1. INTRODUCTION *
1.1 *The Angola Enterprise Programme
This Business Development Services (BDS) market assessment is sponsored by the Angola Enterprise Programme (AEP), a Public-Private Partnership between UNDP, Chevron and the Government of Angola. It will be undertaken in collaboration with the Netherlands Development Organization (SNV).
The AEP was originally designed to promote the development of a diverse and robust “micro, small and medium enterprise” (MSME) sector in Angola by supporting a process to build a consensus around a common vision and a national strategy for MSME development. To achieve this, AEP supports 4 key interventions, namely:
(1) Creation of an enabling environment for MSME development,(2) Expansion of the supply of micro or small business credit through capacity building initiatives,
(3) Redirecting vocational training towards the market, and
(4) Introduction of pilot models of business development service providers and business incubators.
By generating employment and increasing the incomes of the people, AEP believes it can make an important contribution to the National Poverty Reduction Strategy (Estrategia de Combate á Pobreza). It is also envisaged to contribute to the establishment of a knowledge base on micro, small and medium enterprises in Angola. As a public-private initiative, AEP continually enjoys partnership with other local and international organizations.
As a result of its mid-term review that was completed in 30 March 2006, AEP has refocused its interventions to promoting microfinance and BDS to yield significant impact given available resources. Its intervention is thus aimed to contribute towards the development of a conducive private enterprise sector and in building the capacity of local institutions to provide sustainable and quality services to Angolan private enterprises.
1.2 The MSME Environment
Angolan micro, small and medium enterprises face tremendous difficulties as they fight to survive and grow in this volatile economy. The formally registered enterprises are being squeezed between the officially limited profit margins and high taxes: the economic police check that no more than a 25% mark-up is being charged to the customer while a combination of monthly and annual taxes produce an effective tax rate on profits of 47%, which leaves little to the owner of the business. There is a paucity of reliable data regarding the activity in this sector: for example official figures show that between 1994 and 2001 13,636 new companies were registered, but there is no further data regarding these new enterprises.
According to a World Bank study published in 2004, Angola is one of the most-time consuming countries to establish a business. USAID Angola has supported this finding and found that there are 14 procedural steps to start a business in Angola as compared to the regional average of 11. It takes an average of 146 days to register a business in Angola as compared to the regional average of 60 days and for a cost (% of per capital income) of as compared to the regional average of 225.2.
The informal sector has become the ?sector of last resort? for survival of a large proportion of the population in the cities. Although economic data on this sector is also scarce, a study financed by the UNDP on Urban Micro-enterprises in Angola in 2003 provides some interesting information on this sector. It is estimated that more than 50% of population survive from informal sector businesses. Around 82% of operators in the informal sector are self-employed, which indicates that the sector is in its early stages of development. Approximately 74% of the informal sector is involved in commerce while barely a tenth of informal sector operators are involved in traditional productive activities such as baking, carpentry, welding.
Angolan micro, small and medium enterprises lack services, which could support their development and growth. The services that are available are concentrated in Luanda, and focussed on larger clients. Access to business development services is limited and the design and structure of such services, when available, does not sufficiently take into account the needs and realities of doing business at the lower end of the market. Literacy rates are low, especially amongst women (82% of men and only 54% of women in 2001), and the large majority of entrepreneurs whether in the informal or formal sector have few vocational skills. There are a limited number of training centres in Angola, mainly located in Luanda, and their courses are not considered relevant to smaller enterprises. It appears that the most successful training at this level is undertaken informally through apprenticeship schemes. [2]
1.3 The BDS Providers and the AEP Support
There are only few BDS providers in Angola particularly for such services as business training and post-training services. The National Institute for Small and Medium Enterprise (INAPEM) is offering enterprise development training so with a few NGOs on a subsidized price. There are also big international firms such as PricewaterHouse, KPMG and a few local consulting firms offering training and business consultancy especially in financial management and in auditing, bookkeeping and taxation with market rate fees. Many BDS providers are based in the capital city of Luanda. There is limited knowledge of BDS providers for training and consultancy services in other parts of the country.
