Assessment of the Jua Kali Pilot Voucher Program
Arvil V. Adams
World Bank
Background
The Kenya Micro and Small Enterprise Training and Technology Project (MSETTP) was launched in November 1994 under the authority of the Kenyan Government and the Ministry of Research, Technical Training and Technology. The MSETTP recognizes the importance of micro and small enterprises as a source of employment and income generation. Focused on manufacturing and service enterprises with 1 to 50 employees, the MSETTP supports regulatory reforms favoring development of the sector; improves institutional capacity for sector policy development; promotes access to appropriate technology, encourages women entrepreneurs, and addresses infrastructure needs on a pilot basis.
In addition to these components, the MSETTP includes the Jua Kali Voucher Program. Micro and small enterprises are known in Kenya as the Jua Kali, which translated in Kiswahili means "under the hot sun," and refers to the conditions under which many of these entrepreneurs work. The voucher program is part of a training fund component, which is the largest component of the MSETTP, approaching US $12 million. The training fund includes a revolving capital fund for upgrading training capacity, which will soon begin implementation. The voucher program is the only such program of its type in Africa. Vouchers, as used in countries like the United Kingdom, are intended to empower recipients with the capacity to buy training in the open market, and thereby, promote competition between public and private providers of training and the efficient delivery of training services.
As used in Kenya, vouchers are expected to focus attention on the skill upgrading needs of the Jua Kali sector and generate a supply response among trainers to fill these needs. The objective of the training is to improve the productivity of micro and small enterprises and increases the incomes of entrepreneurs and their employees. The voucher program is targeted on established entrepreneurs and employees, rather than new entrants to the sector, in order to assist enterprises with the most potential for growth and employment generation. The exception is for women who are eligible for vouchers as new entrants to the sector in order to encourage their development as entrepreneurs. No fewer than 20% of the vouchers are expected to go to women.
The Jua Kali Voucher Program is important to micro and small entrepreneurs in Kenya, but also to other African countries faced with the need for reform of publicly financed training systems that are poorly aligned with market needs. Government financing of these systems without focusing on their outcomes provides little incentive for reforms. Elsewhere in the region, training funds have emerged with World Bank support --Cote d’Ivoire, Togo, Mali, and Madagascar -- to shift money away from institutions into the hands of employer and workers representatives to buy effective training services. Kenya is the only country where purchasing power has been moved directly into the hands of beneficiaries to promote training reforms. The experience will be watched closely by other countries.
Objectives and Approach to the Assessment
The Jua Kali Voucher Program was launched as a pilot program in September 1996 in Nairobi and Machakos with the objective of testing various design features before considering mainstreaming of the program. The pilot was completed in December 1996. Throughout, it was carefully monitored and evaluated by a consultant employed by the Ministry of Research, Technical Training and Technology and its Project Coordination Office (PCO) which is responsible for implementation of the program. The objectives of the World Bank mission are to evaluate the assumptions underlying the voucher training fund and assess its potential contribution to realizing the MSETTP’s broad objectives for promotion of micro and small enterprises.
The mission has reviewed the implementation experience of the pilot voucher program with the goal of identifying lessons for improvement of the program. To assist it in this task, the mission has examined findings of the monitoring and evaluation consultant and conducted its own field visits with program stakeholders to validate these findings. The consultant findings are contained in a draft report to the Ministry of Research, Technical Training and Technology, dated 21 January 1997, and are based on a sample of training providers (11) and beneficiaries (29), plus data gathered from the program’s four voucher allocation agencies. The mission’s field visits included contacts with institutional training providers (2), mastercraft workers as trainers (3), mastercraft workers and employees receiving vouchers (13), voucher allocation agencies (4), and the Ministry’s Project Coordination Office.
Mission Findings
The PCO consultant report provides useful information on how different design features of the voucher program worked and what might be changed in the future to improve the program’s cost-effectiveness. The report findings, although based on a small sample, were largely confirmed in the mission’s field visits. The consultant report, however, completed so soon after the training, has little to say about the impact of the training on the productivity and earnings of the beneficiaries and whether the training will be successful in promoting the overall objectives of the MSETTP for development of micro and small enterprises. Appropriately, the consultant recommends a follow-up study of voucher beneficiaries to address these issues. The mission concurs with this recommendation.
