1

USAIDFROM THE AMERICAN PEOPLE

Financiamento/Funding

Mozambique

2005-2008

EMPOWERING PRIVATE ENTERPRISE IN THE DEVELOPMENT OF AGRICULTURE

Introduction

In January 2005, three NGOs working in Mozambique joined forces, with the intention

of increasing the per capita income of families in rural areas. TechnoServe Inc.,

CLUSA and ACDI/VOCA all brought with them significant experience in the creation of

sustainable and competitive rural enterprises, but the challenges which continued to

face the rural population of Mozambique convinced all

three companies that a different approach was needed.

The EMPRENDA alliance was formed to promote

cooperation between the NGOs, smallhold farmers’

associations and larger-scale rural enterprises, to target

specific value chains and create market linkages in the

central and northern provinces of the country. In the

Beira and Nacala Corridors, especial attention was

directed towards fruit and horticulture, confectionary

nuts and field crops, identified as areas of high potential

for Mozambican businesses. Since then, the TechnoServe

office in Maputo has served as headquarters for

EMPRENDA activities in Chimoio and Nampula, where

TechnoServe has collaborated with ACDI/VOCA and CLUSA respectively, sharing office-

space and ideas on how to achieve common objectives. The project has seen a

transformation in agricultural sub-sectors, assisting clients to increase their sales

from $4 million1 by the end of 2004, to $12 million by the end of 2007, and towards an

estimated $16 million by the end of 2008. In the Nacala Corridor, the programme has

witnessed the revival of a once thriving cashew nut industry, whilst in Manica, the

birth of tropical fruit production has kickstarted a nationwide initiative to increase

Mozambique’s productive capacity and its global marketshare. Clients have mobilized

almost $26,000,000 of finance over four years, allowing individuals the means to

overcome various obstacles in their efforts to exploit Mozambique’s vast potential. In

the midst of these changes, TechnoServe, CLUSA and ACDI/VOCA have played an

important role as facilitators, designing business development strategies and

providing technical assistance for their clients. At the heart of the programme remains

the central objective of improving the livelihoods of the rural poor, increasing

opportunities for all by developing sustainable businesses in rural areas, creating

employment and providing a reliable source of income for workers. This approach has

allowed beneficiaries to entertain hopes for the future, to advance beyond subsistence

work, to send their children to school and to believe in their own potential to, perhaps

one day, become entrepreneurs themselves.

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1 Estimated baseline taken from the initial EMPRENDA proposal (2004)

The Partners

TechnoServe is a US-based nonprofit organization founded in

1968, with a mission to help reduce poverty by working with

rural entrepreneurs in the creation of competitive and sustainable business in the developing

world. TechnoServe helps create jobs and raise incomes by designing and implementing

competitive business strategies for enterprises whose positions within high-potential value

chains provide growth and employment opportunities in their respective communities. The

company is composed of permanent employees, from both native and foreign backgrounds,

with experience in finance, management and agribusinesses, as well as temporary volunteer

consultants (VolCons) leveraged from some of the world’s leading corporations, including

McKinsey & co., Cargill, and Young & Rubicam. Before engaging in the EMPRENDA

programme, TechnoServe had already accumulated significant experience in Mozambique’s

revitalized cashew processing industry, as well as in its emerging horticulture sector. Its

existing clients would prove invaluable as links in the value chains envisioned by EMPRENDA,

providing markets for smallholders and supplying the impetus necessary to expand

Mozambican business both within and beyond its own borders.

ACDI/VOCA is a private international development and consulting

corporation founded in 1963 to promote economic opportunities

for cooperatives, businesses and communities through the

innovative application of sound business practises. It provides

advisory services in several areas, including agricultural systems,

enterprise development, and financial services. In October 2001 it launched a project to

Reinforce Business for Rural Development (RENDER) in Manica, intended to increase rural

incomes by helping motivated farmers to form member-owned associations. Such an initiative

was essential in the building of economies of scale, increasing marketing power and

facilitating business contracting in Mozambique’s agricultural sector. ACDI/VOCA’s experience

in working with smallholders paved the path for EMPRENDA’s work in the Beira Corridor,

where it was able to encourage increased production levels, improve quality control and boost

the availability of market information, allowing smallholders to gain access to more profitable

markets both internal and international.