The Angola Enterprise Programme addresses the constraints faced by entrepreneurs, through, among other things, capacity building of business development centers that can effectively design programmes for SMEs based on identified needs. The BDS centers are eventually expected to offer their services in a sustainable manner without direct support of AEP.
This approach has so far been implemented with the two Business Development Service Centers in Luanda and Benguela. Each centre was designed to serve as a one-stop-shop for the delivery of business support services (training and post-training services) to micro, small and medium enterprises. As of December 2005, a total of 6 Entrepreneurship Training Workshop were conducted with a total of 193 participants or graduates. In terms of post-training services, 30 enterprises were assessed and 12 enterprises were provided health check or diagnosis.[3]
As a result of the recent mid-term evaluation of the Angola Enterprise Programme, AEP will support the capacity building of local BDS providers and centers instead of directly supporting 2 BDS centers as mentioned earlier. This is to enable AEP achieve greater outreach of BDS providers and entrepreneurs as well as expand its geographical outreach to other parts of the country.
2. The BDS MARKET ASSESSMENT *
2.1 * An Overview of the Market Assessment *
With the new modality of support to BDS providers and centers, the AEP Management Committee decided to conduct a Business Development Services (BDS) market assessment. This decision is premised on the thinking that it is critical to understand the market in order to identify appropriate interventions to support the sustainable development of the BDS market in Angola.
Marketing for BDS is critical as it is the variable that will ensure that the programme reaches its goals of achieving outreach, impact and sustainability by the end of the intervention. An important building block to the sustainability of any service is its ability to attract clients who are prepared to pay the full cost for the services; entrepreneurs who are prepared to pay for services and local service providers who are prepared to charge for their services.
From the above, it is clear that for the AEP to be sustainable, there must exist Local Direct Service Providers (LDSP) who should be adequately compensated to continue to perform their core roles, possibly with a profit incentive for them. Once the local direct service provider has been capacitated to provide BDS, there must exist a pool of entrepreneurs who are willing and able to pay the full cost for the interventions. Whether the resources will come from a training intermediary or the training beneficiary themselves may not really be the big issue at this stage, although it is widely accepted in terms of the BDS market paradigm that sustainability will persist in the long term if payment comes from the end user who is the customer.
It is imperative therefore for AEP sustainability to identify and target clients who are willing and able to pay for the BDS products and services. New market opportunities have to be identified. Existing opportunities have to be examined and re-assessed in terms of demand levels and market growth potential. Where demand is low currently, strategies to create and stimulate it need to be explored. Supply levels also have to be examined in terms of existence of an adequate pool of ?local direct service providers? who are committed and able to perform their roles. Where gaps or exist, appropriate interventions to either increase or stimulate demand and / or supply levels have to be taken. This requires a national market study to understand the bigger picture; scan the environment, identify the problems, identify existing and potential market opportunities, identify attractive market segments and define strategies to reach out to the identified segments.
2.2 *Objectives of the Market Assessment
The overall objective of the market assessment is to help AEP design appropriate interventions to identify local BDS providers or centers (or Local Direct Service Providers/LDSP) and help build their institutional capacity to effectively implement BDS on a sustainable manner.The objectives of this market study are therefore:
- To scan the national market to understand the forces and factors affecting the BDS market in Angola
- Estimate demand and supply levels, opportunities and potential for BDS in the market
- Identify constraints and opportunities in existing and potential markets for BDS
- Assess the capacity of local BDS providers or LDSPs and understand their institutional strengths and weaknesses and their delivery mechanism
- Identify the local BDS providers or LDSPs that can effectively implement BDS in Angola, with technical assistance from AEP
- Identify and define marketing strategies to reach out to the identified beneficiaries
- Identify and recommend appropriate interventions to effectively build capacity of local BDS providers or LDSP
- To present the findings, recommendations and various options for AEP BDS interventions to AEP Management Committee (UNDP and Chevron) and to relevant stakeholders to decide the appropriate BDS interventions
- Based on agreed AEP BDS interventions, to prepare a Request for Proposal for a BDS facilitator or Technical Service Provider (either a consultancy firm or a consortium) to implement the BDS component and its activities.
