(SNV)’S PROJECT SUPPORTING SMES IN NINH BINH

IMPACT EVALUATION OF DEVELOPMENT PROJECTS:
A CASE STUDY OF THE NETHERLANDS DEVELOPMENT ORGANIZATION’S
PROJECT SUPPORTING SMALL AND MEDIUM ENTERPRISES

by

Do Thi Dong

A research study submitted in partial fulfillment of the requirements for the degree of
Master of Business Administration

Examination Committee

Dr. Do Ba Khang (Chairman)
Dr. Fredric William Swierczek
Dr. Sununta Siengthai

Nationality

Vietnamese

Previous degree

Bachelor of Industrial Business Management
Hanoi National Economics University
Vietnam

Scholarship Donor

Government of Switzerland/ Swiss Development
Cooperation (SAV)

Asian Institute of Technology
School of Management
Bangkok, Thailand
April 2001

i


TABLE OF CONTENTS

ACKNOWLEDGMENT.......................................................................................................IV
ABTRACT................................................................................................................................V
CHAPTER 1: INTRODUCTION...........................................................................................1
1.1.Rationale ..........................................................................................................................1
1.2.Problem statement...........................................................................................................1
1.3.Research objectives.........................................................................................................1
1.4.The scope of the research................................................................................................2
1.5. Organization of the Research........................................................................................2
CHAPTER 2: LITERATURE REVIEW...............................................................................3
2.1. Development project......................................................................................................3
2.1.1. What is a development project?.................................................................................3
2.1.2. Types of development project ..................................................................................4
2.2. Project evaluation...........................................................................................................4
2.2.1. What is project evaluation?.......................................................................................4
2.2.2. Types and purposes of project evaluation.................................................................5
2.2.3 The project evaluation framework..............................................................................5
Impacts....................................................................................................................................6
Policy relevance......................................................................................................................6
2.2.4. Evaluation approaches...............................................................................................7

2.3. The impacts of development projects supporting SMEs...........................................7
2.3.1 Social impacts.............................................................................................................7
2.3.2. Economic impacts......................................................................................................8
2.4. The current profile of NGOs in Vietnam...................................................................11
2.3.1. What is an NGO?.....................................................................................................11
2.3.2. Types of NGOs........................................................................................................12
2.3.3. Advantages and disadvantages of NGOs................................................................13
2.3.4. Current situation of NGOs in Vietnam...................................................................13
2.3.5. Roles of NGOs in Vietnam......................................................................................14
SUMMARY OF THE CHAPTER........................................................................................16
CHAPTER 3: METHODOLOGY........................................................................................17
3.1. Research design............................................................................................................17
3.2. Sample design................................................................................................................19
3.3. Data collection...............................................................................................................21
3.4. Data processing.............................................................................................................21
CHAPTER 4: (SNV)’S PROJECT SUPPORTING SMES IN NINH BINH ..................22
4.1. SMEs in Ninh Binh province.......................................................................................22
4.1.1. Overview of Ninh Binh province............................................................................22
4.1.2. Existing problems of SMEs in Ninh Binh...............................................................23
4.2. Overview of SNV..........................................................................................................24
ii


4.3. Project description.......................................................................................................25
4.3.1. Introduction .............................................................................................................25
4.3.2. Project objectives and beneficiaries........................................................................25
4.2.3. Project activities.......................................................................................................25
Summary of the chapter.....................................................................................................27
CHAPTER 5: FINDINGS AND DISCUSSIONS................................................................27
5.1. Characteristics of the sample......................................................................................27

5.1.1 Sample of enterprises................................................................................................27
5.1.2. Sample of employees...............................................................................................28
5.2. Impacts of the project..................................................................................................29
5.3.1. Social impacts..........................................................................................................29
5.3.2. Economic impacts....................................................................................................36
5.3. General Attitude of selected SMEs toward the project............................................41
CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS.......................................42
6.1. Conclusions....................................................................................................................42
6.2. Recommendations........................................................................................................44
REFERENCES.......................................................................................................................45
APPENDIX..............................................................................................................................48
Appendix A: Questionnaires..............................................................................................48
Appendix B: List of selected enterprises...........................................................................52
Appendix C: Data................................................................................................................54

iii


ACKNOWLEDGMENT

I would like to express my gratitude to people, who have given me great support during my MBA
study, especially when I conducted the research.
This is my sincere thanks to Dr. Do Ba Khang, my advisor, for his guidance, support and
recommendation to this work as well as his encouragement during my research study.
I greatly acknowledge the advice and support of Prof. Fredric William Swierczek and Dr. Sununta
Siengthai for serving as committee members of the examination together with useful comments to
improve my works.
I would like to express my acknowledgement to Swiss Government for the generous financial
support. My special thanks are also extended to Dr. Hans Stoessel, SAV faculties and staffs in
Swiss AIT Vietnam Development Management Program who gave me a lot of support, guidance

and advice during the first year of my MBA study.
My special thanks go to Mr. Toon Keijers, Coordinator and Mr. Heino van Houwelinggen, Advisor
of Financial Service Department of the Netherlands Development Organization for providing me
with the project data. My thanks are also extended to Mr. Duong Bien Thuy, Director of the
Council of Cooperatives and Non- State Enterprises in the Ninh Binh province Vietnam and all
SNV staffs including Mrs. Quynh Anh and Ms. Cam Tu for their help and kind support. I also
would like to thank the management of selected enterprises for their enthusiasm and valuable
support at the period of data collection.
My special thanks are extended to Mr. Tran Duong Minh, my student, relative and dearest friend
for his help and encouragement during the time I conduct the research.
I also would like to extend my thanks to my colleagues at School of Management who gave me a
great chance to participate in MBA program and also gave me great support during my MBA study.
Also to be included in my list of acknowledgment are circle of my friends especially SAV6
members for sharing my happiness and sadness through my study and shaping my unforgettable
memories of my life.
Last but not least, I would like to express my deepest gratitude to my family who were
tremendously scarified to my growth education, gave endless encouragement and support and
provided spiritual strength for me.

