Learning Agenda of the FSRE

African Bamboo PLC

April 1st 2014

Addis Ababa

Introduction African Bamboo

African Bamboo (AB) is

-Forest, wood production and bio-energy company

-Established in 2012

-Working on bamboo since 2009

-Started with PPP with GIZ and Fortune Enterprise (sister company)

-Also implanting Dutch PSI for its factory establishment

-Ultimate aim produce 300,000 m2 panel using 1.5 million culms for European market

Introduction cont.

-Up to date 31 coops have established

– In Sidama and two adjacent Woredas of Oromia region

– Market for the panel is secured via two bamboo merchants in Germany

– Refugee shelter is the other market for the company which also involves 2000 farmers of the 31 coops

Technology

-The principle innovation is to

make pre-fab houses from bamboo mats

- The mats will be made in Sidama

- While the final construction will be by the refugees, in their camps

- Several innovations are needed to make

-The bamboo production process more productive and to produce the high quality culms needed:

-Thinning of bamboo stands- insure min dia. of 4 cm

- Sustainable harvesting- only mature culms and uniform no of harvestable culms each year (25%)

- Use seedlings to establish new plantations

-Trian on production of more robust and thicker mats

Organisation

-Three new organisations are formed to set up a quality supply chain

1- Bamboo producers and marketing cooperatives,

2- Transport SMEs and

3-Women SMEs

- Cooperatives:

• 2000 farmers have been organised in 31 coops

•Farmers training on sustainable bamboo production started

•Transport SME- each donkey and cart transport 60 culms on average from hub to CC

•Women Group

Organization

•Organised the supply :

•Make sure that the right number of culms are deliver on the agreed dates

•Check the quality of culms before harvest and at store

•Transport the culms

•Store the culms short term storage at CC

•Sell the culms to AB

Organization

• Transport SME– Each donkey with cart can transport 60 bamboo per day

on average

– To transport 160,000 culms in 3 months period ( 72 working days)

– 40 donkey with cart can do the job effectively in the given period.

– The price per culm to be transported has been agreed based on the size of the culm

– The transporters can make enough cash to themselves as well as to take care of the donkey and the cart

Organization cont.

• Women Group• The idea is to set up informal women groups to weave the mats

• Initially it was intended to form– 20 SME’s each with 8 members total of 160 women will be

organized

– To produce mats from bamboo within the compound of AB

– However we found out that

– 1- 8 is a large group and only 3 women are really needed in mat production in a group

– 2- one man should be included in the team to work hard job like cutting and splitting

– 3-further we have to consider points, why to organize women?

Marketing

-Several refugee organisations showed an interest in the prefab

houses

-UNHCR had planned to buy 2.500

-Mate production needs 135,000 poles , calculated on bases of 9 poles per wall -15 mats per house

-Total of 160,000 poles including structure such as rafter etc... are required including the poles needed

- Due to emergency situations in Syria and Philippines UNHCR, did not have fund for Somalia refuges as planned

-AB is waiting for the budget to be approved form the head quarter

Marketing cont.

- In the mean time, AB is searching for alternative market of sales of treated bamboo poles for construction

- To date AB has purchased 5600 culms from coops , treated and sold for construction

-Main factory which will start production in Jan. 2015 requires 1,5 mill culms a year

- The quality of the product is being developed and getting approval to be sold in EU market with help of university in Germany (institute of fraunhofer)

Economics

-AB offers 30% higher price at the moment

-The farmers get 9.7 Birr instead of 7 Birr market price

-This will stimulate farmers to produce more -Increase the plantation size of bamboo (planting of bamboo seedling)

-Improve their existing bamboo fields (follow the training given in sustainable bamboo mgt by AB through its ext.

agents )

-Farmers expect to harvest and sale 2,500 culms/year

-At a price of 9.7 = 24,250 Birr/year , more than 30qu of wheat per ha

Economics

- AB pay 13 Birr/culm for the coops

-Transporters get 1.5 birr culm = 60*1.5= 90 birr/day for two people (60 birr), enough to get 30B each and maintain the donkey and cart , pay 20 cents per culm as credit repayment ( app. 3 years will take to repay the credit)

-Coops will be paid up to 1.80 for their service and coop reserve

-The mat producers could at least get 30 Birr per day same as the payment of daily labourers in the site

Financial efficiency

• Several inputs are given for free to the coop and the weavers SME

• Tools like sharpeners, saws, measuring devices, etc

• The transport-SME get a donkey and a card. This costs 7,300 ETB and has to be paid back to AB via a deduction of 0.2 ETB on each culm delivered to AB.

