a key role in holding implementers to account
through the KAC and public fora.
5.3. PROGRAMME PLANNING
5.3.1 WOREDA INTEGRATED PLANNING
As already noted, the HABP is critical for achieving graduation at scale and for this there must be
synergy between it and the other components of the FSP. The institutional arrangements
outlined above should facilitate this synergy, but the critical mechanism through which it will be
operationalised is the kebele and woreda planning process. At this level, there need to be
systems and procedures in place so that, for instance, where irrigated horticulture is identified
as a suitable opportunity for CFI households in a particular community (with potential for
irrigation and reasonable access to market), all the required activities to make this a reality are
planned and implemented in a coordinated manner. This includes implementing the PW or CCI
to construct the necessary infrastructure, providing advice and training on horticultural
production, facilitating links with input providers (seeds, seedlings, treadle pumps, irrigation
systems etc.), identifying market outlets, possibly facilitating the formation of groups to
undertake value-adding processing activities etc. Moreover, all of these activities need to be
closely coordinated with FSP activities aimed at developing other opportunities, and with the
other development initiatives taking place in the area. The woreda plan is where plans for the
HAB, for the other FSP components and for other development programmes must “come
together”.
As noted in the FSP document, integrated planning for the FSP activities, and within this for the
HABP activities, requires in the first instance strengthening the overall kebele-woreda planning
process. This has been recognised and MOFED is in the process of reviewing woreda planning
guidelines. The FSP stakeholders are engaged in this process with a view to ensuring that the
outcome of this process is responsive to the needs of the FSP planning. In relation to HABP
planning it is particularly important to strengthen the synergy between household asset building
interventions and community asset development through the PSNP PW and CCI. This requires,
among others, guidelines for the woreda to be able to reconcile watershed development
65
planning which is the cornerstone of the PSNP PW and CCI planning at kebele then woreda level,
and planning for livelihood options which draws on other concepts such as market absorption
capacity and development, and other techniques including technical analyses of investments,
value chain analyses etc.
What needs to happen, at a conceptual level, is illustrated in the diagram below.
Integrated HAB and overall woreda planning
HAB Stakeholder Consultation
Woreda Integrated Plan

* HAB Plan
* PSNP PW Plan
etc.
Kebele Development Plan

* PSNP PWs
* CCIs
FSP stakeholders will ensure that the MOFED team working on woreda planning guidelines
understands well the HAB programme and the processes that need to be planned to implement
it, so that these are included in the guidelines. In turn, the revised woreda planning guidelines
will be reflected (and expanded if need be) in the HAB Programme Implementation Manual.
5.3.2. PLANNING FOR HABP
This section presents a snapshot (in the form of the table below) of the HABP activities that need
to be planned (and implemented accordingly) according to particular timeframes—once,
regularly or annually. Annual activities are those that woredas should plan as part of the woreda
planning process (as outlined in the previous section), in line with the annual planning and
budgeting cycle. They must be planned and budgeted for following the Ethiopian Fiscal Year
cycle. This concerns in particular the conduct of the Stakeholder Consultation. Activities
implemented by DAs are not listed—although they are critical to programme implementation—
as their technical assistance and advice to CFI households are incorporated in their regular
duties and will be ongoing throughout the life of the project. As Outputs 5 and 6 are cross-
cutting to the other four, they are not listed separately in the time schedule outlined below.
Outputs 1, 3 and 4 are listed separately.
Activity Main Implementer Timeframe
Initial Repeat Annual
Output 1
Conduct market/VC analyses Private consultants with woreda X X
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experts, Region when relevant
Conduct technical analyses Private consultants with woreda X X

experts, research centres, Region
when relevant
Conduct stakeholder consultation HABP Joint Technical Committee X X

Prepare recommendations on investment Private consultants with woreda X X
opportunities experts
Identify infrastructure requirements for DAs and woreda experts X X

consideration for integration in PSNP
PWs/CCI
Assess business/market orientation skills X X

of extension service staff (CFI woredas)
Prepare training curriculum in business ATVETs, regional universities, X X

skills and market orientation private consultants
Provide training to woreda experts and ATVETs, regional universities, X X

DAs private consultants
Assess knowledge of DAs and woreda SMEA with Federal and Regional X X
experts on off-farm activities Off-Farm Case Team
Create Off-Farm Case Teams at regional Federal Off-Farm Case Team X

and woreda levels with Regions
Prepare training curriculum on off-farm SMEA with Regional Off-Farm X X

investment promotion Case Teams
Provide training in off-farm activities SMEA with Regional Off-Farm X X

Case Teams
Output 2
Assess MFI and RUSACCO coverage Financial services consultant with X X

and capacity AEMFI
Develop appropriate incentives and sign HABP TC, DBE? X X

MOUs with MFIs
Develop financial products with MFIs and Financial services consultant with X X
RUSACCOs AEMFI and HABP TC (regional)
Disburse line of credit to MFIs DBE? X ?? ??