Founded in 1916, the Cooperative League of the USA (CLUSA), now

doing business as the National Cooperative Business Association

(NCBA), is the oldest national cooperative development and

cooperative membership association in the USA. CLUSA provides

technical assistance to cooperatives, farmers’ groups, micro-

enterprise organizations, and village level associations in the

developing world. The organization was brought to Mozambique in 1995, where it now works

with associations in 15 districts across 3 different provinces. Leading EMPRENDA efforts to

integrate farmer associations into national and international markets, CLUSA’s activities have

helped to strengthen producer organizations, improve farm productivity and enhance farmer

capacity to influence the agricultural policy environment. Its contributions to the programme

are crucial, and include training for farmers in production, business management, functional

literacy and numeracy, auditing, market assessment and development of high value crops.

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Mozambique

Mozambique has made substantial progress since the end of the Mozambican Civil

War (1976-1992), averaging economic growth of 8% since 2000, with a high of 12% in

2003. Much of this growth has been propelled by foreign-financed “mega-projects”, as

investors begin to take notice of the economic potential of the country, and aid-inflows,

which account for 70% of the government budget. There are nevertheless major

difficulties facing potential entrepreneurs Mozambique, which has been ranked 134th

in a study comparing 178 economies according to ease of doing business.2 For those

who can overcome those difficulties, the opportunities are boundless.

The EMPRENDA alliance was formed in order to find solutions to the various obstacles

facing rural entrepreneurs, and from the beginning it decided to focus on the three

value chains with the highest potential for growth.

• HORTICULTURE: With 550,000 hectares of land available for

horticulture production in the Beira Corridor, and an ideal climate

for growing vegetables and tropical fruits, Mozambican farmers

should be able to capitalize on a significant domestic market, and

an ever-growing international one.

•FIELD CROPS: EMPRENDA initiatives have helped to introduce

diverse field crops into the country, including white sesame from

Nicaragua and castor seeds from Brazil. Growing soybeans has

become an important part of an emerging poultry value-chain,

lowering the costs of chicken feed which was previously imported

into the country.

• CONFECTIONARY NUTS: Before the civil war, Mozambique was

the single largest exporter of cashew nuts in the world, and the

revival of the cashew industry has been one of the country’s

biggest success stories. EMPRENDA has been at the heart of the

effort, not only supporting cashew production and processing,

but encouraging diversification into the Macadamia and

Groundnuts industries.

•FORESTRY: Since 2006, EMPRENDA has been working with a

fourth value chain, identified in a recent study as a potential $10

billion/year industry to be developed over the following decades.3

With 3-7 million hectares of potential space for forest plantations,

a socially and environmentally responsible approach could turn

this sector into one of the most profitable in the country.

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2 www.doingbusiness.org

3 Juma Juma, TechnoServe Deputy Country Director, TechnoServe Conference (10th and 11th of July 2008).

For centuries before the arrival of the Portuguese, Sofala was the most important port of Southern Africa, attracting merchants from India and the Middle East dealing in cloth, spices and gold. Today, the most important port in the region is Beira, and the merchants are of a different sort. Travelling into the interior is not an unusual strategy for buyers looking for cheap goods, especially when those goods can be purchased from smallholders at a highly reduced price. The distance from Beira to Machipanda, on the Zimbabwean border, is only 200km, and it is sometimes considered cost-effective to drive to more remote districts, where farmers have little access to market information, in order to gain the upper hand in bargaining. Often, a smallholder will have been waiting at an improvised storage facility for days, hoping for a chance sale to provide him and his association with the only income forthcoming over that production cycle. When a buyer appears, it is considered a stroke of good luck, leaving farmers with very little leverage with which to bargain for better prices. The result is that prices at the farm gate remain very low, even when the same goods are being sold for much higher prices further along the value chain, generating disproportionate profits for the middleman. The challenge is to organize farmers and facilitate their access to information, ensuring their capacity to demand fair prices. A higher and more consistent income would allow farmers to invest further in their work, to gain access to finance, to turn out higher volumes of better quality produce, and to improve their livelihoods.

