Appendix 6 ~ Access to finance in latin america end of project report

Shared Interest Foundation

Access to Finance in Latin America.

End of project report-October 2016

Contents

Executive Summary…………………………………………………….………………3  Financial Report  Four Phase approach to delivery Phase 1: Improving governance structures …………….…….……………………..5  Workshops delivered by CLAC in Peru & Colombia  Feedback from workshops  Impact of this phase (Quantitative & Qualitative & case study) Phase 2: Improving knowledge & capacity in financial management …………...7  Training delivered by SIF in Peru & Colombia  Feedback from training sessions  Impact of this phase (Quantitative & Qualitative & case study) Phase 3: Improving CLAC staff knowledge (10 staff trained) …………………..…9  Training delivered by SIF to CLAC staff  Feedback on training  Impact of the training (action plans) Phase 4: Enabling loan access (12 accessing loans) ……………………………..10  Follow up 1-2-1 visits from CLAC & remote support from SIF  Feedback on accessing finance  Plans to return in February to test the reality of the results Concluding remarks ….……………………………………………………………….11  Next steps  Thank you

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Executive Summary Problem Statement Small and medium producers in Latin America lack capital and have limited access to cash flow. They may have poor or no credit histories, often also lacking business plans, financial statements and the ability to project cash flow realistically. All these factors inhibit them from applying to ethical lenders who could provide finance on fair terms.

In Colombia, large producer expansion is threatening smallholder livelihoods. In Peru, finance is only available to medium to large producers, or to micro producers with financing needs of US $2,000 or less. The ‘missing middle’ are unable to access affordable finance to grow their businesses and prosper.

Project aims Working with our partner, the Latin American and Caribbean Network of Small Fair Trade Producers (CLAC), our project will work with 10 co-operatives in Colombia and 15 in Peru (mainly cocoa and fruit and vegetable co-operatives). The producers will initially attend preparation workshops on organisational capacity building delivered by CLAC. They will then receive financial training workshops, delivered by a consultant who is an expert in this area. The consultant will then deliver training to the local CLAC staff to enable them to visit the co-operatives individually and provide mentoring to embed learning from the training and, where appropriate, provide information on sources of ethical finance and support to apply for a loan.

Report highlights This twelve-month project has successfully delivered all its activities to 25 small producer organisations (SPOs). The results of taking part in this training are:     

92% improved knowledge in financial management 96% improved knowledge in organisational and governance 82% stating an interest in applying for finance 100% of participants developing a strategic review 24% increased knowledge of CLAC staff.

“Many thanks to the funders of this project. This has allowed us to improve in many areas of the Association and strengthen us for the future” Isabel Cordoba (ACATA)

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Financial Report Budget Despite an offer of £50,000 from Shared Interest Society to cover the costs of this programme, a combination of receiving £10,000 toward the project from the Allan and Nester Ferguson Charitable Trust and an underspend in planned costs mean that we have been able to deliver the project using just £36,000 of the Shared Interest Society donation. Below you will see the budget (designed to cover the £60,000 available from the two donors) and the actual spend.

Budget line Baseline study Training material development Joint Workshops Regional workshops Training of CLAC staff Follow up mentoring Organisational strengthening workshops Evaluation (immediate) Evaluation (six months later) SIF project management SIF M&E design, oversight and report writing Recruitment and induction of trainer Trainer adaptation of training material Trainer training delivery Trainer remote support Local travel costs Translation of training material into Spanish

Budget £1,623 £1,960 £2,727 £12,662 £1,364 £5,519 £12,662 £5,195 0 £3,895 £1,850 £390 £779 £3,636 £1,558 £812 £325

Printing of training materials and handouts Contingency Total

£812 £1,467 £59,236

Actual £1930.39 £2260 £3,903.09 £6,575 £758 £6,319.41 £4424.01 £3,268.55 £6,000 £3,895 £1,850 £390 £273.23 £1688.37 £496.08 £1849.13 £198.70 Included in workshop costs 0 £46,078.96

Four phases approach to delivery The main body of this report will follow the four phased approach to delivery giving details at each phase on; what activities have been delivered, feedback from participants and the impact of this phase utilising quantitative and qualitative evidence throughout.

