PART TWO
CHAPTER 20. SELECTING INDICATORS

Chapter 20 consists of three parts:

1. background information on the Malawi Small Enterprise Development Programme (SEDP), the initiative used to illustrate the process of selecting indicators for monitoring and evaluating a programme;

2. questions to guide the development of indicators; and

3. a list of possible indicators for monitoring and evaluating the Malawi SEDP.

BACKGROUND INFORMATION ON THE MALAWI SEDP
Context of the Programme

Malawi is one of the poorest countries in sub-Saharan Africa. It completed a peaceful transition from almost 30 years of a single-party system to a multi-party democracy. The Government is committed to an economic stabilization process and the alleviation of poverty; however, the primarily agricultural economy remains vulnerable. The agricultural sector is having difficulty generating sufficient income and employment for new entrants into the labour force, many of whom will have to find a livelihood outside the formal sector, i.e., in the informal sector.

The Government is committed to the development of the small-scale and micro enterprise (SME) sector as a core element of its strategy to support economic growth, employment and poverty alleviation.17 It aims to eliminate the constraints to attaining this goal, namely, inadequate policy environment, lack of entrepreneurial and technical skills and poor access to credit, technology and markets.

It was within this context that the need for a small enterprise development programme was identified during the formulation of the Malawi fifth country programme.

Programme Design

SEDP was designed to address the constraints specific to SME development. It consists of five components:

Component I Policy, Promotion and Coordination

Component II Entrepreneurial Development and Skills Training

Component III Credit

Component IV Dissemination of Appropriate Technology

Component V Marketing.

The programme is targeted primarily at existing and potential small-scale and micro entrepreneurs in six local impact areas. The areas were selected on the basis of their low human development index (HDI) ranking. The Ministry of Commerce and Industry (MCI) is the government executing agency, with ILO, UNIDO and the United Nations Office for Project Services (UNOPS) as the main implementing agencies. Other participating institutions come from the Government and the NGO and private sectors.

Reporting takes place through the tripartite meetings, which have been relatively infrequent. The programme was evaluated by a joint evaluation mission in October 1995, which recommended, for example, programme-wide reporting that includes the use of indicators for monitoring and evaluation.

BASIC QUESTIONS TO GUIDE THE DEVELOPMENT OF THE INDICATORS FOR MONITORING AND EVALUATING SEDP

What are the objectives of the programme at various levels?

Who are the target groups and direct beneficiaries of the programme and what are their needs and expectations?

TO WHAT EXTENT AND HOW EFFICIENTLY IS THE PROGRAMME ACHIEVING ITS OBJECTIVES?

Effectiveness
What are the outputs to be produced?

Component I:	policy statement on SME development; database on informal sector activities; one-stop
	processing centre in the MCI to provide information to small-scale and micro entrepreneurs;
Component II:	training and advisory services in business management and technical skills; organization
	of small-scale and micro entrepreneurs into groups
Component III:	savings and credit groups formed and linked to commercial banks; guarantee fund
	established; credit to small-scale and micro entrepreneurs;
Component IV:	focal point for appropriate technology established and operational; appropriate
	technology antennae established in each local impact area to disseminate appropriate
	technology information to target groups; target groups trained in the manufacture,
	repair and maintenance of appropriate technology products;
Component V:	marketing focal point established and operational; business groups organized and
	trained; Government Preferential Purchasing Programme (GPPP) established;
	subcontracts with medium-size and large enterprises; marketing services provided.

What is the contribution of the outputs to component, programme and national objectives and UNDP thematic priorities?

Efficiency
How well are work processes (e.g., provision of inputs) carried out to produce expected results?

WHAT ARE THE CRITERIA FOR JUDGING THE PROGRAMME'S SUCCESS?

Impact on target groups, direct beneficiaries, the communities and the SME subsector and contribution to the achievement of national objectives;

Sustainability of the impact;

Contribution to capacity development (self-reliance of small-scale and micro entrepreneurs, enabling environment and organizational structures).

POSSIBLE INDICATORS FOR SEDP
The table below presents some examples of possible indicators of the relevance, performance and success of SEDP and what those indicators show. Through a negotiation process, the main stakeholders of SEDP must select indicators that they consider to be the most important and that will not require complicated and costly data collection. Once the indicators have been selected, time-series data must be constructed (see chapter 12).

	Possible Indicators	What the Indicators Show
Relevance	Human development index (HDI) of each local impact area covered by SEDP*, by gender	Profile of target groups
Performance	Number of jobs created by SEDP	Contribution to the objective of increasing employment Impact on the SME subsector and contribution to the achievement of the national objective
	SEDP cost per job created	Efficiency Cost-effectiveness (when compared with similar programmes and/or alternative strategies)
	Increase (%) in amount of credit extended to small-scale and medium-size entrepreneurs, by gender	Production of a target output: increased access to credit
Success	Increase (%) in people’s income from jobs created by SEDP, by gender	Contribution to the objective of alleviating poverty Impact on target groups
	Increase (%) in SMEs that have been viable/profitable for two years or more	Sustainability, self-reliance
	Integration of the Programme Management Support Unit into MCI as focal point for policy coordination on SME development	Contribution to capacity development: organizational structures Impact on direct beneficiaries

*The HDI was used in selecting the local impact areas covered by SEDP.

17This is reflected in the "Statement of Development Policies: 1987-1996" (DEVPOL) and in the "Policy Framework

Paper", 1991.