The market assessment should help AEP to decide on the following:
- What type of BDS should AEP focus on?
- What consumer segments should AEP target?
- Who are the BDS providers or LDSPs that AEP can work with initially?
- What interventions should AEP use to stimulate BDS markets, benefit more entrepreneurs and build capacity of BDS providers or LDSPs given available resources and limited time frame?
2.3 Scope of Work
The market assessment will be conducted in a scientific, systematic and standardized manner and should employ an interactive approach, and to produce output that is clear, easy to access and use, and comparable to allow for cross-utilization of information generated. The consultant should use various techniques to conduct the market assessment in a logical and flowing manner, and develop relevant tools that should be used for the study.
The market assessment will involve 3 steps, namely:
Step 1: A comprehensive assessment of the BDS market
Step 2: Presentation of the findings, recommendations and various options for AEP BDS interventions to AEP Management and relevant stakeholders for selection and to decide the appropriate BDS interventions
Step 3: Preparation of the Request for Proposal for a BDS facilitator or Technical Service Provider (either a consultancy firm or a consortium) to implement the BDS component and its activities.
The specific tasks included in this project are the following:
(a) STEEP Analysis (A brief analysis)
Business enterprises and organizations do not operate in a vacuum. They operate in a complex and dynamic environment. This environment can broadly be divided into two, the internal and external environment. The external environment is also referred to as the macro environment and it comprises of the technological, socio-cultural, ecological, economic and political / legal environment. The success of any business is dependent on studying and understanding these components of the total environment. This enables the business organization to strike a strategic fit for business and organizational growth.
Using these broad categories of the environment, the consultant is expected to identify those factors that are likely to affect the operations of Business Development Services in Angola.
The consultant should therefore focus on:
- Identification of Socio-cultural, Technological, Economic, Ecological (Physical) and Political-legal factors affecting the BDS market
(b) Industry Analysis (Comprehensive Analysis)
This section should “bring the assessment home”, in that it should assess the industry environment in which the business will operate. The fundamental questions to answer will include an analysis of the performance of the BDS industry in Angola; How well is it doing?), Who is in it? How are the major players doing? Is there business and a future in this industry? It is equally important to know the factors constraining BDS market growth as well as prospects for market growth, identify key industry success factors, identify BDS core competencies and strategic competitive advantage. This enables one to assess whether or not it is feasible to do business in this industry and or to design strategies to ensure that business performance can be improved in that industry environment.
This part should focus on:
Assessing the industry environment borrowing from Porter?s five forces model, which will involve some of the following steps;
(i) Sourcing information from publications on the BDS industry and any studies in papers, business associations, statistics etc.
(ii) Making an assessment of each competitive force to gauge influence on the BDS sector, and drawing personal experiences in the industry
(iii) Drawing conclusions on how to perform better with BDS in the market
(c) Supply and Demand Analysis & SWOT Analysis (Comprehensive Analysis)
This involves estimation of demand and supply, using previous studies, surveys, statistics and other reliable secondary sources of information to know the size (in terms of number) of the total market
Data to be gathered to include: *
Demand:
- Characterisitics of Consumers
- Are consumers aware of the existence of BDS in Angola ; what are the reasons for trying or not trying a BDS service/product
- What are the services demanded by different market segments
- What is the satisfaction level of the existing users of BDS
- What benefits are they looking for in a product or service
- Willingness and ability to pay and frequency of buying
- Maximum price customers are prepared to pay for various BDS
- How do costumers pay the BDS services (free services, paid for by a commercial third party like banks, etc.)