The mission sought to fill this gap by asking voucher beneficiaries for concrete examples of how they were using their training and how they expected to benefit from the training experience. It also inquired of training providers, both institutions and mastercraft workers, about the amount of training they offered in a comparable period prior to introduction of the voucher program and the amount during the voucher program to assess the net impact of the voucher on the amount of training done for the Jua Kali sector. The mission’s assessment of the pilot Jua Kali Voucher Program is summarized below under the headings of (i) basic program statistics, (ii) voucher benefits, (iii) voucher costs, (iv) design effectiveness, and (v) issues in the enabling environment. The latter looks at environmental factors influencing the impact of training on the promotion of micro and small enterprise development.
Basic Program Statistics
The four allocation agencies sold 810 voucher application forms at 100Ksh each. Of this number 600 beneficiaries were approved to receive vouchers as planned under the pilot program. Confusion regarding the requirement that beneficiaries pay 10 percent of the voucher value led to only 427 of the vouchers being issued. Slightly less than half this number, 211, chose to use their vouchers for technical training, while the larger remainder, 216, selected management training. Technical training covered wood working, metal working, auto mechanics, textiles, and food processing. Management training was popular with many mastercraft workers who wanted to know how to run their businesses more profitably. Eighty-four percent of voucher recipients were mastercraft workers with the remainder employees.
Among those seeking technical skills, textile and auto mechanics received the most vouchers, 89 and 46 respectively, with metal working following closely with 42 vouchers. Voucher beneficiaries had 64 training providers to choose from in Nairobi and Machakos. Since beneficiaries were give a choice of where they spent their vouchers for training, only 48 training providers actually received trainees with vouchers. The number of mastercraft workers offering training, 38, exceeded the number of training institutions, 26, although in terms of capacity, the latter offered more training places. The mission was not given a breakdown of vouchers by type of training provider, but since mastercraft workers did not offer management training, the fact that over half of the trainees chose this type of training suggests that well under half of the voucher recipients were trained by mastercraft workers.
Based on a sample of voucher beneficiaries, the average number of full time employees for each enterprise was 2.1 workers. Only one out of six enterprises had more than five employees. The voucher program thus reached mainly the highly competitive subsistence level of the Jua Kali sector and did not, for the most part, reach small enterprises with 11 to 50 employees. The average voucher recipient had 163,000 Ksh in fixed assets with sharp differences for women and men, 70,750 and 265,648 Ksh respectively. The average length of time operating a business in the Jua Kali sector for voucher recipients was 6.4 years. Less than 4 percent of the beneficiaries held a university degree. Only 5.3 percent had a business goal of increasing exports. The level of technology used was generally low with 7 out of 10 beneficiaries using hand tools only.
Voucher Benefits
The voucher program is expected to improve the productivity and earnings of the Jua Kali sector by increasing the demand for training; enlarge the supply of training providers catering to the Jua Kali sector and thereby promote choice; introduce competition into the marketplace between public and private training providers so as to encourage innovation and cost-effectiveness in delivery; encourage the entry of women as entrepreneurs in the sector; and build capacity in the Jua Kali Associations to promote development of the sector. Neither the evaluation report nor the mission’s own field work provides conclusive evidence on all these points, but there is sufficient evidence to say that the program is achieving many of its objectives.
The most difficult to measure is the impact of the training on productivity and earnings. Conventional measures of this require sophisticated research methodologies which were not used for the pilot, but should be used by the monitoring and evaluation consultants if the program is expanded. These methodologies may include, for example, before and after comparisons of earnings for trainees or the creation of control and treatment groups whose earnings can be compared using statistical techniques. The mission used less rigorous measures by asking voucher recipients to give examples of how they were benefiting from the training and to identify where their earnings may have increased as a result of the voucher training experience.
One recipient who had trained with a mastercraft worker on repairing automotive clutches, reported he had since completed five clutch repair jobs, which added income to his business. A mastercraft worker who had taken a management training course proudly pulled out a set of papers to show how he was for the first time keeping track of his income and expenses. He explained that he was now doing weekly planning of production to ensure he was using his resources effectively. He also spoke about team building with his six employees. Another mastercraft worker participating in a different management program also produced a new record book with entries for income and expenses and explained that he had opened his first bank account to better control his business transactions.
