Input credit...through pictures

So a bit of context on input credit in Ethiopia. For the last few years, there has been limited (and in some regions, no) input credit available for farmers. Input credit is very risky since you’re lending without collateral to farmers who could have a crop disaster any year. Also, Ethiopia is experiencing a liquidity crunch (because of a major import-export disparity and the government now working to slow inflation) and smallholder farmers have not been as high of a priority for credit as the major infrastructure projects (the giant hydroelectric dam that is upsetting Egypt…though now they have their own issues, the light rail system in Addis, road construction, etc.).

Turns out, a lack of input credit significantly decreases the adoption (number of farmers using inputs) and the intensity (amount of inputs being used) of input use. Shocking, I know. Input credit was in part limited because of low repayment rates. The old system had several issues that led to low repayment rates, including the following:

·        Loan diversion – farmers using credit for other things.

·        Regional governments provide guarantee but do not have collections responsibility, even though they are guaranteeing the loans.

·        Collection on loans takes place through multiple sets of interactions (primary cooperatives collecting from farmers, cooperatives unions collecting from primary cooperatives, etc.) so ultimately responsibility for collections is diffused throughout value chain and funds can be misappropriated.

·        In case of default, Commercial Bank of Ethiopia (CBE) is paid fully by regional governments, reducing incentive for CBE to apply collections pressure throughout the value chain.

We designed a new system to be pilot this year (and hopefully be expanded nationally next year) to provide input credit while limiting these risks. The new system channels credit through microfinance institutions (MFIs) because they have local presence and historically low default rates (farmer loan groups are one of the ways they keep default low). This keeps the cooperatives out of the credit distribution/collection process. We have also replaced the cash in the system with a voucher, which prevents farmer loan diversion and cooperative cash misappropriation. Over time, regional government loan guarantees will be phased out and replaced by a partial credit guarantee fund.

Everyone asleep now? Bueller? Bueller?

Alright, enough context; picture time.

OCSSCO (MFI that serves 90%+ of Oromia region) branch office in Gassera.

Farmers at one of the primary cooperatives in Gassera being instructed by the MFI about the credit they are about to receive.

Hey, I have those boots.

Farmers waiting for their turn to sign all the paperwork (there’s a lot of paperwork; definitely too much).

While the farmers were waiting, we interviewed some of them about input credit and how it affects the amount of inputs they use. One guy, Mulatu, spoke pretty good English, so needless to say, I spent a lot of time talking with him. He’s the second guy from the right. He’s two or three years into a sublease on a couple hectares of land from some family (all land is originally leased from the government, so everything else is a sublease).

People signing paperwork; I know, super exciting right :)

 

The manager of the primary cooperative.

Due to some…let’s say “issues,” the inputs weren’t distributed until the next day. You’ve got to feel bad for the farmers who had to sit around for the better part of two days just to get fertilizer (improved seed wasn't available at the primary cooperative, which is a whole other can of worms, aka problems).

The next day came with, you guessed it, more paperwork!

The farmers are organized into groups of about five who are all responsible for each other’s loans. Then, all the groups from a primary cooperative meet together monthly to lend support and peer pressure. At the monthly meeting, everyone also has to bring a small amount of money to add to a savings account opened in their name at the MFI. This way, farmers are getting training and experience in overall financial literacy (not just in taking loans). The larger group decides the penalties for tardiness or absence at a monthly meeting, which is what they are discussing in this picture.

After the paperwork was all done, it started to rain, so we hung around for a while before distributing fertilizer. Maybe the largest umbrella I’ve ever seen.

Fertilizer!

A bunch of the fertilizer was caked, which happens when it gets too wet either from rain or too much humidity. This makes the DAP really hard to use and the Urea absolutely worthless. This led to several heated discussions and a trip to the woreda agricultural office to talk with the cooperative promotion office. Each woreda (think county) has a cooperative promotion office, which is the part of the office responsible for the performance and training of the woreda cooperative union and primary cooperatives. Anyway, long story short, more training is needed (as you might expect, some of the trainings from different organizations contradict each other).

Why is the fertilizer caked, you ask? Well, first of all, the country orders way too much so it sits around for 1-2 years. Secondly, the pictures below show the warehouses being used to store the fertilizer. The first one is essentially a big basket (pretty easy for rain to get in). The second one is a metal shed (which in the sun is probably going to make it pretty hot and humid inside).

