Kiva Stories from the Field

By Adam Grenier, KF6 Sierra Leone

In May 2008, Salone Microfinance Trust (SMT) launched an agricultural loan product to clients in the remote farming villages surrounding the city of Kabala, Sierra Leone. The agricultural loan product is designed to stimulate the agribusiness sector. The loan provides subsistence farmers with a capital infusion into their farms for the purpose of increasing their production. Most commonly, the capital is used to purchase seeds, fertilizer and labor. These are the inputs, so to speak. With more inputs, subsequently, there are greater outputs or yields. Increased yields lead to a source of income for a group of people who ordinarily have no little or no income generation.

I recently had the pleasure of visiting 15 of the first SMT agricultural clients in their home villages. The villages have names like Senekedugu, Gbawuria, Heremakono and Karmosalai. All of the farmers I met had similar aspirations in May at the time of their loan disbursement – more inputs to yield more outputs. They have the land to cultivate, but they did not, until May, have the capital. Agricultural grant programs have come and gone over time. SMT’s agricultural loan program was the first of its kind to reach these remote villages. It could not have come at a better time.

Previously, these farmers could only harvest enough food to feed their families. The harvests were not big enough to generate any income. The loans have enabled many of them to generate income and create jobs for laborers looking to work. The program, however, has not come without its challenges.

While their land was ready to produce a bountiful harvest after planting seeds and laying the fertilizer, Mother Nature has not been as accommodating this harvest season. The rain season begins around May and typically lasts throughout October or early November. This year, however, the rains ceased earlier than ever before. The rains were weak and short-lasting. While most of us would prefer to say ‘good riddance’ to rain, these people’s livelihoods depend on rain. They need rain to survive.

Full crops were ruined by the climate change. Cabbage and carrots are the prominent vegetables grown in the villages. I heard case after case of carrots whose growth was stunted or cabbage patches that were ruined. The farmers rely on historical climate patterns to determine their planting and harvest season. They were completely caught off-guard by this phenomenon. The sudden and dramatic change in the normal climate pattern has caused problems amongst many of our agricultural clients. There’s a temptation amongst the farmers to blame it on global warming (yes, this controversial theory has made its way to West Africa), but it’s much too early to tell.

In addition to the climatic issues, Sierra Leone farmers are working with bad seeds. Again, case after case, farmers complained about the quality of the seeds they receive from the capital city of Freetown. The problem is they don’t have any other choice than what they get from Freetown. The seeds are imported from other West African countries, like The Gambia or Senegal. By the time they arrive to the villages, the seeds are no longer viable. The seeds are not germinating properly and can therefore produce no edible food. Bad inputs lead to bad outputs.

While there are many seed programs in Sierra Leone and in other developing countries, the feeling is that they are not affective particularly in the remote villages. Many of them don’t have the financial backing to sustain themselves and reach these far-out destinations. Are there any solutions to bad seeds? How could we possibly control the amount of rain or this global warming trend? There are solutions to these issues and I think they can all be offered on a micro scale by microfinance institutions around the world.

Let’s first consider the importance of agricultural education and training. In response to his client’s problems with managing the harvest calendar during a particularly finicky rain season, SMT’s agricultural loan officer, Mr. Bombeh Conteh, will lead an effort to train his clients on the importance of crop rotation and diversification. For example, starting this coming January, Bombeh will educate his clients on the planting and harvesting of the Irish potato. The Irish potato is a crop that does not require rain, now that we’re in the dry season, and it can be a valuable food item during a period of time when food and commodity trade is usually slow. They’ll have a product that will generate income during a time when income is generally non-existent. He’ll teach them how to take advantage of a specific season and weather pattern. This education will extend into the next rain season, when he will ensure his farmers get out there early to plant their carrots and cabbage.

SMT could also create a seed program tailored to its clients. As a proven, well-managed organization, SMT can obtain higher quality goods than any individual could in Sierra Leone, especially a poor farmer from a remote village. Theoretically, SMT improves the probability that the farmers yield a crop (and thus are able to repay their loans) by selling them the good seeds at the time of their loan disbursement. You are decreasing the risk of crop failure by providing the farmer with better inputs. They’re going to be able to produce more with good seeds! SMT would stand to gain a little from the sale of the seeds, too. If SMT can establish a partnership with a high quality seed provider from anywhere in the world that’s willing to export to Sierra Leone (*hint hint*), then I think we can get this program up-and-running.

SMT also has the ability to create a stable marketplace for the produce grown on their client’s farms. Today, the farmers face dramatic price fluctuations for the foods they harvest. We spoke to several clients who said one week the price they get for a bushel of rice from a buyer in Freetown is 30,000 Leones or $10 USD. Three weeks later the same buyer is buying the bushel of rice for 120,000 Leones or $40 USD. It’s impossible to time this market. The farmers simply hope for the best when they’re at the point when they must sell their goods or their families go hungry and their laborers go without pay. At the same time, holding on to the rice is contributing to the price fluctuations! By restricting the flow of supply to meet the demand, they are inflating or deflating the going-rate for the commodity. It’s a bad cycle.

