REEP

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REEP A Process Model for Developing and
Implementing Collectively owned enterprises in
rural areas
Presented by Zandile Ndaba seda national small
enterprise summit 2005
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Introduction This process model initiative
referenced Empowerment and Equity as its
fundamental drivers to develop an all
encompassing integrated process model that
addresses the many challenges faced by many
community based enterprises. This model has been
labeled the Rural Enterprise Empowerment
Process (REEP) The REEP model provides a
comprehensive reference point to support
facilitators and others in addressing the
complex problem-solving and decision-making
challenges that face project managers and
facilitators . It enables facilitation of the
development of sustainable rural enterprises in a
way that also leads to effective empowerment of
the communities involved.
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• An integrated modelling approach enables a
  facilitator to be an effective change agent by
• Assisting rural communities to choose practical
  solutions to their problems
• Attracting potential investors through the
  promotion of cost-reducing economies of scale,
  and
• Adopting a systematically supported, programmatic
  approach.

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• Benefits of the Model
• Phased/ Structured Approach - It is often
  difficult to clarify which aspects to address in
• what sequence to ensure the smooth development of
  the project from conceptualisation
• through development and implementation to
  operation. This is overcome by providing a
• structured approach that has a hierarchy of
  development phases, activities (tools) and
• evaluation criteria. Each level of the hierarchy
  is linked so as to inform and guide the project
• development throughout.
• Empowerment Focus - Empowerment is a focus
  throughout REEP, thereby aiming to
• ensure that as far as possible a certain degree
  of the skills and capacity required at each

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• Practical Support - Each stage and activity
  within project life cycle requires action and
  decision-making
• before the project can proceed. The model
  provides decision support tools and information
  for each activity
• during each development phase.
• Flexibility The model is considered to be
  flexible at two levels. At a sector level, it
  can be adapted or
• applied to projects that are being developed in
  different sectors such as tourism and small scale
  mining,
• merely by altering the information that may be
  provided at the decision support and information
  level. At a
• project level it provides flexibility with regard
  to specific community, natural resource
  logistics, market, and
• governance issues.
• Monitoring and Evaluation The model includes
  Monitoring and Evaluation criteria for each
  development
• phase and activity. This ensures that activities
  are satisfactorily completed and provides
  guidance as to

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• Development Phases
• The three broad development phases that an
  enterprise/project should pass through are
  defined as
• follows
• Mobilisation (of the community and the business)
• Enterprise development
• Transfer and transformation
• Within each of these phases, a number of
  activities take place and thus a number of
  criteria
• must be met before the project can progress to
  the next phase.

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• Mobilisation
• This comprises two aspects, mobilisation of the
  community and mobilisation of the business
• (strategic and business planning, preparation of
  guidelines for enterprise development and
• signing of Memoranda of Understanding).
• Enterprise Development
• The model provides a step by step guide for
  implementation of the enterprise, highlighting
  key
• stages such as securing all necessary
  authorisations for compliance with all
  legislation,
• establishing the legal entity for the operation
  of the enterprise and securing financial
• resources for implementation including technical
  support, infrastructure and equipment.
• Transfer and Transformation
• The transition and transformation stage provides
  a guide to achieving a transfer of equity and

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• The Role of the Facilitator
• As already indicated there is an important
  emphasis placed on empowerment. This has
• been reflected in key aspects of the model as
  well as by the facilitation approach adopted
• by the facilitator. The facilitator would use
  the guidelines and tools provided as required
• and engage with the model at any phase depending
  on the intervention point with a
• particular project.
• Supporting Tools
• A number of tools are provided to support the
  process. These include
• Entry and Exit Criteria
• Social Plan Development Guidelines
• Business Plan Development Guidelines
• Facilitation Competency Dictionary
• Monitoring and Evaluation Guidelines

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• Supporting Concepts
• In addition to tools, supporting concepts were
  also identified as a reference for facilitators.
• These were recognised as representing some of the
  key dilemmas facing Community based
• enterprises
• Community Resource Optimisation and Benefit
  Distribution
• Engaging an Entrepreneurship Base to Realise
  Resource Potential
• Establishing Effective Partnerships
• Social capital
• Facilitation The Key to Empowerment
• In each of these areas the dilemmas were explored
  and a number of mechanisms were tabled