iv


ABTRACT

This study attempts to develop a framework to measure the impacts of development projects
supporting small and medium enterprises (SMEs) by Non governmental Organization (NGO). It
then tries to apply that framework to evaluation of a development project, which was carried out by
Netherlands Development Organization (SNV), an Dutch NGO to support SMEs in Ninh Binh
province Vietnam. Based on the sample of selected SMEs, data were collected to measure the
impacts of the project in terms of Social and Economic aspects. The comparison between small size

and medium size SMEs and among different SMEs in different industries were made whenever
there is a difference on order to give insights for the donor, the project management and managers
of the partner organization and related institutions.
The results revealed that supported SMEs and their employees made a positive change in economic
as well as social aspects. Among five industries given priority, embroidery industry appeared to be
the best in making use of the project. However, changes seem not to be found in some social
impacts such as health care and insurance. Some suggestions for further study are also given.

v


CHAPTER 1: INTRODUCTION

1.1. Rationale
In the spirit of the “Doi Moi” (renovation) policy adopted by the government of Vietnam since
1986, Vietnam shifted from a centrally planned system to a market- oriented socialist country.
Although the role of Small and Medium Enterprise (SME) in economic and social development
was recognized, the business environment in this economy in transition presented great challenges
to their development and growth. External constraints such as the transitional legal and
administrative framework, scarcity of financial resources, intensifying competition as well as the
internal constraints of company management, all exerted great pressures on SMEs. Despite the
political willingness that existed to promote SMEs, there are still difficulties due to many problems
such as lack of money, lack of knowledge, etc. Support from developed countries, thus, is very
important to Vietnam.
One kind of support from developed countries requiring less procedures than those approved by
government agencies is in form of non-governmental organization- NGO. NGOs often target the
poor section of the population. The utilization of the aid from these organizations in form of
development project often brings prompt results. For this reason, it is important to evaluate these
projects both in terms of economic and social aspects for donors, recipients and related institutions
to not only know whether the project objectives have been achieved but also to draw lessons for

relevant decision- makers for decision making about follow up activities, about other projects of the
same type, or about other projects with the same institutional partners.
As a result of the open door policy implemented in 1986, Vietnam is home to a lot of national
NGOs. Most of the evaluation on NGOs’ projects so far took into account both economic and
social impacts, but the framework is not sufficient. Donors, receivers and interested institutions
find it difficult to have an overview on what the receivers have gain so far as well as what should
they have dodge to achieve their objectives.
1.2. Problem statement
This research attempts to answer the questions “ How to know how much impacts of NGO’s
development project on SMEs are”
1.3. Research objectives
With the above problems, the objectives of the research are as follows:
• Develop a framework to measure the impacts of development projects by NGOs.
• Attempt to apply the framework to a Netherlands Development Organization’s development
project supporting SMEs in Ninh Binh province Vietnam with data from the research jointly
carried out by the organization and the author.
• Draw conclusions and make recommendations on what the donor should do with another
development project in the future.

1


1.4. The scope of the research
The research focuses on evaluation of NGOs’ development projects supporting SMEs. At first, a
framework to measure the impacts of project is developed. Then, the study tries to apply that
framework to explore the worth of SNV’s development project that supported SMEs in Ninh Binh
province Vietnam.
Aiming at improving capacity of the Council of Cooperatives and Non- State Enterprises of the
Ninh Binh province to provide services to SMEs and of the SMEs, the project was started from
October 1998 and terminated in December 2000 (Figure 1.1, project life cycle). Total 125

enterprises in five different industries (embroidery, reed weaving, agriculture, industry and service)
in four districts of Hoa Lu, Gia Vien, Nho Quan and Kim Son were given the support.
The survey was conducted in two periods when the project was in the termination stage. In the first
stage, one survey to explore some issues including employment, income and revenue of the
selected enterprises was carried out by SNV staffs in October 2000. Remaining issues were found
out by the effort of the author in December 2000.
Among recipients, studied enterprises have received support for at least one year. Due to the fact
that the author have only 6 weeks for contacting and conducting interview at the mid of December
when most of the enterprises in Vietnam are busy with their fiscal year report and with TET
holiday, enterprises were selected by convenience. That means their willingness with the research
is given priority in choosing respondents.
1.5. Organization of the Research
The research is presented in six chapters as following:
Chapter 1: Introduction including rationale, problem statement, objectives, scope and organization
of the research
Chapter 2: Literature review that presents the literature about development project, project
evaluation including its impacts. Then more specific information about situation of NGOs in
Vietnam is also introduced.
Chapter 3: Methodology, this is the most important part where the framework to measure the
project’s impacts is developed. In this part, the sample and data collection procedures are designed
and finally data processing procedure is identified.
Chapter 4: The project description. This part gives an overview on the donor organization and
current situation of SMEs in the province. The main purpose of this part is presenting the
description of the project in terms of objectives, size and activities.
Chapter 5: Findings and discussions, the most interesting part. In this part, descriptive information
about the sample characteristics is presented. The impacts of the project are shown.
Chapter 6: Conclusions and recommendations. The chapter gives some conclusions about the
evaluation of NGO’s development projects. Some suggestions for further study are also given.

