Peppers for the People
Critiques of global trade often include the inability of rural agriculture-based small and medium enterprises (SMEs), like farmer cooperatives, to compete on a global scale. A major impediment to fair competition is the lack of access to capital. Due in large part due to past failures of state banks, many private banks in the developing world are hesitant to lend to agro-based SMEs. Additionally, there is a lack of proper mechanisms to mitigate risk associated with the agricultural sector.
The makers of Tabasco Sauce, the Mc Ilhenny Company, experienced firsthand the limitations created by a lack of working capital for its distributors and farmers. Tabasco peppers are grown by over 2,000 farmers on over 3,000 hectares of land in Guatemala, Honduras, Nicaragua, Panama, Colombia, Peru, Ecuador, Zambia, Zimbabwe, Swaziland, and Mozambique. These farmers and cooperatives generally sell to small and medium traders, processors, and distributors that sell them to Mc Ilhenny in the states. As demand for Tabasco, and its heirloom peppers has grown, rural small and medium enterprises (SMEs) have not been able to scale up their production of peppers, which is very labor intensive with payment only on delivery. With the emergence of new models of social enterprise financing, such as the Sustainable Agriculture Guarantee Fund and Root Capital, some of Tabasco’s cooperatives and distributors have been able to access the working capital they need to expand their production.
In partnership with the Dutch government, the global Dutch bank Rabobank created the Sustainable Agriculture Guarantee Fund (SAGF), which decreases the risk incurred by local banks and regional financial institutions by providing partial credit guarantees for loans made to agriculture-based SMEs. This allows the local bank or financial institution to hold future sales contracts with an international buyer as collateral. The SME client pays a fee, about 2% of their loan, in addition to interest on the loan. This allows SMEs to obtain badly needed credit and establish a credit history. It also encourages local banks to lend to a sector they have long neglected. Rabobank’s goal is to get local lenders to a point where they are comfortable lending to agriculture-based SMEs and ensure a more stable system where the SAGF is no longer needed.
While taking a slightly different approach, Root Capital is another well-known hybrid fund offering capital to rural SMEs, calling itself a, “nonprofit social investment fund.” Root Capital was originally founded in 2000 to finance fair trade coffee cooperatives in Latin America. A major difference between Root Capital and SAGF is that Root Capital acts as a direct lender to farmers and cooperatives, holding future sales contracts with major coffee companies such as Starbucks and Green Mountain Coffee Roasters as collateral. Read the full fascinating case study about Tabasco and the Sustainable Agriculture Guarantee Fund by Joshua Levin at World Wildlife Fund. Mr. Levin will be a guest speaker at IPSA’s 8th Annual Conference this Friday, April 8th at NYU’s Kimmel Center.
It is becoming clearer that agricultural food production is the prime direction for global investment sustainability. Political leaders and politicians worldwide must begin to prioritize agriculture as part of their leadership strategy because no one in any nation deserves to go hungry.
This why the October 2011 presidential elections in the West Africa nation of Liberia is drawing serious global attention. One candidate in the Liberian preseidential race has chosen the fight against hunger in addition to tackling corruption as the central theme of his campaign. That candidate is NYU alumna, Dr. Moses C.T. Jarbo, PH.D.
Liberia’s 2011 Elections:
The Road to Lasting Peace, Security and Economic Development
By Bella N’Diaye – Freelance Media analyst
(Washington, D.C. USA) The Republic of Liberia, Africa’s oldest independent republic, is gearing for the second phase of real democratization and the quest for genuine peace and economic prosperity after decades of war and human sufferings. According to the country’s National Elections Commission, the presidential and parliamentary elections are scheduled for October 2011.
As things stand, there are several candidates, including the incumbent President Ellen Johnson-Sirleaf, that are vying for the nation’s highest office. So far, there are only three viable candidates that stand out amongst the wave of current presidential hopefuls. They are incumbent President Sirleaf of the ruling Unity Party (UP), Dr. Moses C.T. Jarbo, Ph.D. of the former ruling National Democratic Party of Liberia (NDPL), and Attorney Charles W. Brumskine of the Liberty Party (LP).
All three respected candidates are American educated leaders. President Sirleaf is a Harvard educated public administrator with strong international credentials having worked at the United Nations and in previous Liberian governments, serving as minister of finance under the late President William R. Tolbert, and head of the Governance in the Gyude Bryant’s administration.
Cllr. Brumskine, a corporate lawyer is a Southern Methodist University Dedman School of Law alumna, and a former official of former Liberian dictator and war-criminal Charles Taylor’s regime. President Sirleaf has promised change in 2005, yet corruption looms and Liberians are still hovering in exile and refugee camps. Brumskine is promising change, but Liberians are skeptical because he has not delivered despite the fact that many trust him now than the incumbent president. In spite of the President Sirleaf’s political vulnerability which is largely due to her administration’s inability to address corrupt practices in her government and the looming national insecurity conditions, she still draws sympathy from some quarters because of being a female president. Others counter that Sirleaf is not the first female head of state in Africa. By all accounts, she is the second. Ruth Sando Perry was Liberia’s Head of State from 1996 to 1997.