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Phase One: Activity report on Organisational Capacity building workshops In total five days training were delivered by CLAC staff between February and March to 48 representatives from the 10 Colombian SPOs. This training was split into two and a half days of input from CLAC staff and was repeated twice; once at a foundation level for five cocoa producers and once at a more advanced level for five banana producers. The same training sessions took place in Peru between 14th and 27th April in the following locations: Chickayo, Satipo and Tarapoto. 40 individuals representing 15 SPOs took part in this training mainly from coffee producers but also cocoa, sugar, banana, avocado, asparagus and pepper.

Day One Organisational Training: Day one explored the main issues that Fairtrade certified SPOs are experiencing in terms of organisational management with the aim of improving their organisational structures through workshop activities including;   

The challenges of partnership Sense of belonging Internal controls & communication

Issues highlighted by trainers included SPOs being unaware of general roles and responsibilities of governing bodies and staff. There was also some confusion around the importance of supervisory boards. These issues were all explored in detail throughout the day.

Day Two Organisational Training: Day two explored the importance of democracy, transparency and participation within the workplace with the aim of improving SPO’s approaches to inclusive business growth.     

Tools for administration Strategic planning Principles of business administration Business planning Developing work plans

Issues highlighted by trainers were focused around out of date mission and vision statements.

SPOs also have incomplete business and strategic plans that do not correspond with their principle objectives. As such, SPOs were supported through the revision of their strategic planning approach. They will be expected to have developed a strategic plan as homework following this training.

Day Three Organisational Training: This half day enabled participants to reflect on the lessons learnt over the past two days as well as make plans to practically apply these lessons. With a particular focus on the strategic plan homework, SPOs worked in groups to discuss how they would approach their strategic plan development.

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Participant Feedback On average, both the lower level cocoa producers and higher level banana producers scored the training at an overall 4.7 out of 5. The three locations in Peru gave an average score of 4.2 out of 5. This included their opinions on delivery of the workshops as well as their knowledge of the topics covered. 46% of cocoa participants specifically stated in their feedback that they had learnt about unfamiliar topics with a further 25% requesting access to more workshops like this one. 100% of the banana and cocoa producers felt that the workshops had met their expectations. 100% of the Peru SPOs stated that the workshop facilitation was excellent and the workshops provided practical tools that they can apply in their own businesses to improve transparency of records. The end of project evaluation illustrated the 96% of all participants felt they had improved knowledge and understanding with 95% feeling that they can/have applied this in their businesses.

Impact: Case study (Colombia) This part of the project aimed to achieve the objective ‘To improve the governance structures of these co-operatives’. As the following case study illustrates, the project was successful in achieving this objective.

Coobamag was set up in 1997 as a cooperative that produces and sells banana. It takes nine weeks from cultivation of the banana to it being ready for sale which involves the support of 160 people. With so many people reliant upon the success of Coobamag, it is constantly trying to improve its internal processes and quality of product. Recent high temperatures associated with climate change are causing concern for the cooperative as it affects the cost of irrigation and can cause the fruit to not develop properly. The organisational capacity building workshops resulted in “greater empowerment” to the administrators as they are more confident in what their roles require. They can also make adjustments to their current processes to be more efficient and effective. Coobamag found the workshops to be very practical and as such provided lots of tools that they could immediately apply within their business. It has given them greater confidence to make improvements.

By the end of September, Coobamag had developed a strategic plan and is now implementing it through a business plan. The practical application of lessons learnt include highlighting areas of improvement and within governance structures and making an action plan to address them.

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Phase Two: Activity report on Financial Management Training Between 16th and 23rd May, SIF delivered two-day workshops in two locations in Colombia and three locations in Peru between 4th and 16th July. In total 42 participants attended in Peru and 52 in Colombia.

