It was my first trip to Ghana, in 2000. I was leading a group of Berkeley MBA students on a study tour, visiting companies and organizations, in order to better understand the business environment there. On this particular day we were on our way to Cape Coast and then Elmina to visit the former slave castle. We stopped en route for a break and bought drinks from a roadside stand. Little did I know that this was to be the start of a firsthand lesson in the power of access to finance.
A cocoa farmer drying cocoa beans
Serving drinks was a young fellow named Augustine. He and I got to talking and, at some point, I gave him my card. My group soon continued on its way and I pretty much forgot about him. But not long after I’d returned to Berkeley, I started receiving letters and phone calls from him. Soon, the requests for money started. “Oh, boy,” I thought. “I shouldn’t have given this guy my contact details.”
I’d often received similar requests from other parts of the globe, in the past. But, somehow, this one was different. I won’t go into details, but Augustine’s story struck a chord.
He’d dropped out of school for lack of money and was working to support his parents, who were both infirm and living in a rural village. But, he desperately wanted to return to school and was asking for support to do so. Skeptical as I was, I took a chance, but on condition that I provided funds directly to the school and that he maintained grades above a certain standard. Each semester’s performance would determine whether another semester would be funded. I needn’t have worried. He always met his targets and then some.
After graduation, he took jobs in the hospitality industry and, before long, was managing a small hotel in Accra. He married and had children. Together with his wife he now runs a small catering business on the side. They are doing OK.
My investment in Augustine was small - a few hundred dollars per year for a couple of years. Trivial in the scheme of things from an American perspective, but life-changing for Augustine and his family. Without access to this finance, he would never have been able to return to school and obtain his degree. He would have been very unlikely to be employed in a position of responsibility and he might have lived a life of subsistence in his family’s village. Seeing what he has become today has been a great return on my investment. But, it gets even better – he named his firstborn child after me.
A cocoa farmer tending to her cocoa saplings
Now, as I strive to open access to finance for thousands of smallholder farmers in Ghana and elsewhere around the globe, I have recurring thoughts of Augustine and the power of small investments to change lives. I’ve seen similar results working with Mohammed Yunus and the Grameen Bank and with other microfinance organizations. But, I continue to be struck by the lack of interest, amongst traditional banks and investors, in lending to individuals with the greatest potential for improving not only their lives, but the sustainability of our planet as well – smallholder farmers.
My organization, Solidaridad, together with partners and with financial support from the Mastercard Foundation, is implementing an ambitious program in Ghana to teach unemployed rural youth the skills necessary to operate cocoa farms as viable businesses. More than 2,000 have completed the program, another 2,500 are currently enrolled and the total will reach 20,000 before we’re through. With support from traditional rulers and villagers, many have obtained access to land to plant their cocoa seedlings. They are working hard and are enthusiastic about their futures. But obtaining the finance necessary to buy inputs, and to carry them through the early period before their plants are productive, continues to be a challenge. Smallholder farmers grow the majority of the world’s food. With a growing global population, demand for food isn’t going to decline. This is a growth industry. So where are the investors?
We hear a lot these days about investors and their power to change the world. Yet, surprisingly, at least to me, there is very little evidence of investors lending to smallholder farmers, especially at the early stages of their businesses, with loans designed around the realities of farming – crop cycles, the vagaries of weather, etc.
Some investors, at least, are sitting on plenty of cash, treasury bills and other safe instruments. If they really want to make an impact (along with a profit) they should be making significant investments in the smallholder farmers of today, and of tomorrow. And Solidaridad is ready to work with them and introduce them to investment worthy programs and borrowers. No guarantees that a firstborn child will be named after you. But, the returns on investment, both financially and psychic, will be worth it.
This blog was originally published on LinkedIn.
Learn more about Solidaridad programmes in North America.