Enterprise Development (ED) &
Climate
25 February 2020
Resilient Agriculture
N. Dlamini
Structure of discussion
1. What we do at Mahlathini DF
2. Purpose for this discussion
3. The problem
4. The solution
5. MDF’s experience
6. Results
7. Next steps
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What we do at
Mahlathini DF
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Programme
Target
Climate change
adaptation production
methodsthat improve
yields(qualityand
quantities)while
rehabilitating and
conservingthe
environment(soiland
water resources)
SmallholderFarmers
Trainingand
supervision of Farmer
LearningGroups
PromotionofCRA
§Improved soil
fertility
§Climate change
adaptable financial
planning habits
§Cooperative buying
§Increased yields
§Functional farmer
institutions
§Improved market
access
§Farmer centres
Results
Methodology
Goal
§CRAfarming
methods
§Financial Education
(Focused Savings
Groups)
§Entrepreneurship
Education (Street
Business School)
§Research (M&E)
Philosophical
underpinnings
Adapt financial
education and
enterprise
developmentto
meetthe
development
objectivesof
Climate Resilient
Agriculture (CRA)
§Just like a
wellness
programme, our
approach aims to
move people along
the awareness-
education-
behaviour-
continuum so that
they can operate:
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Operate Farmer
Learning Groups
Operate Savings
Groups
Draw benefits
from CRA
practice
Operate profitable
enterprise
Improved natural
resource
management
Water
Soil health
Increased yields
Better equipped to
respond to CC
Purpose of this
discussion
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The purpose of this discussion is to:
§Share MDF’s experience ins helping
the Farmer Learning Groups (FLGs)
to operate Savings Groups (SGs) in
ways that avail cash to finance the
business initiatives within the
boundaries of CRA
§Secure interest from farmers and
agree on next steps
Our problems (general)
§Scarcity of money
§Bad reputation of traditional stokvels
§Flooded by debt instruments and pre-paid
consumer products and services
§Prioritizeconsumptionoverproductiveassetsand
farming inputs
§Household food production at its lowest
§Discouraged youth in farming
§Negative effect of climate change are with us;
mainly, erosion, poor soil health and low yields
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Debt Problem
Cash purchase price: R2 000.00
Instalment purchase price: R5 240.00
Deposit: R200 (10%)
Instalments: R140 X 36 months
Totalamountpaid:R5240
Totalinterestpaid:R3240(162%)
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Food over-stocking problem
§Traditional
grocery stokvels
mobilise
members to
spend millions of
food at the end of
each year
Problem of instant gratification
§Non-productive
assets feed instant
gratification brain
Problem of fattening loan sharks
§Welovethemost
expensive money and
complain about debt and
scrupulous loan sharks in
one sentence
Problem of ignoring productive assets
Problem of ignoring lessons from stokvels
§Bad and good experiences in
stokvels
§All experiences are lessons
§Opportunity to extract
positives from stokvels and
transform Savings Groups to
financiers of rural
enterprises
Greatest opportunity
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Promoting
Savings
Groups helps
to make CRA
practical in
communities
§Our
experience
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Plugging the gaps
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Food production, food security, improved
incomes, etc.
Access to capital
Networks that ease access to
organic food markets
Improved and
sustainable livelihoods
CCA
CRA
Rules of engagement: social bonds of association
All members of a Savings Group must know and trust each other
very well –and trust is reinforced by:
§A constitution
§Steel/strong tin money box
§3 way locked money box
§Clean records
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Rules of engagement: transparency
§The meeting shall dispose minimum of 5
items in the following order:
1. Share purchase (savings)
2. Loan repayment
3. Issuing of new loans
4. Booking of future loans
5. Set date, time and venue of the next
meeting
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Money box is opened in a meeting and all monies are counted in front of all
members
Share purchase
§Members shall agree on a minimum value of a share
§A sharemaybesetfromR100upwardsdependingonthe
affordability of the members /in multiples of R100
§All members must at least afford the minimum share
§Members shall be allowed to purchase between 1–10 shares in a
meeting
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R100
§2 shares = R200
§4 shares = R400
R200
§2 shares = R400
§4 shares = R800
R500
§2 shares = R1 000
§4 shares = R2 000
Loan taking
§Loans are booked at the previous meeting
§No loans are granted to absent members
§No loans are granted to indebted members
§Loans shall not exceed 2 times of the value of member’s
shares E.G. a member with R1 000 is eligible for up to R2 000
§10% interest per month is charged
§3 months repayment period
§No interest charged on month 4
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Group fund building fines
§Fines should be established for misbehaving members
§Funds raised from the fines shall be added into the Group Fund.
§No member shall be fined for failing to buy shares or repay a
loan.
§The group agree on the list of offences and fines:
uArriving 15 minutes late at a meeting
uForgettingkeys(Thismustneverhappen!)
uForgettingamoneybox(Thismustneverhappen!)
uForgetting the balances of the previous meeting
uTalkingduringthemeeting
uCell phone ringing during the meeting
uAnswering a cell phone during the meeting22
Summary: Establishing a Savings Group
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§Based on the concept of stokvels / build on what people know
§All members must know and trust each other very well
§They must live in close proximity OR work together
§Transparent / clear procedures / constitution
§Minimum of 12 month/cycle; ideally 3 years
§Monthly compulsory saving (and loan) meetings
§Savings through buying of shares (1-10 per meeting)
§Members take loans / 3 or 4 months term /10% pm
§All transactions are managed by the group
§Money kept safely by the group (3-way lock money box)
§Share-out calculated based on the number of shares bought
Pillars of a Savings Group
§Manageable size of the group (up to 19)
§Trust, neighbourly, care for one another
§Strong social bonds
§Transparency,commitmentanddemocraticprinciples
§Focused savings to support CRA objectives
§On-going training and supervision
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Key lessons
nIncreased circulation of cash in the village
nStarving of debt (loan sharks in particular)
nMoney freed for productive objectives / agri-business financier
nBasis for co-operative buying
nSolid foundation for enterprise development
nImproved networking skills on the part of farmers / secure
services and support agri value chain actors and supports
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nA Savings Group is a “community bank”, but a bank that
requires no proof of income, payslip, identity document,
collateral, etc. to provide financial services
Results
nCash is available locally (R142 493.50)
nEasily available money to operate an
enterprise (8 members able to finance
1ha of maize production; R10K)
nMoney freed for production
nIncreased social capital and bonding of
members / act as a glue
nWomen empowerment, confidence
nFLG + SG = social insurance
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§Enterprise Development
§A StreetBusinessSchool
Approach
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Our goal is to invest savings in production
We use SBS to respond to dissect business
development and networks
5 fingers:
1. Market
2. Technical knowledge and skills
3. Capital
4. Profit
5. Family expenses
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Trainingapproach
§8 short practical modules
§Financial education; and emphasis on
delayed gratification
§Continuous training, supervision and
on the ground business coaching
§Promote CRA commodities
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Main concept
A bright future
exits for everyone
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Financial and economic terms simplified
§Microfinance: strengthened relationship
between people and money in ways that
finance “money making resources”
§Enterprise Development: capacity to employ
available money making resources to improve
and sustain household incomes – where money
making resource are: entrepreneur, skills,
assets and money32
Conclusion
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Farmer Learning
Groups
Savings Groups Production
Natural Resource
Management
Next Steps
Thank you
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