peace dividend marketplace timor-leste: impact assessment report - lautem

8/7/2019 Peace Dividend Marketplace Timor-Leste: Impact Assessment Report - Lautem

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Peace Dividend Marketplace Timor-Leste Micro Matchmaking Impact

Assessment Report:

Lautem

A Report By:Peace DividendTrust

Scott McCordDili, Timor-Leste

[email protected] 2011


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Peace Dividend Trust 2011 ii

Table of Contents

Table of Contents and Acknowledgement: ...................................................................................... i

Executive Summary ....................................................................................................................... iii

1. Introduction ................................................................................................................................. 12. Micro Matchmaking Impact Assessment Overview ................................................................... 1

3. Micro Matchmaking .................................................................................................................... 2

4. The Results .................................................................................................................................. 3

4.1 Baucau District Overview ..................................................................................................... 4

4.2 Timeline of Matches Closed over $1,000 ............................................................................. 4

4.3 FiveRepresented Sectors ....................................................................................................... 5

4.4 Employment Landscape Prior to Matchmaking Involvement ............................................... 6

4.5 Jobs Created .......................................................................................................................... 7

4.6 Jobs Matched ........................................................................................................................ 9

4.7 Tracking Income Derived from Matchmaking ..................................................................... 9

4.8 A Story from the Field ........................................................................................................ 11

5. Conclusion ................................................................................................................................. 11

Acknowledgement

The Peace Dividend Marketplace Timor-Leste project is supported with generous contributionsfrom the Arsenault Family Foundation, AusAid, the Canadian Fund for Local Initiatives, and Eni.

Micro matchmaking in Lautem was made possible with support from AusAid and Eni.


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Peace Dividend Trust 2011 iii

Executive Summary

Peace Dividend Trust (PDT) is a unique non-profit organization, dedicated to making peace andhumanitarian operations more effective and equitable so that they deliver cheaper, faster, smartermissions resulting in a stronger peace and a larger peace dividend. The Peace DividendMarketplace projects, designed to facilitate local procurement and increase market awareness, are

instrumental tools in achieving these objectives. PDT currently has marketplace projects in threecountries across the globe: Afghanistan, Haiti and Timor-Leste.

This report presents the findings of the Peace Dividend Marketplace Timor-Leste (PDM-TL)impact assessment survey on micro matchmaking activities in the district of Lautem. Data wascollected for matches closed over $1,000 and analyzed as to the impact on job creation and thelocal private sector (all monetary values are reported in US dollars). A total of 114 separatetransactions were analyzed, which were valued at a total of $251,885. These transactions rangeacross a total of five sectors. The three sectors with the highest dollar values are: PrimaryIndustry (Including Agriculture and Fisheries), Real Estate and Insurance, and Construction andHeavy Equipment.

Key Findings of Lautem Impact Assessment Study

Total Number of Jobs Created 94

Male 91 Female 3

Permanent 18 Temporary 76

Skilled 48 Unskilled 46

Number of Individuals Matched to a Job

Opportunity

84

Number of Instances Funds Generated through Matchmaking were Spent on:Education 48

Equipment 25

New Business Ventures 16

Personal Needs / Wants 166

Sectors with the Highest Value Transactions Total Value

Primary Industry (Including Agriculture andFisheries)

$211,160

Real Estate and Insurance $25,560

Construction and Heavy Equipment $11,085

The report provides the context and methodology used for data gathering. The results indicatethat the PDM-TL project has promoted private sector development, created jobs, and stimulatedthe economy at the district level and across the country.

The micro matchmaking impact assessment report series will conclude with an aggregate reportwith analysis of PDM-TL results across the 9 districts where PDT has provided micromatchmaking. Coinciding with this series will be an impact assessment study and report on theTender Distribution Service (TDS). TDS works with larger businesses that typically win largervalue contracts and operates primarily in Dili, Timor-Lestes capital.


