Appendix 7 access to finance year 2 final report

This version valid at 27/10/11

International project grant 2009-2012 Annual narrative and data report Please complete all sections of this form in a font no smaller than size 11. Your report should not exceed 25 pages in length. All information should be provided in English. Please also complete the financial report. Append any supporting information requested.

When you have completed your report, please send one hard copy to the International Grants Team, Comic Relief, 5th Floor, 89 Albert Embankment, London SE1 7TP and one electronic copy to reportinternational@comicrelief.com.

Part A: report summary A1

Basic Data on the grant (please also complete basic data in footer section)

Grant Programme Grant Code Grant Title Grant start date Grant year Period covered by the report UK Organisation/Comic Relief grantholder Local Organisation(s) & their country of operation Lead author – Local organisation(s) Lead author – UK organisation Planned total project expenditure for this year (£) Actual total project expenditure for this year (£) Date of submission

Social Investment pilot programme GR002 – 12591 Improving access to finance in East and West Africa 01/04/2013 Year 2 1 April 2014 – 31st March 2015 Shared Interest Foundation Fairtrade Africa – pan African operations Catharine Russell, M&E Manager Joanne Hall, Project Leader £53,829 £69,107 01/05/2015

N.B. Where the grant is working with more than one local organisation please note which local organisation is related to which achievement throughout the report.

A2 Please describe the most significant achievements that the grant has made this year, in terms of changes to the lives of your target groups and/or changes in policy (in 250 words or less).

This project has enabled us to develop a sustainable way of providing support that has surpassed all expectations. Our target of £1million of approved lending was more than doubled, with over £2.5million being approved (£1.6m of this in UK Organisation name: Shared Interest Foundation Page 1 of 24

Grant code: GR002-12591

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year 2). We are delighted with these results and feel they demonstrate the effectiveness of our model. Through training the co-operatives we have increased access to finance for their 31,260 members. This has meant improved trading opportunities, new equipment and, for one organisation, the ability to diversify their income stream.

Across the project we delivered financial training to 122 organisations, 32 of these in year 2. 26 organisations received additional training in governance. In total 48 organisations made applications (24 in each year). 24 have been approved to date.

The training and mentoring delivered has left the co-operatives with the knowledge and ability to manage and access finance for the benefit of their members. The programme was well received by the participants and so we are now developing new projects that roll this out to other groups needing similar assistance.

A3 Where relevant, please describe progress on addressing each of the Comic Relief conditions attached to this grant Condition:

Progress:

A revised budget should be submitted before the start of the grant which reflects the revised grant amount and which allocates additional money to monitoring and evaluation costs.

A revised budget was submitted and approved prior to the start of the grant. This included an additional ÂŁ14,430 for monitoring and evaluation costs

Within 3 months of the start date of the grant a more detailed budget should be submitted to Comic Relief showing expected training costs per country/workshop, showing where and how the budget will be allocated across the five countries, and showing how any surplus funding will be used for extra one-to-one mentoring days if needed by specific beneficiaries.

The more detailed budget was submitted at the end of June 2013, within deadline, and approved. An additional day of mentoring was added to the mentoring programme after the budget was revised, bringing it to a total of 4 days per beneficiary organisation.

The Foundation’s director should draft and The Head of Foundation drafted and provide full Terms of Reference for the agreed the terms of reference with implementing partner, Fairtrade Africa, Fairtrade Africa. which expresses not only the goals but the methodology, criteria and process expected of them for key activities including: trainee selection, trainer outreach/recruitment, trainer short-listing and M&E to guide the interim Fairtrade Africa and set expectations.

These TOR should be added to the Memorandum of Agreement

UK Organisation name: Shared Interest Foundation Page 2 of 24

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Part B: What difference has the grant made – Progress towards outcomes Please review progress this year towards each of the outcomes you identified at the start of the grant in your grant start up form, and provide some examples of what has changed as a result of your work.