2

CHAPTER 2: LITERATURE REVIEW
This part presents the literature about development project, project evaluation and project impacts.
Then more specific information about situation of NGOs in Vietnam in terms of their activities and
roles is also introduced.
2.1. Development project
2.1.1. What is a development project?
What is a project?
Many different answers have been given to the question, what is a project. In the manual of
Commission of the European Communities 1993, project Cycle management: Integrated Approach
and Logical Framework, prepared by the Management for Development Foundation, a project is
defined as a dynamic and multi-dimensional intervention which is intended to:
• Remove or reduce the impact of certain constraints (e.g. constraints on urban waste management
rural transport delivery of agriculture supplies production of construction equipment diet
diversification food production scarcity of foreign currency).
• And/ or develop human physical and other potentials (labor, coastal zones, historic sites,
hydraulic energy, etc.)
What is a development project?
The logical framework used by anonymous1 in Project Cycle Management, 1993 describes all
development projects as having a hierarchy of objectives as follows:
•

The project purpose: a specific objective to be achieved by the end of the project

•

The results: a series of outputs

•

The activities: the combination of a wide range of means (e.g. studies, investments, training,
institutional changes)

•

All projects also contribute to the achievement of broader policy or sectoral objectives, known
as the overall objectives, and thus fit within a sectoral strategy. The intervention logic of a
project is illustrated in figure 2.1.

Regarding to this figure, a project involves combining resources including physical and nonphysical means, which are carefully defined, together with a careful plan, they lead to some new
situation of the objects. We call these situations results.
Projects are designed to bring about changes. In addition to their direct results, they generally have
wider impacts on the economy, environment, communities, and institutions.

3


High level objectives to
which the project
contributes
Specific objectives of
projects

Overall objectives

Project purposes

Outputs of activities that
achieve the project

purposes

Results

Tasks executived as part
of the project

Activities

Physical and nonphysical means nece
ssary to undertake a
ctivities

Means

Figure 2.1. The intervention of logic of a development project
Source: Manual of Commission of the European Communities, 1993
2.1.2. Types of development project
In terms of the outputs, there are three types of development projects
Project with tangible products, i.e. products which can be valued in monetary terms. Such projects
generally aim to increase the production of goods and services:
• Which are sold or not sold but for which a market exists (such as food grown for home
consumption). E.g. industrial projects, power development projects, or credits for firms projects
• Which are provided without direct payment by beneficiaries, or whose benefits can be “easily
valued”. Examples include road projects, most of whose economic consequences concern
transport costs and existing (or induced) traffic volumes or even savings in insurance costs, and
can thus be calculated. Examples include road infrastructure, professional training and
agricultural extention projects
Projects with non- tangible products, i.e. products which can not be accurately valued in monetary
terms without carrying out research which exceed the time and resources. Examples of these

projects are projects dealing with health, education, urban development (e.g. sewerage), social
services, institutional reform or environmental conservation.
Combination e.g. after finishing, the project brings both tangible products and some intangible
results. In this research, the project to be examined belongs to this type. One side, it facilitates
SMEs by establishing an information database to provide information about market, technology,
economic opportunities. On the other side, it includes training activities, policy development and
services to improve ability of small sized enterprises to access financial services.
2.2. Project evaluation
2.2.1. What is project evaluation?
4


According to Reidar Dale, author of the book “Evaluation Frameworks for Development Programs
and Projects”, project evaluation is thorough examination, at specific points in time, of a project or
parts of them, usually with emphasis on impacts and additionally commonly on efficiency,
effectiveness, relevance, impacts and sustainability”.
This definition resembles numerous other definitions of evaluation relating to societal development
work. For instance, Rossi and Freeman (1993) specify it as “the systematic application of social
research procedures for assessing the conceptualization, design, implementation and utility of
social intervention programs”, and Carlsson, Kohlin and Ekbom (1994) consider it “an activity for
finding out the value or results of something, ... answering the information needs of various actors”
2.2.2. Types and purposes of project evaluation
Depending on how the provided information is to be used, Reidar Dale (1998), distinguish between
two main types of evaluations: formative and summative. Basic features and general purposes of
the two are as follows:
Formative evaluations aim at improving the performance of the program or project which is
evaluated, through learning from experiences gained. In addition, it serves as a mechanism to
ascertain the accountability of people with responsibility in the respective program or project.
Formative evaluation are commonly done more than once. Each exercise may not be very
comprehensive. The evaluations may be done at set intervals or according to the needs, as assessed

by the responsible agencies, in the course of program or project implementation.
Summative evaluations are under taken after one part of or a whole program or project has been
completed. Their general purpose is to judge the worth of the program or project and the
appropriateness of its design and management. Summative evaluations has largely been triggered
by a need among foreign donor agencies to prove their accountability vis-a-vis their government
and/ or other money providers as well as the general public in the donor country. For this reason,
summative evaluations have mostly been undertaken by persons who are considered independent of
the responsible program or project organizations and the donor agencies.
In this research, summative evaluation framework is conducted to explore the worth of NGOs’
projects supporting SMEs and is then illustrated by an evaluation of one SNV’s project.
2.2.3 The project evaluation framework
Reidar Dale (1998) built a basic evaluation model as illustrated in figure 2.2. The five main
evaluation categories are efficiency, effectiveness, relevance, impacts and sustainability. They are
specified as follows:
Efficiency is defined as the amount of outputs created and their quality in relation to the resources
(capital and personnel) invested. Efficiency is a link between ‘inputs’ and ‘outputs’.
Effectiveness: This expresses to what extent the planned outputs, expected effects and intended
impacts (development objectives) are being or have been produced or achieved.
Relevance: This issue here is to what extent the program or project is addressing or has addressed
problems of high priority mainly as viewed by stakeholders, particularly the program’s or project’s
beneficiaries and any other people who might have been its beneficiaries.
5


