savings products for tea smallholders

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Mountains of the Moon University

SCHOOL OF BUSINESS AND MANAGEMENT STUDIES

P. O. Box 837, Fort Portal, Uganda; Tel: +256 782 689929 , Website: www.mmu.ac.ug,; Email: [email protected] Slide 1/21

Agri-Finance Marketplace

Savings Products for Tea Smallholders

24th November 2011

Felix Meier zu Selhausen Nelson Basaija

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1. Mpanga Tea Growers

2. The Financial Survey

3. Recommendations

4. Implementation Phase

Agenda

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• The survey conducted by MMU was funded

indirectly through German Development

Cooperation Public Private Partnership

(PPP) tender won by Mpanga Tea Growers in

May 2011

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1. Mpanga Tea Growers Factory

• Mpanga Tea (1995) is one out of 4 tea

factories owned by smallholder farmers in

Uganda (among Igara, Mabale and Kayonza)

• 900 associated growers with an average 1.6

hectares, produce 917kg of „green leaf‟ per

month translating into 330,000 UGX

• Fairtrade premiums reinvested into:

Health services (clinic)

Shallow water wells and pumps

SACCO

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Mpanga SACCO was interested in:

1. Is there a low savings culture among

small-scale tea farmers? If yes, what are

the reasons for it?

2. How can the SACCO improve financial

access (savings) for small-scale tea

farmers?

2. The Survey

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1. The Survey - Overview

• Data collected from 7 tea-centres

• 108/754 Mpanga SACCO members (14.3%)

Tea growers 99

Tea pickers 35

Field supervisors 5

Total 139

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Distance from tea-centre to factory 13.6km

2. The cost of distance

8,400 UGX travel costs

Own a mobile phone 61%

Distance to Mobile Money agent 6.1km

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Monthly savings at Mpanga SACCO (108) UGX 21,000

% of income 6%

Monthly savings at other places (56) UGX 24,000

% of income 7%

2. Low Savings?

• 37% of growers/pluckers save in other places than

Mpanga SACCO

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2. Saving groups

Other place per month No. Savings (UGX)

Other SACCO 17 9,200

Commercial Bank 14 97,000

Saving groups 17 36,000

In the house 8 18,500

How can “house”-savings be channelled to

Mpanga SACCO? Groups!

Costs of distance is a problem – members save

in local groups/house/other SACCOs

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• More than 1 out of 3 responses to „why savings‟

was about preparing/planning for the future or

acquiring an asset

• 57% growers/pluckers stated that they would

save more during a peak-season (seasonality)

2. Why Saving?

Farmers want to plan for the future and invest

into assets.

Farmers require a product that channels their

seasonal peak-incomes into future lump-sums

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3. Recommendations

1. Mobile Money to bridge distance and costs

when saving

2. Savings Groups at tea-centres for savings

mobilization and reduced costs to farmers

3. Commitment Savings to respond to

farmers‟ needs and opportunities (i.e.

fertilizer, school fees)

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4. Training of Trainers Workshop

• The Savings Training of Trainers (TOT) Workshop

(August 2011) aimed at equipping centre heads

and SACCO staff with techniques how to

sensitize and train tea farmers on savings

practices

Savings plan

Budgeting

Saving group mobilization

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4. Member Savings SACCO: 2011

mil

lio

n U

GX

Savings Workshop effect?!

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4. Outreach to farmers via Mobile Money

14km

6km

Mpanga

SACCO C 8,400 UGX

MM

MM

MM

• Satellite cash payment centres which disperse cash

payment to farmers through Mobile Money to

reduce transaction costs for farmers and allows

easier saving in SACCO

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4. Farmer Savings Groups

Mpanga

SACCO

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4. Commitment Savings for Farmers

Fertilizer School Fees

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• Typically tea farmers have two “peak harvest

seasons” when output and thus income is high,

which has to cover expenses for the future months

• Farmers use their incomes for everyday expenses

and for buying agricultural inputs for the next

planting season (fertilizer, seeds etc.)

• However, many find it difficult to resist the

temptation of spending income right after it is

received!

4. Why Commitment Savings?

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• Commitment accounts are offered to tea farmers during

the “low tea output season” (Jan- March & June-Sept)

when farmers typically lack funds while waitingfor the

“peak harvest”

• This is an effective design feature since their lack of

savings is on the tea farmers mind in this period, and

they can commit to saving for the next planting season

• Farmers set a date of withdrawal or a savings goal (i.e.

300,000 Shs) – they are not able to touch their savings

until that date

• Farmers groups received tutorials providing information

on savings and how to open the account

4. Why Commitment Savings?

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Enjoy Mpanga Tea! Meet us at our stand outside on the Marketplace

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Thank you very much for your attention!

Felix Meier zu Selhausen [email protected] Junior Advisor Mountains of the Moon Uni. 0781633148

Nelson Basaija [email protected] SACOO Manager Mpanga Tea Growers SACCO 0774447959

mailto:[email protected]

mailto:[email protected]

savings products for tea smallholders

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