B1

Project outcome 1 – please state

Fair trade businesses in East and West Africa are better able to access finance for business growth, leading to increased employment and/or income for current producers B2

What progress has the grant made towards this outcome this year, including the achievement of any intermediate outcomes? ( Please refer to

your outcome indicators in your grant start up form)

Indicator 1 (short term outcome) 150 businesses have improved understanding of key financial concepts and how to apply them in their business In year 2 we decided to re-prioritise the focus of the training. We therefore held regular training workshops in Kenya and in Cote D’Ivoire, the two countries where demand for the training remained highest. 26 new businesses were trained in these two countries. As with the year 1 training we invited the organisations to send a second participant to the workshop at their own cost and were pleased to see that 4 organisations did so, showing the value they placed on the training. In Tanzania and Uganda we opted to trial on-site training for another 6 businesses, going straight to their premises to work with a team of staff and train using their own financial records as example material. This was a useful way of testing out this method of training.

In the year 2 Kenya workshop 3 participating groups were rated as having poor knowledge at the start of the workshop, 7 as average and 2 as good or very good. By the end of the workshop the participant feedback showed that 100% of the participants felt that the aims and objectives of the session, including improving their knowledge, were well met. In Cote D’Ivoire 94% of the workshop participants agreed that the workshop itself had improved their level of knowledge and ability and 100% felt it had re-enforced their capacity to create Figure 1: Participants developing a sales financial statements within their co-operative. For the organisations that were trained on-site in Tanzania a focus group discussion revealed that 70% forecast, Kenya training workshop group of participants showed that 70% felt that the aims and objectives were well met with the same percentage stating that they would be able to use the new knowledge in their working lives.

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In Ghana we decided to assist the organisations we were working with to put in place the necessary building blocks for understanding financial concepts. We ran training on good governance for 26 participants who had attended the financial training in year 1. Although they had already been trained, the year 1 evaluation revealed that for these co-ops, who were often less than 3 years old, more support was needed in the basics of co-op operations before financial improvements could be addressed. The training was delivered by the Department for Co-operatives in Ghana, forming a useful link for the project staff. A sample (23%) of feedback from the participants shows that training was rated very highly, with the topics most valued being group dynamics, conducting effective meetings and record keeping. One participant commented:

‘There has been a great impact at the Union with effective meeting attendance, collective decision making, and also secretaries have been writing good minutes and good record keeping. The Union manager has been able to record all transactions…’

Overall the project trained 122 businesses in understanding key financial concepts across all 5 target countries. As well as evaluating individual country training we conducted an evaluation of the training overall at the end of the project, with a sample of 20 businesses from the year 2 cohort.

This gives us a 30% response rate over the two years. The amalgamated figures show that 92% of participating organisations over the course of both years felt the project had filled gaps in their understanding. 81% of participants implemented learning into their operations following the training, particularly operating accounts, the budgeting process and formal financial reporting. Comments from the participants on what they implemented post training include:

‘We use to do income and expenditure but after the training we knew that there is a balance sheet’ ‘I fully trained my fellow managers on budgeting controls, social lenders & and basic financial management skills which I acquired’ ‘Held discussion over social lending. Held a seminar at MCU senior staff on financial management’ ‘The annual budget process is now more participatory as I understand the proposals by the finance department’ Across both years the participants rated the training at 4 out of 5 for satisfaction. The top 5 rated most useful topics covered were: preparing budgets, business planning, keeping financial records, how to prepare financial statements and introduction to social lenders. The variety of different responses in what was classed as important however reinforce our learning from year 1 that the mentoring aspect of this programme was so important to tailor the development of skills and knowledge to each organisation’s needs.

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Indicator 2 (short term outcome) 150 businesses have improved knowledge of social lenders, their services and their requirements 122 out the targeted 150 businesses have now attended the information session and completed the module on what is a social lender as part of the training package. 48 producer organisations on the programme began the application process for loan finance to Shared Interest Society, and 3 are known to have applied to other social lenders during the course of the project, a clear sign that they have improved their understanding of social lenders. Of the 48 applicants to Shared Interest Society, 24 applications have already been approved and funds dispersed. 19 more applications are still in progress. The remaining have either withdrawn because of external issues (such as voluntarily de-certifying from Fairtrade due to poor sales) or were rejected. All organisations were asked at the workshop or on-site training stage whether they were interested in pursuing loan finance. 4 of these said that they were not and 1 asked for more time to consider as they had problems completing the mentoring phase within the allotted project period.