The examples above, excluding the case of clutch repairs, are only indirect indicators of increased profitability and earnings, but are nevertheless measures of the potential benefits of the voucher training. Every voucher holder the mission spoke with was enthusiastic about their training experience and when asked if offered a second voucher would they be willing to pay as much as 20 percent of the voucher value, the indication was yes. This was the case even for a group of young persons employed by mastercraft workers. In this case, however, while all felt their training would allow them to increase their number of customers, they expressed the view that the lack of adequate tools, due to insufficient capital, inhibited their taking full benefit of the training by opening their own businesses.
There is little doubt the 90 percent subsidy of training provided by the voucher has increased the amount of training for Jua Kali mastercraft workers and employees. This is measured by asking training providers about the number of Jua Kali participants in their training programs before and during the voucher program. The mission found in one Jua Kali Association, mastercraft workers increasing the numbers trained during the voucher program by 30 percent compared with a similar period of time before the launching of the voucher program. In a second Jua Kali Association, a master craftworker reported increasing the number of trainees from two to four with the voucher program, while a second increased the number from two to seven. Of the 29 trainees sampled in the PCO evaluation report, none reported training prior to the voucher program. The leadership of an Association reported that mastercraft workers who did not train in the pilot program are now asking when the next program will offer them a chance to participate
The program appears to have succeeded in attracting the attention of training providers of all types, although private trainers were more responsive than public trainers. Pride Kenya, one of the allocation agencies for vouchers in Machakos, noted that a Nairobi management training institution had gone so far as to lease classroom space and for the first time bring a program to Machakos. All four allocation agencies reported training institutions coming to visit them, leaving posters and other information about their training programs. The mission visited one institutional provider of training and was shown a one-page brochure identifying training for Jua Kali members. While the PCO evaluation report refers to some providers taking training program off the shelf, a majority of the trainees met by the mission felt their training had been appropriately tailored to their needs, including use of Jua Kali examples. The sample of 29 trainees in the PCO evaluation report universally agreed the courses taken were relevant to their needs.
There is also evidence of competition working to reduce the cost of training. The mission met a mastercraft worker who had listed her training in the directory at 21,000 Ksh, but when the voucher for the training she offered was set at a lower price, she adjusted her price downward so that trainees were not required to top-up the voucher. Similarly, training listed at 37,000 Ksh by a training institution was adjusted downward to the voucher value Two additional examples were mentioned in interviews with allocation agencies. The mission heard criticisms of the voucher program saying that training providers were inflating their training cost as advertised in the directory in anticipation the voucher program would provide a windfall. Competition appears to have quickly reduced the chances of this happening.
In an effort to enlarge the number of women entrepreneurs, the voucher program targeted the distribution of at least 20 percent of the vouchers to women regardless of their prior experience in the Jua Kali sector. This number was exceeded with 159 women receiving vouchers, about 37 percent of the total. The two NGO allocation agencies were more effective in reaching women with vouchers. Slightly fewer women, 77, chose management training, with the majority preferring technical training. There is little evidence, however, of women entering non-traditional trades. The overwhelming number of women, 66, receiving vouchers for technical training in textiles and food processing. Six women chose training for metal working, three for auto mechanics, and one for woodworking. It is doubtful that training alone is going to change this pattern in the future. The PCO evaluation does not indicate how many women receiving vouchers were new entrants to the Jua Kali sector.
The response of the two Jua Kali Associations serving as allocation agencies suggests the positive benefits for capacity building in the sector. One Association during the mission visit was able to show its new telephone and furniture bought with income from the voucher program. The second had added a clerical employee. Comments from officers of both Associations showed increased sophistication about training and the design details of the program. These Associations had engaged in marketing of the program to their members, but also to other Associations. Half of the vouchers issued by one Association were distributed to other Jua Kali Associations in Nairobi. The leaders of the two Associations had gained experience in marketing, communications, financial management, and record keeping.