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Peace Dividend Trust 2011 1

1. Introduction

According to a World Bank report published in 2007, Timor-Lestes formal economy created 400 jobs per year for approximately 20,000 school leavers.1 Two years later the countrys youth

unemployment rate (ages 15-29), particularly in the district centers, is cripplingly high. Timor-Leste currently has an estimated unemployment rate of above 20% in rural areas, with theunemployment rate as high as 43% in urban centers.2 Without specific programs targeted todevelop the private sector and create jobs, economic stagnation will continue to be a seriousproblem for the countrys well being.

The work accomplished by Peace Dividend Trust (PDT) through its marketplace project isaligned to address the disparity between the number of job seekers and the number of jobsavailable. Peace Dividend Marketplace Timor-Leste (PDM-TL) is underpinned by the philosophythat helping businesses win business helps establish a sustainable private sector. With asustainable private sector providing lasting job opportunities, progress towards a secure andenduring peace can be solidified.

2. Micro Matchmaking Impact Assessment Overview

For over two years, Peace Dividend Trust has provided matchmaking services to microbusinesses in Timor-Leste, through its Peace Dividend Marketplace project. This service isintended to fill the informational gap between those seeking to buy and those seeking to sellgoods and services and, by enhancing the flow of information between buyers and sellers, tocreate opportunities for private sector growth and job creation.

Historically PDT has monitored the success of the program by tracking the total dollar value ofeach transaction facilitated, as well as the total number of transactions. While this offers a useful

depiction of the monetary value provided by the service to Timorese businesses, it is by no meansa comprehensive measure of the services overall impact on the local economy. This is one ofseveral reports that will broaden PDTs impact assessment by probing deeper into the benefits ofmicro matchmaking on the business communities where it operates. For the purposes of thisreport, micro matchmaking refers to all non Dili based matchmaking activities, or the linking of abuyer to a supplier which facilitates a transaction where money is exchanged for goods orservices. This report on Lautem is one sample of the impact the program has had at the districtlevel. PDT has already published a report on the impact of matchmaking activities in Baucau3 andwill publish an aggregate report that synthesizes information from all nine micro matchmakingdistricts.

Drawing on a tested survey used by the Peace Dividend Marketplace Afghanistan project to

measure job creation in Helmand province, Peace Dividend Marketplace Timor-Leste (PDM-TL)developed a survey to assess the impact of its micro matchmaking program on job creation andprivate sector growth. Appropriate modifications from the Afghanistan survey were made to

1The World Bank Group and the Asian Development Bank, in consultation with Development Partners,Economic and

Social Development Brief, August 2007, page 3.2Secretaria de Estado da FormaoProfissional e Emprego (SEFOPE), Timor-Leste National Youth Employment ActionPlan (NYEAP) 2009, 2009, page 4.3 See http://www.peacedividendtrust.org/en/Baucau_Impact_Report.html


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adapt to micro level businesses as well as other conditions specific to Timor-Lestes economicenvironment.

A survey of this kind faces several challenges. First, due to the amount of time that has passedbetween the completion of a match and the survey interview dates, the information gatheredreflects what the interviewee could remember at present, which may have changed slightly from

the past results. Second, the countrys lack of infrastructure (namely poor road conditions andlimited telecommunication reach) has made it difficult for surveyors to relocate and make contactwith suppliers living outside the district hubs.

Third, many of the suppliers involved in these matches are individual entrepreneurs, notnecessarily registered businesses, who have since changed their residence or phone numbers (anumber of individuals, particularly in the rural regions, had no phones to begin with). As such,the PDT surveyors were unable to track down a portion of the intended interviewees and severaltransactions that were initially targeted to be analyzed could not be evaluated. The success ratesof interviews vary from district to district. In Lautem, where most suppliers were spread acrossthe district, surveyors received feedback from 64% of the matches. Despite the challenges, theinformation offers valuable insight into the impact of the business matchmaking program in

Timor-Leste, if viewed as a sample of the overall data.