Day One: Financial Management Training Day One explored the importance of being able to interpret financial records and how to do this for different audiences. It also provided an introduction to social lenders, how they operate and what they require in an application. Workshop activities included;  Telling the story of your business  Understanding and managing profit and loss  How businesses benefit from finance  An introduction to social lenders The trainer identified the massive range in financial knowledge between the 25 SPOSs and felt that day two and the 1-2-1 follow-up support would be extremely beneficial to the participants to support them in putting this theory into practice. For the majority of participants, the concept of social lenders was completely unknown so again the 1-2-1 support was in exploring the potential for each business in more detail.

Day Two: Financial Management Training Day Two provided further detail in keeping financial records. Building on the businesses deeper understanding as to why financial records are important, this day provided skills based training in how to keep accurate and useful records. Workshop activities included;  Balance sheet management and interpretation  Managing cash-flow  Forecasting cash-flow and sales  Basic Financial statements  Applying for finance The trainer again identified a large range in ability and so adjusted the level of detail to suit the needs of each training session. Many of the participants felt more comfortable with this session as it offered practical advice rather than theoretical approaches. Others were less comfortable as it was not their area of expertise within their organisation.

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Participant Feedback After completing the Financial Management Training, the Colombia participants were asked to complete surveys indicating the impact of the training on each subject area. 30 complete surveys have been analysed made up of ten banana SPOs and 20 cocoa SPOs. In every section we saw the movement expected for each indicator with an average 19% improvement in participant’s knowledge on financial record keeping. 21% improvement was seen in the participant’s ability to tell their business’ story and a 42% increase in the participants understanding of social lenders.

The Peru participants also took part in the same survey. 31 complete surveys have been analysed made up of 10 participants from Chiclayo, 8 from Tarapoto and 13 from Satipo. In every section we saw the movement expected for each indicator with an average 20% improvement in participant’s knowledge on financial record keeping. 28% improvement was seen in the participant’s ability to tell their business’ story and a 39% increase in the participants understanding of social lenders.

The end of project evaluation illustrated that 92% of all participants had acquired new information and understanding with 96% of participants stating that they will/have applied this learning into their business.

Impact: Case study (Peru) This part of the project was working to the objective of ‘improving the financial knowledge, understanding and capacity of 25 targeted CLAC member co-operatives’. As this case study illustrates, the project was successful in this objective.

Cooperative Agraria Cafetalera Perene (CAC Perene) was originally established in 1966 to produce and sell green coffee beans. It ceased to function in 1987 due to social and political problems but was re-established in 2005. CAC Perene currently has over 30 employees and 80 producers. The financial management training has enabled CAC Perene to improve their internal financial reporting to the Board of directors. This will enable the Board of directors to utilise financial indicators and react accordingly. CAC Perene hopes that this will enable them to function more effectively and plan more accurately.

At the end of September, CAC Perene stated that the financial management training has had a favourable impact on the business as the newly formed strategic plan paves the way to seek finance for post-harvest infrastructural improvements.

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Phase Three: Activity report on training of CLAC staff The CLAC regional staff were all urged to attend the SPOs training session on financial management. They were then given a separate training event in order to build upon their current knowledge of social lenders and to learn how best to support their members in accessing finance.

This full day session recapped on the lessons covered in the SPO Financial Management training days providing the CLAC team with practical tools to offer follow up to their members. Workshop activities included:    

Business diagnostic tools GROW model of business coaching Supporting self-reflection Preparation for providing follow-up support to the SPOs

Participant Feedback After completing the Shared Interest Foundation training, the CLAC staff were asked to complete surveys indicating the impact of the training on each subject area. Six complete surveys have been analysed made up of 3 staff from Colombia and 3 from Peru. In every section we saw the movement expected for each indicator with an average 23% improvement in participant’s knowledge on financial management. 25% improvement was seen in the participant’s knowledge on accessing finance and a 24% improvement in participant’s ability to support members in accessing finance.

