Report of the mission of Giancarlo Canzanelli in Lebanon. (8-13 July 2010)
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1 1. Activities Report of the mission of Giancarlo Canzanelli in Lebanon (8-13 July 2010) 8/07 Arrival Beirut Tyr D-Briefing with Teodora Hristoforova Work-shop in Tyr on Prioritisation of business plans 9/07 Beirut Meeting with F. Bicciato, Teodora Harastirova, Marie Helen Kassardjian Work Shop in SSB on History and Perspectives of the LEDA in SSB 10/07 Beirut Preparation of the Advanced Methodology for Prioritising Business Plans for the Lebanese Ledas 12/07 Tripoli Workshop on Territorial Marketing 13/07 Beirut Final D-Briefing with AGL staff 14/07 Departure Final D-Briefing with UNDP (Raghed Assi), and AGL Staff 2. Results a) Members of the LEDA Steering Committees Local actors in South Lebanon, SSB, and North improved in their capacities of managing specific aspects of a LEDA. b) An advanced methodology for prioritizing business plan in the framework of the Lebanese Ledas (see annex 2) c) Plan for establishing the LEDAs shared with UNDP and ART GOLD responsible. 3. The plan for establishing the LEDAs Two elements were taken into consideration for establishing the plan: 3.1 The new situation of AGL Program with regard to the financial assets, due to the diminished contribution of the donors. 1
2 The initial situation was, in fact, a fund able to establish a Guarantee Fund (with a total amount of 2,800,000 USD), sufficient for guaranteeing solid bases to the LEDA sustainability. According to the ILS LEDA experience, in fact, only few cases of LEDAs established with no or little GF have survived. The last numbers provided after the ILS LEDA mission in March were the following: Contribution AGL for LEDAs in 2010 vs Number of LEDAs 1 LEDA 2 LEDAs 3 LEDAs 4 LEDAs Contribution to running costs Guarantee Fund (minimum) Total In order to minimize the risks of failures AGL should dispose of 3,280,000 USD for the four LEDAS. In the current situation the resources for the Guarantee Fund amount to 1,500,000 USD. Considering a minimum budget for the LEDAs of 80,000 USD per year, the new table is the following: Contribution AGL for LEDAs in 2010 vs Number of LEDAs 1 LEDA 2 LEDAs 3 LEDAs 4 LEDAs Contribution to running costs Guarantee Fund Total It is evident in this table the risk of establishing 4 LEDAs, which one of them with a 375,000 USD for the Guarantee Fund, whereas little risk would occur up to two LEDAS (ILS LEDA recommended option). Since the financial variable is not the only component of the LEDA s sustainability, and due to the shared decision AGL shall sustain the LEDAs in all the four areas, the establishment plan will take into consideration four LEDAs. 3.2 The AGL Program schedule, and the need for establishing the LEDAs as soon as possible for assuring the necessary financial and technical support. In the meeting with AGL and UNDP the establishment date was established as on January This will give the LEDA the chance to be tutored by UNDP AGL for at least 1 year, and to achieve sufficient capacities before 31 December 2011, for assuming the ownership of the Guarantee Fund, temporary managed by ESDF. According to the aforementioned variables the LEDA Establishment Plan (LEP) will have the following master schedule: 2
3 1. Opening LEDOS, within 1 August Elaboration of the LEDA Statutes, within 15 October LEDAs Feasibility Assessment and Plans, within 15 October 2010 (see annex 1) 4. Budget assigned by AGL for contracts to LEDAs, within 15 October 5. LEDAs members capacity building for start up realised, within 31 December LEDAs legalization, staff recruitment, office equipment, within 31 December UNDP contracts with the LEDAS finalized, within 31 December LEDAs starting operations, while LEDOs close, in January LEDAs tutorship (and possibly mentorship), during Transfer ownership of the Guarantee Fund, within 31 December The LEDA sustainability The Leda sustainability is linked to four main factors: a) The financial sustainability b) The institutional sustainability c) The social sustainability d) The technical sustainability There are cases (for instance in Colombia and Ecuador) were the initial weakness in the financial sustainability (for instance for the absence of the Guarantee Fund) was compensated by the contribution of the members (institutional commitments), or other cases (for instance in El Salvador, and Ixcán in Guatemala) where technical and managerial capacities were able to raise a lot of funds. 4.1 The financial sustainability The financial sustainability means the LEDA s balance between costs and the incomes shall be assured at least for the first 4 years. After that time the LEDA learning curve will be consolidated and the future more safe for the accumulated capacities. At the beginning the minimum resources could be 1 director, 1 technician, and 1 administrative staff, whereas it is recommendable not overcoming a 80,000 USD budget. The following table 1 will guide the financial plan: 3
4 Table 1: Leda Costs LEDAs budget USD Director Technical staff Secretary Running costs Total <80,000 The sources of income so far certain for the first 4 years are: the UNDP ART GOLD contract for 2011 of about 100,000 USD, and the 4,5% interest from the Guarantee Fund, for an amount of 16,875 USD for each LEDA, starting since 2013 (accumulated 2012 interests, due the transfer of ownership in 2012) The scheme for elaborating the financial plan is the following and it needs to be completed by each LEDA Steering Committee. Art Gold Contract 100,000 LEDA FINANCIAL PLAN Guarantee Fund Income 16,875 16,875 Membership fees Projects execution Special Services Client services Previous year balance 20,000 Total 100,000 20,000 16,875 16,875 LEDA Costs 80,000 Balance 20,000 16,875 16,875 a) AGL contribution: it is 100,000 through a 2011 service contract with each LEDA. UNDP shall define TORs and procedures, according to the UNDP rules and regulations b) Guarantee Fund Income: it is the correspondent interest accumulated each year (4,5%)on the fund assigned to each LEDA (that is 375,000 USD). It shall start from 2013, since it would be possible the transfer of ownership from ESDF to the LEDAs since 1 January 2012, and it will take 1 4