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MODELLING PROJECT OVERVIEW The three phases of
the project were
The Status Quo Report provided a descriptive
platform from which in-depth analysis was
conducted in the process of establishing
meaningful sector-based lessons learned. The
experience of the researchers in exploring and
documenting the representative CPPP projects was
that it was sometimes difficult to merely
describe aspects of the project without providing
some analytical perspectives. On the whole
however, the Status Quo Report attempted to give
a detailed summary, which served as a critical
reference to the next two phases of the Modelling
Project. It was evident that effective
facilitation played a key role in creating and
supporting sustainable partnerships.
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The second phase of the project was concerned
with analysis at a sector level. This included
the development of an analytical framework, which
was applied as a first step in the development
of practical, sector-based perspectives. The
challenge of the analytical process was to make
sense of the various project experiences in
order to translate lessons learned into sector
level representations. The final phase focused
on synthesis and a model framework for community
based enterprise initiatives. The outcome of
this phase is that of programme level model/s,
strategies and to make recommendations regarding
important tools that could be developed in
support of a community empowerment approach.
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• Mobilisation (of the community and the business)
• Enterprise development
• Transfer and transformation (of capacity and
  equity)
• Parallel with these three phases, and implicit in
  all activities, is the process of empowerment of
  the community partner and/or entrepreneurs.

OVERVIEW OF THE MODEL The three broad development
phases that an enterprise/project should pass
through are defined as follows
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Checklist for the Mobilisation Phase (community
and business)
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Checklist for the Enterprise Development Phase
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Checklist for the Transfer and Transformation
Phase
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• EMPOWERMENT
• Empowerment is an ongoing process that must be
  built in to every aspect and phase of the
• enterprise in order to ensure that there is
  appropriate capacitation of the community partner
  in
• order that they may share equitably in the
  benefits generated through the enterprise. This
• empowerment will need to be realized through a
  range of direct and indirect activities that will
  
• include
• Ongoing mentorship by facilitators
• Active participation of community members in
  planning, decision making and implementation
• The transfer of responsibilities and power
• The preparation and implementation of a social
  plan that addresses empowerment interventions and
  leadership development training being made
  available to community leaders and participants

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• The mobilisation phase incorporates
• A guide to identifying and reviewing the
  enterprise opportunity. For example an
  enterprise for rural
• empowerment could be based on one or more of the
  following opportunities
• Natural resource base opportunity
• Intellectual property or indigenous knowledge
  owned by a community
• A market opportunity
• A resource of community entrepreneurs (individual
  or group)
• The specific key variable in each case will vary
  from project to project or sector to sector.
• In the case of compliance, a guide is provided
  for the steps of community mobilisation and
• assessment of economic viability of the
  enterprise. These steps highlight the important
  facilitation

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• Facilitation of the community in order to
  establish credibility with community, community
  awareness
• of enterprise opportunities, determine resource
  ownership, negotiate enterprise ownership, reach
• agreement on short term benefits and incentives
  for community participation.
• Facilitation for the preparation of terms of
  reference for the feasibility assessment and
  development of the business plan. This
  facilitation activity also requires monitoring of
  the feasibility and planning activities and
  evaluation of the outcomes.
• The outcome of this stage includes
• Preparation of a social plan addressing community
  empowerment, capacity building and skills
  transfer.
• Guidelines and criteria for the implementation of
  the enterprise .
• The transition is made to the next stage if the
  community is effectively mobilised and the
  enterprise opportunity proves to be economically
  viable. The guide demonstrates the step of
  revising the original concepts.

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• The model provides a step by step guide for
  implementation of the
• enterprise, highlighting the following key
  stages
• Securing all necessary authorisation for
  compliance with all legislation, policy
• and relevant traditional practices and
  requirements.
• Establishing the legal entity for the operation
  of the enterprise.
• Securing financial resources for implementation
  including technical support,
• infrastructure and equipment.
• Securing or developing the necessary skills and
  expertise. This would
• include both training of community members as
  well as potentially securing

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• The model also highlights the key facilitation
  requirements particularly for securing of
  appropriate partners.
• The model identified the target of enterprise
  operationalisation, and highlights that this
  could either be at a primary production level or
  involving value adding or downstream activities
  in the sector value chain.
• Once operationalised the process model provides a
  guide for the assessment of the level of
  efficiency and whether optimal production is
  achieved. If not, the process highlights the
  potential intervention steps for assisting the
  project to achieve efficiency.
• The transition is made to the next stage if
  monitoring and evaluation indicates that a
  sustainable enterprise is achieved.