Impacts: these are the longer- term, largely indirect consequences of the program or project for the
intended beneficiaries and any other people.
Sustainability: this means the maintenance or augmentation of positive changes induced by the
program or project after the later has been terminated.
Figure 2.2. Evaluation Framework for Development Program and Project

Impacts

Policy
relev

Effects
Effects

Outputs
Outputs

Effort of
the project

Efficiency
Efficiency

Activities
Activities

Effectivenes
Effectivenes
s
s
Sustainability
Sustainability

Resources
Resources

Organization
Organization

Strategy
Strategy
Environment

Objectives

Notes:
Design link
Means- end link
Other influence links
Sources: Evaluation Framework for Development Program and Project, 1998, Chapter 3.
Evaluating effectiveness, efficiency, relevance and sustainability need a long time and huge effort
to study and contact with stakeholders. Given the time and resources constraints, this study only
focuses on impacts of the projects.

6


2.2.4. Evaluation approaches
The procedure to conduct an evaluation depends on the evaluation approach applied. There are
number of evaluation approaches which can be distinguished by their objectives structure and kinds
of analysis. Table 2.1. presents some common ones.
Approaches

Use

Form

Analysis

Logical framework Project planning and Matrix
analysis
performance evaluation

Descriptive
numerical

and

Experimental
and Qualitative estimate of Statistical
quasi- experimental project impact
design

Univariate
or
multivariate analysis

Systems analysis

Project planning and Graphic and Descriptive
performance evaluation
mathematical mathematical

and

Causal networks

Ongoing planning and Graphic
revision of evaluation matrix
design and synthesis of
hypothesis and findings

Process modeling

Evaluation planning and Graphic
defining
format
for
presenting findings

Path analysis

Estimating
the Graphic and Multivariate analysis
contribution of project statistical
components and nonproject
variables
to
project outcome

or Descriptive or simple
numerical

Descriptive
numerical

and

Table 2.1. Some of evaluation approaches
The experimental research type of study is quite prominent in evaluation. As shown in table 2.1,
once more precise statistical estimates of project impact are required, experimental or quasiexperimental designs should be used. In practice, the strict requirements of scientific research have
to be adapted to the reality. Under such circumstances the quasi- experimental approach can help to
achieve as much control as possible. In addition, according to many of the evaluation literature,
assessment of project impacts should a randomized evaluation design ( Boruch and Wothke 1985)
or a quasi- experimental design (Cook and Campell,1979; Rosi and Freeman, 1993)
2.3. The impacts of development projects supporting SMEs
Impacts of projects can be classified into economic impact and social impact. These impacts will be
discussed in more detail in the following sessions.
2.3.1 Social impacts
(i)

Employment effect

7


SMEs those receive any kind of NGOs‘ support present a change in business. Employment effect
measures the extent to which the SMEs brings more jobs to people. The direct employment effect,
wich could be generated by labor- intensive products or production technologies within the small
and medium industrial sector, can be classified into that nature (Clapham, R, 1985)
Paralleled with creating direct jobs, the aid from SMEs projects may also have strong effect on
employment through creating indirect jobs. They include the jobs created through backward and
forward linkage, transportation service company and providers of services: masons, tea shop, etc.
(ii)

Income generation

As a country with over 80% of the population who are poor and backward farmers, the increasing
of income level (including salary and other allowances) for the people is an important thing. One
more concern in Vietnam to date is that over 80% of the population live in the rural areas. Among
that, the SMEs’ labor force occupies a significant share. Therefore, one of the first solutions for
improving the income level of labor force and diversifying the income sources is the development
program of SMEs. Results of surveys show that income levels in the regions in which SMEs
develop are as four times as that in the regions purely relying on agriculture (Living Standard
Survey 1997). Multiforming income sources contribute to increasing level of living and also
reducing risks for residents especially in the region where climate is harsh for agriculture
development. Income generation and diversification will lead to other social impacts such as health,
welfare, education, gender, etc.
(iii)

Other social impacts

Apart from that, there are some other social impacts such as education, skills and training, health
care and insurance, consumption pattern, change in individual, human quality and social costs.
These impacts also need to be assessed in the current context of Vietnam.
2.3.2. Economic impacts
(i)

Economic efficiency

Economic efficiency is recognized as there was the better utilization of available resources such as
raw materials, labor and capital that will increase the productivity, income, the standard of living
and the like. SMEs in many countries, especially in Vietnam, their contribution to the national
economic efficiency is highly appreciated. However, it is well known that in any society,
knowledge and skills of an economic and technical nature will be scattered and scare in the future.
Creating the favorable conditions for SMEs development is an unavoidable work and needs to be

enhanced.
(ii)

Economic change in the community

When new jobs are offered to new people, the employment situation of the whole community is
improved. In addition to that, an increase in income of employees also leads to an increase in
income of the community. Besides, with the numerous number of SMEs operating in different
markets, there is a greater probabilities that competition will prevail. This means in general that
prices will be lower, new and improved products will be more frequently introduced and there will
be better service for customers. This impact, together with some following impacts is recognized in
qualitative result rather than quantitative.
8


•

Use of local materials

SMEs use relatively few imported raw materials, but procecure the necessary inputs from the
domestic market. They operate in the field of production which handle and process raw materials
available locally and regionally. Usually, local materials used are recycled from industrial anf other
waste products. The activities of SMEs in collection and reutilization of such materials make a
contribution in ensuring that these materials are not lost to the economy.
•

Supplementing the industrial sector.