The data provides largely unprecedented information outlining the types of business opportunitiesthat exist at the district level. The report looks past the monetary value of each match bydescribing what type of matches were most prevalent, how many jobs have been matched orcreated, and how the money earned from each match has been spent.

3. Micro Matchmaking

Peace Dividend Marketplace Timor-Leste began its micro matchmaking program in 2008 afterwitnessing high demand for a service that would connect local supply to demand from

international actors working in Timor-Leste. Navigating the local marketplace in the countrysrural districts can leave international institutions and individuals frustrated by the lack of up-to-date market information and the idiosyncrasies of each areas marketplace. The matchmakingservice is the missing link between district suppliers and potential buyers. The matchmakersfamiliarity with the local market and understanding of both parties needs greatly facilitates localpurchasing in the districts. Local purchasing in turn generates several benefits for the districteconomy.

The service has evolved since its inception as the needs and types of business transactions havechanged. One noticeable difference is that the matchmaking program now includes nationalbuyers, rather than just international institutions or personnel, in its list of clients. The 2006 crisishad a devastating effect on the country, essentially destroying longstanding networks across

Timor-Leste. By connecting, or at times reconnecting, national buyers and national suppliers, thematchmaking program is strengthening sustainable business relationships within Timor-Leste. InLautem in particular, a high number of transactions in Primary Industry (Including Agricultureand Fisheries) occurred with national buyers. Recently, in the border districts a special focus hasbeen placed on cross border trade with the countrys largest trading partner, Indonesia.

Since its creation in 2008, the rural matchmaking program has directed just under $8 million tolocally owned businesses (all monetary values are reported in US dollars). Over 12,800 uniquebusiness transactions have been facilitated to achieve this sum across 9 districts: Ainaro, Baucau,


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Bobonaro, Covalima, Lautem, Manatuto, Manufahi, Oecusse and Viqueque. Unfortunately, dueto funding constraints, PDM-TL suspended its matchmaking services in the districts of Baucauand Manatuto at the end of September 2010. Services in Ainaro, Manufahi and Lautem weresuspended earlier in 2010. Unless further funding is secured, all matchmaking activities in thedistricts will be closed down at the end of March 2011.

4. The Results

All data was gathered from matches closed over $1,000, as the PDM-TL team deemed this anappropriate sum to expect tangible, measurable results.

The reports focus on the effects of the PDM-TL project on employment, as job creation is one ofPDTs key objectives. As mentioned in the introduction, Timor-Lestes employment rate isestimated to be above 20% in rural areas, reaching as high as 43% in urban centers.4

In this report, employment created through PDM-TL facilitation is measured in two ways: 1) Jobscreated and 2) Jobs matched. The first reflects an instance in which a transaction has required, or

allowed, a business owner to hire additional labor, hence creating a job that did not exist before.The second reflects an instance in which a project or an employer was seeking labor and thematchmaker found a suitable candidate(s) to fill the position, hence matching a job seeker with ajob.

The report differentiates laborers in three ways. The first differentiation is by gender. The secondmakes a distinction between skilled and unskilled workers. For the purposes of the survey, skilledworkers represent all laborers who had received education at, or above, the secondary level or hadreceived job-specific training. Unskilled workers represent all workers who had not completedsecondary education or received specialized training. The third differentiation breaks down theduration of each labor contract to permanent and temporary. Permanent workers are expected tostay at the job for over 6 months, while temporary workers are expected to complete their

contract prior or at the 6-month mark.

Although this impact assessment report focuses on the largest transactions, it is important to notethat the regions in which they take place are still relatively less developed compared to thecountrys capital, Dili. According to the International Labor Organization, around 70% of thepopulation of TimorLeste lives in the rural areas where the incidence of poverty is high ascompared to that in the urban centers. As a result, almost 90% of the poor are in rural areas andpoverty has become primarily a rural phenomenon.5 When reviewing this information, it isimportant to remember that every job matters and even small dollar amounts can go along wayinto alleviating poverty and generating business.