While the above are bright spots in the program, there are questions about the quality of the training offered, particularly by mastercraft workers. The PCO evaluation consultant reports complains about this. Most mastercraft workers have no pedagogical training. Few know about lesson plans and curriculum development. Few have adequate space and tools for numbers of trainees and most are working with unsophisticated technologies. There was no evidence in the consultant’s sample or in mission visits with mastercraft workers of pairings with training institutions to bring the best from both in practice and theory together. Still, one mastercraft worker visited by the mission was able to produce a hand-written set of lesson plans. The enthusiasm of trainees for their training should be weighed against this concern. There is doubtless room, however, for more attention to quality issues in the training approved for voucher use.
Voucher Costs
The full cost of the voucher program includes the direct cost of the training provided and the administrative cost of operating the program, plus the indirect cost of the time spent in training by the trainees. The latter is an opportunity cost for trainees representing the income foregone while training. The 427 vouchers were issued with a market value of 5.8 million Ksh, or about US$ 252 per voucher. To this can be added the PCO’s administrative cost for printing, supplies and advertising of 1.3 million Ksh, representing another $57 per voucher. This figure does not include the administrative cost of the allocation agencies or the time of PCO staff and consultants. These costs could substantially increase the $57 figure, but would likely be biased upward by the small pilot program, since the cost could be spread over a larger number of voucher recipients if the program were brought to scale.
To calculate the value of all resources to society used in the voucher program, the foregone income of trainees needs to be added to this figure. The mission has no data with which to make this calculation. Further, much of the training was designed to reduce the time away from work and thereby limit the amount of foregone earnings. These figures are therefore an incomplete estimate of the actual social cost of the voucher program. The sum of the average voucher value of US$ 252 and the non-labor administrative cost of US$ 57, totaling US$ 309 per voucher, therefore represents the minimum increase in Jua Kali earnings and the value of other social benefits from the voucher program needed to pay for this investment. Even with generous assumptions about the additional administrative cost and foregone earnings, it remains likely that with a favorable enabling environment, the voucher program would produce a positive social rate of return
The distribution of the voucher cost between beneficiaries and government and the benefits each realizes would lead to even higher private rates of return. The fact that voucher beneficiaries now pay only 10 percent of the voucher cost, but receive all increases in earnings implies a very high private rate of return for beneficiaries in comparison with the expected social rate of return. This in turn suggests that the government subsidy can be reduced as the additional beneficiary earnings from training become evident and beneficiaries become willing to invest more in their training. The government subsidy can be reduced by increasing the percentage of the voucher paid for by beneficiaries, thereby improving the sustainability of the program. The continuation of a government training subsidy in the long term would depend on the value of benefits the government receives from private training decisions. The mission recommends use of this cost-benefit framework in subsequent monitoring and evaluation of the voucher program.
Program Design
The mission is impressed with the PCO’s implementation of the pilot voucher program. The design was adapted where necessary and the PCO intervened at key points to overcome unexpected problems that arose. Whether it was stepping in to bolster a weak allocation agency, adapting voucher pricing formulas to ensure wider beneficiary choice of training, or working under pressure to produce a training directory, the PCO responded admirably to the circumstances. The pilot has produced a number of important lessons for consideration in moving the voucher program to scale. These lessons appear in timely fashion to guide the efforts of private consultants that have recently arrived to carry program implementation further. The PCO monitoring and evaluation consultant has done a good job in identifying many of the lessons. The mission does not plan to review all the consultant’s findings regarding the program design, but will highlight below those it believes most important, while adding others.
Allocation Agencies. The four allocation agencies were allowed to charge 100 Ksh for each beneficiary application form sold to partially offset administrative costs. Concern this might lead to over marketing of the application to unqualified applicants as a money making venture has proven unfounded. The allocation agency selling the most applications, 447, received 44,700 Ksh in revenue for their effort to support the subsequent processing of these applications. For this allocation agency and the others, this revenue is inadequate to cover all administrative cost and the PCO has entered into an implicit if not explicit agreement to consider claims for additional administrative expenses from these agencies. The monitoring and evaluation consultant has recommended the PCO consider a payment of 20 percent of the 10 percent voucher fee collected from beneficiaries. This would be 117,400 Ksh. The mission recommends this issue be settled promptly and supports a formula that links the payment to the number of vouchers handled or revenues collected.