• farmers 160,000 2.2 352,000 transporters 160,000 0.75 120,000 women –mates 15,000 30 450,000 Total Birr 922,000

• in EU 36,880 budget 134,000 investment recovery period 4 years

Environmental issues

• The project generates several environmental benefits:

• Bamboo is a fast growing plant that produces more woody materials than other trees and shrubs per year per ha.

• Bamboo can produce reasonably even on poor lands.

• Bamboo stands prevent runoff and erosion on steeper slopes.

• Using bamboo pre-fab houses is stead of imported tents reduces both transport costs as well as avoids waste (of broker tents etc.)

Gender

-The project aims to set up women groups for mate weaving

- Even if the mate producing group does not form then the women will be given the job in mat production

Food Security

- Farmers get extra income from the sales of bamboo

- The expanding of bamboo area will definitely compute the pasture land , which may affect the milk production

-However , the extra income generated by bamboo sales can compensate for this

Entrepreneurship

-Both the coops and the transporter SME’s will enhance the entrepreneurial skills and attitude

-Training has already been provided on the business aspects of the coops as well as topics such as bookkeeping

Scaling up

• - scaling up has the following components

– Market for prefab houses is expected to increase of remain stable

– The major product of the factory – panel production Out door decking – will lead to a demand for more bamboo supply

– Different products – 1-treated bamboo culms for construction 2– production of industrial flooring

– This will lead demand of more seedlings to be planted each year for expansion of production by the farmers

– AB is ready to supply farmers 25,000 seedlings each year which can cover 83 ha per year

– Farmers get 30% premium for quality culms and AB having good export market the prospect is good for the scaling up

Conclusion

• The project has different positive aspects

– Increasing income of farmers – farmers can get better price for their product

– Job creation – youngsters and women can get job

– Promote of better environmental issue

– Open issues

– The refugee market development is not yet clear

– The organizing women in mat production may not help them as well as AB. therefore it may even be better to give them job as daily laborers

Learning questions

• The possibilities and limitations of this innovation :

1- What are the economics of making mats?

A- How many hours are needed for a standard 3x3 mat and for other odd-sized maps?

B-What are the opportunity costs for labour of women and what is, consequently, a reasonable payment per mat (or per day)?

2-A monitoring system is needed to collect a range of data on:

1-Bamboo economics: yields, labour needs and cash expenditures

2-Costs of transporting culms

3-The economics of the coops and the transport SMEs

•  

Action plan: what to measure and how to organise this ?

1- What are the economics of making mats?

- need to measure the time required to produce a mate and set the norm for the mat production by a group of three women

- measure the amount of culms to be split by one person per day

- As alternative- employee women on piece rate after developing the norm of mate production and pay on the job perfomed

- 2-A monitoring system is needed to collect a range of data on

- 1-Bamboo economics:

- yields- average yield at the moment is known from the qualitative bamboo survey done by AB

- It need to be repeated every 3 years to look for the difference

- labor needs – need to be monitored

- and cash expenditures – need to be monitored for different activities

2-Costs of transporting culms

- The cost of culm transport should be compared with the cost for the hiring of donkey and cart in the area

3-The economics of the coops

-The expense of the coops in organizing the coops members for delivery of bamboo

-Expense in CC for the guards

- Any other expense eg. Stationary, transport to bank etc.. Should be monitored

4-The economics of the transport SMEs

- Payment of the youngsters per day

- Amount of feed for the donkey per day grass as well as concentrate

- Veterinary expense for the donkey

- Maintenance cost of the cart should be monitored

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