Insights 2012
Insights 2012

Insights emerge from the lessons we learn through local experiences in supporting pro-poor business development.

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Learning Where Deals Can Go Wrong. Over the last year twelve trader networks across Kenya, Uganda and Tanzania have conducted some eighty deals providing cash-on-the-bag (COB) payment advances to small farmers using secure transparent transactions. While less than ten percent of the deals failed completely many experienced problems. In this brief we share the hard lessons learned in the words of the network managers.

Impact of COB Deals on Smallholders. This brief presents a short summary of the impact of COB deals on smallholders and why they like COB deals. Over one thousand smallholders have benefited from COB deals. The value of trade so far has exceeded $170,000 US dollars. The dollar income to smallholders from this trade has been $155,000. COB deals increased smallholder prices by some 15% adding $15,000 more dollars to their income. Price increases were made possible by adding value and increasing the efficiency of value chain operations to around 20% of total deal value.

Facilitating Value Chains the Missing Middle. A business opportunity exists for those who can provide services that solve the problems of the missing middle in agriculture value chains. Facilitating secure transparent transactions between small farmers and scaled processors with Cash-on-the-Bag payments to farmers (COB) is one such service. Key tasks for this service include: transparency in negotiations, quality checks, cash on the bag payments, checks on delivery, and controlled payment systems. Over the last year twelve trader networks across Kenya, Uganda and Tanzania have conducted some eighty deals benefitting over one thousand small farmers.

Investment Challenges to Scaling Up ‘Inclusive’ Businesses. Scaling up emerging ‘inclusive’business models presents many challenges to investors. Experiences over the last year show that transparent transactions along the value chain along with Cash-on-the-Bag (COB) payments to small farmers can be commercially viable. Social impact is demonstrable. Farmers regularly get 20% higher prices for their produce. Value chains operate at 80% efficiency with costs per deal being only 20% of total deal value. However, it is equally clear that such impact will not be enjoyed by large numbers of farmers unless investors come together and address the real world conditions.