(The list above is not exhaustive, please add additional data or information especially on market segmentation, market penetration and other demand indicators as deemed necessary).
Supply:
- Types and profile of BDs providers/suppliers in the market, including location
- What range of BDS products/services is available?
- What are the current strengths and weaknesses of current BDS suppliers (capacity)
- Comparison of BDS providers/suppliers
- BDS providers/suppliers marketing strategies and how effective
- BDS services offered by suppliers and which are most in demand
- What substitute products and competitors exist for BDS in Angola; their strengths and weaknesses and market share of competitors and services offered.
(The list above is not exhaustive to do a supplier diagnostic. Please add other relevant questions to assess the following: product/market mix, ownership and relationship, market expansion strategies and capacity, supplier’s view of the market, and private sector orientation, etc.)
Suppliers to include existing and potential BDS providers such as public and private vocational training centers, association of entrepreneurs (e.g. PRESTIGIO, RASME), NGOs, other national government entities, etc.
In order to strategically re-position BDS in the market, it is important to assess its current performance and potential. To do this, the SWOT (strengths, weaknesses, opportunity and threats) tool should be used.
Focus should be on:
- Strengths, Weaknesses, Opportunities and Threats of BDS in the market
- Profiles of current Local Direct Service Providers, Services provided, product(s) features, extend of usage of product and market share, constraints faced by LDSPs in implementing BDS in Angola.
(d) Segmenting the Market (Very Important)
Market segments in this case are the different types of consumers that need BDS. The process of market segmentation requires that you identify customers who require similar services (homogenous) but the segments must be different. Similar services here is defined as customers who need training to identify business opportunities (start-ups), and those who are already in business but want to improve their operations.
Main focus here should be:
- Where are the existing consumers / target market
- What are the services demanded by the different market segments
- The estimation of the market size (This is important as it gives the training providers an indication of the total potential demand for BDS)
- Willingness and ability of the identified market segments to pay the full cost of training services
(e) Development of Marketing Strategies (Very Important)
This section should use all the information and process used from the beginning and describe in some detail the strategy to be used to reach out to the identified markets / segments.
Strategies recommended should capitalize on BDS market opportunities and address market weaknesses and assist in:
- Re-positioning the BDS products in the market
- Developing marketing interventions, strategies and tools to be used to reach out to the selected market segments
- Coming up with reasonable pricing strategy
- Developing interventions to address key problems and opportunities and to build the capacity of local BDS providers or LDSPs
3. DELIVERABLES
As part of the project assignment, the consultant is expected to:
- Undertake background review of documents supplied by AEP and other literature on market assessment / research
- Develop tools, procedures and techniques to collect and collate market data using the following specific analysis (as introduced above)
- STEEP analysis
- Industry analysis
- Supply and demand analysis + SWOT analysis
- Segmenting the market
- Developing of marketing strategies :
The ultimate output resulting from this exercise should be a report that can be used by AEP to identify and select specific type of BDS that is responsive to the needs and demands of a potential consumer segments and reach out to new customers and better serve existing ones. The study to provide specific information on the attractive market segments, their profiles, where they are found, what their needs and expectations are, what they are willing to pay for BDS. It is equally important for the study to identify existing and potential BDS providers as well as description of the profile of competitors. Criteria in selecting BDS providers and LDSPs that AEP will support should be clearly spelt out. Finally the report to clearly define the interventions that AEP will use to stimulate BDS markets, reach out and benefit more entrepreneurs and build the capacity of BDS providers and LDSPs to effectively implement BDS.