Smallholders’ Associations

A large majority of Mozambique’s rural population engages in subsistence farming, planting only what must be consumed in order to survive. Surplus production may fetch an additional income at a local market, but significant changes to a farmer’s quality of life can only be achieved if produce is grown

commercially, in volumes substantial enough to attract interest from urban or international buyers. ACDI/VOCA has been working with farmers in the Beira Corridor since 2001, forming smallholder associations, where farmers cooperate on a large stretch of land and share the profits from sales, to promote collaborative and business-minded production. The challenges are numerous: farmers must be shown how to plant in an orderly and systematic fashion; they must be educated on the benefits of planting more than they need for their own survival, and solutions must be found to various agricultural challenges, from acquiring seeds to setting up irrigation systems. To respond to these challenges, ACDI/VOCA has set up a network of trained Technical Assistants, each with an area of responsibility consisting of 15-20 associations, who help farmers cultivate crops through all stages of the production process. Significant progress has also been made in legally registering the associations, giving them the

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The Beira Corridor

official status they need to perform basic functions, including applying for finance and forming higher-tier associations. In the last quarter of EMPRENDA’s second year, SIWAMA was formed: a second-tier association with the aim of providing closer linkages with input suppliers, financial institutions and research. In 2007, it was recognized as an NGO by the Mozambican government, and if it continues its good work selling seed and finding markets for farmers’ produce, it should be able to achieve its long-term goal of becoming a fully fledged agribusiness entity. As such, it would use its members as outgrowers, transporting produce by its own means and using profits to invest in improvements such as irrigation systems, transport facilities, fertilizers, better quality seeds, and storage facilities.

Kufuma Ishungo

When ACDI/VOCA first began working with Kufuma Ishungo, an association located near the Zimbabwean border, only one crop of vegetable products was harvested over the course of a year. Crops were planted in a haphazard manner around the land, and the little available space was not being used to its full potential. Quality control was virtually non-existent, and the farmers showed limited discernment in their choice and use of seeds and fertilizers. Today, crops are planted in orderly rows, and there is even a nursery where young and fragile plants are cultivated before being transplanted to the farm proper. Under the EMPRENDA

programme, the association has begun planting on a rotational basis, switching between vegetable products and soybeans depending on the season. Soybeans are sold to Abilio Antunes, a large-scale poultry producer and TechnoServe client located in Manica province, who replaces expensive imported soybean cake with the local product, significantly lowering his production costs in the process. The twenty-odd farmers who work at Kufuma Ishungo have thus been enabled to participate in two value chains, with a guaranteed buyer on at least one side of the equation. An EMPRENDA-initiated deal between SIWAMA and Logistica, a company interested in sourcing fruits and vegetables from six client associations, would have guaranteed a buyer for horticultural products as well, had not Logistica pulled out due to lack of finance. Despite this setback, association farmers have been enabled to negotiate a fairer deal for themselves regardless, since the introduction of TradeNet in 2007, which helped to overcome the communications barrier between smallholders and the Beira market. Association leaders, with EMPRENDA advice and assistance, have invested in mobile phones and can communicate with other associations and partners at the ports to discover the price of a commodity on a particular day.

Notwithstanding these advancements, the challenges facing the Kufuma Ishungo association remain numerous and difficult to overcome. There is as of yet no irrigation system at the farm, and for a period of two months in the summer, farmers struggle to cultivate crops which would otherwise fetch a high off-season price. The high price of seeds and fertilizers (as well as their low availability) sometimes compel farmers to walk across the border to Zimbabwe to acquire necessary materials, bringing them back through circuitous routes in their pockets. Access to finance is scarce, and the banks have not yet begun accepting applications from farmer associations.

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Companhia De Vanduzi

When the EMPRENDA alliance began work with Cia. de Vanduzi in January of 2005, the company had been forced to halt production for six months, as part of a strategic decision to reassess its product line, target more attractive markets and test niche products. By the end of the year, with EMPRENDA assistance, it had reorganized its management structure and begun working with smallholders, on whose behalf a

proposal for $150,000 was sent to USAID, intended to improve irrigation canals and horticulture production in the area where the company now functions. Throughout the following years, Vanduzi would sign contracts with associations, providing them with inputs for horticulture production, and buying their produce for export to European markets. Throughout 2006, smallholders accounted for 2% of processed products at Cia. de Vanduzi, especially baby corn and fresh chillies, but the relationship was hard to

maintain due to misunderstandings and the numerous limitations affecting smallhold farmers. Today, there are still a couple of smallholders’ associations working as outgrowers for Vanduzi, but the real success lies with the company itself, which exports around 35 tonnes of horticulture products a week, with a return of $2.6 million last year, and expenditure on salaries of almost $600,000.

