Social enterprise helps smallholders succeed

Founded in 2012, the Nigerian social enterprise Babban Gona offers a franchise model that supports companies with agricultural equipment, knowledge and training, financial services and market access. Measures let smallholders increase yields, save costs and earn fair prices. To a great extent, Babban Gona has managed to automate the agricultural business activities at their disposal: From recruiting to distributing operating materials (seeds and fertilisers), to stock keeping all the way to crop surveying. Since modern technologies have helped streamline business processes, it has been possible to increase employment in the supported smallholder target group. Forbes Magazine called Babban Gona “one of the five most innovative and influential social enterprises” – honouring the company’s proud track record of having provided 70,000 people with access to healthy nutrition.

More jobs through sustainable cotton

In India, GIZ works on behalf of BMZ with the Better Cotton Initiative (BCI) to train a total of 140,000 cotton producers in sustainable production methods compliant with the BCI standard. With the agricultural good practices they learn and adopt, producers can protect biodiversity in their region and ensure sustainable cotton is available on the domestic and international markets. However, using environmentally friendly production methods also means some steps along the production line are more labour intensive. As a result, smallholder cotton farmers need more workers to introduce and apply these methods over the long term. To date, conversion to sustainable production methods has created around 10,300 new jobs. In addition, more than 300 new instructors were certified to impart knowledge of the methods they have learned to other cotton producers in the region. This is not only effective but also has a sustained effect. To maintain production of sustainable cotton, the workers are again needed in the following years.

That number would fill Dortmund‘s football stadium, Germany’s largest, six times.

Beyond simple support: Responsible business creates added value – Development partnerships with the private sector

With the develoPPP.de programme, the BMZ fosters the involvement of the private sector in areas where business opportunities and development policy initiatives overlap. To this end, the BMZ provides financial and technical support for companies that want to do business in developing and emerging-market countries. At every stage, the companies will work with one of the two official partners commissioned by the BMZ to implement the programme on its behalf: DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. Since 2014, SEWOH has been providing targeted support to GIZ development partnerships that have the potential to drive innovation in the agricultural and food sectors of developing countries. The innovation potential of the partnership between institutions of state development cooperation and the private sector is intended to help reduce poverty in rural areas and improve the food situation.

Vanilla for Future

Since March 2019, SEWOH has been cooperating through GIZ with the Swiss spice trading company McCornick in Madagascar. The partnership aims to improve the economic self-sufficiency of around 4,000 vanilla farmers in the Sambava district in the Sava region. Many producers are unable to manage their small farms sustainably and profitably. In addition to vocational training, there is also a lack of health and social insurance. Due to increasing slash-and-burn cultivation, the quality of cultivated land is declining and producers are at increased risk of falling into extreme poverty. Despite pandemic-related restrictions, 4,000 farmers were able to participate in an environmental education programme by March 2021 and have become members of a health insurance. They now have extensive access to health services for themselves and their families. Advisors have been trained as trainers for professional vanilla cultivation and the first group of 90 producers has participated in a business management training. In addition, around 1,550 producers have received training in small-scale livestock management, which teaches them how to diversify and increase their income, and more than 70 community-based credit unions have been formed with around 1,300 members, improving access to finance.

A fund for a world without hunger

In 2010, the G20 states created the Global Agriculture and Food Security Program (GAFSP) in reaction to the food price crisis of 2008/09. The programme is designed to promote global partnerships and provide flexible multilateral financing mechanisms that help fight hunger, malnutrition and poverty in the poorest countries. The fund bundles monetary support from donors and passes it on to smallholders and companies through organisations on the ground. A wide variety of investment instruments are available along the entire value chain and can be used to strengthen resilient agricultural and food systems. The World Bank manages the money, and the steering committee, currently chaired by the BMZ, includes donors and partners together with agricultural and civil society organisations. This ensures that development policy, technical, regional and local expertise flow into the programme’s control and decision-making processes. By 2020, GAFSP had provided more than 1.3 billion US dollar in subsidies, 330 million US dollar for investment projects and 13.2 million US dollar to support producing organisations, helping to improve productivity for 13 million smallholders. It also ensured access to healthier nutrition for about 1.2 million people. To maintain GAFSP, 1.5 billion US dollar will be needed over the next five years. As part of the replenishment drive for the fund started in October 2020, the BMZ pledged 200 million euro to the programme.

Better Access to Operation Materials and Financing

To maintain a strong agricultural and food economy, rural entrepreneurs – for example farmers – need better access to operating materials and financing. Both are either hard to find or unavailable in rural areas, particularly in African regions south of the Sahara. Only a fraction of farmers there has the chance to take out loans, for instance to invest in their businesses. Machinery that would enable them to do their work more efficiently is also lacking. SEWOH supports structures that offer both.

Cooperative banks make farmers richer

In Benin, KfW finances the Faitiere des Caisses d’Epargne et de Credit Agricole Mutuel (FECECAM) cooperative bank with BMZ funding. The FECECAM in turn passes those funds on in the form of loans issued mainly to smallholders and very small, small and mid-sized companies. Over 215,000 people have gained access to agricultural financing, as confirmed in a scientific study conducted by the German Institute for Development Policy (Deutsches Institut für Entwicklungspolitik, DIE). The report shows that loan recipients’ annual incomes rose by about 3,000 euro on average – with women achieving higher increases than men. The future looks promising. The FECECAM is planning to digitalise its programmes so customers can access needs-based savings and loan products even more affordably and quickly.

Strengthening Farmers’ Organisations

Development is a joint effort. Allowing rural areas to thrive requires a common vision and commitment from all parts of society. The “ONE WORLD – no Hunger” special initiative focuses on supporting civil society institutions, political structures and private businesses, and promotes cooperation with one another. In this context, farmers’ organisations play an important role. They act as advocates, as voice and as service providers for their members and represent the interests of rural populations in politics, the economy and trade. Economic and political participation lets people in rural environments build their worlds with more self-determination.