Transforming African Smallholders into Rural Entrepreneurs

By George Mukkath, FARM-Africa’s Director of Programmes

Transforming African Smallholders into Rural Entrepreneurs

Prices of certain basic food commodities have risen sharply in recent years. According to a 2011 World Bank report on food prices, global wheat prices have risen most, doubling between June 2010 and January 2011. Maize prices are about 73 percent higher.

Increased food prices have had an adverse impact on food security worldwide: the UN estimates that between 109 million and 126 million people may have fallen below the $1 per day poverty line since 2006 due to the increase in food prices. And according to the 2011 World Bank report, recent rises in global food prices have pushed 44 million people into poverty in developing countries.

Volatility in global food prices is exposing increasing numbers of African smallholder farmers to household insecurity and hunger.

Eastern Africa Context

Over 80% of people living in remote or rural areas of Africa rely on the food they grow and the animals they keep to survive. Uncertainty caused by fluctuating commodity markets means that it has never been more crucial that African smallholder farmers are able to increase their food production. Increased food production both reduces African smallholders’ exposure to prices hikes and also enhances their ability to sell surpluses of food to generate additional income.

How Farm-Africa is Helping African Farmers to Respond to Rising Food Prices

In Kenya the government has identified fish farming as a key sector for development as part of its economic stimulus programme. The logic is simple: demand for fish is high and supply is low. As a result, fish ponds were dug in 160 out of the 210 parliamentary constituencies in Kenya with the vision of helping smallholder farmers to generate income from aquaculture. The Government of Kenya has invested 4 billion shillings in this Economic Stimulus Programme, providing farmers with fish fingerlings (young fish) and fish feed.

FARM-Africa, through funding by the UK Government’s Department for International Development, has established an aquaculture project aimed at supporting and training new fish farmers to boost fish supply, thereby reducing fish prices in the region. The project also aims to train new fish farmers in business skills and to enhance linkages to thriving regional markets in Kampala and Nairobi where demand for fish is high. The project is located in Western Kenya where almost 60% of households are dependent on fish, either directly or indirectly, as a source of food and income.

FARM-Africa’s project is adding value to the Kenyan government’s drive to promote aquaculture through its development of aqua shops. These shops, established as six commercial franchises, act as a hub, providing fish farmers with quality inputs as well as technical training.

Approximately six hundred farmers have been trained and equipped to set up and run viable fish farming businesses since the project began.
This project demonstrates powerfully the potential for African smallholders to develop into rural entrepreneurs, fully plugged into commercial markets. It is this crucial link between farmers and markets that needs to be embedded in the rural economies of Africa that can make it vibrant and compete with emerging economies across the world.

Editor’s Note:

We would like to thank George Mukkath of FARM-Africa for his blog contribution to coincide with World Food Day and Blog Action Day on October 16th, 2011.

Farm-Africa was founded in 1985 to help poor farmers and herders in Africa grow more food, keep their livestock healthy, make a basic living and manage their natural resources in a sustainable way.

Follow them on twitter at @FARMAfrica

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9 Responses

  1. Our project, the Butterfly Project, is also doing exactly this, though we add in some extra themes, such as training in Ethical behaviour, ICT, problem-solving and SOCIAL enterprise.  More about the project at http://www.socialenterpriseafrica.org. The blog is at http://www.chrysalisuganda.wordpress.com.  All the participating children are gifted and talented and are participating in real businesses, as well as learning what works in rural areas and how they might apply it to their own situation.

  2. During my assignment with the Commonwealth Secretariat as Entrepreneurship Development expert to Malawi we tried several projects to stimulate,support and sustain entrepreneurship at the grass root level.Rural entrepreneurs and enterprises can really make a big change in the economy as well as quality of life in Africa.What is needed a small intervention by the stake holders.

  3. While I believe these types of projects are often needed and can do good, I think we as the development sector are doing ourselves a disservice with statements like the following:

    Approximately six hundred farmers have been trained and equipped to set up and run viable fish farming businesses since the project began.
    This project demonstrates powerfully the potential for African smallholders to develop into rural entrepreneurs

     

    How many of the 600 entrepreneurs who were trained are now actually running viable, sustainable businesses? What has actually changed in terms of people’s behaviours and livelihood outcomes? Once there is a number for that, then I would say we might have evidence of that potential. To say that the training of 600 people demonstrates “powerfully” anything is the type of statement that puts us further away from honest evaluations of what works and what doesn’t work in development, and pushes us back towards unaccountable aid dollars.

