With over 35 years in the agribusiness sector, team leader Mohan Nair is managing an innovative catalytic fund for the World Bank in Mozambique. By linking successful corporations to grassroot agriculture, the fund aims to start bridging the wealth divide.
The inequality in Mozambique stares you in the face. Around the country’s coalfields, for example, there are some of the richest companies in the world, surrounded by some of the very poorest communities in Africa. The contrast is exactly the same, from north to south. You'll encounter areas of rapid development, but the deep poverty is plain to see on all sides. Around 70% of Mozambique’s population still live in rural areas, with more than half of all families beneath the poverty line.
Without investment in its farming communities, Mozambique will struggle to bring about the necessary socioeconomic change to improve living and working conditions among its scattered, rural population. The World Bank and the Government of Mozambique have recognised an opportunity to connect the success of these agribusiness corporations to smallholder farms and micro, small and medium enterprises (MSMEs) that are struggling to find investment in a country where hard currency is in short supply.
The Integrated Growth Poles Project aims to improve rural employment and economies around the Zambezi Valley and Nacala Corridor – both identified as high growth potential zones. Strong private sector operators are effectively incentivised to launch social enterprises that will reach out to nearby individuals, associations or cooperatives. Interestingly, the World Bank has yet to make widespread use of this kind of funding, with previous trials limited to Madagascar and China. By providing ‘magnets’ for economic expansion, the programme helps to support and centralise the country’s efforts to improve healthcare, education, infrastructure and social services.
Our team brings close working relationships with both the World Bank and the Mozambican Government, as well as a good understanding of the country itself. Our role is to manage, disburse and account for a sub-project called the Innovation and Demonstration Catalytic Fund (IDCF). As the name suggests, beneficiaries of the fund need to offer something new to their sector that can be replicated by others, in a way that will stimulate growth in local communities. The grant encourages the creation of so-called ‘business vehicles’ that can carry smallholders along with them on the journey to prosperity. The investments will also grow the number of skilled workers and the range of skills available in the local labour market – leading to more inclusive economic growth.
Connecting the supply chain
Ventures were chosen for their potential to contribute to a more competitive market place, allowing the ultimate beneficiaries – rural households – to have real choice and gain a realistic price. For example, the fund disbursed a grant to strengthen the ecosystem of an organic sugarcane factory. In total, 550 smallholders will now produce sugarcane that can be processed into organic sugar by EcoFarm near the town of Chemba in Sofala Province.
The factory also supports local cattle farmers, by spreading dung from 2,000 cattle, and the blood from slaughter, to fertilise the soil organically. In turn, molasses from the factory will fatten the cattle. The factory’s water boiler is powered by electricity generated from bio-mass, such as the cane crushings. Besides the 550 small-holders, the company directly employs 700 workers in agriculture and 250 in the factory. During the harvest a further 800 are employed seasonally.
Likewise, the fund is helping to establish a new long-life milk market in Manica province, central Mozambique. A thousand soy farmers will contribute to a new animal feed factory, while 200 dairy farmers will receive cattle – including Nurja Norman, who recently lost many of her cattle to disease. She and her husband will gain six milking cows to rebuild their stock.
Nurja is in no doubt that the proximity of the new collection centre will make a big difference. “We used to take milk to a factory in Vanduzi, which involved a long bus journey to deliver just 5-10 litres of milk,” she said. "This programme is very important to us. We don’t have jobs, so this will be our sole source of income."
Twenty-four-year-old Anselmo Pereira is a founding member of the sugar cooperative (COOP-CANA) in Chiúre, Cabo Delgado province. With IDCF support, the cooperative is now installing an irrigation system, comprising two pivot systems, or sprinklers, which will be able to water 45 hectares each.
Anselmo is already thinking of the future. “My dream is to help develop and alleviate the suffering of my community. For example, many women and children are attacked by crocodiles when washing laundry or drawing water from the Lúrio river. We want to save up and open a public water hole will take away the need to compete for space with the crocodiles.” That’s good for the people, and good for the crocs too.
The project is still gathering momentum, yet already it is impacting 40,000 people directly – and therefore touching the lives of over 200,000, including their immediate families. Poverty is not just a measure of how many dollars are earned per person, per day. When you develop rural areas, good things start to happen. Child mortality comes down. Life expectancy goes up. Fewer mothers die in delivery. Drinkable water becomes available. Children start going to school. People buy bicycles. They buy radios. All of this matters.
The most important step towards change is always the first.
Mott MacDonald is grant manager for the World Bank.