Project Design

Strengthening the Role of AIDS-Affected MSEs in Productive Markets, DAI, USAID AMAP, 2005

    Description
    This paper addresses the important issue of sustaining the role of MSEs in productive economic activity when MSEs are directly affected by HIV/AIDS. It identifies the constraints that are specific to HIV/AIDS-affected MSEs and presents promising approaches to address these constraints and mitigate the impact of HIV/AIDS on MSEs.

    The paper takes the approach of understanding MSEs within the context of the business relationships that characterize the value chain in which they operate. The paper identifies the constraints specific to HIV/AIDS-affected MSEs participating in value chains and links these with promising approaches to mitigating the impact of HIV/AIDS.

    The paper begins by introducing the value chain concept, an important tool in understanding MSEs' opportunities and constraints even without the impact of HIV/AIDS. Chapter 3 is an overview of HIV/AIDS in the world today. Chapter 4 presents in brief what is known of the impacts of HIV/AIDS on the macroeconomy, sectors, businesses, and households. Chapter 5 then uses the value chain concept to explore the constraints specific to HIV/AIDS-affected MSEs. Finally, the paper examines a small but growing set of strategies now in use to reduce these constraints and keep MSEs actively connected to markets, even under the stress of HIV/AIDS.

    Summary of results
    The paper identifies four major constraints specific to HIV/AIDS-affected MSEs participating in value chains: resource constraints, transaction costs, risk for MSEs and large firms, and lack of market orientation. The paper links these constraints with a set of six promising approaches to mitigating the impact of HIV/AIDS: asset protection via financial services, asset protection via legal services, workplace policies and programs, labor-saving technologies and production inputs, inter-firm cooperation and vertical linkages.

    The paper recommends that programs adopt "nontargeted but adapted" strategies and consider high piority targeted interventions as necessary. This suggests that programs should monitor and analyze the impact of AIDS with the target populations of the project and use an "AIDS lens" in program design and implementation to adapt nontargeted activities to ensure that AIDS-affected MSEs are not excluded from participation.