     

    While there may be much more behind this story that isn’t written which demonstrates the actual impact or effectiveness, or this is possibly an instance of premature reporting on project results, I am disappointed with the language here and the implication that training equals results. It does not. And we cannot continue to pretend that it does.

  4. Thank you for your article George, and thanks for the work you do.  

    I understand Ben’s point that 600 people trained does not necessarily equate to 600 lives changed, but I also recognize that while measuring viable businesses, behaviors, and livelihood are important, these are difficult measures to obtain or even define.  Clearly that work has to be done and real results need to be measured, but it takes time and 600 people trained sounds like a good start.

    I work in Kampala, and even in the city, the number of people engaged in sustenance farming is remarkably high.  Rising food prices present a significant challenge and opportunity.  Without enough production, my neighbors are plunged deeper into poverty.  With excess produce, they can rise out of their current situations.  

    As you point out, corn and wheat prices have increased dramatically.  Is Farm-Africa also working with East African to increase production of these crops?

  5. I tend to agree with Ben – without being exhaustive, a potential small trader or entrepreneur is going to need skills that include business, financial and marketing as well as technical.  They will need the tools for the job and the finance to get the materials and provide some level of working capital.  Plus some assessment needs to be done of the local market to ensure that an area is not swamped with people all trying to ply the same trade.   Then as Ben suggests, we need to track the results after a year or two, learn from what has happened and adapt the approaches, and accept that as in any small business, there will be a level of attrition. 

    I’m not sure that many of those with a purely NGO background have fully grasped this though they have much to contribute in tackling the wider social issues.  Its where people and organisations with small business experience need to be making a critical contribution, ideally working in partnership

  6. I don’t think the article above implies that training alone leads to successful entrepreneurs.  It also makes the point about incentive.  There is no point in training to people to make something for which the market is too far away and there is no means to transport it there.

    Investing in Africans, where that money does exactly what it says it does is incredibly good value.  The USA invests millions of dollars in AIDS “awareness” but is anyone counting those people that have become aware that weren’t before?  Possibly, but that is not the point.

    Whilst I agree with the tracking, where possible, do you really think that such positive actions should not go ahead, if tracking is difficult or there is no money for it?  It stands to reason that entrepreneurship training, logistics development and sales training will lead to improved living standards in lands where the economy is so biased towards urban areas.

    If you question how many of the 600 are now viable entrepreneurs, then my response would be how many would be significant? – 600? 60? 6?  How much value are you, as a Westerner putting on the improved living standards of an African?  How many Africans are you prepared to see die due to lack of medical care or starvation in a village for your dollar?  By comparison, hundreds of thousands of pounds can be spent just to safeguard a single life here in the NHS in the UK or tens of millions just in case of a flu outbreak.  We find it easy to justify these expenditures for ourselves (giving ourselves fifty years supply of drugs in the latter case), but when we are giving money to others, we question, to such an extent that the money given drops by 30%, due to administration.

    The key to this is trust. Find people – social entrepreneurs that are capable and you can train to keep good records – and then funnel funding through them.  Give them the hand of trust giving them the flexibility that they need, not the begrudging hand of the auditor.

    Lastly, don’t apply the business techniques of Western corporations to African smallholders.  Expanding a business in Africa is very hard and relies on trust with money given to many people, which is difficult when 95%+ of people are living in poverty, so building a business needs different techniques, perhaps cooperatives, perhaps profit going into projects that benefit everyone equally, such as school equipment or healthcare.

  7. While monitoring and evaluation can certainly add costs to a development program, we are doing ourselves and our beneficiaries a disservice if we do not do it. This ties in to your point on how many viable entrepreneurs are significant. The answer is that it is relative – relative to what the other opportunities for spending money are. If no one monitors their work then we have no idea what reasonable results are on a project like this, and we are forever doomed to stumble around in the dark. How many projects do you think have been carried out to train rural people in entrepreneurship skills? I can think of five off the top of my head here in Northern Ghana in the past year. Add in other countries and other years and the number is enormous. My guess is some achieved better actual outcomes than others, and probably all have something to learn from one another. If we had a reasonable accountability system we would know what a reasonable number in terms of results (actual viable businesses) would be. Instead, I primarily see project results reported at the output level as in this case – with number of beneficiaries trained. This is a vanity metric. It looks great and makes us feel good but doesn’t really tell us much. It doesn’t tell us anything about the efficacy of the project and doesn’t help us learn about what we can do better. How many entrepreneurs that could have benefited from a project will we continue to let down due to projects that would be designed and operated more effectively but are not because we can’t get our act together and invest in learning what matters to beneficiaries?

