Global Grassroots Entrepreneur Trading Network Workshop, The World Bank, Washington, DC USA

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Magnus Bradley
6 years ago
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1 Aid to Artisans Founded in 1976, Aid to Artisans (ATA) is a US-based non-profit organization that creates economic opportunities for artisans and supports community-based economic growth through craft enterprise development. Working in partnership with local producers, suppliers, exporters, and NGOs, ATA provides technical assistance in product development, training and marketing to help artisans strengthen their craft businesses and enter the global marketplace. ATA positions itself as a fulcrum for artisan commerce. On one side of the bar are artisans in need of increased sales and strengthened businesses to improve household income, selfdetermination, self-sufficiency, and cultural continuity in the face of the homogenizing tendencies of globalization. On the other side are the consumer markets of the United States and Europe, with ever more competitive pressure to tighten costs and delivery cycles, and to enhance customer service. ATA s role is at once to help artisans meet the demands of the market, and also to introduce the market to the ways in which artisans can help address market constraints. Between , ATA managed 19 grants and contracts from funders like USAID, IDB, DFID, corporations, foundations, and foreign governments, to implement craft development projects around the world. ATA s budget for FY02 is $4.5 million, up from $4.2 million in FY01. In FY01, ATA leveraged more than $5 million FOB (US retail equivalent = $30 million) in sales for artisans, and benefited more than 25,000 artisans around the world. ATA s projects have yielded sustainable results in many countries. Three years after our project in Armenia ended, the income of the women we worked with increased from $5-10/month to $40-50/month. Artisans we worked with in Hungary between are still benefiting from the trade linkages we helped establish. In Ghana, exports have increased from $500,000 to $4 million over eight years, and the local NGO that ATA created has taken over the program and is now contracting ATA for its own project activities. ATA has had successes as well as challenges in connecting artisans at the grassroots level to global markets. In Armenia, ATA collaborated with local partners to strengthen the Armenian Craft Enterprise Center (ACEC) under a USAID grant in In just two years, ATA and ACEC were able to establish market links with wholesale buyers, local markets and the U.S. market, as a result of which sales figures doubled, generating $50,000 in salaries paid to the artisans. By the end of the project, ACEC employed a total of 340 artisans, with 150 artisans employed on a regular basis, 25 on short-term contracts, and 165 additional artisans benefiting from secondary employment. Thirty-eight percent of artisans earned over $30 per month, (the average household cash income at the time was $5 per month, while the average food cost was $25 per month) and 98% of all artisans used income to provide daily sustenance to their families. Three years after our project in Armenia ended, the income of the women we worked with increased from $5-10/month to $40-50/month. Approximately 85% of the artisans working directly with ACEC were women; many of the women were single mothers with two or three children, widows or women whose husbands worked out of the country; some of the women were physically challenged and only worked Aid to Artisans Case Study Page 1 June 26, 2002