Large companies in developing countries usually have relatively higher fixed cost and unit cost
because of their lower efficiency in comparison with that in industrial countries. Accordingly, it

must be stressed that large enterprises need SMEs on economic grounds as suppliers and purchaser
of products and many service capacities. Thus, an efficient SMEs sector can contribute to the
economic efficiency of large enterprises.
•

Supplementing consumer supply

In developing countries, purchasing powers of consumers are limited due to some reasons such as
low income, inadequate transport possibilities, high transportation cost, etc. When the business of
the enterprise is improve, that means SMEs now can supply consumers with products or services
with better quality , lower price, large variety of choices, easy to access to buy, etc. Consequently,
it can be said that SMEs with better business make a very important contribution toward make the
quality of life of people better.
In order to evaluate the impacts of aid projects of NGOs to SMEs, the author uses both qualitative
and quantitative indicators as shown in the table 2.2
In fact, some indicators, which are used for measuring social impact reflect economic impacts such
as income indicator. One side, an increase in income of employee result to an increase in living
standard since the savings or the purchasing power of that employee will goes up. On the other
side, increased income of many individuals will lead to increase in income of the community, or to
an economic change in the community. As a result, there are overlaps between economic impacts
and social impacts.
The below table presents impacts of project and some indicators to measure them.

Table 2.2. Impacts of project and some indicators used to measure them
Impacts
Social
impact

Employment

Indicators
Type of employment
Number of people working (part- time and full- time)
9


Cost- effectiveness in creating jobs
Income generation Percentage of increase in income on average

Education, skills Number (%) of employees trained for basic skills or
and training
improving training
Number of visits of technical or technological
consultants/ advisors (domestic or foreign)
Number (%) of employees believing that their currently
working skills are good or very good.
Number (%) of employees believing that their working
skills are now better than before receiving the support
Amount of money spent on education and training
Health care and Access to medical services
insurance
Amount spent on medical services
Access to insurance
Consumption Amount spent on housing
patterns
Amount spent on food
Amount spent on vehicle, household appliances,
equipment
Amount spent on health
Amount saved

(in comparison with before receiving the support)
Change
individuals

in Change in living standard
Change in the role relations
Change in the perception of job’s importance
Change in the opportunities to join the community
Change in the attitude toward the future
Change in the interest in work

Human qualities

Social
impact

Number (%) of employees feel that their opinions are
considered
Number (%) of employees understand enterprise’s
policies on training, promotion, raises, and feel they are
applied fairly
Perception of profit distribution

Social costs

Length of time that children keep out of school to help
with the business
Number (%) of employees believe that the gap between
the rich and the poor in the enterprise does not get bigger
Number (%) of employees believe that the working

conditions become more dangerous and unhealthy
Length of time the business owner spent away from his or
10


her family and children
Economic Economic
impact
efficiency

Increase in sale volume
Increase in exported volume
Utilize local materials
Acquire and spin off new technology
Upgrade infrastructure
Reduce unit cost
Better quality products
New product introduction
Change new suppliers

Economic change Increased income for the community
in community
Increased employment
Links with other business
2.4. The current profile of NGOs in Vietnam
2.3.1. What is an NGO?
There is no single correct answer to this question. For instance, in one workshop on NGO
organized at Asian Institute of Technology, Bangkok Thailand on October 17- 21 1998, nine
definitions of NGO were given. However, there are some characteristics that are found in most
NGOs studied. According to Asian Development Bank- ADB, in it policies to cooperate with

NGOs in 1992, NGOs, in the broadest sense, refers to organization (i) not based in government;
and (ii) not created to earn profits. Although this broad definition is correct semantically, it presents
a problem in that it embraces a large number and wide range of organizations that structurally and
functionally are unrelated. It refers more to what an organization is not, rather than to what it is and
can be applied to many organizations.
Joanne Sandle gave another definition in 1995. According to this concept, NGOs are generally
observed to:
•

Be not based on government.

•

Be non- profit and service – oriented.

•

Depend primarily on shared values as basic for mobilizing human and financial resources.

•

Contribute to the alleviation of human suffering and to development in poor countries.

This definition seems to be clearer than the previous one and it also overcomes the shortcomings of
the previous.

11


2.3.2. Types of NGOs

NGOs can be classified in many ways. However, according to Cousins William, a expert of
Asian Development Bank, 1991, the common classification is based on two criteria: the
orientation and level of operation.
2.3.2.1. NGO types by orientation:
•

Charitable Orientation often involves a top-down paternalistic effort with little
participation by the "beneficiaries". It includes NGOs with activities directed toward
meeting the needs of the poor -distribution of food, clothing or medicine; provision of
housing, transport, schools etc. Such NGOs may also undertake relief activities during a
natural or man-made disaster.

•

Service Orientation includes NGOs with activities such as the provision of health, family
planning or education services in which the program is designed by the NGO and people
are expected to participate in its implementation and in receiving the service.

•

Participatory Orientation is characterized by self-help projects where local people are
involved particularly in the implementation of a project by contributing cash, tools, land,
materials, labor etc. In the classical community development project, participation begins
with the need definition and continues into the planning and implementation stages.
Cooperatives often have a participatory orientation.

•

Empowering Orientation is where the aim is to help poor people develop a clearer
understanding of the social, political and economic factors affecting their lives, and to

strengthen their awareness of their own potential power to control their lives. Sometimes,
these groups develop spontaneously around a problem or an issue, at other times outside
workers from NGOs play a facilitating role in their development. In any case, there is
maximum involvement of the people with NGOs acting as facilitators.

