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My first visit to these 2 countries, and a very satisfying one at that!
We’ve been struggling with how to engage MFIs in Africa given the significant challenges Africa presents in terms of a very rural, very agricultural-based economy. The traditional models of microfinance which work very well in other parts of the world are producing much lower impact and much higher default rates in Africa.
Over the last year or so, as we accelerated our programmes elsewhere, it became apparent that we needed to be supporting agricultural value chain projects in Africa rather than pure agricultural production in order to keep the value-add in the local communities, reduce the same communities’ vulnerability to supply and demand factors and encourage the youth to stay in their local communities rather than moving to the towns and cities.
If we want to encourage the local population to move up the value chain, we also need to be mindful that these projects need a degree of technical expertise and input. This expertise is rarely available directly in the local population, so a mix of international & national NGO support seems to be of the utmost importance.
We don’t have a one-size fits all recipe (is that a mixed metaphor?), but the following ingredients seem to point to a stronger, more robust project structure with a greater chance of real, sustainable impact:
To illustrate the above points, here’s an example from 1to4’s visit to Togo & Benin.
In the Kpalimé region of Togo, a local MFI (Fececav), an international NGO (Brücke-Le Pont) and a local NGO (ADIL) have come together to develop a project which produces and sells quality red palm oil. Red palm oil is tasty and provides a high Vitamin A content which is helping to reduce the incidence of blindness in the local population. To date, there are 297 members within the cooperative. Pretty impressive for a project which only got serious traction in 2010!
We also visited and heard of many other agricultural value-chain projects during the trip including cooperatives for poultry and rabbit, rice and soya groups and dried mango and pineapple initiatives.
Well, we’re busy putting the pieces of the puzzle together and hope to be able to announce soon that the direct result of this trip is a financing agreement with 2 MFIs, one based in Togo, the other in Benin.