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Agricultrual enterprise development 2013 2014 Overivew
- 1. SaveAct Savings and Credit Groups and Small Enterprise Development 2014
- 2. What does SaveAct do? Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! A stepped-approach, with self-selection ‘filters’: Channelling human capital Mobilisation of Savings & Credit Groups: • Savings as a ‘glue’ stimulating social capital • Social fund • Platform for efficient & effective support strategies Savings & Credit Life skills training & financial education • Enhances awareness of risks & opportunities • Economic literacy • Improved coping strategies • Consumption smoothing • Improved capacity to take risk Enterprise development • Stimulates formation of enterprises • Incubated in savings groups & commodity investment groups • Fed by savings & credit, share-outs, Isiqalo Training • Improved capacity for self- reliant action People choose to participate in a structured process with rewards ... What to do? Towards more sustainable livelihoods & financial services for the poor
- 3. How does SaveAct support enterprise development Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! 1. Savings Groups express interest (2-4 ) - More mature - Finalised financial education -Specific interest and groups (FOs, CBPs) 2. CIG Initiaton process: - Introduction -PVCA - Prioritization of commodities (FOs, CBPs EDOs) 3. Commodity Interest Groups (CIGs) formed - registration of members- Action plan developed -Chronology of intervnetions per commodity of interest defined (FOs, CBPs EDOs) 4. Isiqalo (enterprise) training Business plans developed (factoring in share-outs/ loan capital & collective opportunity, eg bulk buying) (EDOs, businses trainers) 5. CIG Activities : -Input supply, bulk buying -production support , training and farmer innovation -Marketing support; joint initaitves, innovative ideas, agribusiness inolvement and negotiation. (EDOs , agric trainers) 6. CIGs mentored - Including bulk buying - Further business plan mentoring - Monitoring of individual pariticipants -Special interest meetings -Support for local facilitators (EDOs research staff, interns, FOs)
- 4. PVCA: participatory value chain assessment • Helps to prioritize commodities of interest for the area based on criteria developed by participants. Includes local ‘’market assessment” • People interested in business start up training chosen from these groups – members belong to a number of local SCGS Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali!
- 5. Commodity Interest Groups (CIGs) • CIGS set up in Matatiele for potatoes, vegetables, maize, sheep, cattle and pigs • Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! Sthathi. Khubetsoana, Mpharane, Moyaneng Thinana/Ghobo Khubetsonana, Mpharane, Moyaneng Thafa, Mehloloaneng, Nchodu, Hebron Lubisini Conservation Agriculture CIGs
- 6. Scaling out with CIGs Farmer Centre – Pontsheng; inputs, advice, access to tolos for sharing, hiring etc Sekhutlong -CIG -CA learning group -5 new farmer based trials Mapheng -CIG -CA learning group - 2-3 farmer based trials Pontsheng -CIG -CA learning group -7 CA farmer mentors 2ndary level experimentation - 35 Farmer participants linked to farmer mentors Nkau -CIG -CA learning group -CA farmer mentor with 5 farmer volunteers Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali!
- 7. Inputs supply and access • Bulk buying; vegetable seedlings, potato seed, poultry inputs – Potatoes - >300bags – Seedlings - ~25 000 (Jan-April 2014) – Poultry (chicks plus inputs)- 300 – Livestock feed – 4 bags Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! 0 2 4 6 8 10 12 14 16 Bulk buying; Matatiele N=40 Seed Potato Vegetable Seedlings Poultry Package Breeding Stock
- 8. Business start up training; Isiqalo • Linked to the CIGs and commodities of interest. • 4 day training leading into CIG process of mentoring and production support. Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! Isiqalo training summary (2013) Matatiele Bergville TOTAL Isiqalo trainee days 102 52 154 Improvement of current business (acc to business plans submitted) 40 (n=69) 30 70 New businesses (Acc to new business plans submitted) 16 (n=69) 31 47 Isiqalo themes per training group: Maize 1 Poultry; broiler production 1 Sheep; meat and wool 1 Vegetable production and sheep management 1 Vegetable production and poultry 2
- 9. Production support • Training through local and other specialists e.g pig production • Mentoring; short and practical sessions on issues of concern in a commodity e.g. Grading of wool for sheep production • Farmer innovation; tackle a whole production system and issues of efficiency ,e.g. Conservation Agriculture • Include stakeholders in market chain e.g. Seed suppliers, agribusiness (Grain Sa and Poultry SA) Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali!
- 10. Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali!
- 11. Marketing • Local marketing mainly; Joint discussions around the issues – oversupply at certain times, developing niches, different types of crop (e.g. different varieties of potato seed or planting different times,),joint activities such as joining together for pension days. • New ideas – e.g. Local milling, production and supply of animal fodder – different types- teff, lucerne • Some individual marketing in town, or buyers coming to them. • Still the best option – becomes more of an issue as production increases Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali!