Fertilizer delivery system.

Ewenetu, one of the analysts on my team, is on the left. Morkema, the representative from OCSSCO headquarters in Addis, is on the right. Major props to both for putting up with me for five days.

Head of the Gassera cooperative promotion office.

The store at the primary cooperative. We went to several primary cooperatives, and each of them has a store that sells consumer goods. This is because the government has made the margins so small on fertilizer that they don’t even cover the cooperatives’ costs. They have to sell consumer goods (and misappropriate money) just to keep things running. In case you’re wondering, yes, the cooperative is selling some kind of Teletubbies biscuits.

  

In Tiyo, where planting had already happened a few weeks ago, we interviewed some farmers, the cooperatives, and the MFI branch office. We went to visit one of the farmer’s fields with him. He talked to us about planting and how input credit had changed his input use. I love that as soon as he got to the field, he started weeding. No reason to waste the time he was talking to us not working.

Until next week...

The beard is gone...and other news

So the beard has left my life. It was time...probably past time. I tried to take a before and after picture, but before I share it with you let me just say that it is difficult to take a picture of yourself. You've got to get the camera far enough away from you, and the camera on my phone (gratitude shout-out again to Chris for the phone) requires you to touch a particular part of the screen to take a picture. If you miss by just a little, it pulls up a menu instead. I decided I needed to take the picture in the bathroom so I could see the phone screen in the mirror while taking the picture. Turns out you get weird pictures when you're trying to orient the camera to see the screen in the mirror (and your eyes are always looking somewhere besides at the lens). Also, can I just say that it is incredibly sketchy feeling taking a picture of yourself in your bathroom. I felt like a politician or a pro-sports athlete, and I don't mean that in a good way.

Anyway, I think you get the point...I used to have hair on my face, and now I don't. Moving on...

I forgot to mention this last week, but we had SPA farewell #7 on August 7 for Catherine. Catherine was the SPA for the Research & Extension Team. Previously, she was at Bridgespan (non-profit consulting firm spun off from Bain) then in Rwanda for a year with Partners in Health then with Teach for America headquarters in New York. She leaves ATA to go get her MBA at Stanford. She's very cool and here's wishing her the best of luck.

That same day we also said farewell to Rozina, the analyst for the Gender Team. Rozina is going to work for an NGO in Sudan. Both Rozina and Catherine didn't finish up until the end of that week, but we didn't know when the Eid holiday would be (seriously, no one knew if we had work on Thursday until after dark Wednesday night) so we celebrated on that Wednesday. Considering the farwells, the up-in-the-air holiday, and the US closing all its Middle East embassies, it was quite an eventful week (which begs the question why I didn't mention any of this last week).

Catherine said her entire farewell speech in Amharic, raising a bar that I will dramatically lower when I leave: I like to think of that as my service to the SPAs who leave after me; I mean seriously Catherine how selfish of you ;)

Rozina getting a farewell present before her speech.

Brief note to replace the diatribe I had planned: people of Ethiopia, I love ya, but holy crap, you can't treat your livestock like that. For a country that prides itself on telling investors they have the most livestock of any country in Africa, the livestock management practices here are...nonexistent is not anywhere near strong enough...let's go with abysmal. Dragging a sheep or goat by one leg while it hops on the other three is not herding. A whip is a signalling device to the animal. You're not supposed to actually hit the horse with it every 3 seconds while it pulls the carriage. Nor is it super effective to be continually beating the last animal in line when you are herding. I should not be able to see torn skin on your emaciated horse / mule where you continually whip it and where you put the harness on wrong.

Look, I think we've established that I love animals, but apart from that, these practices are not efficient or effective. Well maintained and treated livestock works harder / doesn't die as quickly and is more productive for dairy and meat.

Okay, so it still ended up being a diatribe, but seriously, I'm disappointed in how people treat cats/dogs here but I'm shocked that people would treat the livestock they depend upon for their livelihood so badly.

To end on a positive note (more pictures from the visit next time), on Monday night I had dinner with the new Uganda Mission President and all the missionaries in Ethiopia. Besides the senior couples, there are 26 missionaries in Ethiopia (4 in Awasa, 4 in two villages a little north of Awasa, 4 in Debre Zeit, 4 in Kaliti, 4 in Beklobet, and 6 in Meganaana). There were a few more at the table because the APs from Uganda came up with the Mission President. That's a lot of men (and a few women) of God at one table. By the way, if any senior couples want to come to Africa, apparently it's a shoe in. Much larger supply of opportunities than demand for them (just stay away from Egypt for right now).