Prepare plan for creation of RUSACCOs Cooperative Promotion Bureaus X X
Assess households’ confidence, skills Private consultant with MFIs and X X
and knowledge in business investments AEMFI
and financial literacy
Prepare financial literacy training Private consultant with MFIs and X X

curriculum AEMFI
Provide training to DAs MFIs and other service providers X X
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Output 3
Assess input facilitation skills and Private consultant with ATVETs X X

capacity gaps of DAs and woreda
experts
Prepare training curriculum in input ATVETs, Regional Research X X

facilitation skills and demand-driven Institutes, Regional Rural
service delivery Technology Development
Institutes,
Provide training to woreda experts and ATVETs X X

DAs in input facilitation skills
Provide training to woreda experts and Research centres X X

DAs in seed and seedling multiplication
Output 4
Assess marketing facilitation skills of DAs X X

and woreda experts
Prepare training curriculum in marketing ATVETs X X

facilitation skills
Provide training ATVETs X X
5.4 COST ESTIMATE AND FINANCING PLAN

The basic parameters used in the calculation of the costings: number of Regions, woredas,
kebeles, FTCs and RUSACCOs are shown below.
Table 3. Basic Data: Numbers of Regions, PSNP Woredas/kebeles, RCB Project

Woredas/kebeles and numbers not covered by RCB Project; plus number of existing and
required RUSACCOs, assuming 1 RUSACCO per kebele.
BASIC DATA: FTCs TIGRAY AMHARA OROMIA SNNPR AFAR DIRE DAWA TOTAL
(i) Total: CFI Woredas
Woredas 31 64 75 80 29 1 280
Kebeles (FTCs) 551 1,437 1,149 1,650 58 28 4,873
(ii) RCB Project: CFI Woredas
Woredas 17 7 13 20 5 1 63
Kebeles (FTCs) 193 175 169 268 10 ? 815
(iii) Balance remaining: CFI Woredas
Woredas 14 57 62 60 24 1 218
Kebeles (FTCs) 326 1,262 980 1,382 48 ? 3,998
BASIC DATA: RUSACCOs TIGRAY AMHARA OROMIA SNNPR AFAR DIRE DAWA TOTAL
Total Woredas 31 64 75 80 29 1 280
Total Kebeles 551 1,437 1,149 1,650 58 28 4,873
Woredas with RUSACCOs 30 24 10 19 2 1 86
Total RUSACCOs 318 99 27 228 5 96 773
% RUSACCO total kebeles 58% 7% 2% 14% 9% 343% 16%
RUSACCOs Required (1/kebele) 233 1338 1122 1422 53 0 4,168
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Table 4. HABP Cost Estimates
PROGRAMME ACTIVITIES ETB USD

CAPACITY BUILDING
OUTPUTS 1, 3 & 4 (EXTENSION, INPUTS AND MARKETING)
Capacity Building: Federal, Regional & Woreda 30,556,000 2,771,519
Capacity Building: FTCs & DAs 294,052,900 26,671,465
Support to Innovation in On/Off-farm Investment/IGA Enterprise Development 292,478,000 26,528,617
SUB-TOTAL 617,086,900 55,971,601
OUTPUT 2 (FINANCIAL SERVICES)

Capacity Building: RUSACCOs 206,318,500 18,713,696
Capacity Building: MFIs 91,095,000 8,262,585
Regulation & Supervision 3,520,000 319,274
SUB-TOTAL 300,933,500 27,295,556
TOTAL CAPACITY BUILDING 918,020,400 83,267,156
MONITORING AND EVALUATION

Household asset building 1,900,000 172,336
Financial services 1,450,000 131,519
TOTAL MONITORING AND EVALUATION 3,350,000 303,855
CREDIT AND GRANTS

Credit 5,298,475,000 480,587,302
Grants 935,025,000 84,809,524
TOTAL CREDIT AND GRANTS 6,233,500,000 565,396,825
HABP TOTAL 7,154,870,400 648,967,837
5.5. SPECIAL CONDITIONS AND ACCOMPANYING MEASURES TO BE TAKEN