4Secretaria de Estado da FormaoProfissional e Emprego (SEFOPE), Timor-Leste National Youth Employment ActionPlan (NYEAP) 2009, 2009, page 4.5International Labour Organization, Timor-Leste: Decent Work Country Programme 2008-2013, June 2009, page 5.


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Apart from the high number of cattle matched, the districts results are typical of matchmaking indistricts across the country. The construction and real estate sectors provided opportunities tocompanies and landowners to increase profits and expand their businesses. Entrepreneurs rentingcars to an International Labor Organization (ILO) project accounted for the high valuedAutomotive sector.

Sector BreakdownSector Number of Matches Value of Matches

Primary Industry (Including Agricultureand Fisheries)

101 $211,160

Real Estate and Insurance 5 $25,560

Construction and Heavy Equipment 4 $11,085

Automotive 3 $2,880

Heavy Machinery/Equipment, Generators,A/C and Solar Panels

1 $1,200

The spread of sectors for all matches, regardless of the value, follows the spread of sectors formatches over $1,000 that were assessed for this report. Primary Industry (Including Agricultureand Fisheries), with a total of 236 matches, accounts for $381,469 of all matchmakingtransactions in Lautem. Construction and Heavy Equipment follows in value with $159,400 worthof transactions, but leads with the most transactions facilitated at 270 transactions. Real Estateand Insurance was the third highest grossing sector, with $29,150 facilitated derived from 10matches. Sixteen out of 26 other sectors were represented in the total spread of Lautemmatchmaking data.

4.4 Employment Landscape Prior to Matchmaking Involvement

Prior to the matchmaking transactions, the aggregate number of unique jobs among PDM-TLsupplier clients, including business owners, was 176. This means that of all the businesses inLautem for which PDM-TL facilitated matches over $1,000, there were 176 people employed oractive leading up to the matchmakers intervention. Of these 176 persons, 90% were male (159)and 10% were female (17), and 17% of persons were classified as skilled labor (30) while 83%were classified as unskilled labor (146).


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4.8 A Story from the Field

Cattle owners often cite several difficulties when trying to buy and sell their product. The mostcommon of these can be divided into two categories: transportation and access to marketinformation. The first can be difficult to arrange, as road conditions, proper vehicles (most cowsare loaded into the back of dump trucks), and weather can be significant obstacles. The other

issue, lack of market information, is what the PDM-TL matchmaking service aimed to address.

The Lautem matchmaking team found several entrepreneurs who were willing to brave theseobstacles and purchase cattle in large quantities. For Antonio da Costa Bareto from Lautem town,the cattle trade has been a significant source of profit. In total, Mr. Bareto has bought over$270,000 worth of cattle in the two years of the projects operation, receiving matchmakersassistance with over 100 matches. After completing a transaction, Mr. Bareto organizes for thecattle to be transported and sold in Dili.

With revenue generated from his success in the cattle industry, Mr. Bareto opened a smallbusiness in August 2009 named Atis that manufactures concrete blocks. As the constructionindustry in Lautem grows, his business expands. He currently lives in Lautem and is still active in

the cattle trade while he manages his new business.

5. Conclusion

The findings of this study provide a closer look at the impact of PDM-TLs micro matchmakingservice. The district of Lautem, as shown through the data collected in 191 separate interviews,has experienced job creation as well as investment in education and short and long term capital.

The micro matchmaking program remains one of Peace Dividend Marketplaces most valuablecontributions to building the local economy. One of the reasons for its success is that itconcentrates on micro businesses, where even the smallest of matches can make a significant

difference, especially when the majority of people living in the districts survive on less than adollar a day.

peace dividend marketplace timor-leste: impact assessment report - lautem

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