The Mango Farmers’ Group

The Mango Farmers’ Group is our name for the entrepreneurs who, since 2005, have approached the EMPRENDA alliance with a wish to set up their own mango farms. All of them are self-financed and otherwise employed, dealing in the mango business during their spare time, and contracting farm managers to care for crops whilst they are engaged. Mike Scott’s mango production farm, EAM, is perhaps most central to this project, having established itself as the first initiative in the sector, with access to marketing facilities abroad and a great record in community development. The commercial tree grafting nursery on his site, founded in 2005, has been an important training ground for farmers wishing to graft mangos with export qualities (such as Tommy Atkins, Keith, Kent, and Sensation), and its success has inspired the inauguration of another nursery, which, as of this year, will be at full capacity to provide seedlings for mango farmers in the region. This initiative and others, representing a $48,000 investment made in 2007 alone, have visibly resulted an emerging industry, in which EAM functions as a major commercial farm, supporting four emerging out-growers in the surrounding area. The success of the industry, moreover, cannot be disputed, given the latest and largest export of mangoes to South Africa, which altogether amounted to 500 tonnes. Despite this success, farmers have been working hard to clear further land, intending to diversify into litchi and pineapple, both of which have been confirmed as profitable crops to be planted in the region.

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Until 1898, the Island of Mozambique was the capital of Portuguese East Africa, located 3 kilometres off the eastern coast of Nampula province. When the capital moved to Lourenço Marques (Maputo) in the south, the fortunes of the north declined drastically, and today the inhabitants of the northern provinces suffer from the lowest adult literacy rates in the country and account for less than one fifth of the Gross National Product. The area’s main industry suffered a similar fate over the course of the Mozambican Civil War. As late as the 1960s, Mozambique was responsible for half of the world’s cashew, with production peaking on the eve of independence at an excess of 200,000 tonnes per year. By the late 1990s, virtually all large, mechanized factories had closed down and an estimated 7,000-10,000 workers found themselves out of a job.4 In 2001, TechnoServe began work towards the revitalization the industry, completing a feasibility study and supplying entrepreneurs with the expertise to open new cashew processing factories in the region. Since 2002, when Antonio Miranda’s factory in Namige first became functional, 24 more factories have begun processing cashew, and the industry has become one of the country’s success stories, providing employment and boosting local economies. EMPRENDA’s work with cashew has focussed on a large section of the value chain, not only providing assistance to processors, but supporting smallhold farmers’ associations in the trial-plantation and further cultivation of cashew trees. Intercropping has become common practise amongst farmer associations, who now produce sesame, cowpeas and groundnuts as well as cashew for a growing market.

The Cashew Processing Industry

Once Miranda established his first cashew processing factory in Namige, it was not long before other entrepreneurs followed suit. The employment opportunities generated by the initiative were key to EMPRENDA’s efforts in the sector, and the results are beginning to show. Extra cash has ensured the development of micro-economies around the factories, as opportunists open small shops, bars and cantinas, and the local population are showing real desire to gain access to the consumer goods which they can now afford, from basic necessities, like medicines and mosquito nets, to luxury items like radios.

Turning cashew processing into a successful industry has been a complicated process, and entrepreneurs have often had to invest time and effort to find the resources needed to establish a reliable business for themselves. Finance is scarce, quality

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4 Brad Paul, “Factories in the Field: Rural Transformation and the Organization of Work in Mozambique’s Cashew Triangle”, 2008.

The Nacala Corridor

control is difficult to enforce, and the machinery needed to produce significant volumes of quality cashew is expensive. In 2004, a TechnoServe employee discovered a butterfly infestation in a factory owned by Condor Caju lda., and quickly advised the owner to treat all bags in stock with insecticides. The precaution rapidly recovered production and probably saved the factory from going out of business. Since then, the same advisor has promoted the purchase of humidification chambers, which makes cashew peels brittle, allowing workers to remove them at a much higher rate without having to use a knife. Factory owners have rapidly understood how these, and other measures like staff training, can increase productivity and quality, guaranteeing customer satisfaction and, perhaps more importantly, loyalty.