Due to government restrictions on the PCO opening a checking account, allocation agencies were forced to bring cash to Nairobi to the PCO’s offices in Jogoo House for the 10 percent payments made by voucher beneficiaries. This is an unsatisfactory system. It places agents of the allocation agencies at risk in carrying sums of cash. It generates additional administrative cost for the delivery of this cash to the PCO. The system may work as long as vouchers are kept within Nairobi or its immediate surroundings, but it will not work once the program is extended to areas beyond Nairobi. Furthermore, it creates a liability issue for the PCO as to who is liable if the cash is lost en route to Jogoo House. The mission recommends the PCO consult with the Permanent Secretary and the Treasury to find a solution to this problem allowing the PCO to open a checking account into which direct deposits can be made by allocation agencies, whether in Nairobi or outside.
Marketing. The PCO arranged media coverage on a limited scale as the voucher program was developed. Plans to bring aboard a communications consultant to build a marketing campaign were slow to be implemented. Only now is the consultant about to be hired. As a result, there were no program brochures for allocation agencies to hand out to prospective beneficiaries explaining the program. There was no media strategy in the beginning to counter unfavorable rumors regarding the program. The PCO conducted briefing sessions for training providers and allocation agencies, but marketing was left largely to word of mouth. Even now, the favorable results of the pilot program are not being communicated to the public. An opportunity is being lost to build a positive public relations environment around the voucher program that would reduce the cost and improve the effectiveness of future marketing efforts. The mission recommends this task be undertaken immediately by the communications consultant and a marketing program implemented.
Application Forms. The mission heard complaints from stakeholders on the length and complexity of the beneficiary application form. There were complaints in general about the number of forms to be filled in and records kept for the program. The mission is aware of the need to collect information that can help the program target vouchers to those Jua Kali members in enterprises with the most potential to grow. As part of future monitoring and evaluation activities, the mission recommends the study of effective targeting indicators to ensure training reaches enterprises with growth potential. Meanwhile, it encourages a careful review of the application form with the goal of reducing its complexity. During the first round of applications, few applicants were aware of how their answers might affect their eligibility for vouchers. Thus, verification of applicant responses was not considered an issue. However, in future cycles verification will become more important. The mission recommends adding a statement to the conclusion of the application which the applicant would sign stating the applicant verifies all information is accurate subject to forfeiture of the voucher if determined otherwise.
The Directory of Training Providers. The directory of training providers is intended to provide beneficiaries with market information on training so they can choose the best training for their needs and willingness to pay. The directory also serves a second purpose. Training providers must pre-qualify to be included in the directory. This is to introduce a measure of quality control and eliminate unqualified training providers who may wish to exploit the voucher program. The pre-qualification procedure is meant to establish a minimum threshold of standards and is not intended to restrict market entry. However, the mission is aware that due to time constraints, the pre-qualification procedure was not applied to many mastercraft workers, leading to concerns about poor quality training. The mission recommends a careful review of the pre-qualification procedure for mastercraft workers to ensure the procedure is being correctly applied. In looking ahead, the mission urges examining the development of a two or three-day training of trainers course for this population to strengthen their capacity and provide a screening tool for the directory.
The pilot directory included training opportunities of widely varying cost and level of technology. This made setting a value for vouchers difficult as it often meant combining prices for quite different types of training. The mission has been asked by the PCO about listing training in different cost ranges which would be roughly correlated with levels of technology, because more sophisticated technologies, like the repair of electronic fuel injection systems in automobiles, tend to be more expensive than training in less sophisticated technologies. The proposal called for the publication of as many as three directories with each directory focused on training within a given price range, e.g. 1,000 to 17,000 Ksh; 17,001 to 50,000 Ksh; 50,001 to 100,000 Ksh . The mission believes this is worth testing in conjunction with the offering of vouchers for different values and levels of cost sharing as described below, particularly if trying to target training to small, more sophisticated Jua Kali enterprises with 11 to 50 employees. The mission also supports the sale of advertising in directories to reduce their cost.
Valuation of the Voucher. Plans to set voucher values at the 20th percentile of the distribution of prices offered by providers for specific trades or skill groupings were intended to ensure an adequate set of training provider choices for beneficiaries, while controlling program costs, giving beneficiaries a chance to choose more expensive training by topping-up the voucher, and encouraging price competition among providers. The result, however, if strictly adhered to, would have directed training almost exclusively to master craftworkers who were low cost (and sometimes low quality) providers. The mission agrees with the PCO’s decision to modify the pricing formula to shift to an average of the distribution of prices, which was shown to open more opportunities for institutional training alongside mastercraft workers, while preserving the other benefits of the valuation scheme.
