What am I doing here?

It's probably time that I actually wrote about what I am actually doing here besides learning how to bucket bath, hoe a garden and communicate with hand gestures.

My personal goal for this trip was to spend some time in the field in Africa, work inside an NGO, and attempt to apply concepts I learned in class to 'real world' poverty challenges. To achieve this goal, I signed up for a short volunteer stint with Africare, a US-based non-governmental organization (NGO) that focuses deliver aid to Africa. Africare is currently active in 21 African countries and they have been working on the continent for over 35 years. During my stay here, I am helping Africare evaluate their portfolio of initiatives to create additional revenue streams for small-scale/family-run farmers. I have divided my work into two separate components: 1. small-scale dairy and 2. micro-enterprise programming.

For the small-scale dairy initiative, Africare is looking build a local dairy industry in Chimoio. It is working with a Zimbabwean dairy-farmer who has set-up a dairy processing facility (for milk and cheese) just outside of Chimoio. This dairy farmer is looking to purchase milk from small-scale farmers since he has more production capacity and demand than milk he can produce. Africare would work with the local farmers to teach them how to raise dairy cattle. The farmers would then sell the milk to the Zimbabwean dairy farmer who then process it, package it and sell it both domestically and internationally. I am working on building a finacial model for the project to see if it is economically feasible for the small-scale farmers and for Africare. So far it looks good. Moreover, there are several other factors which suggests that there is a large potential for dairy in Mozambique. First, several other countries have built successful small-scale dairy industries: Malawi, Botswana, Zim, South Africa, Kenya. Second, the macro data suggests that there could be a supply shortage of dairy in both Zimbabwe and South Africa. Mozambique is geographically well positioned to export milk to both of these countries.

From the farmers perspective, dairy farming is much more lucrative than cash crops. Dairy prices are also much more stable than commodities like sunflower or sesame, which would give the farmer a smoother income stream. Of course, there are significant start-up costs as well as a steep learning curve. The farmers will need to change the way the manage cows. Almost all the farmers I have met have never worked with dairy cows, which demand a much higher level of care than a non-dairy cow. For example, many farmers will hit the cows to get them to behave, but dairy cows cannot be hit. They need to be spoken to politely and cannot be stressed. If they are not treated well, they will not produce much milk. I've really enjoyed this project

My second project relates to evaluating Africare's work in helping these small-scale farmers deveop micro-enterprises. A micro-enterprise is basically a small business that has fewer than 5 employees and is usually managed by the owner. For Africare, micro-enterprises provide farmers with another source of income that is separate from their farming income to provide some income diversification. Last week, I had a chance to visit a bakery (see photo on left), a tinsmith/blacksmiths, an oil producer (sunflower and sesame oil) and a soymilk producer (see photo on right) etc. Most of these businesses were run by an association of farmers and I had a chance to speak with the Presidents of these associations to hear about their experience creating a small business and flesh-out the role that Africare should play to support these micro-enterprises.

Based on my field visits, I struck by the business opportunities that existed on these farms - many of these micro-enterprises were profitable. While a farm may appear to be completed isolated, it was likely to be surrounded by other farms. All of these farms were located far away from the closest town. Together, they form a local market for goods and services. Take the bakery that I visited. It was run by a farming association headed by two women (very rare). Each day, two people spend two hours producing 100 rolls. They sell them for 2MT each (roughly 7.5 cents) and they sell-out almost every day. They have a profit margin of 35%, which results in an annual profit of roughly $1,000. They can use the funds to invest in equipment to improve their farms or to expand the bakery. While $1,000 may not seem like a lot of money, you must keep in mind that the average GDP per capita in Mozambique in $200.

The challenge for Africare was two-fold: how to provide these farmers with business skills to grow their existing micro-enterprises and how to train other farmers to set-up their own microenterprises. Going back to the bakery, I found it fascinating that they did not consider expanding production beyond 100 rolls. When I asked them about it, they were afraid that the rolls would not sell, even though they sell out almost every single day! The idea of expanding production seemed very risky to them, even though they could easily scale back production if the additional rolls did not sell. I think if they had more business training or someone who could help them think about their business, they could expand their business to be even more successful.