From the year 2 training cohort 8 out of 32 organisations had previously assessed some form of loan finance. However these organisations were still in need of support to improve and refresh their financial management skills and ability to manage loans once accessed.

Prior to the training stage participants in Kenya could name some other social lenders but did not know of Shared Interest. In Tanzania the most commonly heard of social lender was Oikocredit who the producers thought had a support network to assist with applying for loans. Despite this knowledge however the groups were not aware of the requirements of social lenders nor how to approach them.

Indicator 3 (short term outcome) 45 businesses have clear business plans including sound financial projections Business plans: 47 businesses were selected for mentoring over the two years. This exceeded the target by 2 as it was clear from the feedback that mentoring was the most highly valued aspect of the project, therefore, where it was possible, more resources were diverted into this. These businesses were offered tailored guidance on the creation of a business plan. The baseline for year 2 shows that out of the 10 organisations mentored in East Africa 5 already had some type of business plan in place. However these plans were often outdated, rarely referred to and commonly had been developed by an external consultant with little staff engagement. The quality of existing plans was rated very poor (1.75 out of 5 on average on the profiling tool). For example in Uganda one organisation did have a plan in place but it was a 20 year plan which could not adapt to the changing circumstances facing the business. Feedback from the trainers suggest that this element of the mentoring process requires much more time than was allocated as it is a considered process that the staff must understand thoroughly and many were starting from the very beginning. However the trainers did note that the process is a very good one to accompany the financial records and statements training, to offer a more rounded support package for a business.

By the end of the mentoring 9 organisations in East Africa now had a good quality business plan in place. In West Africa 4 organisations developed business plans during the mentoring phase and 1 updated an old plan to make it relevant with the help of the trainer. Combined with the 26 developed in Year 1 this gives a project total of 40 against the target of 45.

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Financials checklist: Of the 18 producer organisations mentored in Year 2, 4 would have been eligible at the start of the project to apply for a loan with a social lender based on the checklist of information needed, i.e. having the complete set of financial and business records. The most commonly lacking requirement was the cash flow statements though it was frequently observed by the trainers that, though P&L and balance sheets existed, they were not always of a good standard.

By the end of the project 40 of the 47 businesses who went through the mentoring would now meet the checklist of requirements, although not all of them have chosen to apply at this time. This is 85% of the number mentored, exceeding our target of 75% of mentored businesses having the full checklist in place. In addition 8 of the 15 organisations who applied directly to Shared Interest Society without mentoring support also met the checklist of requirements. The remaining are currently being asked to provide additional information to progress their applications.

Indicator 4 (short term outcome) 30 businesses make good quality applications for loan funds with a combined total value of £1 million over2 years Loan applications: 48 producer organisations have applied to Shared Interest Society as a result of this project. To date 3 proposals have been rejected outright, with one rejected and then approved after the organisation underwent mentoring and re-applied. 1 organisation has withdrawn their interest after initial applications (due to voluntary decertification from Fairtrade). 20 applications are still pending with 2 at the final review stage and expected to be approved in the next month. Table 1 below shows the breakdown of applications by country.

TABLE 1: Loan finance applications to Shared Interest Society Country Number of applications in total

Number of successful loans

Amounts approved

Kenya Uganda Tanzania Cote D’Ivoire Ghana Totals

3 4 2 11 4 24

£122,000 £653,000 £136,000 £1,626,000 £119,000 £2,656,000

10 4 5 21 8 48

Out of the 48 who applied 15 of these organisations did so after attending the initial training workshop and without the support of the mentoring phase. Significantly 10 of these 15 were from Cote D’ Ivoire. Our internal evaluation pointed to the nature of the cocoa industry in Cote D’Ivoire as an explanation, as all of the Cote D’Ivoire lending was into cocoa. There is a clear and growing market for this product and the regulatory framework (under the Conseil –Café- Cacao) requires co-operatives to prepare financial accounts to comply with the laws of cocoa trading. For the remaining applicants it is clear that the mentoring made a vast difference in enabling them to apply for a loan. The case study below (extracted from a full case study done for the internal evaluation) demonstrates the impact of the project and the mentoring scheme on an organisation that accessed finance through the programme. It is compared to a counterfactual, a member of the Fairtrade network that has not been involved in the programme.