2.3.2.2. NGO types by level of operation:
•

Community-based Organizations (CBOs) arise out of people's own initiatives. These can
include sports clubs, women's organizations, neighborhood organizations, religious or
educational organizations. There are a large variety of these, some supported by NGOs,
national or international NGOs, or bilateral or international agencies, and others
independent of outside help. Some are devoted to rising the consciousness of the urban poor
or helping them to understand their rights in gaining access to needed services while others
are involved in providing such services.

•

Citywide Organizations include organizations such as the Rotary or lion's Club, chambers
of commerce and industry, coalitions of business, ethnic or educational groups and
associations of community organizations. Some exist for other purposes, and become
involved in helping the poor as one of many activities, while others are created for the
specific purpose of helping the poor.

•

National NGOs include organizations such as the Red Cross, professional organizations,
etc. Some of these have state and city branches and assist local NGOs.
12

•

International NGOs (INGOs) range from secular agencies such as Save the Children
organizations, OXFAM, CARE, Ford and Rockefeller Foundations to religiously motivated
groups. Their activities vary from mainly funding local NGOs, institutions and projects, to
implementing the projects themselves.

In this study, only INGOs are taken into account. The term NGO stands for International Nongovernmental Organization throughout the research.
2.3.3. Advantages and disadvantages of NGOs
The aid activities of NGOs for developing countries have many advantages as well as
disadvantages as described below to complement official development assistance.
2.3.3.1. Advantages
•

They have the ability to experiment freely with innovative approaches and, if necessary, to
take risks.

•

They are flexible in adapting to local situations and responding to local needs and therefore
able to develop integrated projects, as well as sectoral projects.

•

They enjoy good rapport with people and can render micro-assistance to very poor people
as they can identify those who are most in need and tailor assistance to their needs.

•

They have the ability to communicate at all levels, from the neighborhood to the top levels
of government.

•

They are able to recruit both experts and highly motivated staff with fewer restrictions than
the government.

•

2.3.3.2. Disadvantages

•

Paternalistic attitudes restrict the degree of participation in program/project design.

•

Restricted/constrained ways of approach to a problem or area.

•

Reduced replicability of an idea, due to non-representativeness of the project or selected
area, relatively small project coverage, dependence on outside financial resources, etc.

•

"Territorial possessiveness" of an area or project reduces cooperation between agencies,
seen as threatening or competitive.

2.3.4. Current situation of NGOs in Vietnam
Before 1975, there were more than 100 NGOs in Vietnam. The national unification in 1975 with
the policy of adopting a centrally planned economy partially caused withdraws of a large number of
foreign organizations. In this period, there were only tens of NGOs. However, as a result of the
open door policy implemented in 1986, international NGOs flocked into Vietnam with
13


continuously increasing number. There was no legislative foundation for NGOs at that time. The
operations of NGOs are governed by a decision from 1996 issued by the Prime Minister. This
decision includes regulations on the operations of foreign NGOs in Vietnam. All NGOs have to be
registered with the Committee for NGO Affair, get permission for operation and work in
accordance with the guidelines issued for the implementation of the regulation.
After 10 years of pursuing the open door policy, the number of NGOs continuously increased and
reached about 231 in 1996. The activities of NGOs concurrently were broadened. In the period of
2000- 2001, there are 301 NGOs registered in Vietnam. Their activities are classified into six main
sectors. They are health, education, natural resources, income generation, development and other
sectors. The activities of NGOs in these sectors are showed in detail in the following table.
Table 2.3. Activities of NGOs by sectors in Vietnam
Sectors

Activities

Health

Primary health care, Reproductive health, Disability, HIV/ AIDS, Nutrition,
Water and sanitation, Health- other

Education

Education- primary secondary tertiary, Education abroad- scholarships etc.,
Foreign language training in Vietnam, Training

Natural resources

Agriculture, Agroforestry, Forestry, Irrigation, Agriculture, Environment

Income
generation

Savings and credit, Handicrafts, Vocational training, Income generation- other

Development

Integrated development (includes both rural and urban)
Community development (includes both rural and urban)
Capacity/ institution building

Other sectors

Advocacy, Culture, Information and communication, Construction and
(physical) infrastructure, Disaster- preparedness, relief and rehabilitation
Landmines, Gender, Children , Aged

Source: Vietnam NGO Directory 1999- 2000
2.3.5. Roles of NGOs in Vietnam
Among the wide variety of roles that NGOs play in Vietnam, the following six can be identified
as important:
•

Development and Operation of Infrastructure:

Community-based organizations and cooperatives can acquire, subdivide and develop land,
construct housing, provide infrastructure and operate and maintain infrastructure such as wells
or public toilets and solid waste collection services. They can also develop building material
supply centres and other community-based economic enterprises. In many cases, they may need
technical assistance or advice from governmental agencies or higher-level NGOs.
•

Supporting Innovation, Demonstration and Pilot Projects:

NGO have the advantage of selecting particular places for innovative projects and specify in
14


advance the length of time which they will be supporting the project - overcoming some of the
shortcomings that governments face in this respect. NGOs can also be pilots for larger
government projects by virtue of their ability to act more quickly than the government
bureaucracy.
•

Facilitating Communication:

NGOs use interpersonal methods of communication, and study the right entry points whereby
they gain the trust of the community they seek to benefit. They would also have a good idea of
the feasibility of the projects they take up. The significance of this role to the government is
that NGOs can communicate to the policy-making levels of government, information bout the
lives, capabilities, attitudes and cultural characteristics of people at the local level.
NGOs can facilitate communication upward from people to the government and downward
from the government to the people. Communication upward involves informing government

about what local people are thinking, doing and feeling while communication downward
involves informing local people about what the government is planning and doing. NGOs are
also in a unique position to share information horizontally, networking between other
organizations doing similar work.
•