BY GOVERNMENT
The Household Asset Building Component will be largely staffed by core Government of Ethiopia
staff, particularly within the Ministry of Agriculture and Rural Development. Of particular note
has been the efforts made by government to put in post three DAs in each kebele (including
kebeles where the HAB Component will be operational). This has dramatically increased the
human resources available to this and other programmes. The Government will continue to
provide the majority of the staffing required for HAB Component implementation through
mainstream government budgets.
Further work will take place over coming months to refine the roles and responsibilities for the
HAB Component of the various government departments and to finalise the management
structure (including any necessary technical committees). This process will be finished prior to
September 2009. The final agreed roles and responsibilities will be documented in a
Memorandum of Understanding which will be signed by all relevant parties.
It is anticipated that HAB Component planning will be one component of the overall woreda and
regional planning processes. This planning process is currently being reviewed by MoFED and it is
critical that the DRMFSS feed into the revision process to ensure that the revised planning process
includes a Community Based Participatory Watershed Planning approach and reflects the needs of
HAB Component planning.
Two key pilots are currently ongoing in the CFI woredas:
• The Pastoral Areas Pilot is testing various implementation modalities for a planned
expansion of the PSNP to pastoral regions. This pilot, together with other pastoral
livelihoods programmes such as the World Bank-funded Pastoral Community
Development Programme (PCDP) and various USAID-funded programmes, are critical for
generating the lessons learned for the scale-up of the HABP to pastoral areas. The Pastoral
Task Force is responsible for analysing the lessons learned and providing
recommendations to the Food Security Programme.
69
• The Variable Levels of Support (3-6-9) pilot is on a much smaller scale and is reviewing
the possibility of providing households with different numbers of months of transfers (3, 6
or 9) on the basis of their annual food gap. In addition to allowing the programme to be
more responsive to actual needs, this approach may allow a phased approach to
graduation which might better enable households to withdraw from programme support.
If scaled up, this tiered approach can help with targeting of clients for the services
provided in Output 2.
The Government will continue to support these pilots and ensure adequate lesson learning to
enable results to be adopted in mainstream programming.
1 6 FACTORS ENSURING SUSTAINABILITY
6.1 POLICY SUPPORT AND COORDINATION

The policy environment is supportive of the proposed HABP. Indeed, it is envisaged that the
new proposals in the HAB component will accelerate the implementation of several policy ideas
that
have been put forward in the various policy and strategy documents, such as: (i) the separation
of extension from financial services; (ii) the establishment of sustainable rural finance through
the use of MFI and financial cooperatives; (iii) an unprecedented focus on marketing linkages,
and (iv) the development of off-farm/non-farm income generating activities as instruments for
achieving the fastest path to graduation.
The new HABP requires a greater degree of coordination than previously as a number of new
players are entering the food security programme. For instance, in view of the recognition of off-
farm/non-farm activities as key to ensuring food security, the Food Security Directorate needs to
coordinate proactively with institutions such as the Ministry/Bureau of Women’s Affairs and
Youth and Sport, and the Small and Medium Enterprise Development Agency.
6.2 ECONOMIC AND FINANCIAL ISSUES

The Ethiopian economy has been growing by over 10% for the last five years, largely as a result
of agricultural sector growth. If this rate of growth is sustained, it will create an enabling
environment for the HABP. Economic growth will create new opportunities for households to
invest in on- and off-farm activities, thereby supporting the programme’s objectives.
Availability of finance for CFI households is key to the success of HABP. It is also equally
important that the terms and conditions be flexible and affordable to these households. The
programme will therefore invest significant resources in the achievement of Output 2.
6.3 INSTITUTIONAL AND MANAGEMENT CAPACITY