The mission also observes considerable variation in hours and content of training offered in the trade groups, and encourages the PCO to introduce more information about these details in the directory to inform the choices of beneficiaries. It discourages the recommendation of the monitoring and evaluation consultant to force standardization of features such as hours and prices, and instead, supports resolving this issue with information and market competition, letting beneficiaries choose what they believe to be the best training value for their purchasing power. The mission is also aware of the problem posed by training providers whose cost is lower than the value of the voucher. The mission encourages looking for administratively effective ways to ensure the beneficiary is charged 10 percent of the actual training cost and not the higher value of the voucher.
In light of the proposal above for multiple directories targeted to different ranges of training cost and technology, the mission recommends consideration of vouchers that provide access to training within each range, but with a higher level of cost sharing than 10 percent. Beneficiaries of vouchers for more expensive training could be asked to pay in step fashion up to 50 percent of the voucher value. Small, growth-oriented enterprises with 11 to 50 employees and more sophisticated technologies may have little use for the low value vouchers offered by the pilot voucher program. As observed, most voucher beneficiaries came from micro enterprises with five or fewer employees using hand tool technology. Providing vouchers for the cost of more sophisticated technologies would open a new market for training, one with considerable potential for job creation and earnings growth, plus a greater capacity and willingness to pay. Retaining the lower valued voucher of the pilot program with its larger subsidy would serve equity interests.
Voucher Redemption. More than a month after completion of the training, providers have not been paid for their services. The mission found this to be a sore point in the case of all training providers visited. It is important because it is dampening enthusiasm for participation in the program. The credibility of the voucher program demands that vouchers be redeemed promptly on their submission with appropriate documentation. The mission recommends a target date for issuance of a check two weeks from the date a properly submitted voucher form is received by the PCO. The mission is pleased to learn that this problem has been addressed by the PCO and that the first group of checks will be issued within the week, and the second and final group of checks will be issued a week later. The problem appeared through an oversight in planning by the PCO and steps should be taken in the future to ensure a system is in place for the prompt redemption of vouchers.
Environmental Constraints
Training may not achieve its objectives for increased productivity and earnings for participants where the enabling environment is unfavorable and limits the opportunities for application of the training to productive activities. The example mentioned earlier of a group of young voucher beneficiaries who felt the lack of money and access to tools limited their capacity to move from the status of a wage employee to that of self-employed entrepreneurs illustrates this point. The solution in this case could be as simple as the trainees beginning a savings program or looking to family and friends for assistance. Both are time honored solutions to the capital constraints felt by small businesses. It could also include financial reforms that encourage financial institutions to expand services to micro and small enterprises. The latter would promote a more favorable enabling environment.
The mission examined credit and other possible environmental constraints to the development of micro and small enterprises and realization of the economic benefits of training, including the legal environment surrounding operation of the Jua Kali sector. The findings are contained in Annex B. Insofar as the legal environment is concerned, laws themselves are not the most important constraint facing the Jua Kali, except perhaps for those without secure worksites who are subject to displacement at any time by local or central authorities. Access to land is a key to avoiding hassles from the authorities. Rationalizing licensing fees is also found to be important as is decentralizing the process of legal registration of business names. Access to credit is considered an important constraint, although Kenya is a leader in Africa in providing relatively efficient and sustainable financial services to micro entrepreneurs. Fast growing small enterprises are most likely to face credit constraints.
The cost to individuals of information about training may itself distort market demand for skills development and the efficient use of newly acquired skills. Public interventions to provide this information through cost-effective means can create a more favorable enabling environment for realizing the benefits of skills training. An example is information on the quality of training that would improve the decisions made by voucher holders in choosing training providers and those who would employee trained workers. The mission has recommended improvements in the directory of training providers to make more information on quality available. Unlike formal sector occupational standards, there are few standards defined for skills in the Jua Kali sector which limits testing and certification of those trained. The MSETTP includes a component for expanding the number of standards and trades tests for the Jua Kali sector. The mission continues to see this as an important part of the enabling environment for training.