Technical Assistance and Training:

Training institutions and NGOs can develop a technical assistance and training capacity and use
this to assist both business organizations and governments.
•

Research, Monitoring and Evaluation:

Innovative activities need to be carefully documented and shared - effective participatory
monitoring would permit the sharing of results with the people themselves as well as with the
project staff.
•

Advocacy for and with the Poor:

In some cases, NGOs become spokenpersons for the poor and attempt to influence government
policies and programs on their behalf. This may be done through a variety of means ranging from
demonstration and pilot projects to participation in public forums and the formulation of
government policy and plans, to publicizing research results and case studies of the poor. Thus
NGOs play roles from advocates for the poor to implementers of government programs; from
agitators and critics to partners and advisors; from sponsors of pilot projects to mediators.

15

Summary of the chapter
 A development project is observed to have a hierarchy of means, activities, results, purposes
and objectives. There are three types of development projects, project with intangible
products, with intangible products and combination.
 There are two types of project evaluation: formative and summative. Formative evaluation
is often done several times by people belonging to project stakeholders whereas summative
evaluation is done by an independent party. In evaluating project, five main evaluation
categories are efficiency, effectiveness, relevance, impacts and sustainability. The procedure
to conduct an evaluation depends on the evaluation approach.
 Project impacts can be classified into types, social and economic impacts. Social impact
includes some impacts such as (1) employment, (2) income generation, (3)education, skills
and training, (4) health care and insurance, (5) change in individuals, (6) human qualities
and (7) social costs. Economic impact consists of economic efficiency and economic change
in the community. However, there are some overlaps between these two types.
 Currently, there are about more than 300 INGOs in Vietnam. They mainly operate in six
sectors of health, education, natural resources, income generation, development and other
sectors. Among the wide variety of roles that INGOs play in Vietnam, six can be identified
as important as (1) Development and Operation of Infrastructure, (2) Supporting Innovation,
Demonstration and Pilot Projects, (3) Facilitating Communication, (4) Technical Assistance
and Training (5) Research, Monitoring and Evaluation and (6) Advocacy for and with the
Poor.

16


CHAPTER 3: METHODOLOGY
This is the most important part where the framework to measure the project’s impacts is developed.
First, the research, sample, and data collection procedures are designed. Then, data processing
procedure is identified.

3.1. Research design
The aim of the project is to develop a framework to evaluate the effectiveness and the impacts of
project on SMEs in terms of social impacts and economic impacts. The findings of the research is
completed by applying secondary data research, questionnaire survey and in- dept interview with
owners and employees of the enterprises and with the SNV program officers.
Firstly, a secondary data research was conducted to find who are SMEs in Vietnam where are they
operate and what are their activities and projects. The list of SMEs those have projects supporting
SMEs in Vietnam was completed. One project of one NGO is selected by convenience. That means
any NGO who is firstly willing to cooperate with the author is chosen.
Two sets of questionnaires, one for the enterprises and the other for employees are conducted.
Before these questionnaires are distributed, a number of semi- structure interviews were made in
order to explore whether there are ideas or aspects that the framework and the questionnaires have
not captured. Interviews are the owner or the top executive of the SMEs in various types and
various sizes of enterprises. Due to the time constraints, the number of interviewees is limited to 4.
Two major issues are mentioned in each interview. One is the impact that the project brings or
created to the enterprise. The other is to test the draft questionnaires to make sure that it is fully
understandable and answerable. For this purpose, 4 more interviews were made with employees at
various positions at those enterprises.
Employees who receive questionnaires were chosen randomly. Concurrently, in-dept interviews
were held with some enterprise owners and some employees who are also selected randomly. A
final interview is held with the advisor, the co-odinator and two project officers of the project.
The collected data is analyzed based on the theoretical framework. As mentioned previously,
impacts are classified into social and economic impacts. Each type, in turn, includes several
impacts. Social impact consists of (1) employment, (2) income generation, (3)education, skills and
training, (4) health care and insurance, (5) change in individuals, (6) human qualities and (7) social
costs whereas economic impacts includes economic efficiency and economic change in the
community. All these concepts are measured by following indicators. Each indicator, in turn, was
defined by specific measurements, accompanying by the reasons why the measurement is important
and useful in exploring impacts.
(i)

Employment effect

Various surveys in different countries such as Pakistan, India, Bangladesh, etc. showed that SMEs’
projects contribute to the local economy by creating a lot of job opportunities. This concept can be
measured by the number of full- time jobs created. The number of part- time jobs offered can be
converted into full- time jobs by using the ratio of 2:1, seasonal jobs converted with the ratio of 3:1
(Le Van Be, 1995). The project not only has some impacts on target groups but also on non- target
groups since SMEs create job opportunities for not only their employees but also for their
backward and forward partners and create jobs for residents in the vicinity such as server in
17


cafeteria, servant, baby sister, etc. Job creation reflects economic expansion and the health of local
firms and is a measurement of the vitality of the local economy.
The cost- effectiveness in creating jobs is the ratio of total expenditure of the project divided by the
number of new jobs created. This figure reflects the actual cost needed to create a new job in the
supported enterprises. It also provides a rough guide on how effective the SMEs generate
employment per unit of investment. Given this figure of other projects with the same services, we
could make a comparison to know where and which enterprise had used the investment more
effectively.
(ii)

