If you want to get out of poverty, you cannot be a softy
It was a clear speech by a female small-scale farmer from the Mtu kazi group. The question was why, unlike most of their neighbours, they had made the choice to become shareholders in MTC - an entrepreneurial company for small-scale rice farmers in Tanzania. A company that is supported with expertise and capital by Norges Vel - through funding from Norad.
By: Eli Bleie Munkelien, Director of Innovation Norway East Africa, 27.05.2021
The company's growth strategy for the next two years is to triple the number of shareholders, invest in mechanization and processing to increase the value of the end product, and to increase access to capital. "But our most important challenge is market access. - Can we sell to Norway »?
Donor or partner in business development?
Back in 2018, the total of 35 farmers agreed to put money into Mbarali & Neighbors Small Scale Farmers' Limited (MTC) - which has now grown to 100 co-owners. Along the way, the owners have invested more capital in the company. The entrance ticket, which previously cost 30,000 shillings (approx. 150 kroner), has now increased to 265,000 shillings.
Through an increase in equity, coupled with the support from Norges Vel and bank loans, they have managed to realize desired investments. They now own, among other things, a warehouse, a milling machine, a shop that sells fertilizer and other inputs, a combined harvester, two small trucks, and office space in Ilongo. But just as important as the financial support they have received from Norges Vel, has their knowledge transfer and training been.
Good results provide effective recruitment
Demonstration field that shows how rice production is using recommended methods and input are also a good selling point for new members and co-owners.
An effective recruitment method is the preparation of "demo plots" - smaller areas that clearly show what the rice production looks like when you use the right methods and inputs. From one of the meetings, a man rises to explain the significance of MTC.
It didn’t take long until he saw that his own crops, compared to that of his neighbour, was terrible.
He is neither a member nor a co-owner. He was sceptical of new methods. To invest in a new type of seed, in fertilizer, in spending time on training - he did not believe in that. So he continued as before while several neighbours joined MTC. It didn’t take long until he saw that his own crops, compared to that of his neighbour, was terrible. What in the world was that neighbour doing? He decided to "steal with pride". It gave positive results. So positive that he is now saving to become a shareholder in MTC.
Agri in Africa
The agricultural sector in Tanzania is the country's largest sector in terms of jobs, but has limited contribution towards GDP. According to the Tanzanian authorities, the country has over 44 million hectares of arable land, but only 24 percent is cultivated. There are large commercial farms, but the majority are small-scale farms. 70 percent of the poor live in rural areas and more than half are farmers. It is thus easy to see the link between measures to achieve the Sustainable Development Goals and efforts in the agricultural sector.
Eli Bleie Munkelien, Director of Innovation Norway East Africa together with Adeline Peter, manager of MTC.
Mbarali & Neighbors Small Scale Farmers ’Limited - MTC
MTC currently has fourteen employees, a board consisting of both women and men of different ages, and a manager named Adeline Peter. The management gives a solid impression. In addition to training in improving rice production, an important service is to provide access to microfinance loans that provide the opportunity to buy, among other things, quality seeds and fertilizer. MTC obtained capital from Self Microfinance and Victoria Finance (VF). VF manages funds from Norad financed through Norges Vel. The board of MTC used their houses and property as collateral to obtain the loan from Self Microfinance.
MTC has also entered into an agreement with Yara. Their fertilizer is described as the best, and their training as very valuable. It was nice to be able to tell them that the company is Norwegian. Norwegian support and aid is highly valued, but what does the board think about going from "aid to trade" - I asked. The answer came quickly - from 2025 we will stand on our own two feet. And they also have big ambitions for MTC to expand to other areas in Tanzania. Both to contribute to sustainable development and to ensure market access with strategic positioning of the company.
On paper, MTC presents almost a doubling of production, but seeing it with your own eyes has the greatest effect.
The pandemic affected the market and economy
The board and management have a good understanding of the challenges and measures to overcome them. What neither MTC nor others have been able to predict is, of course, the pandemic and its impact on economic development. The investment in warehouse building has allowed them to sell rice when prices are good and thus also making more money. However, closed borders and falling prices in Tanzania have put an end to this otherwise effective measure. Both export and import have been subject to changes in regulations, which have created business challenges for many companies.
The MTC board and management outside their warehouse.
The future is mechanized
All progress is carefully measured, and the financial statements show both turnover and income from the investments. For example, the accounts show profit on the investment in a combined harvester after only two months of approx. 20,000 kroner. It may not be an impressive amount, but it is easy to be impressed by MTC and their investors and members.
There is rift about renting the combined harvester.
Today, farmers plant and harvest by hand. It is hotly debated with lots of laughter whether harvesting is a job for men or women. Harvesting is hard work that today is performed with the sickle in hand and the back bent for days - in the scorching sun.
There is rift about renting the combined harvester. The investment is quickly recovered - both when you look at the investment side and the customer side. Purchasing several machines is high on the investment list, and with positive and carefully documented financial history, good business management and consistent business development, the company and its members will have access to capital - this is something they have learned about business development and entrepreneurship through Norges Vel.