SMT, or any other microfinance institution with clients in the agricultural sector, can step in as a business enterprise with strong distribution power and provide the farmers with a reliable, steady market for their produce. The client harvests their foods, they bring them to the SMT office, SMT sells them at a fair price from a central location, and SMT gives the money directly to the client. Retail sales would prove to be a lot more reliable and steady than the risks and fluctuations associated with selling their goods wholesale. SMT is considering this marketplace concept today for possible implementation in the future.

Finally, related to the sudden and dramatic decrease in rainfall this past season. There is a new product opportunity that could serve as a partial solution to this problem. Rainfall insurance is a new idea being floated around in international development circles. Think of rainfall insurance as you would any other type of insurance product.

As an example, let’s say SMT is both the agricultural loan provider and the rainfall insurance agent. SMT can collect a small premium out of the agricultural client’s monthly loan repayment, maybe ½ of 1 percent during the dry season. If there is a drought the following rain season and crops fail because of the lack of water, SMT will pay out on the insurance policies to the farmers. The farmers will use the insurance proceeds to pay back their loans in-full, feed their families, pay their laborers and prepare themselves for the next harvest season. Rainfall insurance is protection against the uncontrollable elements handed to us by Mother Nature.

Farmers in third-world countries are the poorest of the poor. The fruits of their labor sustain life and yet they have nothing themselves to show for it. We cannot neglect the farmers. We need to be creative with the products and services offered to the farming poor in the developing countries. The products and services must be tailored to meet their needs. Microfinance institutions are in a unique position where they can offer many of the solutions to their problems. Their ability to offer these solutions underscores the importance of the financial sector in reducing extreme poverty.

By Adam Grenier, KF6 Sierra Leone

Excerpt from recent conversation with Archibald Shodeke, Finance Manager, SMT:

Archibald:  “Would you like to participate in a market survey of the Waterloo district near Freetown?  We are considering a partnership with a U.S. based organization called Shine on Sierra Leone that may enable us to open a branch office there.  They heard of us through the Kiva website.”

Me: “Definitely!  Can you tell me more about it?”

Archibald: “Well, I think it was founded by an American artist or actress…Stephanie Parsons? Or, Tiffany Spears?  Something like that…”

Me: “Britney Spears?!”

Archibald:  “I’m not sure.  We’ll have to check the website.”

For a moment, I actually thought Britney Spears might know where Sierra Leone is on a map of the World, never mind the possibility that she was part of anything meaningful, like a partnership with a microfinance organization.  Alas, the founder is not Ms. Britney.  And no, I’m not disappointed.  The organization sprang from the creative mind of filmmaker Tiffany Persons.

The partnership Archibald referred to has the potential to be a very special one.  Shine on Sierra Leone is “a human service foundation that provides education, mentoring, and nutritional support to African diamond mining schools.”  A partnership with Shine on Sierra Leone (visit http://www.shineonsierraleone.org) will allow SMT to expand into the Waterloo market.  This is a very exciting opportunity for both organizations.

During a recent trip to the Forum for African Women Educationalists (FAWE) School in Waterloo, we interviewed 23 parents of FAWE girls – 21 moms, 2 dads – to get a sense of whether they are interested in the services we provide.  Their daughters are particularly vulnerable to the poverty trap.  At any given moment, they may have to be removed from school to work, to generate income for their families in the Waterloo area.  Providing microfinance services to their parents improves the daughter’s chances to stay in school.

The results of the FAWE survey were as follows:

• All 23 were interested in SMT’s microfinance services
• 5 of 23 have borrowed from other MFIs, but are willing to switch over to SMT
• Most common loan amount needed = 500,000 Leones ($167 USD)
• 22 of 23 would prefer group loan product versus individual loan, seeking cohesiveness and building community relationships

These results verify the potential to provide a much-needed service to these hard-working parents.  More importantly, their daughters can continue their education in a positive learning environment found at FAWE.

Thanks to Kiva and the people at Shine on Sierra Leone (heck, you too Britney, if you’re reading), there is a very good chance Kiva will be able to provide their services to the FAWE parents and the broader Waterloo market.  This is just another wonderful example of Kiva’s reach and mission to connect people through lending for the sake of alleviating poverty.

I promise I won’t let the Madonna/Guy Ritchie break-up news distract me from writing a great blog on the mission and values here at SMT in Sierra Leone.  While I admit I’m grief-stricken, I need to move on.  I’ll look on the bright side…Guy Ritchie can now go back to making fantastic movies (see Lock, Stock and Two Smoking Barrels).