The HABP has paid due attention to institutional and management capacity because capacity is
key to sustainability of the proposed systems (e.g. provision of sustainable rural finance). A
separate output (Output 5) is dedicated to these activities in order to make it possible for the
programme to monitor and evaluate to what extent capacity has been addressed at all levels.
70
6.4 TECHNICAL ISSUES, INCLUDING REGULATORY AND OPERATIONAL
6.4.1 TECHNICAL DESIGN ELEMENTS
A key principle guiding the design of the Household Asset Building Component has been the
need to create a more efficient, responsive and demand driven approach to the Extension
System. The technical design of the Component has focused on the following key elements:
• Integrated extension, input supply and market linkages. One of the key pillars of
PASDEP is a market led approach to agricultural development. Hitherto the extension
approach has focused almost entirely on commodity production. The HABP has been
designed to include a wider range of input suppliers and distributors and an attention given
to value chains (storage, processing, and quality control) and stronger linkages with market
players.
• Demand driven approach to extension. This depends on rural households gaining

knowledge, skills and self-confidence to embark on a more diversified range of asset building
and income generating investments. The HABP design recognizes the need to expand the
range of potential investments to include both agricultural and non-agricultural off-farm
activities.
• Separation of extension and financial services. The inappropriateness of the combination

of extension and financial service provision was a key lesson learned from the previous
phase of the programme. The programme design therefore includes a heavy emphasis on
building the capacity of financial service providers to reach CFI households.
• Focus on institutional capacity building and household confidence building. The

technical design recognizes the importance of these two underlying factors in the success of
the overall programme and has therefore dedicated two Outputs to building institutional
capacity (in terms of management, facilitation skills, and technical issues) and household
confidence.
6.4.2 LEVELS OF TECHNOLOGIES

The HABP supports technological innovation through linkages to input and equipment suppliers.
The programme will link farmers to sources of research-tested technologies developed by
research stations and private companies, with a focus on appropriate technology to ensure their
appropriateness to local agro-ecological and farm management conditions. Off-farm non-
agricultural technologies will emanate from the Rural Technology Development Institutes, who
will be members of the Regional/Zonal level Farmer-Research-Extension Advisory Councils, and
from experience gained in the implementation of the micro/small scale enterprise development
programme of the Bureau of Trade and Industry.
The HABP design also supports the development by farmers themselves of innovative solutions
to production, storage and processing problems that may arise during implementation of
agricultural based investments.
6.4.3 GOVERNMENT REGULATORY ROLE IN USE AND DEVELOPMENT OF

TECHNOLOGIES
The programme supports a widening of the range of input producers and distributors. The
Government’s role is in the certification of basic seed, quality control, and organizational and
technical assistance to small-scale producers in seed multiplication.
71
6.5 ENVIRONMENTAL PROTECTION
The HABP will contribute to positive environmental outcomes by supporting sustainable
agricultural practices for crop, livestock and tree production. The Component will adopt the
Environmental and Social Management Framework (ESMF) of the PSNP. This will be amended to
include the storage and use of agro-chemicals. Use and propagation of the ESMF will ensure
increased environmental awareness and mainstreaming of environmental concerns as part of
training and capacity building support to programme support services and rural households.
6.6 SOCIO-CULTURAL AND GENDER ISSUES

6.6.1 EMPOWERMENT AND CONFIDENCE BUILDING OF CFI HOUSEHOLDS
The Investment Stakeholder Consultation process that forms a key element of Output 1 is
designed to develop food insecure households' knowledge, skills and financial awareness to
provide them with self-confidence to undertake asset building and income generating
investments of their own choice. In this way, participation will be increased and households will
be empowered to identify their own problems, develop solutions themselves and so improve
their own livelihoods.
6.6.2 GENDER EQUALITY

