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Business Development Key to Sustained Incomes

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With just under two years to go before the deadline to achieving the Millennium Development Goals, filed staff from Millennium Villages in East Africa gathered in Nairobi last week to ensure that development gains made so far can be sustained by the communities themselves. The week-long workshop for agribusiness, cooperative and business specialists from Ethiopia, Kenya, Tanzania, Malawi, Uganda and Rwanda was held at the Columbia Global Centers | Africa in Nairobi. Participants were able to share experiences and best practices with colleagues from the Global Center and the Earth Institute in New York as a way to streamline and improve business development and cooperative formation in the villages. The objective is to ensure that, when the project is complete in 2015, communities can maintain sustainable incomes as members of viable, cooperative enterprises.

Grouping small-holder farmers into cooperatives has had tremendous results in raising prosperity levels in the villages. It has moved communities away from the insecurity of subsistence agriculture, and exploitation by unscrupulous middle men who capitalized on farmers’ isolation to buy low and sell high elsewhere.

As a first step, agricultural productivity was raised by the project, through the provision of improved seeds, fertilizer, and modern irrigation technologies, increasing staple crop yields of produce such as maize by as much as five times in some villages. Once basic food security was addressed in the first years of the project, farmers that showed an interest in cash crops such as fruit, coffee, and high-value vegetables, as well as livestock, were trained and provided with start-up support  to embark on profit-making ventures. Joining like-minded farmers into cooperatives gave them strength at market, access to loans and inputs, and, combined with business training on subjects such as accounting and literacy, have allowed many farmers to vastly increase their incomes and develop a steady client base for their products.

Finding fertilizer and certified seeds had always been a problem in remote villages all over Africa. Cooperatives allow for group planning to make sure these inputs are available, and give credit so farmers can buy what they need, then pay back their loans at harvest time. One such program providing seeds and fertilizer in Mwandama meant that the Village Grain Bank collected more than 800 tons of maize from 6,000 farmers. With money from the maize sales, the Grain Bank’s management committee built a new grain mill and shop, and bought a truck, which together provide local employment, give workers new skills, and will help the group guarantee independent income after the Project hands-over in 2015.

“We aim to save USD 70,000 in capital to prepare for the project handover in 2015,” said Bonwell Kaunga, the Grain Bank Manager. “Last year, we had an income of USD 125,000, more than double the USD 58,000 we earned the year before. With a constant rise in our sales, I believe it is possible to increase our capital base, so we can plan for the future.”

Rising independent income levels, as well as improved access to financing has also encouraged individual entrepreneurs, opening shops, tailoring businesses, or hairdressing salons to name a few. Increasingly, people are able to invest their money into social goods such as education and health, laying a strong foundation for an independent and prosperous future.

Despite the success so far, the villages still face challenges of achieving full business potential and growth, including shortfalls in the governance of some cooperatives, and a lack of adequate funding.

The Nairobi workshop has developed and streamlined ways to address these challenges over the next two years, and MVP field staff will now focus on working with cooperative committees to increase and sustain agricultural productivity as a first step.  Training in better agricultural practices, the selection of appropriate tools for selecting agricultural technologies, bacterial wilt disease control in horticulture, aflatoxin control in postharvest management of grain and legumes, agricultural extension system, and yield estimate were identified as key priorities.

“Proper assessment of farmers’ commodity supply capabilities is critical for devising well targeted support to enable them to engage gainfully in the modern agribusiness networks,” emphasizes Solomon Mkumbwa, the MVP’s regional agriculture specialist.

In addition, the Project will focus on improved agriculture service delivery, support value chain development and access to markets, and promote access to financial services and public private partnerships.

Ensuring that cooperatives are legally registered and comply with national regulation is also important:

“A fluid market system can impose non-tariff barriers on small farmers and suppliers,” explained Dr. Belay Begashaw, who opened the workshop. “The only way to compete is to bring cooperatives firmly into the legal system, which will enable them to get credit, borrow capital, and negotiate at scale. This is a privilege that can only be achieved by forming a legal entity.”

Cooperatives and field staff will be trained in governance, cooperative marketing, business planning, financial management and outcome monitoring.

Finally, workshop participants defined three commodity value chains per site:

  • Kenya – Dairy, Horticulture and Staples,
  • Tanzania – Honey, Poultry and Staples,
  • Uganda – Bananas, Dairy and Coffee,
  • Ethiopia – Horticulture, Sericulture and Honey,
  • Rwanda – Cassava, Horticulture and Crafts,
  • Malawi – Maize and Horticulture.

All these measures will ensure that Millennium Village cooperatives continue to operate as going concerns after 2015.

 

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