Ecuador – Local Business Development Project

Encouraging Licit Economic Opportunities in Border Regions

Ecuador, located between two of the world’s leading producers of coca and cocaine, faces the threat of a rapidly growing illicit drug economy. Although the country has sound agricultural production, its high poverty levels leave the rural population vulnerable to the effects of the narcoeconomy.

To address this problem, ACDI/VOCA is providing targeted rural economic development to Ecuador’s rural population through the two-year, USAID-funded Local Business Development program (known locally as PRODEL, for Programa de Desarrollo de Empresas Locales ). The program is implemented under AED’s Financial Integration, Economic Leveraging, Broad-Based Dissemination (FIELD-Support) Leader with Associates award in collaboration with CARE Ecuador. PRODEL aims to increase incomes and create employment for families along the northern and southern border areas by expanding private enterprises and strengthening local private producer groups and associations. ACDI/VOCA recognizes the importance of both private and public sector actors in overcoming obstacles to sustained growth such as physical isolation, lack of knowledge of end-market requirements, difficulty in accessing financing for working capital or investments and difficulty in attaining economies of scale for profitable participation in value chains.

To achieve the program objectives, ACDI/VOCA uses a value chain approach, identifying and addressing major opportunities and constraints to growth while ensuring sustainable impact at the household level. Specifically, the program targets 20 lead firms (or “anchor firms”) and the linkages within each anchor firm’s business system, reaching more than 8,000 microenterprises and their families. Program interventions address the whole value chain, reducing constraints on the anchor firm’s ability to grow while facilitating the growth of its suppliers and buyers. ACDI/VOCA provides market-driven technical assistance and financing packages to anchor firms as well as to suppliers and ancillary firms.

PRODEL also promotes a more conducive private sector-enabling environment. It accomplishes this through mobilizing and stimulating the business community to assist local governments. Additionally, the program promotes more business-friendly registration procedures, licensing, and fee and tax structures.

In February 2009, the PRODEL team added the complementary Certification of Agricultural Best Practices component to the program. This component builds on the program’s current activities to promote the conservation of biodiversity and tropical forests while increasing yields, market access and incomes. To do this, PRODEL trains beneficiaries in technical skills and environmentally safe agricultural practices and promotes the adoption of those practices.

PRODEL’s enterprise development strategy aims to have broad, sustainable impact among the target municipalities and populations, generating new and more lucrative opportunities for families to develop their own businesses or obtain jobs within the legal sectors of the economy. Ultimately, PRODEL strives to develop a competitive private sector in Ecuador that can stimulate and promote employment and income growth in the northern and southern border regions to combat the effects of the country’s expanding drug economy.

For more information, contact Lisa Kearns at Lkearns@acdivoca.org.

Updated: 7/09

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