From the inception of the programme—and particularly through the stakeholder consultation
process described in Output 1, women will be key participants in the planning process of the
programme. Programme interventions such as tailored household business plan development
and household confidence building activities will take into account the specific needs and
capacities of women in both male- and female-headed households. This could include attention
to low levels of asset holdings (in particular land), in particular household labour availability
and availability of draught power. The programme will pay special attention to women’s needs
in terms of business skills and financial literacy training.
The programme will also ensure adequate representation of women on the FREGs and FREACs
and provide training to enable them to actively participate at all levels of programme
implementation.
6.6.3 HIV/AIDS
None of the activities envisaged under this Component are expected to increase risk of HIV
transmission among target populations. The specific needs of households affected by HIV/AIDS
will be considered in the development of tailored household business plans and the promotion
of off-farm activities for labour-poor households.
72
7 PROGRAMME PERFORMANCE: MONITORING AND
EVALUATION AND ACCOUNTABILITY
7.1. MONITORING AND EVALUATION
The Household Asset Building Programme has an integrated logical framework designed to
achieve its Outcome and ultimately the Goal of the Food Security Programme. The framework
fits within the overall FSP logframe and outlines objectively verifiable indicators and means of
verification at Output, Outcome and Goal levels. This is one important foundation for the HABP
monitoring and evaluation system. The HABP M&E system is also conceived as a part of that for
the broader FSP.
As noted in the FSP document, in this phase the focus will be on ensuring that the Food Security
Programme M&E system is directly useful for all FSP stakeholders; that is, implementers,
planners, decision-makers, oversight bodies, financiers and clients. The M&E system will capture
the information necessary to ensure that feedback on programme performance enables the
adjustment of programme implementation or even design if required. These principles apply to
the design of the HAB M&E framework as well. Moreover, the M&E system will enable
accountability at all levels:
Among Government agencies and between Government and Development Partners, along the
lines of the institutional arrangements for the HABP outlined in section 5.2 above
From the programme implementing agencies to the programme clients; that is, the
households eligible to benefit from HABP activities.
Further work will take place in the period preceding the start of implementation of the second
phase of the FSP to develop the FSP M&E framework and that for each of its components,
including the HABP. This will be a consultative process involving all current and potential users
of M&E data and information. In-depth discussion will be held with the institutions having key
responsibilities for undertaking regular monitoring and periodic assessments and evaluations.
The work will include the final determination of indicators for the FSP as a whole and for the
HAB programme, as well as the identification of information sources, collection approaches and
institutions responsible for collection and analysis.
Of relevance for the HAB, the FSP M&E framework will address challenges left outstanding in the
previous phases. Notably, participatory monitoring will be operationalised and there will be
greater attention to following up of programme achievements in relation to special categories of
programme clients such as women, youth, and the ‘ultra-poor’ households benefiting from the
cost-sharing element in the HAB programme.
The M&E framework for the HABP will cover the monitoring of financial service provision to
programme clients by the MFIs and RUSACCOs. This will include regular assessments of
stakeholders’ compliance with the agreements signed to operationalise the channelling of
financial support from the programme (see Figure 3 above). Indicators and tools will also be
developed to monitor the actual level of provision of services to programme clients, in a way
which is compatible with the financial and cooperative sector regulatory framework.
Subject to validation in the course of the work outlined above, the following broad categories of
achievements of the HABP will be measured and monitored:
73
• Activity-level indicators: The extent to which the targeted clients and/or their
institutional structures utilise the various forms of support provided (resource
management and utilisation indicators focused at the activity level). Day-to-day
supervision and records of programme and partner staff, along with the quarterly
reviews will provide the main opportunities to assess indicators at this level. These may
include the following:
o Number of household and group business plans developed through programme

support
o Volume and value of loans given through the programme’s line of credit
o Number of RUSACCOs created and new MFI branches opened in CFI woredas as a
result of programme training and incentives
o Number of woreda experts and DAs trained in business skills, market

orientation, and facilitation techniques
o Number of households participating in stakeholder consultations and receiving

financial literacy training
• Output indicators: The success of the programme in realising the results of action plans
or inputs and delivering Outputs, including the validity of Activity-to-Output
Assumptions in the HABP logframe. The annual woreda level reviews will provide the
main opportunity to assess indicators at this level, and to ensure that the programme is
on track to achieving its expected Outcome and identify any adjustments needed. The
results of the various surveys will also inform adjustments in programme activities.
Possible indicators include:
o Savings and loan repayment rates of participating financial institutions in CFI

woredas
o Rate of adoption of new technologies by client households
o Number of participating households making new investments in input supply or

distribution
o Number of participating households making new investments in off-farm

activities
o Number of households accessing new labour opportunities through programme

linkages
o Number of DAs in CFI woredas with improved facilitation skills
o Timeliness and quality of programme reporting
o Number of participating households reporting increased knowledge and

confidence in investing in new technologies or IGAs, participating in markets, and
accessing credit
o Number of participating households taking loans for the first time
74
• Impact indicators (Outcome- and Goal-level): The changes that are brought about for
the direct and indirect clients and/or their institutional structures as a result of the
activities initiated by the programme (impact indicators) will largely be the
responsibility of independent assessments including the biannual household survey and
the PSNP and CCI impact assessments. There will be a need to monitor the validity of
Output-to-Outcome Assumptions in the HABP logframe to ensure that the intervention
logic will hold and that the planned Outcome is likely to be achieved. Systems for such
monitoring will be developed prior to Programme start-up. Possible Outcome and Goal-
level indicators include:
o Increase in value of assets of participating households
o Increase in diversity of income sources of participating households
o Reduction in number of food gap months for participating households
o Percentage of participating households achieving food sufficiency
o Percentage of participating households achieving food security
One important aspect of the development of the FSP M&E framework will be to assess the tools
and reports already existing in order to expand, revise, streamline and complement them as
required to cater for the expansion of the scope of the programme and ensure that indicators,
tools and reports are integrated across FSP component programmes wherever possible, and to
better indicate what their use will be (by whom and for what). Existing monitoring and
evaluation tools will be revised and broadened following the revision of the Monitoring and
Evaluation Framework.
Among existing tools and reports that will be revised in this way, the following tools are
applicable to the HABP:
M&E Tool/Report Information it will provide
Regular collection of information at output and activity level.