     

    What I do agree with you on is that trust is key to making a system like this work. I would be interested to hear how this trust was built and agreed upon with 600 potential entrepreneurs. I have not seen any projects that are able to build the type of trust you describe with 600 people in a short time frame, but would love to learn more if this is the case here.

     

    Lastly, I’m not sure if the comment about Western business practices applied to me and other comments or the project which states it is promoting a franchise model. While I agree we can’t blindly apply ideas across contexts, some ideas are useful in many places. I for one would be very interested in how the franchise model works in this context. Did it work and why? What can we learn about how to apply this model or why we shouldn’t? Your other ideas are also interesting and I would love to see how all of these things compare against each other at the end of the day. For me that is why we need to start doing a better job of learning, and stop kidding ourselves when we report output level results as success.

  8. Due to high population growth, landholding becomes smaller & smaller, due to high deforestation and climate changes the productivity of the land is becoming very low, which makings rural livelihood so difficult for the youth and the landless. Therefore, Designing rural entrepreneurship development and investment by Governments and NGOs should be considered as the main intervention. which can really make a big change in creating self help generations who can contribute to developing countries economy as well as quality of life in Africa.What is needed is a real commitment by Governments and NGOs and real intervention by the stake holders in developing Entrepreneurial Education for the Rural Community and assist them to establish their own economic institutions such as cooperatives.

    Cooperatives are real institutions which can support the low economic and poor community, because cooperatives have unique nature and characteristics that distinguish from Investor Oriented Firms. that is

    1. 1.      Democratic member leadership: – Cooperatives operate with full participation of members and leaders elected from among members (community based businesses, who are owned by all size in low-income and lower middle-income countries in Sub-Saharan Africa and South Asia). Every member has equal voting rights, which is based on “One member One Vote Principle.” Accordingly, one member has only one voting right, regardless of whether he/she has high or small amount of money in savings and shares, has higher political or religious power or has better educational and economic status. In primary SACCO Society members have equal voting rights and Societies at secondary, tertiary etc levels are also organized in a democratic manner with system of equal representation by election. This equality gives the proper base for democratic management of their resources to members within their SACCO.

    The members elect Board of Directors and other committees from among the members and even they have the right to drop out inefficient and unfaithful elected Board of Directors at any time. 

    The highest responsibility for the individual members in developing democratic administration within their SACCO is attending the meeting & deciding conscious decision which will be held at monthly bases, quarterly and yearly.

    1. 2.      Member control-in SACCO societies members: –

    ü  Protect membership rights, Monitor if there is fair sharing of benefits or not,

    ü  Assign tasks to further benefits to all,

    ü  Build transparency among the members,

    ü  Discuss problems together and identify solutions by themselves before the worst comes. etc

    1. Benefit, service to members: SACCO Societies are designed to give safe place for savings to unbanked society and provide accessible loan to needy members based on their loan policy, regulations and procedures for any productive purpose such as livestock production and fattening, seed and fertilizer purchases, implements and tools purchases, school fees, home construction, other income generating business, etc.
    2. Cooperatives keep economic benefits within a community. Profit is not drained off by outside investors, because the Cooperative’s members are owners, and the Cooperatives exist to fill a need in a community that is not being organized by other profit oriented businesses owners/investors.
    3. Service at cost with minimum margin; not profit maximization.

    It is true that the main objective of the SACCO Societies is not to make aggressive profit, but it is also true that a well-organized and successful SACCO Society should end up with a balance of funds, that enable it to: –

    1. Cover all the business transaction costs,
    2. Protect members share and savings from any risk,
    3. Allow expanding its financial services and expand th
  9. The Numbers Game

    Would be interested to hear  how many of these  600  farmers that George from Farm Africa  quotes above as have being  trained and equipped to set up and run viable fish farming businesses since the project began  are  making a profit at the end of their first year? second year?  third year out of fish farming  ? I hope that the project will be keeping everyone  on this blog and elsewhere  in touch  of  how these 600 people  are getting on after 1 2 3 years, . It is rather  strange that  George doesnt actually explain that setting up the 6  Aquashops was actually the main  component of this DFID  funded project and the original reason for allocating funding  from DFID – rather than  “Training ” as is implied by  George above?  Strangely he also doesnt mention or acknowledge  Imani  Development who were the project partners who carried out the main business and entrepreneurial  training programme of the  6 Aquashops owners or in fact two other  partners who were also  involved and contributed to this project.  Funny sometimes words  …. and numbers  …….  arent always quite as they seem ……….

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