Income generation

With employees, having a job means having more income. Total personal income includes wages,
proprietor income, property income and transfer payment such as pensions and unemployment
benefits. Income is the standard measurement for the overall wealth of residents and might also
have impacts on level of living of the respondents. It is a froxy measurement for the ability of
individuals to make necessary and discretionary expenditure on goods and services improve their

quality of life. While income includes all sources of income, the average wage per worker measures
wage or salary only and is better indicator of the health of local companies and the economic wellbeing of workers.
(iii) Living standard
Level of living or living standard refers to the actual living conditions of people. Increase in living
standard were measured by increased purchasing power. The following indicators are used to
assess the living standard of the respondents in the survey: increase in savings, purchase vehicle,
household appliances, improved existing house and purchase house or land, increased ability to
support their children in studying, improving their own education, medical expenses and travel.
(iv) Training, health care and insurance
While some owner managers have the view that training is an operational expense rather than an
investment (Finegold and Soskive, 1998, cited in Kerr and McDougall, no1), and that training
beyond the level necessary to perform the immediate job is a lucxury to be provided only when the
firm is making money (Henry et al., 1991, cited in Kerr and McDougall, no1), many still have to be
convinced of the bebefits to be delivered from learning and training (Wood, 1992). Therefore,
SMEs offer their employees opportunities to access more training and education regardless of
formal or informal planning. The impacts can be measured by the abilities of the beneficiaries to
access educational or training programs (Valadez and Bamberger, 1996). Similarly, impacts on
health can be measured by the abilities to access health care or medical services (Zuveka, 1979)
(v) Change in individuals
People will only climb out of poverty when they realized that they can change their situation and
when they develop a positive attitude toward the future (Shirley Buzzard and Elaine Edgcomb,
1988). Change in employees’ situation is measured and realized by their perception of changes in
their living standard, their knowledge and skills, their willingness to work with other in the
organization, and to join the community activities.
(vi) Human qualities
18


Some intangible parts of the organization that make it an exciting place work and one where there
is a feeling of enthusiasm and progress are called human qualities (Shirley Buzzard and Elaine

Edgcomb, 1988). According to this concept, the management style of the manager, the
effectiveness of the personnel office and the mechanisms for the communication do affect
employees. If employees feel they are cut off from the organization, they will feel demoralized and
discouraged. For this reason, we do need to know how human qualities of the enterprise are and use
some indicators to measure it. Some common ones are number of employees who feel their
opinions are considered, number of workers feel they can speak openly with their own supervisors
and people high up in the organization, number of workers understanding policies on training,
promotion, raises and feel they are applied fairly.
(vii) Social costs
It does not always means that the results of the project will be all good. Changes usually have its
costs as well as its benefits. Social costs are undesirable and unintended consequences of
development. Sometimes, we do not realize the cost until a project is well underway and problems
become obvious and difficult to solve. Some indicators used to measure this impact are the
perception of employees toward the workplace: whether the working conditions are dangerous or
unhealthy.
Furthermore, information about enterprise characteristics such as the total employment, the input,
the final market, and their contribution to welfare programs are also collected. These are
information to clarify the sample but not the objectives of the research. Table 3.1. presents a
summary of concepts, variables and scales of all above mentioned indicators .
3.2. Sample design
The project of SNV which supported SMEs in Ninh Binh province has finished at the end of 2000.
The total number of supported enterprises is 125. Since this figure is not so large, taking all the
population to explore the worth of the project is possible. The time constraints, however, do not
allow the author to access all the enterprises. The sample selected from the population in this study
could be relevant as long as the figure ensures the distribution characteristic of the population.
In this research, SMEs which have received support at the end of 1998 and beginning of 1999 are
selected on the basic of information from SNV. The following criteria will be considered: industry,
their willingness to cooperate in the survey and their potential for providing information relevant to
the study. The sample will be designed in a way to achieve a diverse sample of firms with different
sizes, types of ownership, technologies, etc.

Table 3.1. Measurements of indicators:
Impacts Indicators
Measurements
Employment Number of employees before and after project
Social
Types of employment
impacts Income
Individual monthly income
19

Items
Scale
7 Scale
2 pts. categories
1 Interval


Average monthly wages of employee
Education level
Ability to access training(before and after the
project)
Ability to access health care
Purchasing power
• Ability to support their children in studying
• Increase in purchasing of food
• Increase in purchasing of goods
Savings
Economic Final market destination
linkages

• Number of enterprises exporting
• Percent of exported volume
Materials suppliers
• Percent of inputs taken from domestic market
Change
in Change in knowledge and skills
individuals Their willingness to work with others in the
enterprise
Number of employees feel they can speak
Human
openly with their colleagues and their own
qualities
supervisors
Number of employees understand the policies
of the enterprise
generation
Education,
skills and
training
Health
Living
standard

Social costs The cleanliness of the environment
Length of time the business owner spent out of
family for doing business
Economic Economic Cost reduction
impacts impacts on Increase in sale volume
the business Increase in exported volume
Upgrade infrastructure

Better quality
Changes in sources of credits
Change suppliers
Economic Increased income for the community
changes in Increased employment
community Links with other business

1
1
1

3 pts categories
3 pts categories

1

Nominal
Categories

4 points
categories
Nominal

Nominal
Nominal
Nominal

Nominal

Since the project has different impacts on different groups, it is important to design survey or other

methods of data collection, to target each of the affected population groups. The validity of
estimates can be tested by comparing them with estimates obtained from independent sources.
Qualitative method such as interview with the key informant and in-dept case study can also be
used. At the same time, structured questionnaires are delivered to an arbitrary sample of workers.
There are many mathematical formulas to calculate the sample size. It depends on the size of the
population, the desired precision level, variability of the sample, confident interval and the data
analysis techniques. The large the sample size, the more confident the result would be. However,
20