Monitoring
Data collected will include information on clients, uptake of
reports financial services and extension support. There is also a need to
ensure that data is collected in resettlement sites.
This currently focuses on PSNP-specific data, will be expanded
Information
to potentially include a key set of indicators on the Household
Centre reporting Asset Building component of the programme—see logframe and
potential indicators listed above.
Quarterly IFRs The quarterly (and annual) financial reports provide
information on budget expended according to agreed line items.
Annual planning This review assesses the adequacy of integrated woreda plans.
review The review will assess the planning process and the quality of
the resulting plans.
Many woredas are now conducting annual reviews of household
Review of
assets to assess progress to achieving asset benchmarks. This
household asset experience will be scaled up and may be made more frequent.
building progress There is also a need to ensure that data is collected in
resettlement sites.
Review of This tool will provide an independent assessment of progress
75
M&E Tool/Report Information it will provide
progress towards towards graduation to complement the above review of

graduation household asset building progress.
Audits will fulfil three functions: audit of accounts; systems

Audits audit; and review of transactions to clients to ensure that funds
disbursed are used for purposes intended. Existing roving and
annual audits will be amalgamated into one streamlined audit
process with quarterly as well as annual reporting.
Roving Appeals This independent audit looks at whether proper procedures are
Audit followed and records kept in the appeal system.
Procurement Will review procedures followed, adherence to guidelines and

Audit make recommendations on how procurement could be
improved in future.
Panel Survey Eight woreda survey, which includes repeat visits to households
as the approach to assess progress towards outcomes and
impacts. Smaller sample size allows rapid calculation of results.
The household survey assesses outcomes and impacts of all
Biannual
components of the FSP in chronically food insecure woredas.
Household Survey There is also a need to ensure that data is collected in
resettlement sites.
7.2. ACCOUNTABILITY FOR PERFORMANCE
As explained in the FSP document, in this phase of the FSP there will be greater focus on
strengthening bottom-up accountability, as a way of pressing for programme performance. A
variety of means will be used to address this challenge, notably: strengthening the
implementation of the FSP-wide communication strategy, introducing a system of FSP client
cards, further strengthening the appeals system, and the introduction of performance incentives.
All of these measures have a bearing on the HABP.
Strengthening communication will provide programme clients with the information that they
must have in order to hold implementers to account. The way in which the communication
strategy will be strengthened and rolled out is described in the FSP document. With regard to
the HABP, communication activities planned and implemented as part of the strategy will
represent an important vehicle for the key messages underpinning the programme. Priority will
be given to developing and disseminating messages that explain the major shifts undertaken in
the HABP—toward demand-driven extension, the provision of financial services by specialised
service providers, and the move away from subsidies that distort the financial market.
Another measure aimed at improving transparency in programme implementation and

strengthening accountability to programme participants will be the introduction of FSP clients’
cards. The primary objective of the system is to provide programme clients with an increased
sense of certainty over their entitlements and a proof of the services that they actually receive
from the programme. While in the first instance the system will likely focus on the PSNP, the
intention is to include information on the implementation of the HAB programme too (e.g. access
to credit services, to training programmes etc.), once the system has demonstrated its usefulness
in a simple version.
76
In this phase of the programme, performance incentives linked to success in programme
delivery will be introduced. This is further outlined in the FSP document. The intention is to
develop the system over time so that eventually it covers all components of the Food Security
Programme. Again, while it should be relatively easy to put a system in place for the PSNP, there
is an opportunity to start implementing the performance incentive system for the HABP at the
same time as programme implementation begins. Further work will therefore take place during
the final stages of preparation of the HABP to identify how this could be done (i.e. what kind of
performance indicator and targets could be used and for which ‘level’, individual or
organisational, to start with). Particular attention will be paid to identifying indicators and
targets that provide incentives for implementing agencies and actors to adhere to the demand-
driven approach underpinning the HABP.
77
ANNEX 1: OVERVIEW OF HABP OUTPUTS, ACTIVITIES AND STEPS
Output 1: Potential on- and off-farm investment and income generating enterprise
opportunities identified and adopted
Activity 1: Identify viable investment and income generating opportunities for food insecure
households
• Step 1: Conduct market/value chain analyses within the target area
• Step 2: Conduct technical analyses
• Step 3: Engage in a consultative process at the community, woreda and regional