In 2005, TechnoServe representatives together with other high-profile guests, including Mozambican President Guebuza, the U.S. ambassador, and the director of USAID, attended the launch of “Zambique”, a confectionary nuts brand sourcing from client factories with a common standard of quality. Zambique cashew nuts have a guaranteed buyer in Europe, and although factory-owners sell outside the brand to other buyers, the approach is preferred because of the good relationship it creates between the supplier and his client. As processors in other

countries default on more and more cashew exports, it is hoped that AIA, the company responsible for marketing cashew for associated factory owners, can capitalize on the reliable supply of Mozambican cashew nuts like Zambique, to attract buyers into sourcing from Mozambique on a priority basis.

Employment and the Minimum Wage

Although paying wages to factory workers may seem basic practise to those accustomed to employment and social security, it is not always so easy to find funds for wages and still turn a profit. The margin of profit for factory owners in the cashew processing industry has remained consistently tight, since costs must be divided between workers’ wages, the purchase of raw materials (unprocessed cashew), machinery, and the maintenance of factory conditions, including facilities for the workers themselves. In 2008, TechnoServe collaborated with factory owners in an effort to lobby government officials, requesting that the wage of factory workers be determined according to their productivity.. On the 2nd of May, the government passed a law defining the sector as “agro-industry”, lowering then official minimum wage to 1350MTN/month, and allowing the factories to remain open, to turn a profit, and to have enough left over to ameliorate working conditions for their employees.

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Name of factory Location Year founded

Number of employees

Miranda Industrial 1 Namige 2002Miranda Industrial 2 Angoche 2004 1493Miranda Industrial 3 Meconta 2004

Africaju Lda. Namialo 2003 210IPCCM Murrupula 2003 223Moma Caju Mecone,

Moma2004 112

Alexim Lda. Luluti 2004 203Condorcaju 1 Nametil 2005 1088Condorcaju 2 Anchilo -2008 TBDMauricaju Napaco 2005 -Olam Monapo 2005 1095Gan Lda. Mecua -2008 TBD

Ikuru

IKURU is a third-tier farmers’ association which has been transformed into an agribusiness company, buying its members’ produce for export to the European market. It is also a certified seed-company, selling seed to its members (sometimes on credit) for goods which it will later purchase from them. IKURU has made significant strides over the past few years, the most significant of which was its earning Fair Trade and Organic certification in 2005. As such, it has been able to sell its agricultural products at a premium, the profits of which are largely returned to the farmer and/or used to expand the associations’ business capacities. EMPRENDA has to an even greater extent facilitated one of IKURU’s largest and most profitable exports, namely the sale of Fair Trade cashew nuts to Twin Trading. IKURU would not of itself have been able to process cashew nuts produced by its member associations, but agreements have been struck between EMPRENDA clients, farmer associations and factory owners, and IKURU is now able to have their goods processed as a service at a fixed price, before selling them on to the external buyer. The export of groundnuts has also picked up since the introduction and operation of a new aflatoxin testing laboratory at Uni Lorio University, which has helped to resolve the problem of aflotoxin contamination that was identified by EMPRENDA agriculturalists and had been putting IKURU’s Fair Trade certification at risk. Thanks to these and other efforts to improve storage facilities, the fertility of soils, quality control and access to credit, IKURU’s sales have now surpassed 2500 tonnes a year. Over $1.5 million in revenue have been generated, resulting in tangible, positive benefits for farmers, and inspiring others to join or form client associations, which have increased their membership from ca. 12500 in 2007 to almost 24000 today.