Next Steps
The pilot voucher program is now complete and a decision on mainstreaming the program must be made. The evidence gathered by the mission on achievement of the program’s development objectives is positive. We have found evidence of the program’s positive impact on productivity and earnings in the Jua Kali sector at a favorable cost. Women have participated in significant numbers, although their entry into non-traditional trades has been limited. We have seen an important shift in the supply side of the training market to respond to Jua Kali needs. Most important, we have observed competition between public and private providers of training for the new market created by vouchers with the result being a reduction in the cost of training that will in itself expand access to training in the future. With access to appropriate information, this competition will help sort out remaining questions about the quality of training offered.
The mission has examined what design features have worked well in the pilot and what have not. The mission’s favorable assessment of the program supports its moving to scale. However, we have reason for concern that discourages the immediate mainstreaming of the program. The pilot voucher program in Nairobi and Machakos has operated in an incubator environment with the PCO following closely each step in the program. It has been a labor intensive process by design. The program has been highly centralized to ensure control during the pilot and the appropriate management structures and personnel are not in place to support a more geographically dispersed system. The pilot did not require developing and testing a field organization where many of the functions performed by the small PCO team would be decentralized.
Some examples of these functions include development of localized directories of training providers that will be required in numerous locations at once. The PCO struggled to meet the deadline for producing one directory in the pilot. Localized sources of program information are going to be needed for marketing as are managers for responding to issues raised by widely distributed allocation agencies. The PCO took responsibility for conducting all briefings of allocation agencies and training providers in Nairobi and Machakos. In a larger system, it will need a field staff to do this and to manage the activities of allocation agencies. Personnel from Directorates of the Ministry of Research, Technical Training and Technology were not fully engaged in the pilot. The PCO has discussed using the Ministry’s provincial and district applied technology officers as field staff in a mainstreamed voucher program, but there have been no institutional arrangements made for this or capacity building undertaken.
A field organizational structure has not been defined. In one sense, this has not been the immediate responsibility of the small PCO team. Instead, this will be the responsibility of the training fund and the organization and staff development contractors who only assumed their duties January 1997. While the lessons provided by the pilot voucher program are valuable to the program’s expansion, there remains a need for developing and testing a field organization for managing the program, and most importantly, building the capacity of staff in this operation, which includes strengthening Jua Kali Associations and NGOs in their roles as allocation agencies. For these reasons, the mission recommends an interim step before mainstreaming by calling for a phase two pilot. The phase two pilot should repeat the voucher program in Nairobi and Machakos and expand beyond five the number of trades or skills eligible for vouchers. The scale of the program can also be increased beyond the 600 vouchers authorized for the pilot.
In addition, the PCO should select two to three new sites some distance from Nairobi where a field organization can be developed and tested. The mission recommends consideration of Kisumu and Mombasa where capacity constraints for allocation agencies will not be a factor. A third site away from these areas can be added. This task now belongs to the three private contractors -- training fund, monitoring and evaluation, and organization and staff development -- to carry out under the supervision of the PCO. Along with this task, steps should now be taken to implement the revolving training fund for building capacity on the supply side of the training market as a project component. Overall, the mission is pleased with developments under the pilot voucher program. We emphasize the importance of continued monitoring and evaluation of all training activities. The process evaluation conducted during the pilot should now be joined with impact evaluation to confirm in a more rigorous manner the program effectiveness in achieving its goals.
Alongside this activity, the mission recommends attention to development of appropriate targeting indicators for selecting voucher recipients whose training would expand employment and possibly export growth. The mission has recommended development and testing of vouchers that would cover the more expensive training for higher level technologies often used by small enterprises with more than 10 workers. These vouchers should demand additional cost sharing up to 50 percent. The mission recommends continuing the current voucher program with its beneficiary cost sharing of 10 percent for training that does not exceed 17,000 Ksh. This serves the needs of small Jua Kali enterprises using less sophisticated technologies. The mission also urges implementation of the project component extending the number of trades tests for the Jua Kali sector. Finally, the mission encourages the PCO and the private contractors to focus on better integration of MSETTP activities with those of the Ministry of Research, Technical Training and Technology to lay the foundation for an exit strategy and a sustainable future for the MSETTP |