Impact The objective we were aiming to achieve during this phase of the project was to ‘enhance CLAC staff knowledge on how to assist their members with financial management and access to finance’. From the feedback received, the majority of staff feel more confident to offer support to their members. The training provided them with both the theoretical principles and practical tools in order to provide tailored advice to each SPO depending upon their needs and ability levels. As many of the CLAC members of staff had not had experience in working with social lenders, the access to finance support offered through the training proved vital in order to build their capacity to offer support to their members. The success of the 1-2-1 support provided by CLAC can be seen with 95% of all participants marking this part of the project vital to being able to practically apply the lessons learnt from training.

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Phase Four: Activity report on mentoring in applying for finance Through a combination of 1-2-1 mentoring sessions provided by CLAC and remote support from the SIF consultant, all 25 SPOs received follow-up support in practically applying the lessons learnt into their businesses. This included:  Improving general organisational capacity (inc Governance structures)  Preparing to access finance (inc good record keeping)  Strategic planning support  Action planning The range of businesses involved in this project meant that the individual support offered through 1-2-1 mentoring was vital. All of the businesses received this intensive support.

Participant Feedback The end of project survey asked participants what the most important aspects of the mentoring was to their business. The percentages below show to what extent the Colombia and Peru cohort agreed with the following statements: The mentoring resulted in…

Increased understanding of the training lessons

Colombia 98%

Peru 91%

Practically applying the lessons learnt Making changes to improve my business Making preparations to access finance Getting practical advice on my businesses needs

96% 98% 96% 98%

92% 92% 92% 93%

Reducing the risk of breaching the criteria of Fairtrade

98%

97%

Whilst this feedback suggests 93% of businesses are making preparations to access finance and 92% of participants stated that their businesses are considering accessing finance, the narrative feedback from participants suggests that the majority of businesses are currently working on improving their internal processes and are therefore not currently looking to access finance. 86% of all participants did however report an improved understanding of how to apply for finance and what options are available in the form of social lenders.

Impact This final part of the project was designed to achieve the objective ‘To enable access to loan finance for targeted CLAC member co-operatives’. As participants have already made massive progress in improving their internal governance structures, financial record keeping and management, we expect this objective to be realised in the near future. In order to assess the progress in this objective, we will be returning to complete a longitudinal study in February.

Currently, the majority of businesses state a focus on making internal improvements before looking to apply for finance.

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Concluding remarks Objectives In our application we set ourselves four objectives: 1. To improve the financial knowledge, understanding and capacity of 25 targeted CLAC member co-operatives.

Shared Interest Society’s South American lending officer acted as our expert trainer with a vast experience of providing consultancy services and training. As a result, the financial training modules were delivered with improvements seen in every business in relation to their financial knowledge and understanding.

2. To improve the governance structures of these co-operatives.

The CLAC training sessions resulted in all of the SPOs working towards a strategic plan to highlight areas for improvement and practical action plans to achieving these changes. These plans will be monitored by CLAC staff as they offer the businesses support beyond this project.

3. To enable access to loan finance for targeted CLAC member co-operatives.

We are expecting $750,000 of loan finance to be accessed through this project. At this time, most of the producers interested in finance have stated their desire to lend in local currency.

This means some of the $750,000 may be accessed through local lenders. This target will be reviewed in February as none of the businesses are currently pursuing finance due to the internal improvements needed in each business.

4. To enhance CLAC staff knowledge on how to assist their members with financial management and access to finance.

The CLAC staff training day was vital in building CLACs capacity to offer support beyond this project to its membership businesses in both financial management and accessing finance. The CLAC team will be continuing to monitor the businesses involved in this project to ensure they are given the appropriate support when needed.

Next steps In order to test the long term impact of this project both on CLAC staff and to see if any of the 25 SPOs are successful in applying for finance, a longitudinal study will be carried out in February.

Thank you At this time, we would like to thank Shared Interest Society for providing financial support and expertise to ensure this project was a success.

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