5 year for being accumulated, provided the GF is not used for unreturned credits. c) Membership Fees: they are the annual quotas possibly each member provides, according to the decision of the Assembly, and to the financial possibility of each member. d) Project implementation: It is the income proceeding from the realization of the projects elaborated by the LEDA, submitted to financial supply (donors, sponsors, call for proposals, etc.), either as overhead, or implementation costs. e) Special Services: These are services negotiated with relevant national or international institutions, for implementing their programs in the area. f) Services to client: These are fees charged to clients for services supplied, where the client could be persons or institutions (mainly public administration). The following table shows advantages and risks for each item. Source of Income Advantages Risks Art Gold Contract Guarantee Fund Income Membership fees Projects execution Special Services Client services: support to business plans Client services: support to members (for projects, planning, administration, training etc) It is an unique start up opportunity It is a certain fund, that in many starting LEDA represents about the 50% of the total income It shows the commitment of the members The LEDA is a unique publicprivate structure in the area, and it has good chances to access to project financing The LEDA is a unique publicprivate structure in the area, and it has good chances to provide them It could be relevant for the Leda sustainability, since it is a main need for producers It could be relevant for the Leda sustainability, since it is a main need for members Sudden Lack of funding Priority given to other activities The credit is not returned to the bank, and it decreases the fund availability Difficulty of assigning and/or maintaining this contribution for the local institutions and associations Technical weakness; Disagreement in priorities; Long procedure and time consuming Lobbying weakness LEDA could rely too much on this income, and prioritize this services for people able to pay, and not for the most needed clients Becoming a main source of income, the risk is on the future changes: lack of the members funds, changes in representatives in the LEDA 5
6 4.2 The institutional sustainability It has to do with the interest, the willingness, and the commitment of the local actors for the LEDA. Higher are these elements, higher the probability of the success, as proved in the majority of the cases, where ILS LEDA has been operating. The last news given by the lawyer contracted by UNDP about the possibility of the local administrations to participate in a association together with the private sector opens an important door to this sustainability. Another indicator measuring the institutional sustainability for the start-up is the ownership: How much the local actors (and mainly the members of the LEDA steering committee) feel the LEDA as their choice, and something for which is worthwhile to invest time and energy? How much do they consider the LEDA as a service for the improvement of the territorial chances of development, and not just a service for themselves? The final step of this commitment is the elaboration and the approval of the statute. 4.3 Social sustainability It has to do with a balanced participation in the LEDA of all the important sectors of the local society, either in the assembly or the executive board without exclusion: local administration (municipalities and union of municipalities), producers (through their associations), the social sector (through NGOs and associations women, disabled, young people, etc.), the universities and research centers, etc. An important constrain in the AGL areas is the weakness of the associations of producers, that have to be created or strengthened. 4.4 Technical sustainability It refers to the technical capacities of the LEDA of providing services and implementing activities and projects, and it has a relevant impact on the other sustainability components. Higher these capacities, higher the probability of gaining visibility, respectability, and channeling funds. The minimum conditions for the LEDA start up is to include a technical directo, and a technician. The first one should work with the Executive Board for the prioritization and implementation of the activities, for the fund raising strategy, for the identification and the elaboration of the projects, for the support to the public sector. The second one should work for the prioritized sector and value chains (mainly the productive sector), for strengthening the entrepreneurs and their associations, support the preparation of the business plans for the access to credit, and other business services. 6
7 It is recommendable to have this personnel full time working in the LEDA since the beginning (1 January 2010) for the following reasons: a) The LEDA shall be recognized by the internal and external actors with full capacities and organizational assets. It would be risky present a LEDA, that in future will achieve this result. b) The LEDA shall learn its own implementing and managerial path, and it is better it will do it during the Program tutorship, and with a director selected through the UNDP AGL assistance. 5. The feasibility assessment and plan for the LEDA start up and sustainability One of the first activity of the LEP (LEDA Establishment Plan) is the feasibility assessment and plan for the LEDA start up and sustainability. It is: a) An assessment on the current process for establishing the LEDA, with regard the sustainability factors. b) A document that identifies the weaknesses of the aforementioned factors, and the plan for reducing or abating them. The LEDA can be considered feasible when the start up conditions include an high probability of success. Better the feasibility conditions, higher this probability. The feasibility assessment could be carried out through the annexed document. Each area shall realize the assessment and the plan, as first activity of the August-December 2010 Plan of actions with the LEDA Steering Committee. The ILSLEDA recommendation is a LEDA cannot be established without this plan finalized within the 15 th of October The suggested LEP Agenda is the following: 7
8 July Aug. Sept. Oct. Nov. Dec. Statute First step: mission, objectives, services, eligible members and rules (duties and rights) Second step: Definition membership (assignment representative of each member in the assembly, promotion of membership towards relevant local institutions) Third step: Finalisation of the statute and approval from the members; Submission to the competent authority Feasibility assessment and plan Financial feasibility Institutional, social, technical feasibility Strengthening Plan proposal Association processes started Pre-Start Up Strengthening plan realised Recruitment Technical and administrative staff Contract process UNDP LEDA Office Ready 8
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