Side note to the "by the way," speaking of Egypt, EgyptAir, you and I need to have a conversation. To put it nicely, your country is "unstable" right now. How much worse does it have to get for you to lower your ticket prices? Seriously, I figured I could get cheap tickets with everything that's going on, but your tickets are still more expensive than two other airlines. How is that possible? Who is willing to fly into or even through Cairo right now except me and wackos like me?

The plight of the Ethiopian smallholder farmer

It's time to talk about tweedle beetles...no wait...that's Dr. Seuss...it's time to talk about smallholder farmer inputs. You're not allowed to be bored; I swear this is really interesting and cool (also incredibly frustrating in its current state).

Having now seen how things work on the ground, I understand the farmers here a lot better. The current problems (or more optimistically / consultanty "opportunity areas") are too many to enumerate here. Lets take a big one, though. One of the issues is how interdependent all the pieces are, so you can't just fix one part of the system. For example, my team has been working a lot on providing input credit to farmers to buy fertilizer, improved seed, and chemicals. There have been significant hurdles in providing input credit this year, and even for those farmers who received credit, fertilizer quality and access to improved seed were major problems. If farmers don't get the fertilizer and improved seed they need to increase yields, then providing them with credit is counterproductive (causes them to go into debt without a way to pay it off). Availability of high-quality improved seed was a major issue this year. Many places didn't get improved seed (or at least not anywhere near enough of it). Much of the improved seed was terrible (and I mean terrible quality) with up to 10% of the seed crushed or with weed seed mixed in. Also, most of the improved seed that was delivered was delivered late, so farmers had already planted with 2-3 year old seed bought from their neighbors.

This is before we even consider the need for insurance and ensuring buyers exist for the increased production (there's a horror story about an NGO that got a gruop of farmers to produce "high-value" crops, in this case tomatoes, but didn't find them a connection to the market; the tomatoes ended up rotting on the side of the road). Lots of people at various stakeholders talk about how farmers are so risk averse that they won't adopt the right practices/technologies. Given the far-from-perfect systems they have to work with, I bet you'd be risk averse, too. Unless the farmer has the option to adopt the entire system of financing and all the necessary improved inputs (and where possible insurance, mechanization, and output aggregation), you can't expect her/him to adopt one piece of that package.

Remember, these are farmers living very close to the ultimate poverty line...the one with starvation on the other side of it. If you take a risk on something new and it doesn't pan out, that is a choice with literal life or death consequences.

All this is to say I now really understand the appeal of the One Acre Fund model, where you take a small group of farmers and provide them with a holistic solution (providing all the inputs, training, and finance they need). Then, you scale it to more and more farmers every year. There are major victories to be had working at the country-wide level in government (like I am now) because if you get something right it can benefit millions of farmers. Getting things right with the existing system (instead of creating a new system without the "path dependence" of the old system) can frequently be tricky, though. There's a reason companies rarely disrupt themselves and are almost always disrupted by new competitors who don't have the same history weighing them down (see anything Clayton Christensen's ever written if you want to better understand these dynamics).

All right, now I'm getting sad. Give me a hit of the good stuff...

Ah...there it is...that's what I'm talking about.

Let me point out that things are definitely trending in the right direction and significant progress is being made. Many stakeholders (from government to NGOs to the private sector) are working really hard to improve things. It's just that sometimes we take a step backwards in order to move forwards, and that, combined with the slow rate of progress, can be frustrating.

Despite all this and their very justified complaints about the systems, in general, all the farmers we spoke with were happy...just good people doing their best to get by.

Sorry this was one of those rambling "why can't we fix the world faster" posts. More pictures of farmers, MFIs, etc. next time, I promise.

Escape from Addis

Wow! I mean, wow! What else can I say after I finally spent a week in the field out in rural Ethiopia. We were in two of the wheat growing areas (meaning the elevation was higher than Addis for both) and of course on the road for the many hours in between. Addis is fine and everything, but it’s definitely losing this battle by blowout, in straight sets, by unanimous decision…all right, that’s probably enough sports analogies for you to get the point. Outside the city, the air is clean. The people are friendly and happy despite their struggles, and the countryside is astonishingly beautiful.