2 from their homes. The result of increased orders as described above had a significant impact on the lives of these women, enhancing their financial security and independence. Some women who began as artisans became trainers of other artisans, and graduated to managerial positions. Since the ATA project ended, the knitwear business has continued to flourish, and at this time employs approximately 650 artisans. ACEC (now A&A Sharambeyan Ltd.) attracted private capital investments of $50,000 for further expansions, and since the project ended, they are earning 40% annual growth. The latest figures indicate that craft sales have expanded from near $0 in 1993 to almost $500,000 (FOB) in The United Nations Department of Public Information selected ATA s work with ACEC as one of the best sustainable development programs in Armenia. In Peru, ATA has been working with the Association of Exporters (ADEX) since 1994 with funding from USAID. Selecting an exporters association was a novel approach for ATA, which was accustomed to working directly with artisans at the grassroots level. The appeal of the new approach was the possibility of reaching many more artisans through two dozen or more existing medium-scale exporters, and reaching substantial sales rapidly by working through more experienced businesses rather than with start-ups. Within a year or two, ATA and ADEX had settled into a productive routine of design consultancies to produce market-driven products and extensive marketing efforts in the U.S. The project resulted in some substantial and successful business partnerships: ATA found a major US importer for one ceramics producer and exporter, and the two companies signed a million dollar contract for future business; reverse painted glass products proved to be a tremendous success, and the Pottery Barn chain reported that ATA-designed coasters were their best-selling coasters ever. Several importers made long-term purchasing commitments to these products as part of their permanent collection. In 1994 when ATA launched this program, craft exports from Peru were $12 million a year and declining. By late 2000, ADEX reported sales increases of $18 million (FOB Peru) and the generation of approximately 18,000 jobs, on an ATA budget of less than $2. In ATA s evaluation of the project, artisans reported steady prices, increasing quality of goods, a new sense of the importance of design, and confidence in the future. The strategy of working directly with exporters was not only innovative in ATA s approach to craft enterprise development; it was also the reason for the rapid increase in exports as well as the enhanced scale of outreach achieved through the program. Microenterprises often do not have the experience or the resources to take full responsibility for the process of exporting. Constraints such as limited understanding of government regulations, lack of access to shipping companies, packaging, technology and equipment, geographic isolation, and lack of access to raw materials put emerging enterprises at a disadvantage in ensuring quality control, adequate pricing and on-time delivery of products factors that are crucial for succeeding in international markets. Working through more experienced exporters not only enables them to reduce costs, time, and administrative effort associated with transportation, shipping, and marketing, but also provides them with access to buyers as well as market information. Aid to Artisans Case Study Page 2 June 26, 2002

3 Making the right product one that has a market is a consistent challenge for artisans at the microenterprise level. Exporters can be an important source of design services to artisans, as they generally receive design feedback from their customers; seek trends in the Internet, periodicals, and through limited trade show participation; and develop their own products. Payment for product design is always indirect and embedded in price markups from one player to the next. As long as markups are equitable, ATA sees an important role for exporters who are actively marketing in international markets. In Peru this approach of working through more experienced businesses was the primary factor in the rapid increase of craft export sales. One of the major lessons that ATA learned from the Peru project is that there are two equally important models of working through exporters in the craft sector. The strategy for working with each is different. In the Peru project, ATA found that producer-exporters were willing to (and did) invest in design, marketing, training and equipment. Trader-exporters, who outsourced production, sometimes invested in design, but were resistant to investing in the means of production, primarily because of the perception that competitors would reap the benefits of the investment. Yet, trader-exporters are crucial because they are the market link for microentrepreneurs, particularly in rural areas. Another lesson that ATA learned was that while it is important to work with exporters in order to enhance scale of outreach, it is important to measure more effectively the impact of this type of strategy, especially on microentrepreneurs. In all these examples, ATA has applied a variety of strategies to connect artisan entrepreneurs at the grassroots level to the global marketplace. ATA s overall model has three interdependent components. Market links are successful only when product is market-ready in terms of price, design and color, quality. ATA s market-driven product development and design helps artisans adapt their traditions, skills and resources to create innovative and market-driven products that are appealing, competitively priced and marketable. Because of their limited experience in export markets, artisans at the grassroots level often do not know how to recognize and respond to buyers needs and improve their products. ATA s training in entrepreneurial and organizational development enhances the capacity of artisans to access local, regional and international markets, cultivate and maintain relationships with buyers and key actors in the craft sector, and respond to market trends and expectations in the production and marketing of crafts. Finally, ATA s integrated marketing strategy brings products to the attention of major buyers through an extensive network of import, wholesale, major retail and e-commerce buyers; exhibition space at major trade shows; and market representation in the U.S. and Europe. While this three-pronged strategy is a major factor in terms of what works, there are a number of other internal and external factors that have contributed to the success of ATA projects. Strong craft traditions and skills, as well as a desire to work with us on the part of artisan entrepreneurs lay the foundation for any successful ATA project. In Armenia, we also had a strong entrepreneurial leader who was able not only to strengthen his business and continue our work after our project ended, but also to act as a trainer of trainers in other countries and regions where ATA works. Strong local NGO partners, as well as international NGOs and funding organizations have also been a factor in the success of our projects. Self-directed local artisan groups that were committed to the revival of crafts long before ATA started working with them, made our project in Central Asia all the more successful. A regional approach to craft enterprise development has also been a successful strategy in ATA projects. Our project in Central Asia Aid to Artisans Case Study Page 3 June 26, 2002