We’ve all been members of organizations during some part of our life – corporations, unions, schools, Tuesday night basket weaving, Guy Ritchie fan club, etc., etc.  The one constant I’ve found in every organization I’ve been a member of is that they all have a mission statement. 

To some, like Kiva employees and Fellows, the mission statement is powerful and engrained permanently in our memories (Connecting people through lending for the sake of alleviating poverty).  To others, the mission statement consists of empty words on a piece of fancy memo paper that we slyly toss in the recycling bin after a week of having it tacked up in our cubicles (I’m neither confirming nor denying I’ve done such a thing). 

The mission statement at SMT is as follows:

To reduce poverty among the economically active

by providing sustainable access to financial services

Let’s break it down…

“…reduce poverty…”

There will be those who will be unsatisfied until the World is completely rid of poverty.  I’m not convinced, however, that poverty has garnered enough attention to this point to be considered museum material.  We’re only at the beginning stages of the global effort.  We need a starting point and reduction is a more fair and suitable approach to our missions.  SMT understands it’s a gradual process and maybe someday they’ll be able to change their mission to “eliminate poverty…”

“…economically active…”

SMT will help those who want to be helped, who thrive on being active in the market and in their community.  Potential SMT borrowers are thoroughly screened to ensure they are capable of generating income to re-pay their loans.  SMT does not do hand-outs.  If they did, they would not survive as an institution.  Furthermore, we should agree that poverty is a threat to peace.  If microfinance can make inroads in places like Pakistan and Afghanistan, then we are moving in the right direction toward peace and economic stability.

“…sustainable access…”

Charity is not sustainable, particularly in the fight against extreme poverty.  Giveaways and handouts take away initiative and responsibility from people.  Handouts encourage dependence rather than self-help and self-confidence.  The poor that SMT serve have a chance to participate in decision-making that affects their lives.  SMT empowers its borrowers to control their own destinies.  This way, they can achieve a lot more, a lot faster.  It’s a philosophy that can be continued over multiple loan cycles.

“…financial services”

The focus of SMT remains on offering a premium micro loan product to their clients.  They offer four micro loan products, which I will discuss more extensively in a future blog: (1) individual (2) group; (3) salary; and (4) agriculture.  As mainstream microfinance evolves to include other products such as micro insurance or other products, SMT, in collaboration with their parent organization, Christian Children’s Fund, will assess the opportunity and determine whether a foray into the new product is prudent. 

Well, I hope this posting has given you a better understanding of SMT’s mission and values.  In the brief amount of time I’ve had the pleasure of working with SMT, I can unequivocally say their mission is possible. 

SMT

Adam Grenier is a member of Kiva Fellows Class 6 placed in Makeni, Sierra Leone.  When he’s not wondering how on Earth the Tampa Bay Rays (!!) beat his Red Sox to get into the World Series, he can be found meeting Sierra Leone borrowers and supporting SMT and Kiva’s missions.

After weeks of mental and physical preparation, I have finally arrived in Sierra Leone.  My Kiva Fellowship brings me to Salone Microfinance Trust (heretofore referred to as “SMT”).  Over the next few months, I will share on-the-ground insight of Sierra Leone, educate on SMT’s business model and convey stories about SMT’s wonderful employees.  But first, I’d like to share a story about my arrival to Makeni.

I can immediately feel comfortable in any setting when music becomes the topic of conversation.  Upon arrival to my apartment in Makeni , I was greeted by Tunkara, Ibrahim and Sheka – all SMT employees or helpers.  As soon as they saw I had brought a guitar with me, I knew I had struck a chord (pun intended) with my new friends and colleagues. 

Within minutes, I was teaching Ibrahim (SMT’s Kiva Coordinator) how to hold the guitar and play a C-to-G-to-C chord progression.  By the end of the Fellowship, I promise him, I’ll teach him how to play one of his favorites – Bob Marley’s “Redemption Song.”  Meanwhile, Tunkara (SMT’s Senior Finance Officer) was flipping through my copy of the recent Rolling Stone.  After discussing Alicia Key’s beauty and Akon’s falsetto crooning abilities, we concluded (with a big laugh) that Tupac was dead.   

The people of Sierra Leone have all made me feel very welcome this week.  They’ve helped me overcome any anxieties associated with being in a very foreign place.  It is clear now that, as  Mr. Marley eloquently sang, “everything’s gonna be alright, everything’s gonna be alright…”

Adam is a member of Kiva Fellows Class 6.  When he’s not sweating profusely and being eaten by mosquitoes while sleeping, he can be found writing journals on Sierra Leonean borrowers or promoting his Kiva Lending Team, “Sierra Leone Supporters.”