levels
Activity 2: Provide advice and support to food insecure households in the development of
business plans
• Step 1: Conduct awareness raising of different options.
• Step 2: Provide technical assistance in the preparation of business plans
• Step 3: Refer households to financial institutions for financing of their business

plans.
Activity 3: Support the implementation of business plans through technical assistance on

various technology options and monitoring of household investments
• Step 1: Support training on new technologies and improved agricultural practices.
• Step 2: Provide monitoring and follow-up support on household investments
Output 2: Access to sustainable financial services enhanced.
Activity 1: Build the institutional capacity of financial service providers (RUSACCOs and
MFIs) for sustained delivery of multiple financial products
• Step 1: Undertake a detailed (woreda- and kebele-level) mapping and capacity

assessment of existing financial service providers
• Step 2: Capacity building of MFIs, RUSACCOs and facilitators
• Step 3: Promote the expansion of MFI coverage and the creation of new Village
Savings and Lending Associations (VSLAs) and RUSACCOs where these do not exist
• Step 4: Work with financial service providers to develop appropriate financial

products
Activity 2: Provide a line of credit to financial service providers and a credit guarantee
through commercial banks
• Step 1: Establish HABP financial services funds
• Step 2: Develop operating rules and procedures for capitalising RUSACCOs and MFIs
• Step 3: Disburse funds
78
• Step 4: Link financial institutions together for more effective use of partial credit
guarantee scheme
• Step 5: Monitor loan funds and credit guarantee
Activity 3: Support the implementation of an appropriate regulatory and supervisory

framework for grassroots financial institutions
• Step 1: Develop regulatory framework for RUSACCOs
• Step 2: Support regulatory framework for MFIs to provide asset insurance
• Step 3: Build strategic partnerships
Output 3: Sustainable input sourcing, production and delivery systems enhanced for food
insecure households.
Activity 1: Build linkages between suppliers and users of inputs and technologies necessary
for the implementation of business plans
• Step 1: Identify potential producers and distributors of required inputs and assess
their capacity requirements
• Step 2: Establish contacts between suppliers and programme participants.
Activity 2: Promote multiplication or distribution of inputs/products by model farmers or

volunteers from within client communities
• Step 1: Demonstrate new technologies
• Step 2: Promote input production and distribution as a viable investment/income

generating opportunity
Output 4: Access to product and labour markets increased through value addition and
improved market transactions.
Activity 1: Improve storage, processing and quality control for increased value addition
according to business plans
• Step 1: Incorporate training and technical assistance in value addition into extension
package provided to CFI households
• Step 2: Where appropriate, assist in the preparation of business plans and link to
sources of credit for group investments.
Activity 2: Improve marketing transactions and access to higher-value markets for new
investments or wage employment
• Step 1: Support the creation of groups for bulk marketing
• Step 2: Incorporate market orientation and business skills into the extension package
provided to CFI households
• Step 3: Link suppliers (of products as well as services) to markets
79
Output 5: Institutional capacity to manage and implement the HABP strengthened.
Activity 1: Strengthen management capacity of Government implementers
• Step 1: Assess management and M&E capacity
• Step 2: Build financial management systems
• Step 3: Strengthen M&E and reporting systems
Activity 2: Strengthen technical capacity of Extension Service, Cooperative Promotion

