ICT Integration in Business Cluster Development in Ethiopia- CTA project I. Background of the project
General In Ethiopia  12.5 million  6.5 million and 2.5 million farmers are involved in the production of respectively cereals  pulses and oilseeds. In those sectors  the 128 multipurpose  grain unions  and their estimated 7195-member cooperatives have limited involvement in output marketing and concentrate on input marketing and the selling of agricultural consumer products (2012 data). Even if these unions and their member cooperatives are engaged in output marketing  their track record is much to be desired with losses regularly occurring. In the agricultural component of the Growth and transformation Plan II  the accelerated growth in agricultural productivity continues to be an important area of focus  a gradual shift in emphasis towards high-value crops and livestock production with an enhanced focus on market access. Necessary supports is given the in supply and utilization of inputs  in agricultural extension  in strengthening cooperatives  in enhancing agricultural investments. Clear development directions will be set out for cooperatives through creating a conducive environment to become main actors of the agricultural marketing system. Here  ICT based solutions will be instrumental which includes the continuation of the IVR/SMS services  Ethiosys soil database  the roll out of the threshold warning system and the e-voucher systems. On top of this the BMGF is supporting de development of a national extension platform. 
  
Most of challenges at the level of the unions and their member cooperatives are more likely to be addressed if all critical actors  as unions and their member cooperatives  buyers  private and public input and service providers  research  and public regulation and enforcement  are working strongly together as a multi-actor system or cluster. These clusters can effectively support the business arrangements and make use of the profitable business opportunities. 
  
The Cooperatives for Change (C4C) project Following this approach  the project "Cooperatives for Change (C4C): Value Chain Approach for Cooperative Development in Ethiopia"  SNV and Agriterra in collaboration with the Federal and Regional Cooperative Agencies supported 16 business clusters with 16 Unions  160 PCs and 44 000 farmers. It enhanced the internal capitalization of 6 unions raising over US$ 2 million from their own members. They benefited from increased output marketing in C4C selected crops over the 4-year project with an additional value of $ 6.3 million. 
  
To increase further the internal capitalization  output marketing and service delivery  a well-functioning management information system of the clusters with in particular the unions will be critical. Under the right conditions  ICT supported solutions for the overall operational management and service delivery can be highly beneficial and scalable. The latter include the link to the publicly funded national advisory services and make investments in inputs and services more resilient to climate change. 
  
The SNV-Agriterra C4C consortium has tested at a very limited scale and scope an ICT based management information system. This innovative MIS  powered by an ICT registered platform developed by Kifiya PLC  was piloted at Tsehay Union. The initial business case was based on the following initial revenue drivers: • Improving communication and building trust in the system between the farmers  cooperatives and unions  but also with the relationships with banks and buyers; Project Nr 1-1-39-102-9 - Contract Nr 2019-175 Page 15 of 34 6°V

These shows that even with the weak ICT infrastructure in Ethiopia  several ICT solutions are present  but that the business case development most likely need some level of sequencing to achieve short break-even periods  making similar investments more likely and actual scaling can take place without or with limited external support.
This project will build on the earlier C4C experience  innovate further with ICT solutions for operational management at a limited scale  and consequently scale these innovations  by considering the present level of output marketing  market drivers and the internal capacities. The operational management system will potentially include:
  
Operational/inventory management tool for PC/union  both inputs and outputs.
  Sales projections and working capital needs.
  Pricing / market trend information.
  Provision of financial services  advisory services and inputs to farmers.
  Farmer record keeping (profiling) as traceability/quality assurance tool.
  Linkages with existing systems including the publicly funded extension and weather forecasting.
  Potentially areal mapping (if feasible and has business sense).
  
Other uses have a more limited potential for now  but developments in Ethiopia are moving fast and it will be not far at the horizon: these are the additional data (big data) use including best practice  satellites  drones for surveying  pricing/market intelligence and ICT supported soil testing and advisory services.
  
The idea is to test ICT supported solutions in operational management and service delivery of unions and cooperatives within a business cluster already supported by Agriterra as a co-funded partnership between CTA and Agriterra. An Ethiopian ICT firm will be recruited to develop the ICT-supported solution  which will be translated into an agreed business case by a business advisor before implementation. The project is expected to contribute to the following outcomes:
Enhanced trust/transparency in the relationships between cluster partners;An increased use by cooperative members of financial services  advisory services  and inputs;Sales increased of member farmers via coop system;Output marketing increased via cooperative system;More efficient value chain operations with a reduced transaction cost and increased profitability with a break-even period of the investment of less than 3 years (not measurable during the project period);
An increased production and productivity of members of the cooperatives (impact not expected in project period).The Incremental nature of ICT supported MIS based on a profitable business case and short break-even periods of the investments;The private sector institutions within the business cluster  who will keep the union and cooperatives business focussed;The enhanced trust within the cluster and the potential (joint) investments in services;The continuing capacity strengthening support by Agriterra. In the upgrading of existing business cluster of cooperatives  unions  private companies and different service providers benefiting 10 000 small farmers as members of cooperatives  there is a need for improved systems and a business case for better operational management.
The project concept builds on best practices in market development integrating three types of project interventions: (1) mediation/facilitation of the relationships between cluster actors  (2) business case development of innovative ICT supported solutions and (3) capacity development of unions and the member cooperatives.