Harbu Micro Finance Institution S.c o

1. Harbu Micro Finance Institution S.co Value chain financing European microfinance week 2010 Luxembourg

2. Main chain supporters Harbu Micro Finance Institution: Established in 2005 and is affiliated to Facilitator for Change (NGO). Harbu MFI aims at boosting agricultural productivity and agricultural marketing by supporting value chain development and access to financial services. Harbu currently operates in 13 Branches Having 19,600 clients operationally sustainable with OSS by 127% and the PAR to the level of <1% Facilitator for Change (FC): a national NGO established in 1998 that works with disadvantaged communities overcome their poverty. It focuses on enabling them to improve their livelihoods using their own resources, skills and experiences, with minimum external support. FC currently has eight projects in Oromia and Amhara states in Ethiopia. It is heavily involved in value chain promotion, especially on soybeans. So far it has organized about 5,000 farmers into 64 farmer marketing organizations. It promotes soybean value chain in Jimma zone.

3. Started in 2006 by FC and Jimma Agricultural Research Centre • Started with smallholder farmers with the aim to boost production and productivity and thereby ensure the food security of farmers. • However, after observing an ample opportunity and understanding that, beyond the local consumption, soybean can further be processed into soymilk Development and implementation phases

4. Functions and Chain Actors Main functions Main actors Chain supporters and enablers /promoter Consuming JU Students &Dwellers Retailing Tsehay Aabebe Retailers Processing &wholesaling Women CLAs FC, & Harbu Collection & storage FC, Gov. , Coop. & Harbu FMOs Production FC, Gov, Research and Harbu Smallholder farmers

5. Illiterate and large family size (Mostly more than ten) which exacerbated the level of poverty and misery. • On average, farmers in the area • Annual earning about 450 USD • Earning per family member per day, 0.125 USD. 1. Smallholder farmers

6. They play a role of collection from their members • Primary cleaning, packing and make it ready for sale. FMOs roll & conditions they were

7. The farmers have been exploited by a long market chain which did not add any value to the product. • Local traders and brokers use to cheat farmers through distorting weighing scales and manipulating prices • Farmers do not have any control over price. Farmers before organization

8. Werevery poor • Used to generate their living from fire wood collection and selling, charcoal selling, selling the labor of their children and engaged in daily wage in construction and better off families. • More than 95% of them were illiterate • Earn a daily income of less than a dollar a day and live dilapidated houses. who are the women

9. Women at their Factory processings, the soya into milk

10. Includesindividual entrepreneurs around Jimma city • The association itself engaged in the wholesaling and retailing at door step of the factory Retailers

11. Residence of Jimma town and the surrounding (University students (who account for 10% of the market) • Cafeterias, hospitals, and the middle class residents. A Dutch based organization, Share People, supported FC and Harbu in testing the product in universities and cafeterias to check people’s preferences and tastes. The comments and feedback from this market research were encouraging. In addition to the Share people a BDS named FFARM PLC is also supporting in providing technical and advisory services to chain actors. consumer

12. Description of the initiative:

13. Harbu’s Loan products across the chain actors Actors • Working capital loan • Short term - bullet payment • Lease financing • Working capital loan • Agricultural loan • Installment loan: • Term loan/ bullet payment Products • Processing machine • Working capital • Stocking Purchase of inputs Purpose Stocking Semi-processing

14. Inspired results were the very important for our success • The aspiration of the actors and promoters • Proven sustainability of the program through different indicators that has high returns and bringing changes in the livelihood of the very poor Situations assisted us to succeed

15. Farmers are no longer dependent on a single crop. • Their income raised by more than 20% and improved the fertility of their soil which as a result reduced the fertilizer costs. • They are now more able to grow crops for the market, and they can get loans to increase their productivity and incomes. • Their ability to organize and promote sustainable local development has been increased. VCF initiative for Small holder farmer

16. They have a reliable buyer for their product • Raised their profits by over 15% and improved their ability to serve their members. • The relation between the women’s association and the FMOs has improved the reputation of these farmer groups. Then what for FMOs

17. Purchase committee of FMOs

18. Soybean stock

19. Those poor women whose income was less than a dollar a day and now working together in the association have also benefited much. • Today at minimum they could able to get five bottles of milk a day (25 birr a day) which increased their income by five fold. . • Moreover, most of them get employed in the factory and fetch income, their social status has raised and serving as a model for other poor women in Jimma town. • Get mental satisfaction as they mentioned during group discussion with them The women today

20. Women at their Factory processing the soya into milk

21. Increased its portfolio and its clientele base by 20%. • Lowered the risk of default by working with several actors in the chain rather than with individual players. • Reduced its transaction costs by at least 20%. Harbu as promoting organization

22. Improve farmers’ income and farming systems. • Improved the soil fertility of the land and reduces the fertilizer cost of farmers. • Environmentally friendly business enterprise. • Increase in income means many things – sending children to school, improve health status, and overall livelihood improvement of communities. • Capacity of FMOs strengthened to promote sustainable local development • Market opportunities for producer farmers and employment opportunity for urban women and youth created. Positive Impacts of the initiative

23. Lack of initiation and willingness by some promoters • Lack of proven/tested references for value chain developments in Ethiopia for smallholder producers • Absence of soft regulation to enforce local contracts and quality standards • High electric interruptions and shortage which might affect the function of the processing machine. Hampered situations

24. Thanks! Enjoy soymilk!