4 demonstrated that a regional approach achieves synergies that are not possible under a onecountry project. Regional training workshops that for budgetary or other reasons could not be held in all five countries strengthened the knowledge and skills of local artisans, as well as fostered regional collaboration that enhanced the sustainability of the project beyond the program term. South - South training, (ex: Uzbek paper makers working with Indian technical experts to refine production techniques and processes, Armenian entrepreneurial leaders helping set up a craft project in the Balkans, technical ceramics experts in Peru working with potters in Honduras), has also strengthened regional collaboration and capacity building, enhancing the sustainability of ATA s work. ATA s holistic approach of providing economic and social benefits to artisans in an environmentally sensitive and culturally respectful manner is also an important factor in developing sustainable strategies to bring grassroots entrepreneurs into the global marketplace. By promoting the use of renewable resources, recycled materials, natural dyes, lead-free glazes, efficient kiln technologies and non-toxic processes in craft production, ATA projects encourage income-generating activities in a way that addresses poverty alleviation and environmental protection simultaneously; by increasing employment and income opportunities, as well as entrepreneurial training, we empower marginalized social groups like women in terms of their financial security and independence, and their own entrepreneurial and managerial capacity; by translating craft traditions and skills into income-generating activities, we enable communities to preserve and continue their cultural traditions, improve their standards of living, and send their children to school at the same time; by providing not only technical assistance but also advocacy training in Central Asia (ex: teaching methods of lobbying on issues like tax legislations and export regulations), we enhanced the ability of artisans at the grassroots level to become active players in the economic and political decision-making structures and processes in their countries. Technological developments in this era of globalization present many opportunities for the grassroots entrepreneur. Information and communication technology, for instance, opens up new opportunities to eliminate the digital divide between low-income producers and hi-tech global markets. While exploring opportunities to develop e-commerce for the artisans we work with, ATA has been cautious about pursuing it aggressively, because it has not yet been firmly established as a profitable and sustainable venture. We believe that there is potential for using ICT to catalog products and disseminate information (ex: initiatives like PeopLink s Catgen) in ways that could be more useful for artisans at the grassroots level. We use ICT more as a tool for communication, information sharing, and distant-designing (i.e., transmitting designs to artisans electronically). While we have completed successful projects in many countries around the world, we continue to face diverse internal and external constraints that make scaling up a challenge. The lack of organization among producers and weak export infrastructure (ex: Mozambique), trade policies and restrictions, high prices of products, limited skilled labor pool, and high transportation and shipping costs also present serious obstacles to developing export markets for artisan entrepreneurs. ATA s experience also shows that investment in the artisan sector requires three to five years to realize substantial, lasting gains in the craft sector. Since trade relationships usually take time to develop, ATA s impact is often greater after a project ends. Thus, funding restrictions in terms of money and time sometimes undermine our efforts to scale up. We also Aid to Artisans Case Study Page 4 June 26, 2002

5 have to be aware that we could sometimes raise the expectations of artisans without being able to bring them successfully into the market particularly if their product is not market ready and that this could be more harmful for artisans. One of the biggest challenges that we are faced with in terms of scaling up is that artisan entrepreneurs at the grassroots level often need a significant level of mentoring before they are able to reap the long-term benefits of our projects. Restrictions in funds and timeframes make this level of nurturing of emerging businesses difficult to accomplish. Our experiences in connecting grassroots entrepreneurs to the opportunities of the global marketplace demonstrate that with appropriate technical assistance and resources, we can strengthen the capacity of the poor and disenfranchised to compete in global markets. Aid to Artisans views this opportunity to share our experiences as an important step in expanding the existing knowledge base on the ways in which grassroots entrepreneurs can connect to the global marketplace. Prepared by: Clare Brett Smith President Aid to Artisans 331 Wethersfield Ave. Hartford, CT USA Tel: Fax: atausa@aol.com Internet: Aid to Artisans Case Study Page 5 June 26, 2002

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