The Nacalolo Warehouse

The Nacalolo warehouse is the most imposing building in the area, built in brick and cement and rising a few metres above the homes of those who live in the immediate surroundings. In front of it is a more modest house, which was once used by the local FORA (second-tier farmer association) as a storage facility, but now serves mainly as an office. The new storage facility was built by

IKURU to house machinery newly purchased from India, used to refine sesame seed produced by member associations. Although most of the purification of sesame can be done by hand, this added facility pushes the quality up to the highest possible percentage, commanding a higher price in international markets. Sesame, like cashew, need no longer be exported to India for processing, and it will not be long before this investment, made as a result of IKURU’s profits over the last few years, begins to bring in more money. The warehouse is not the only one to be found in the district, as prosperous farmer associations accumulate extra cash and invest in sheltered spaces, where they can store the products that constitute their main source of income. Government and/or NGO donations contribute to the farmer’s available finance, but the projects themselves would be meaningless without the commercial success facilitated by EMPRENDA and enjoyed by farmer associations across the corridor.

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Forestry

In Mozambique, it has come to be recognized that there is a potential for forestry much larger than that of South Africa, where forest products account for 2% of the national GDP, even if all projects were to be limited to the province of Zambezia. The industry has been identified as an area with the potential to generate $10 billion for the country, with prerequisites largely limited to land preparation, seed acquisition, labour and forest fire control. There are, however, significant psychological barriers to the development of this sector, since most investors fail to understand that planting forests can be a lucrative business. Start-ups are most difficult to achieve, since initial investments can only be paid off after the trees have grown to their full size, which in some cases can take about 25 years. In Mozambique, current land use and land access systems represent an additional difficulty, since forests are often burnt down by local farmers clearing land or hunting, unaware that they are destroying important sources of income. Educating locals them in the benefits of the industry is therefore an important aspect of the work undertaken by the EMPRENDA alliance as part of their efforts in this sector.

Malonda Tree Farms

The Malonda Foundation was the first private-sector initiative to promote forest plantation in Niassa since Mozambique achieved independence in 2975. In 2006, Malonda Tree Farms was founded, and immediately began work establishing two nurseries in the Lichinga and Sanga districts, which now have the capacity to produce 2000 hectares worth of seedlings. Over 570 hectares of

Pine and Eucalyptus trees have since been planted, and the aim is to reach at least 1000 hectares by the end of the year. The company has in total spent 1,230,000MTN in salaries, benefitting more than 250 employees and demonstrating that the obstacles facing this sector are not insurmountable. With the assistance of TechnoServe, working within the EMPRENDA programme, it has been able to implement high-level business development strategies and to tackle the challenges which were revealed along the way, including those posed by termite infestations and forest fires.

Gorongosa National Park

The distinctive ecological conditions of Gorongosa supported what was once known as the densest and most diverse wildlife population in Africa. During the Mozambican Civil War, the delicate environmental balance of the park was disturbed by the bombings and land battles which took place within and around its perimeter. Since 2004, the

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Mozambican government has engaged in a joint effort with the Carr foundation to restore the park to its former glory, and in 2006 GNP personnel approached EMPRENDA to commission forest fire and forest management plans. Since then, there have been no forest fires, and initial pilot projects have been run to test the feasibility of bamboo plantations in the area, with the ultimate goal of producing charcoal and building material. Throughout the process, assistance has been provided to smallhold farmers both within the park and in the surrounding area, on how to make the most of their resources in an environmentally friendly manner. With time, these smallholders will also have the capacity to apply for employment in the forestry business, as they pick up knowledge and skills from experts around them.

Finance Mobilized

A cross-cutting issue of primary importance, affecting smallholder associations and rural entrepreneurs alike, is the scarce availability of finance, especially credit, to be had in Mozambique. It is not unusual for banks to offer loans with interest rates of between 25% and 50% per year, and it is even more likely that they will require collateral that the applicant does not have. One of the EMPRENDA alliance’s first decisions in 2005 was to focus work on those associations with irrigation systems, or conversely those who would be able to acquire irrigation systems, as a means of reassuring the banks of their credit-worthiness. At the beginning of that year, the alliance ran a pilot-project which loaned associations a certain amount of money, and discovered that members could make an average of $7 for every $1 loaned to them. Since then, and indeed since the launch of the EMPRENDA programme, “Finance Mobilized” has been one of the Core Indicators used to measure the success of our projects.