Man, it felt good to get out of the ivory tower and see something happen. Between two years at a consulting firm and six months at ATA headquarters in Addis, I crave seeing actual on-the-ground operations. This was by far the best week I've had at ATA. Not only was it a great experience, but spending time with the farmers, cooperatives, woreda officials, etc. taught me a ton about how things really work here.

The two places we visited were Gassera and Tiyo. Gassera is a woreda (think US county) that’s a little off the beaten path (which I think adds to its charm). We left Addis Monday morning and got to Goba that night. By the way, quick side note – the fact that we spent a bunch of the week driving was great because (1) I got to see more of the country, (2) I am a huge road-trip junkie, and (3) I forgot how nice it is to drive somewhere instead of walking. Anyway, from Goba it’s just a 2-2.5 hour drive on a gravel / dirt / mud (especially this time of year) road to Gassera. Tiyo is near Assela, so we stopped there on the way back to Addis later in the week.

On the map below, point A is Addis, point B is Gassera, and point C is Assela. But wait Charles, those look pretty close together. Why does it take so long to get between them? Between traffic, road disrepair (much rarer than I expected), and the animals / people in the middle of the road every 50 meters or so (though “continuously” may be a more accurate description), it takes a long time to get anywhere here. Personally, I enjoyed the more leisurely speed; it gives you more time to see the country.

I have to apologize for the pictures you are about to see. I would see something amazing (pretty much every five feet), take a picture of it (or whatever was right after it since, as you’ve learned with my blog, my picture taking reaction time is pretty slow), look at the picture, and think, “that’s not what I saw.” Seriously, several times I would be looking back and forth between the picture and the real thing trying to understand why they weren’t the same. Trying to capture the beauty of Ethiopia in pictures is kind of like trying to get a bad picture of Barney Stinson (HIMYM reference alert) or trying to get a picture of a ghost. It just can’t be done. I think this is a combination of (1) the quality of my cameras – a seven-year old Canon and a camera phone from a couple years ago (always blame the equipment first), (2) the fact that most of my pictures were taken from a moving car, and most importantly (3) my lack of skill (it’s possible I didn’t even realize these cameras have a “landscape” setting until halfway through the trip; turns out only ever using the on/off button and the shutter button is not maximizing the camera’s ability…who knew?).

All this is to say that if you want to see what I saw, I guess you’ll just have to come visit me :)

My chariot. Land cruiser is definitely the way to go in Ethiopia. If you look closely, you can see Mesfin, our driver. He's got some serious skills (as his ability to not hit anything the whole trip and to prevent the car from getting destroyed can attest).

I thought these mats were kind of funny when I first got in the car. I like that the little car icons say "car" underneath them.

Later their necessity would become apparent, as would my "farmer boots" (which is what I get yelled at me when I walk around Addis in them). Turns out this is a pretty accurate description as several of the farmers wore them, too.

In Gassera, there is a beautiful gorge right off the road in between the woreda government office and the primary cooperative we visited. I'm trying to compensate for the lack of quality in the pictures with quantity :)

Beard alert!

I'm a huge sucker for the beauty of farmland (maybe it's the Midwesterner in me). Here it's even prettier because you'll have farmland in the foreground with mountains, hills, forests, etc. in the distance.

Rural Ethiopia goes on the list of potential retirement locations. This is definitely the way to do Africa – up in the plateaus and mountains where the temperature extremes are “warm” and “chilly.” By the way, these goats definitely agree that July-September is the "chilly" extreme.

Between pictures and videos (which as we’ve learned previously, I can’t share until I visit a country with better internet connectivity), I’ve got seven GB of stuff from the last five days. In other words, this may become several blog posts.

Heck, I haven't even discussed input credit yet. We went out to witness input credit disbursement and to interview smallholder farmers who had gotten input credit previously, MFI branch employees, cooperatives, and woreda government officials. Until next time, let’s just say some things are working and some things are not. Looking on the positive, things seem to be headed in the right direction. On the other hand, it’s hard to meet these farmers personally and not feel that they are getting a raw deal. Not only is bone crushing poverty prevalent, but the hoops they have to jump through just to (maybe) get inputs are pretty nuts. Their optimism and positive attitudes despite all this is inspirational.