- 12. Involvement in CIGs; improvements and issues Has not improved 16% Income improved 5% Inputs cheaper 29%Inputs easier to access 2% Knowledg e gained 14% Markets found 3% Other 7% Productio n better 19% Working together with communit y members 5% Business improvement through involvement in CIGs; Matatiele N=85 Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! Credit 3% Inputs 25% Knowledge 1% Market 4% No issues 18% Other 12% Production factors 18% Weather 19% Present business issues; Matatiele, N=85
- 13. Livelihood concerns • Track the complex interactions between multiple and diverse livelihood activities and their contribution towards overall livelihoods • Track increase in production, enterprise activities and income through involvement in CIGS Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! 0 2 4 6 8 10 12 14 NumberofPeople Average Monthly Income Income Distribution of Respondents ; Bergville N=40 CIG Member Non-Member >R6 000 2% Don't know 2% R1001-R2000 55% R1-R500 5% R2 001- R3000 17% R3001-R4000 4% R4001-R6000 1% R501- R1000 14% Income distribution of CIG members in Matatiele N=100
- 14. Livelihoods tracking • E surveys (Dooblo) – for tracking CIGs, isiqalo and livelihoods outcomes • Uploaded and analysed in Excel • Individual reports with photos and GPS points possible. • Building up over time – interview the same people over time, increase number of people included in monitoring, provide baselines through those involved in SCGs but not in CIGS Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo Maize None Potato Poultry Sheep Vegetable s member 16 1 40 13 2 13 non member 14 1 0 5 10 15 20 25 30 35 40 45 Noofpeopleinvolved Agricultural enterprise involvement; main enterprise Matatiele N=100 Agricultural enterprise CIG member; Main enterprise Non member Total Single enterprise Total no Cig members involved in enterprise Maize 16 16 1 47 None 1 14 15 15 Potato 40 1 41 3 41 Poultry 13 13 11 42 Sheep 2 2 2 12 Vegetables 13 13 8 53 Pigs - - - - 15 Total 85 15 100 25
- 15. Use of SCG loans for enterprise development Agric Enterprise Basic Needs Education House Improvements Non-agricultural enterprise Other: start enterprise Other: Pay off debt Other Loan 1 17 15 14 16 3 2 2 6 Loan 2 16 17 10 32 2 0 0 3 Loan 3 7 13 5 6 1 0 0 2 Loan 4 1 6 0 1 0 0 0 1 Loan 5 1 4 0 1 0 0 0 0 Total 42 55 29 56 6 2 2 12 % 21% 27% 14% 27% 3% 1% 1% 6% 0 10 20 30 40 50 60 Noofpeople Use of SCG loans in 2013 cycle; Matatiele Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali!
- 16. Livelihoods cont.: E survey example Financial Services & Sustainable Livelihoods for the Poor Question ID Question: CIG involvement Answer 50 What activities have you been involved with in your CIG Meetings,Learning sessions,Implementation,Joint action 51 Describe any new activities you have been involved in CA trial 52 How has your business improved since you have been involved with the CIGs? Inputs cheaper, Inputs easier to access, Production better, Knowledge gained 53 What are your present business issues? Weather, Knowledge, Moles on potatoes and insect pests 54 What further support would you like to receive? Training on production as well as home remedies in dealing with pests as chemicals are expensive and difficult to follow properly.
- 17. Livelihoods cont. Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! Ques tion ID ISIQALO: Question Answer 55 Have you received Isiqalo business training from SaveAct? Yes 56 Do you want to receive Isiqalo business training from SaveAct? 57 In what year did you receive this training? 2012 58 What was the theme of your Isiqalo training? Vegetables 59 Would you be interested in repeating the training or have additional similar training? Yes 60 Did you fill in a business plan? Yes 61 Why have you decided not to fill in a business plan? 62 What was the enterprise you filled out the business plan for? Vegetables 63 Have you implemented your business plan? No 64 Why have you not implemented your business plan? She decided not to follow through vegetables as an enterprise. Doesn’t see viable enterprise as yet but thinks maize may be it, waiting to see on the performance. 65 What has the income been from THIS enterprise in the last year? R 0 66 Please rate the Isiqalo training in terms of how helpful you found it. 4
- 18. Income from Agricultural Enterprises - Matatiele• Incomes a ‘slow’ to increase through involvement in AEs and CIGs due to larger economic and structural issues of market access • Participants mainly use production for household consumption but do contribute around 15% to their overall incomes with these activities. Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! 0 2 4 6 8 Do not participate in this enterprise R0 R1001-R1500 R1501-R2000 R201-R500 R3001-R4000 Poultry Income from Poultry production Total 0 2 4 6 Do not participate in this enterprise I don't know R0 R1-R200 R201-R500 R501-R1000 Vegetables Income from Vegetable production Total 0 10 20 30 Potato member I… Potato member R0 Potato member… Potato member… Potato member… Potato member… Potato member… Potato member R8… Potato non… Income from potato production Total
- 19. Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali! info@saveact.org.za
Notas del editor
- There are three main components in SaveAct approach and they are seen by SaveAct as forming a stepped-approach. The first pillar of the approach is the creation of savings and credit groups. These are seen as platform for building social capital and promote support strategies. The second component of the approach is the financial education training which is provided to SCG members. This is meant to improve their ability to manage their finance and gain control over them. As a third step, SaveAct promotes the development of enterprise with its more mature members. This is done in several ways, such as through training and mentorship. The overall approach is meant to bring poor people towards more sustainable livelihoods and greater choice of financial services.