• AUTHORISATION AND COMPLIANCE
• All permits and licenses must be obtained from
  relevant authorities in line with legislation and
  policy. These would include
• Department of Environment Affairs and Tourism
• Department of Water Affairs and Forestry
• National Department of Agriculture
• Department of Mineral and Energy Affairs
• Conservation authorities
• Traditional authorities

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South Africa has a range of policies and
legislation designed to guide and promote
sustainable development. Acts such as the
National Environmental Management Act (107 of
1998) and the Environmental Conservation Act
(73 of 1989) aim to ensure that, for example,
environmental sustainability is not compromised
in striving for social and economic development.
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• APPROPORIATE LEGAL ENTITIES
• The most appropriate legal entity will vary
  according to the type of enterprise and the
  objectives of the participants and partners.
• The appropriateness of each type of legal entity
  can be assessed according to a set of criteria

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• PUBLIC AND PRIVATE FUNDERS
• Funding for working capital, skills development
  and implementation can be sourced from a range of
  potential funders. Examples include
• Public Funders
• Department of Land Affairs (National)
• Department of Agriculture (National)
• National Skills Development Fund
• Department of Economic Development and Tourism
  (Provincial)
• Department of Trade and Industry (National)
• Private Funders
• Kellogg Foundation
• Ford Foundation
• World Bank
• DBSA

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• TRANSFER AND TRANSFORMATION PHASE

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• The transfer and transformation stage provides a
  guide to achieving a transfer of equity and
  benefits to
• the community that reflects the change in their
  contribution to the enterprise as they are
  empowered and
• develop capacity and skills
• The need for the implementation of the social
  plan is again highlighted as an ongoing process
  particularly
• to facilitate community empowerment, and the
  important of ongoing monitoring to track the
  transfer of
• skills, equity and benefits to the community and
  the transformation of the enterprise to reflect
  these
• changes at a management and operations level.
• The final stage in this process is the evaluation
  of the success and sustainability of the
  enterprise and the
• implementation of the exit strategy when the
  enterprise meets exit criteria.

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Exit Criteria Success Scenario
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• Failure Scenario
• If any of the following scenarios emerged, it is
  likely that facilitation would have to terminate
  its involvement in the project
• Sustainable markets cannot be secured.
• Economic viability cannot be achieved and the
  project is not profitable (i.e. it cannot evolve
  from startup into rapid growth maturity
  phases).
• Key inputs cannot be secured (options exhausted).
• Unresolved conflicts - facilitation cannot
  resolve inter- or intra-partnership disputes on
  equity and benefit distribution.
• Partners are failing to meet their roles and
  responsibilities, to the extent that the project
  cannot proceed.

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• In the process model, exit points were identified
  at the following stages
• Revision of the BP has not allowed the
  identification of changes that would make the
  project economically viable.
• An appropriate legal entity cannot be
  identified/established.
• Financial support cannot be obtained.
• Necessary skills are not present and cannot be
  sourced.
• Successful enterprise development has not taken
  place.

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Exit Criteria Failure Scenario
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• FACILITATION COMPETENCIES

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Monitoring and evaluation According to the World
Bank1, monitoring is seen as the continuous
assessment of project implementation in
relation to agreed schedules, while evaluation is
the periodic assessment of a project's
relevance, performance, efficiency, and impact
(both expected and unexpected) in relation to
stated objectives. Objectives should be set and
indicators selected in consultation with
stakeholders, so that objectives and targets
are jointly "owned". Monitoring and evaluation
needs to be more than just a reporting mechanism,
and should serve as a management tool and as a
means for advancing the organisations goals.
Monitoring should also include the assessment
of the use of inputs, infrastructure, and
services by project beneficiaries. It provides
managers and other stakeholders with continuous
feedback on implementation. It identifies
actual or potential successes and problems as
early as possible to facilitate timely
adjustments to project operation.
1 World Bank 1996, Designing Project
Monitoring and Evaluation, Operations Evaluation
Department, http//www.worldbank.org/oed/
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• Monitoring and Evaluation of Projects
• The founding principles are
• Sustainability
• Growth
• Job creation
• Replicability
• Community empowerment.
• Equity and ownership
• Profit

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• Other lessons learned during the modeling
  exercise
• Small, Medium and Micro Enterprise (SMME)
  Development
• All enterprises regardless of the sector within
  which it occurs require some type and level of
  service or additional goods. Examples include
  security, cleaning and transport services.
• The range may be larger for example in the
  tourism industry where it may extend to the
  supply of food for a lodge restaurant, crafts for
  decoration and curio shop and walking, or
  horse-riding guiding services. The key is for
  the full range of SMME opportunities to be
  investigated and where the broader community can
  provide these, facilitate these linkages being
  developed and formalised. This extends to the
  development of processing and value adding
  industries normally associated with the
  agricultural sector.
• Complementary Opportunities
• Development of the project scope should
  investigate complementary opportunities. While
  in the case of timber it may be honey production,
  for tourism, certain activities are seasonal and
  can be alternated with activities that would
  conflict if undertaken at the same time in the
  same area. Maximising opportunities on this
  basis increases the scope of opportunity for the
  community despite the key resource being utilised
  by a select group or individuals.