The results, however, are not limited to smallholders, since start-up funds and working capital account for much of what constitutes a successful entrepreneur in the cashew industry, in commercial farming and in forestry projects, whether finance be used to purchase machinery, raw materials, or anything else. It is an unfortunate reality that many of our clients have to resort to using private funds in order to support their businesses, and yet, as the EMPRENDA programme has progressed, this has become less and less necessary. In 2005 alone, cashew processors were helped to mobilize $5 million to purchase raw cashew from farmers, while both smallhold and commercial farms were assisted in their applications for finance to build irrigation

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Y I (Feb - Sept 2005) Y II (Oct 2005 -

Sept 2006)

Y III (Oct 2006 -

Sept 2007)

Y IV (Oct 2007 -

Sept 2008)

Target Achieved Target Achieved Target Achieved Target Achieved

Aggregate USD USD (%) USD USD (%) USD USD (%) USD USD (%)

Finance

Mobilized

$1.30 million

$1.34 million

103% $5.8 million

$5.5 million

95% $7.5 million

$6,13 million

82% $18million

$12.88 million

72%

systems, presented to organizations as diverse as ADIPSA, DANIDA, USAID and the micro-credit banks already present in the country. Since the second half of 2006, EMPRENDA clients have leveraged banks like Banco Oportunidade and Banco ProCredit, in addition to sustaining their older relationship with GAPI, in order to ensure access to credit for all involved. Since then, the number of approvals for loans from these institutions, intended to finance pumps, pipes and inputs, among other things, have increased steadily as experience and confidence is gained in working with entrepreneurs in the agricultural sector.

Achievements to Date

The EMPRENDA programme has continued expanding since it began in 2004, working with new crops and different businesses depending on the opportunities which have arisen. It is difficult to get an overview of EMPRENDA activities without losing the sense of scope that would truly communicate the changes experienced in the Beira and Nacala corridors. To the specific associative efforts, industries and business described above can be added the following:

In the North, CLUSA has done remarkable work introducing or promoting the production of highly profitable crops, including white sesame seed from Nicaragua (of which 4 tonnes were imported in 2005), castor seeds (of which two varieties were imported from Brazil in 2007), groundnuts, cowpeas and soybean. Almost 18,000 new cashew trees supplied by INCAJU, a government body that provides subsidized seedlings for smallhold farmers, were planted in collaboration with CLUSA technicians, whose expertise ensured that a large majority of the plants survived the difficult process of transplantation. Today, these trees stand secure as a steady source of income for smallholders, who have since acquired the additional benefits to be derived from intercrops, now grown on a wide scale thanks to CLUSA’s efforts in setting up demonstration plots and training sessions to teach farmers the best way to use their resources. New products have also begun to appear in the confectionary nuts sector, following a 2006 Macadamia pilot-project, in which 120,000 seeds were planted, 62,000 plants grafted and 15 local technicians trained as part of an initial feasibility study. Antonio Miranda has established the first commercial macadamia plantation in the district of Gurué, and once he has completed the construction of his processing

factory (projected for 2010) it is hoped that Macadamia will constitute another value chain, and another stable source of income for Mozambican workers in the future. As if this were not enough, Miranda is also engaged in the construction of castor seed oil-extraction factory, intended to supply oil for export to developed economies.

In the South, field trials have been conducted in the production of linseed, and the results suggest that

this crop, of which there is a worldwide shortage, is well-suited to production in Manica. Fruit and vegetable cultivation continues to be an interesting area of

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exploration in the region, and the efforts in litchi-production which have recently been added to those of the mango-farmers, this year, have resulted in a tropical fruit production boom. Our work with bird’s eye chillies continues to move forward since the commercialization of the first container was completed in 2007. A new entity called Mozchillies has taken over the commercialization of the chillies produced by the former CAC

(Companhia Agricola de Chimoio), and will be selling on a regular basis to Nando’s chain of restaurants. On the horizon, the tantalizing possibility of producing bananas in Mozambique continues to look attractive, and it may yet come to pass that EMPRENDA’s feasibility studies in this field are used to their original purpose.