- Even more important is how people can keep their enterprise running and the study found large evidence that SCGs provide access to credit to support existing enterprise. In the study we asked all SCG members who were involved in enterprise if they had used an SCG loan to support their enterprise activities in the last 12 months. 78% in B and 59% in M used at least one loan to support their enterprises. (showing the relevance of the model for enterprise) When asked to explain how being a member of an SCG helped them in supporting an enterprise: Most members said that access to credit meant that they were able to buy stock and inputs when needed They were able to invest more and increase their profits In Bergville they said that it provided them with financial stability and access to bigger markets (Bergville) While in Matatiele, members spoke about the knowledge shared within the group (Matatiele)
- SCGs build on a culture of informal savings groups. The last theme we will cover here is building agency and social capital. When asked about the reasons for joining SCGs and the benefits of SCG membership, the sense of increased financial security came out strongly. Members mentioned that SCG membership: Improved their confidence in the ability to manage their own finances Gave them more financial independence and decreased their reliance to loan sharks.
- The third way in which SCG membership supports enterprise development is that it enables investment. Members in both sites were asked about the main purposes of the loans they took out in 2011. From the list of uses we found that about 70% of the loans reported could be categorised as being used for investment purposes. To explain, here non-investment referred to: Buying food and groceries Medical expenses Expenses for social and cultural events Or repaying debts The investment purposes here are divided into four categories, with household investment being the largest in both areas: This refers to buying building materials to renovate or extend a home or to build a house from scratch; it also refers to buying assets such as fridges or lounge suites. Therefore many members are investing in meeting their household needs, and in doing so they are likely to be better and to focus on enterprise in the long run. In the phased approach of SaveAct, it is argued that basic household stability and consumption smoothing needs to be secured before members feel ready to take a risk on enterprise. The above figures show that many members are investing in meeting their household needs; in doing so they are likely to be better able to focus on enterprise in the long run. As asset bases expand, so aversion to risk tends to decrease, thereby increasing the likelihood of their expanding enterprise activity, including starting new enterprises In the phased approach of SaveAct, it is argued that basic household stability and consumption smoothing needs to be secured before members feel ready to take a risk on enterprise. The above figures show that many members are investing in meeting their household needs; in doing so they are likely to be better able to focus on enterprise in the long run. Circularity: In both sites, money from grants was most commonly used to pay back loans (45% in Bergville and 65% in Matatiele). As a regular and predictable source of income, the receipt of grants allows SCG members to plan the repayment of their loans. Earnings from enterprise were also mentioned as a source (45% in Bergville and 34% in Matatiele). This again underlines the importance of the two-way relationship between SCGs and enterprise – not only do savings and loans from the savings group support enterprise, but income from enterprise enables SCG members to pay back the loans they have taken. The use of share outs also showed a similar pattern. Household improvements and assets were the top priority followed by buying food or groceries and then paying for educational expenses and the buying of clothes.
- We left it as last theme but it is actually a very important one. SCGs build on a culture of informal savings groups. The last theme we will cover here is building agency and social capital. When asked about the reasons for joining SCGs and the benefits of SCG membership, the sense of increased financial security came out strongly. Members mentioned that SCG membership: Improved their confidence in the ability to manage their own finances Gave them more financial independence and decreased their reliance to loan sharks. Reducing vulnerability is essential before people are willing to take a risk. As asset bases expand, so aversion to risk tends to decrease, thereby increasing the likelihood of their expanding enterprise activity, including starting new enterprises There was also a sense of ownership, as the money is kept in the community by the members.
- Also under investment we again looked for an indication of trends over time by comparing the levels of savings of newer members with levels of older members. It appears that the longer one is a member, the more one tends to save. There are several possible reasons for this: SCG members may tend to save more as they become more familiar and comfortable with the savings group methodology, see the returns on their money and their trust in the model grows Or because there is increasing involvement in enterprise over time. Again, this study has given an indication but it would be useful to explore this further in a longitudinal study.
- It also came out strongly that being together in an SCG also helps members to build mutual support and trust in each other as well as a new sense of collectivity. Several used words or phrases such as love, unity, friendship and advice in describing the benefits of SCG membership, and one referred to gaining a “spirit of working together”. Lastly, most members also said that when they take out loans, they are the ones who decide how to use them. This is notable because most of the SCG members are women.