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• Employment
• A basic option for ensuring distribution of
  benefits is by offering employment within the
  enterprise to community members. This needs to
  be realistic as certain specialised jobs may
  require external expertise at least initially,
  as community members can be trained and gain
  sufficient experience over time to fulfill such
  roles. Again, employment opportunities need to
  be maximised by considering input that the
  broader community may have during different
  phases of the project from construction through
  to operation.
• Lease/Concession Agreements
• The community may also derive an income from the
  resource by leasing, normally in the case of
  land, to the entrepreneur. Alternatively, as in
  the case of certain tourist facilities, the
  entrepreneur will be granted a concession whereby
  a percentage of the profits accrue to the
  community. Depending on the nature of the
  resource it is possible that a combination of a
  lease and concession are agreed to. This
  combination provides the community with a degree
  of security as the there will be a fixed income
  from the lease, even if no profits are generated
  during the initial stages of the project.
• .

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• Recognize Communal Ownership
• Communal ownership is deeply entrenched and must
  be recognised when engaging
• communities. More specifically, the community
  structure in relation to ownership and use
• rights to the resource in question must be
  defined as a first step. Where possible, some
• form of proof or confirmation of rights should be
  obtained to avoid conflict over benefits
• arising later in the project cycle.
• While the new Communal Land Rights legislation
  may provide a mechanism for legally
• allocating ownership of communal land to
  individuals it does not necessarily address any
• conflict that may arise as a result of this. It
  is therefore important to recognize and
• address any sensitivities and conflicts, which
  may arise within the community through an

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• Classify the Carrying Capacity of the Resource
• The carrying capacity and full range of
  opportunities that can be generated by the
  resource must be established up front. This will
  provide the basis on which to demonstrate what
  number of people can realistically benefit on a
  direct basis from the resource thereby
  preventing the development of false expectations
  by the community.
• Secure Community Support
• Having defined the full range of opportunities
  and value of the potential benefits to be
  derived, it is important to obtain agreement from
  the broader community about which sectors of the
  community should benefit and in what way. The
  use of traditional decision making structures
  that normally represent the interests of, and are
  respected by all components of the community, to
  select direct beneficiaries and structure
  associated beneficiaries will improve the level
  of support for the project and beneficiation by
  individuals. Agreement should then be entrenched
  in binding agreements appropriate to the
  mechanism such as the lease, concession or supply
  agreement.
• A mechanism therefore exist for overcoming the
  challenges of supporting projects that are based
  on the direct beneficiation of a small portion of
  a community through their use of an asset or
  resource that is owned by the broader community.
  Achieving success is dependant on the management
  of perceptions around the capacity of the
  resource and associated opportunities.

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• PRIVATE SECTOR PARTNERSHIPS
• The role of the private sector partner is
  recognised as most critical to the sustainability
  of the enterprise. In particular, the private
  sector partner should represent access to
  markets, value addition opportunities, mentoring
  and technical know-how.
• Conclusion
• The focus of this model therefore is to ensure
  that the enterprise vehicle is sustainable from
  a business perspective and a community
  empowerment perspective. Empowerment is an
  ongoing process from mobilization to exit, and is
  implicit in all stages of the establishment of
  the enterprise. Only then can the promise of
  equity and real wealth creation be fulfilled.

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• Opportunities for further development
• A wide range of insights and conclusions have
  been developed during the process of synthesizing
  the work. Recommendations have therefore been
  summarized and clustered for the sake of clarity
  in the table below

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MODELLING PROJECT PARTICIPANTS Zandile Ndaba
- CPPP Theresa Breytenbach -
CPPP Trini Mdumela - CPPP Thuli
Fakude - CPPP Mapule Mahlase -CPPP Ntsoak
i Mngomezulu - CPPP Matome Kgowedi - CPPP
Denver Goliath - CPPP Patrick Ntsime -
DBSA [phone] Mohammad Karaan - University
of Stellenbosch [phone] Gustavo Alfaro -
University of Stellenbosch [phone] Michael
Wakatama - Newport Solutions [phone] Otilia
Maphosa - Newport Solutions [phone] Jenny
Mander - Institute of Natural Resources (033)
3460796 Bridgid Letty - Institute of Natural
Resources [phone] Dave Cox - Institute of
Natural Resources [phone] Rene Ford -
Institute of Natural Resources (033)
3460796 Fonda Lewis - Institute of Natural
Resources [phone] Isaac Banda - Enzangakho
Consulting [phone] Albert Modi -
University of KwaZulu-Natal [phone] Edwin
Ngidi - Ludloko Developments cc (033) 251
0768 Isaiah Mahlangu - BukIndlalo Consulting
082 3457 960 Shamim Bodhanya - Equilibria
Consulting [phone] Gaye Evans - Equilibria
Consulting [phone] Jessie Naidoo -
Equilibria Consulting [phone]