Conclusion

EMPRENDA partners believe that market-driven development is the best recipe for success, and we are convinced that our clients will be able to continue their work generating revenues for themselves, paying wages to their employees, and contributing to a more dynamic and prosperous national economy. It has already been announced that TechnoServe will be withdrawing its assistance from cashew processors in Nampula by the end of the year, since business in this sector will henceforth be able to stand on its own two feet. IKURU is another company which has become perfectly capable of providing for itself and its own members, and although CLUSA will continue building up farmer associations in the region, it is hoped that the work completed so far will have taught farmers to continue being productive, turning a profit, and ameliorating their own businesses in the future. These are the reasons why the EMPRENDA programme measures its own success according to the success of its clients, taking as its core indicators the sales and revenues of client associations and rural enterprises. The services provided by the three partners have sustainability as their fundamental aim, which is why EMPRENDA finance, supplied by USAID, was from the beginning reserved to fund the activities of its three partners. The few grants procured by the EMPRENDA alliance for its clients have been extraneous to the initial sum, and most of the finance mobilized for clients have come from micro-credit NGOs

or private-sector banks.

Y I (Feb - Sept 2005) Y II (Oct 2005 - Sept

2006)

Y III (Oct 2006 -

Sept 2007)

Y IV (Oct 2007 -

Sept 2008)

Target Achieved Target Achieved Target Achieved Target Achieved

Aggregate USD USD (%) USD USD (%) USD USD (%) USD USD (%)

TOTAL

EMPRENDA

CLIENT

SALES

4.7 million

10.6 million

225% 13 million

11.4 million

88% 14.4 million

12.3 million

85% 16.5 million

7.4 million

45%

Association

Sales

$1,700,000

$1,613,420

95% $2,200,000

$2,602,547

118% $2,700,000

$2,986,829

111% $3,450,000

$1,526,281

44%

Rural

Enterprises

Revenues

$3,000,000

$8,960,944

299% $10,800,000

$8,813,467

82% $11,700,000

$9,267,013

79% $13,000,000

$5,874,399

45%

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Beira Corridor

Corridor

Sales

$1,800,000

$2,314,035

129% $2,000,000

$1,540,622

77% $2,100,000

$3,144,503

150% $3,250,000

$2,678,481

82%

Association

Sales (AV)

$600,000

$874,802

146% $800,000

$1,189,622

149% $900,000

$884,858

98% $1,250,000

$332,569

27%

Rural

Enterprises

Revenues

(TNS)

$1,200,000

$1,439,233

120% $1,200,000

$351,000

29% $1,200,000

$2,259,645

188% $2,000,000

$2,345,912

117%

Nacala Corridor

Corridor

Sales

$2,900,000

$8,260,329

285% $11,000,000

$9,875,392

90% $12,300,000

$9,109,339

74% $13,200,000

$4,722,199

36%

Association

Sales

(CLUSA)

$1,100,000

$738,618

67% $1,400,000

$1,412,925

101% $1,800,000

$2,101,971

117% $2,200,000

$1,193,712

54%

Rural

Enterprises

Revenues

(TNS)

$1,800,000

$7,521,711

418% $9,600,000

$8,462,467

88% $10,500,000

$7,007,368

67% $11,000,000

$3,528,487

32%

Mozambicans are aware that theirs is a country of enormous potential, and when we are approached by an entrepreneur with ambition and an idea, we try our utmost to ensure that they are supplied with enough assistance to create their own business development strategy. The focus of an enterprise can fall within any of the above-mentioned value-chains, and sometimes, outside of the programme, we are faced with proposals in other areas where Mozambique shows significant potential, whether that be tourism, poultry, coconuts, bananas or anything else. In many cases, we are able to confirm what the entrepreneur already knew, about the feasibility of their chosen investment or the business landscape of their country. In most cases, our highly skilled VolCons can supply them with cutting-edge and convincing business development services, and an extra hand up in dealing with the obstacles cluttering the business landscape in Mozambique. Perhaps the most important activity occurring within the EMPRENDA programme is the exchange of ideas which takes place, between agricultural technicians and management consultants, smallholder associations and entrepreneurs, banks, NGOs, the government, and many others. The dynamic created when minds meet is only a step away from the financial dynamic needed to promote business and a successful economy. If the EMPRENDA programme were ever to continue, it would ensure that even greater numbers of entrepreneurs were brought into this dynamic, which would expand to include a larger number of sectors with potential. At bottom, our success would rely on the same ingredients which have achieved the above results to this day: hard work, and a little bit of faith in people’s desire to make life better for themselves. We believe that this continues to be the best way of helping people out of rural poverty, and we hope that we are not alone in this belief.

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