For entrepreneurs in any country to thrive, the business environment has to actively encourage and support the creation of start-up enterprises. This is the view of TechnoServe, an international non-profit organisation that empowers entrepreneurs and helps them to break the cycle of poverty. The organisation has considerable international experience – and success – in linking small entrepreneurs and farmers to commercial markets.
Mandla Nkomo, TechnoServe SA programme manager for agribusiness and food security, says the challenges facing smallholders are obvious. “These are mainly lack of access to finance, markets and technology. TechnoServe provides support and training in developing business plans to these entrepreneurs, links them to markets and seed capital, and improves their management skills. The aim is to help them produce high-quality products and services and operate more efficiently.”
The organisation was started by US medical doctor and businessman Ed Bullard in Ghana in 1968. Today it operates in 28 Latin American, African and Asian countries. TechnoServe has been in SA for ten years and has assisted no fewer than 582 farmers during this time, helping to create sustainable farming enterprises linked to markets.
TechnoServe works closely with funding partners to design programmes that meet these partners’ enterprise development goals. In 2009, financial services firm JP Morgan gave TechnoServe a grant to assist disadvantaged farmers in the Nkomazi district in Mpumalanga. The project involved planting 7 500ha to sugarcane. Because of its proximity to the border, the project has been able to market the crop to Mozambique and Swaziland.
The Nkomazi project has since been expanded from two to nine farmers and now employs 149 locals through additional funding from JP Morgan. Annual income is R7 million and profit R1,3 million. TechnoServe has also helped the project to establish a wholesaler and warehouse.
In 2011, the Woolworths Foundation gave TechnoServe a R1,25 million loan to assist three emerging farmers to produce tomatoes for its stores in Limpopo. Wellington Mamatjo, Samuel Phasha and Albert Shokane were selected after a comprehensive assessment process. A second funding partner, Woolworths’ fresh produce supplier Qutom, assisted the trio by providing marketing support and packhouse facilities.
TechnoServe provided technical, accounting and business support to ensure that they were able to repay the loan. The plan called for the three farmers to produce tomatoes on 10ha. In the first year, they supplied almost 400t of first-grade tomatoes to Woolworths and 200t of second-grade tomatoes to the informal market. “The income was in the region of R2,7 million,” Mandla recalls.
Massmart and e-fresh
TechnoServe has also partnered with Massmart and E-Fresh to help farmers sell their produce. “Massmart has its Direct Farm programme through the Massmart Supplier Development Fund. They required our expertise to develop a programme for smallholder farmers as direct suppliers to the retailer,” explains Mandla. The project has proved highly successful, with a total of about 40 smallholder farmers now supplying produce to Massmart.
E-Fresh is a company with an established fresh produce market that distributes the produce of farmers to hawkers and larger fresh produce markets. E-Fresh provides the farmers with packhouse facilities that include cold storage.
The project was launched as a pilot scheme with 30 small-scale farmers near Trichardtsdal in Limpopo.
Building the community
Instead of bringing in technicians from outside communities, TechnoServe empowers local people by training them for specific jobs. This helps to break down cultural and language barriers. Velly Ngobeni is a junior business advisor in the Trichardtsdal area and works with 68 farmers in 16 separate units.
“Most of them produce green peppers and beans, butternuts, pumpkins, tomatoes, sweet potatoes, gem squashes and watermelons,” he explains. “They face many difficulties, lack of capital being the main one. Others are infrastructure, especially irrigation systems, fencing and tractors for land preparation.”
Velly’s main task is to help farmers plan their production and provide technical and financial advice. “I also help them draw up fertilisation and spraying programmes, schedule irrigation and control quality,” he adds. Velly joined TechnoServe in 2012 after working in Tiger Brands’ quality control department. At TechnoServe he received training in aspects of farming from various organisations, including sustainable crop production offered by Hygrotech.
Mandla emphasises that selection of farmers for the projects is stringent. Existing farmers are evaluated first. “We focus on a farmer’s ability to supply formal markets. This is based on his or her history, and conditions on the farm. Then we look at the farm’s growth potential, availability of water and land, and the farmer’s potential.”
Mandla stresses that the farmer must show commitment and be willing and able to learn. “Once we’ve selected an enterprise, we develop a tailored programme of technical support and mentoring, starting with a business analysis and plan. We support the farmer for up to three years, by which time he should be self-sustaining,” he explains.
TechnoServe has found that a smallholder farmer tends to sustain and grow an enterprise if there is a secure and sustainable market for the produce. To arrange this, the organisation links up with large wholesalers and retailers with distribution systems that specialise in handling fresh produce. “This is why we’ve linked with Massmart and Woolworths, which also provide funding for the projects,” says Mandla. “Guaranteed off-take agreements make it easier for financial institutions to finance such farmers.”
Mandla adds that the cost of inputs is also important. “Farmers find it difficult to access inputs at a reasonable price. Individually, they have limited power to negotiate prices, but collectively they can buy in bulk to give them bargaining power. TechnoServe helps them with this. Farmers can then buy inputs in bulk and distribute them at a lower end-user price.”
One of TechnoServe’s concerns is sustainability of projects after the organisation has exited. Despite TechnoServe’s efforts to mentor the farmers and ensure quality, several have been tempted to cut corners when on their own. In Mpumalanga, some farmers reverted to planting cheaper but inappropriate seed. What is needed, stresses Mandla, is a structure to help ensure that the good work and discipline is sustained.
Contact Mandla Nkomo on 011 482 6005.