Some international commentators and ordinary Liberians, many of whom are young people who vote, will decide who takes the highest office in the country after the 2011 elections are predicting that Dr. Jarbo will have a landslide victory over both Sirleaf and Brumskine.
Amongst many of the reasons given for this prediction is that Liberians trust Dr. Jarbo by far than his two main rivals in the election because they know that he can deliver – he delivered in the past by restoring peace and security to the country in 2005, and he is the only candidate who many Liberians believe that can address the needs of thousands of ex-combatants who are currently being abandoned in a volatile region where conflict looms.
Another reason why Dr. Jarbo continues to be seen as the strongest candidate to win the election is his closeness and ability to connect with ordinary Liberians. Many people see him as very approachable and the candidate with the most listening ability and problem solving skills.
Coming second to Dr. Jarbo in interpersonal relationship skills rating for many Liberians is Cllr. Charles W. Brumskine who is the candidate for the Liberty Party. Liberians dislike leaders who are aloof and self-centered. A charge a vast Liberian unemployed youth and rural residents argue the current president portrays in spite of her international connections which they say only benefit she and her followers – many of whom are benefiting from the massive corruption in the country in country of 3.4 million and vast natural resources, and an unacceptable unemployment and poverty rate.
Dr. Moses C.T. Jarbo, Ph.D., an alumna of New York University (NYU) is contesting the upcoming October 2011 presidential election in the Republic of Liberia, West Africa, as the Standard-bearer of the former ruling National Democratic Party of Liberia (NDPL). NDPL governed Liberia from 1985 to 1990. The party’s current candidate, Dr. Jarbo, remains the leading and most viable opposition candidate against incumbent president, Mrs. Ellen Johnson-Sirleaf.
Dr. Jarbo was Executive Director of the United Nations – led National Commission on Disarmament, Demobilization, and Reintegration (NCDDR) in Liberia from 2003 to 2005. He is also a renowned resource and scholar on conflict resolution and management in West Africa. In addition, Dr. Jarbo is a well-known farmer who believes in agricultural self-sufficiency as the best option to ending hunger in Africa and fostering economic advancement for rural inhabitants. Dr. Jarbo believes that good and honest public service is the best tool for social change, economic empowerment and the rule of law for developing societies, and has made early childhood education, and women’s’ rights and participation in public leadership the hallmark of his social change agenda. He is the only Africa politician that believes that government budget and expenditures must be on the Internet for public access as a way to stop corruption and fiscal mismanagement.
Liberia went through a period of prolonged civil conflict for a decade (1990 -2003). The Liberian conflict resulted in the death of more than 250 thousand people and destroyed all major institutions and agricultural food production in the country. The international community, including the United Nations, European Union and western nations such as the United States, Britain and France could not figure out how to resolve the conflict in Liberia because of its complex nature – and more than five warring groups.
After so much failed initiatives, the international community counted on the leadership and expertise of Dr. Jarbo in the United States in resolving the conflict. Something that Dr. Jarbo credits to his training and experience from NYU where he completed his post-graduate studies. From 2003 to 2005, Dr. Jarbo was able to bring all of the warring factions and armed groups in Liberia together and disarmed more than 300,000 combatants, including the national army, paving the way for the 2005 presidential elections that ushered in President Johnson-Sirleaf.
Although Dr. Jarbo was the most popular choice of the Liberian people for his leadership in restoring lasting peace and civility to the country, he turned down repeated requests from ordinary Liberians in 2005 and returned to the United States where he last served in a leadership position at the Interfaith Medical Center in New York City until 2010.
From 2009 to 2010, the European Union’s hired Auditor General for Liberia, John Morlu, CPA, repeatedly reported that the current Liberian government under President Sirleaf is the most corrupt in the country’s history, and one of the most corrupt regimes in Africa. Knowing that corruption is the root cause of poverty and civil conflicts in many African nations, and had been the main reason for the decade-long Liberian war which Dr. Jarbo resolved as head of the UN-led NCDDR from 2003 to 2005, he feels strongly that the country’s security is at stake if the corruption trend continues in addition to the massive unemployment and renewing tribal tensions and class struggle.
Dr. Moses C.T. Jarbo is among a group of NYU trained African reformists and international managers who are bent on changing the notion and understanding of public service in Africa. In Egypt, NYU Law School alumna and former Director General of the United Nations International Atomic Energy Agency (IAEA), Mohammed ElBaradei, is also seeking the presidency of Egypt. Mr. ElBaradei contributed and guided the Revolution 2.0 that is transforming Egypt at the moment. If Western education, training and experience have ever been viewed as positive to ordinary Africans, Liberia’s Moses C.T. Jarbo and Egypt’s Mohammed ElBaradei are paving the way in a continent where ordinary people regard politicians with western education as being aloof and incapable of fostering real change that puts people first.
that was lots of info about Liberia in the last comment, mine will be much shorter.
My comment goes to the question of the investment by these banks. Do we have any information on the statistics of the loans? Are they for only low income countries? Are specific countries singled out? How do growers get access to these loans if it is foreign?
Is this all just a PR excercise? I would love to see some numbers.