Bureaus, SMEA and other relevant institutions to provide demand-driven extension and
training in market-oriented business planning and technological innovation
• Step 1: Assess technical capacity
• Step 2: Prepare HABP Technical Implementation Manual
• Step 3: Develop training curricula and a technical support network for DAs
• Step 4: Provide logistical support
Activity 3: Strengthen capacity of financial service providers to provide appropriate financial

services to food insecure households
• Step 1: Assess financial management and service provision capacity
• Step 2: Address capacity gaps through training
Output 6: Confidence, knowledge and skills of food insecure households in CFI woredas
built and strengthened
Activity 1: Build skills, knowledge and confidence in business planning and management
Activity 2: Build skills, knowledge and confidence in financial management
Activity 3: Build skills, knowledge and confidence in input sourcing and production,
particularly for new technologies
Activity 4: Build skills, knowledge and confidence in marketing and value addition
80
ANNEX 2: INTEGRATED PLANNING FOR HAB AND OTHER
FSP COMPONENTS
LIU LZ data,
simulations etc.
Watershed development Household Asset Building Programme planning
Analysis of biophysical and

socio-economic Market/value chain
Technical analyses
dimensions and their analyses
relationships
Identification of focus
areas and priorities
Enabling environment (*)
(HABP-described) consultation process
Identification and
prioritisation of
interventions that bring List of investment and IGA opportunities
change (e.g. gully recovery
etc.)
Further steps in watershed

development planning,
Further steps in advising households (business plan
including identification of
development, linkage to financial service provider etc.)
PSNP PWs and FSP CCIs
contribution
81

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Final Draft, 2009-07-27

Food Security Programme

HOUSEHOLD ASSET BUILDING

Activity 3: Support the implementation of an appropriate regulatory and supervisory

6.4.3 Government regulatory role in use and development of technologies .............. 71

ACSI Amhara Credit and Saving Institute

RDPS Rural Development Policy and Strategy

2 BACKGROUND AND JUSTIFICATION

2.1 GOVERNMENT/SECTOR POLICY MOST RELEVANT TO THE COMPONENT

• Rural finance policy

• Women and youth-related policies

2.1.1 RURAL FINANCE

FIGURE 1: THE POVERTY CYCLE – RURAL FINANCE AS THE CRITICAL

Little or no Limited use of inputs

1 Based on description in the RDPS (MOI, 2002:186-189)

Table 1: Challenges and opportunities for rural finance in Ethiopia2

2.1.2 COOPERATIVE PROMOTION

Financial services provided through agricultural/multipurpose cooperatives are generally

2.1.3 PASTORAL POLICY

2.1.4 WOMEN AND YOUTH PACKAGES AND OFF-FARM ACTIVITY PROMOTION

2.2 FEATURES OF THE SECTOR

Rural communities—whether are they agricultural, pastoral or agro-pastoral—are vulnerable to

2.3 EXPECTED CLIENTS

2.4 PROBLEMS TO BE TACKLED

awareness on the importance of saving, promoting financial service provision by

b) The inability of local administrators and extension workers to perform their

2.5 OTHER RELEVANT INTERVENTIONS AND INSTITUTIONS INVOLVED

2.5.1 THE EXTENSION SYSTEM

• Inadequate training, advice and technical support for CFI households

• Limited awareness of upgrading opportunities and complementary services (additional

• Ineffective operation of FTCs

• Involvement of extension staff—particularly DAs—in credit disbursement and collection

• Absence of gender considerations

• Lack of effective M&E

Support to agricultural extension (including livestock-related extension) consists of capacity

2.5.2 COOPERATIVE DEVELOPMENT

2.5.3 FINANCIAL SERVICE PROVIDERS

TABLE 2: AVAILABILITY OF FINANCIAL SERVICE PROVIDERS 5

Region No. of woredas with No. of woredas with Total SACCOs in

Total 225 87 791

2.5.4 AGRICULTURAL GROWTH PROGRAMME (AGP)

• Supporting farmers to intensify their production in order to increase productivity

2.6 POLICY, STRATEGY AND PROGRAMME GAPS

2.7 LESSONS LEARNED FROM PAST PROGRAMMING

3.2 OUTCOME AND STRATEGY

The objectively verifiable indicators for this Outcome are:

1. Average real value of assets

2. Percentage of food insecure households report new sources of income

6 Important but not sufficient; needs to be complemented by PSNP and CCI.

Figure 2. Pathway to Graduation from PSNP and overall FSP

Graduates business planning, input linkages and service

Village savings & credit and

Figure 2 above illustrates the sequential nature of these interventions.

Output 1: Access to viable on- and off-farm income-generating opportunities improved.

Output 2: Access to sustainable financial services enhanced.

Output 3: Sustainable input sourcing, production and delivery systems enhanced.

Output 4: Access to effective product and labour markets increased.

Output 5: Institutional capacity to manage and implement the HABP strengthened.

Output 6: Knowledge, skills and confidence of food insecure people built.

3.3.1 OUTPUT 1: ACCESS TO VIABLE ON- AND OFF-FARM INCOME-GENERATING