Co-operative Retail Commodity Distribution Program

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Co-operative Retail Commodity Distribution Program

Sri Lanka
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

A partnership between Chambers of Commerce and youth groups in Sri Lankan unplanned communities to provide basic commodities to slum residents at reasonable prices. The Chambers of Commerce purchasing power and organizational status would be used to buy bulk goods at a lower cost and profits would fund the youth group activities.

About Project

Solution: What is the proposed solution? Please be specific!

The innovation is to bring together two partners that will allow a youth group to access the purchasing power and the management capacity of the Chamber of Commerce to assist them in setting up a social enterprise. The social enterprise involves buying basic foodstuffs and other commodities at wholesale prices, and retailing them in a low income community for a reasonable profit. Currently, low income residents can only afford to purchase small amounts of goods such as rice and oil which make them very expensive, further impacting their purchasing power and standard of living. The youth group will take assign one worker per 10-15 households to take orders and distribute the goods saving on storage and transportation costs. The social enterprise will benefit customers by providing goods at lower prices. The social enterprise will benefit the youth group by providing it with a steady income to carry out non-profit activities (e.g. education or cultural activities). It will also benefit individual members of the youth group by providing opportunities for employment, and the development of management and retail skills. The Chamber of Commerce has the opportunity to engage in supporting a low income youth group in a way that takes advantage of its unique skills and assets. This unique cooperation between a low income community and the Chamber of Commerce also assists the municipal council to reach it social development goals with minimal effort.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

The anticipated social impact includes: • Lower commodity prices for low income households improving their purchasing power and ability to meet basic needs • Employment for youth • Young people gain entrepreneurial skills, gain confidence in their own abilities, are empowered • Steady funding source for community youth projects • Potential money available for revolving micro-loans further reducing poverty in a low-income community • Strengthened relationships between civil society organizations • Engagement of an organization (Chamber of Commerce) in poverty reduction strategies beyond the scope of its typical activities
About You
Organization:
International Centre for Sustainable Cities
About You
First Name

Samantha

Last Name

Anderson

Website
Your Organization

International Centre for Sustainable Cities

Country

, BC

About Your Organization
Organization Name

International Centre for Sustainable Cities

Organization Phone

604-596-0965 ex307

Organization Address

205-1525 West 8th Ave Vancouver, BC V6J 1T5

Organization Country

, BC

Organization Type

Non-profit/NGO/Citizen-sector Organization

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Your solution
Country your work focuses on
If multiple countries, please list them here. If your solution targets an entire region, please select it below
Region(s) your solution focuses on:

South Asia.

Range of turnover in your target firms, in USD

Less than $1 Million.

Average turnover in USD of your target firm

$15,000

Number of employees in your target firms

5-24.

Average number of employees of your target firm

10

Specify the size, average and range of expected loans or investments in each target firm

$100,000 grants for training, capacity building, supervision and project management for 1 year ($16,000 per city + $4000 lessons learned workshop bringing all 6 cities together)
$1000 loan for capital investment (purchase of wholesale commodities) per city

What stage is your solution in?

Idea phase

Innovation
How does your proposed innovation leverage public intervention in catalyzing private SME finance?

Co-operative enterprise efforts in Sri Lanka were successful from 1965 to 1975 until restrictions on import commodities hampered the economy in mid 1970’s. Then, economic reforms in the early 1980s swung to the other extreme emphasizing the free market as a solution to all problems. This took over the entire society, widening the gap between the rich and poor. Today, the approach to poverty reduction with regards to financing, from the grassroots to national levels, micro credit and international projects all depend on loans and debts. It ignores the need for capacity building and partnerships.

Partnerships and collaborative investments are needed in order to develop the economy in a more sustainable way. The National government initiates partnerships as well as collaborative efforts for larger enterprises. This project focuses on micro-enterprises and low-income communities. The project encourages collaboration and partnership between the private sector as represented by Chambers of Commerce, and poor communities as a way to develop skills needed to run a business, and leverage the Chamber’s purchasing power. The partnership in Kurunegala has been catalyzed by the VanLanka Community Foundation operating under the umbrella of the Sustainable Cities Foundation, and would assist in the skills training and capacity building efforts.

The initial grant is needed to provide training, and seed money to start up the pilot business. The commodity retail business will then create a revolving fund that can be used for other investments, and/or activities of benefit to the community but not necessarily profit-driven. There are already several Chambers of Commerce around the country interested to see if the model would work. If the pilot project is successful, the public investment is focused on the training/capacity building, while the private finance would come in the form of a loan for the start-up of the business i.e. the initial purchase of the wholesale commodities and shop rental.

What barriers does your proposed solution address?

Informality, Lack of collateral, Lack of financial capacity, Lack of SME access to skills / knowledge / markets, Unavailability of financial products tailored to SME needs.

If you checked any of these barriers, describe how your solution addresses them

The solution addresses the informal nature of micro-enterprises, their lack of collateral and unavailability of loans to start up this kind of business. Most importantly, it addresses the lack of skills, knowledge and access to markets through the partnership between the Chamber of Commerce and the youth group.

Impact
Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact

Approximately 450 words left (2000 characters).

How many firms do you expect to reach?

The project will start with one pilot in Kurunegala Municipality and expand to 5 other cities

What is the volume of private SME finance you aim to catalyze?

The success of the initial pilot project will engender similar projects in 5 other cities. Grants for training will continue to be required, but the success of the pilot will catalyze loans for the Chambers of Commerce in the other five cities to start up the businesses ($1000 per city).

What time frame will be required to reach these targets?

1.75 years:
3 months initial training, set-up and marketing
3 months supervision of youth group’ commodity distribution enterprise, accounting methodologies, troubleshooting
3 months capacity building with youth groups for profit distribution (e.g. as micro credit, as grants for community projects etc.)
3 months scaling up of project to other cities followed by 9 months of training, supervision, capacity building etc.

Does your solution seek to have an impact on public policy?

Yes

What would prevent your solution from being a success?

• Opposition from current retailers
• Lack of proper training
• Lack of customers

Sustainability
List all the funding sources that are required for the sustainability of this solution

International funders
Chambers of Commerce

Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?

Once the initial training and set-up is completed, the enterprises will be self-sustaining.

Demonstrate how your proposed solution will survive a potential loss of its largest private funding source

The project cannot start without the initial investment in training. Once the initial training has taken place, the capital investment is small, so if the main funder is lost after the training, the funds can be replaced through private donations/investment, and/or micro-credit. Lost of the major funder would impact the ability to expand the project to other cities, but since several Chambers of Commerce throughout the country have expressed interest in setting up similar projects once they see if the pilot is successful, it is likely that the funding for replication can be replaced.

Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation

The partnership between the youth groups and the Chambers of Commerce are key, but will be assisted through partnerships with the Ceylon Research Network, the VanLanka Community Foundation and Sustainable Cities, and the municipal councils of each community. The NGOs provide training, facilitation of the relationships, awareness of the solution and scaling up. The municipal councils provide support and may be a source of future funding to replicate the solution in other communities.

Are there non-financial issues that could threaten the sustainability of your proposed solution?

Turnover of staff, lack of capacity of new staff

Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically

The solution aims to scale up to a total of 6 low income communities in multiple municipalities across Sri Lanka. By engaging municipal councils, funding agencies, and other actors, the solution could potentially reach even more communities.