4. PROPOSAL SUBMISSION
Interested parties shall submit a proposal of no more than 15 pages (including offer, curricula vitae and other possible appendices) in Word or PDF format (1-inch page margins, 12 pt. font) by 22 May 2006 to: * cc (telephones: +244 222 331181 or 331193) or fax: (244-222) 335609
The proposal should include:
(i) A detailed description of the tools, techniques and methodologies to be used for market assessment, the objective, and the data or information to be gathered for each tool/technique or methodology;
(ii) Description of the steps in analyzing the data and the outputs that it will yield per step;
(iii) Outline of the report, including criteria for selecting local BDS providers or LDSPs that can qualify for support by AEP;
(iv) A time schedule and work plan for conduct of market assessment until submission of report;
(v) A detailed budget for the conduct of market assessment until submission of final report;
(vi) Organization profile, including a list of market assessments carried out by the organization/consultant (present objective, location, key outputs, and other relevant information);
(viii) CVs of consultant/s who will be directly involved in carrying out the market assessment. A team approach is expected with a minimum of one person who has deep knowledge of the content area (BDS market Assessment) and one other person who is trained and experienced capacity building for BDS centers (LDSPs), i.e., has a strong background in selection and training of BDS centers at managerial, technical and organizational levels. The proposal should demonstrate the track record of each of these two people;
The proposal should present two options in terms of consultants to be involved (cost to be reflected in the budget): Option 1 – with two international consultants, or Option 2 – only with one consultant to pair with SNV or local consultant.
(ix) Names and contacts (email and telephone numbers) of at least 3 referrals, especially the sponsors or funders of market assessment that you or your organization have conducted; and
(x) Contacts. Please provide the names, title, e-mail addresses, telephone number and address of the primary and secondary persons to whom the Angola Enterprise Programme should direct questions during the project implementation. Similarly, please provide the name, title, email address, telephone number, and address of the person with the authority to negotiate and contractually bind your organization.
5. EVALUATION
Proposals will be evaluated on the following aspects:
- Demonstrated field experience of overall BDS design and implementation of the bidder(s).
- Given the nature and scope of the project, it is encouraged to have a two-person team with relevant technical skills in capacity building of the BDS centers and in developing products that address the needs of SMEs at various levels
- Gender and/or regional knowledge are an added advantage.
- How well the proposal clearly demonstrates an understanding of the project scope and tasks.
- Timeliness of completion of project and capacity of bidder.
- Creativity in approach to completing the project successfully.
- Demonstrated ability to complete project successfully
- Cost effectiveness
- Consultants proven experience in market assessment and in preparing Request for Proposal
- Consultants proficiency in oral and written English and Portuguese or Spanish (a must); at least one consultant proficient in Portuguese or Spanish
6. GEOGRAPHICAL COVERAGE
The market assessment will cover the following key growth centers:
(1) Capital city of Luanda (5 days)
(2) Benguela (2 days)
(3) Cabinda (2 days)
(4) Huila (2 days)
7. TIME FRAME *
22 May 2006
Proposals (electronic or paper) are due to the Angola Enterprise Programme by 1700hrs.
25 to 26 May 2006
Telephone conference for short-listed organizations
26 May 2006
Selection of the successful bidder and notification through e-mail and/or telephone call
29 or 30 May 2006
Sending of invitation letter to selected consultant/s for application for Angolan visa
10 or 11 June 2006
Consultant/s arrival in Angola
12 June to 7 July 2006
Conduct of market assessment, including analysis and presentation of results and recommended BDS options to AEP Management and relevant stakeholders and preparation and submission of Request for Proposal for BDS facilitator or Technical Service Provider to implement the agreed AEP BDS interventions.
7. CONFIDENTIALITY STATEMENT *
All data and information received from the AEP stakeholders for the purpose of this assignment are to be treated confidentially and are only to be used in connection with the execution of these Terms of Reference. All intellectual property rights arising from the execution of these Terms of Reference are assigned to the Angola Enterprise Programme. The contents of written materials obtained and used in this assignment may not be disclosed to any third parties without the expressed advance written authorization of the Angola Enterprise Programme.