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Ghana case study comparison

Case study: Ahafo Ano Type of organisation: Smallholder citrus co-operative Loan accessed: $50,000 Interest rate: 11%

Counterfactual: Ajumako Enyan Essiam Type of organisation: Smallholder citrus co-operative Ahafo Ano was established in 2005 and has 360 members (36f).

It has always to of access finance. It requires huge outlays for farm Loan accessed: None struggled – not part the programme maintenance to increase yield and achieve better quality. Before the project began the group were in a desperate state. Producers couldn’t afford inputs and had to reduce farm sizes. They turned to the executive for a bailout, but the co-op could not support them. They tried, in vain, to access finance from commercial banks who said they were too risky and would not accept members’ farms as security. Neither the co-operative not the members could access finance. One female producer remembers ‘The first question, they will put to you is “what business do you do?” and the mention of the word farming “takes all the attention away from you”. Members lost faith and meeting attendance dropped off as some began to leave.

The livelihoods of producers and their families was deteriorating.

Ahafo Ano describe their introduction to the project as "a God sent one and today we can see a bright future looming in the horizon". Farmers could not hide their joy. The association noted that previously they did not have books of accounts but they have now purchased them and will use them appropriately to enhance their financial management practices. Producers now have a renewed trust in the ability of the association to deliver. The executives sounded very positive, full of energy and very confident in their ability to move the association to another level. It has increased their selfconfidence and they have earned so much respect and admiration from their members.

Ajumako Enyan Essiam started as collective groups in 2003 and formed an association of 1170 members in 2010. They rely on membership fees and levies for basic financial needs and have no funds in their bank account. They have never accessed finance. They have an account with a local agricultural bank and so in 2013 they approached them with a request and were told they could only have a loan if they found a third party ‘reputable’ business to apply for it on their behalf. In 2014 they tried again but were again rejected so they approached another bank who simply said agriculture was too risky. Some individual members accessed micro-credit facilities that one member described as the worst experience of his life (getting an interest rate of 28% over a short time period). Members got into personal debt and had to sell belongings, sweeping away any small profits they had.

These are two associations in the same industry in the same country with the same history of struggle to access finance. The project has enabled one to change the course of its history and to bring back hope to its members whereas the other one is still battling to determine what to do to access finance. In an interview with the chairman of Ajumako he exclaimed, “Sir, we don’t know how to do it, teach us, show us the way and will follow it.

The onus lies on me to help these farmers get out of poverty”. You could clearly see a mix of confusion, anxiety and determination.

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The internal evaluation provided further feedback on the mentoring programme and loan application support, as shown in the following quote:

‘Without it (the mentoring) we would not have accessed finance. It raised awareness of the social lenders…. They tried to explain how to monitor the operations- compare the actuals with the projections and percentages of the deviations. We weren’t doing that before’ Scorecards: A sample (34%) of the project’s applicants to Shared Interest Society was compared with a small sample (3%) of Shared Interest Society’s annual portfolio of customers to give a comparison scorecard rating. This found that the project participants had a rating of 3.10 compared to the Society’s average of 3. Although this is only slightly higher than the average applicant who has not accessed similar training and mentoring, anecdotal evidence of the quality of applications however has revealed a marked improvement in understanding, particularly of the need for cash flows and financial projections. For future use we will refine the ratings system for the scorecards to allow it to demonstrate more of a variety in applicant capability as currently the system is resulting in very similar ratings.

Value of lending: By the end of the project a combined total of £2,656,000 in loan facilities was approved by Shared Interest Society. This far exceeds the projects original aim of £1million. The total is shared between 24 organisations across the 5 countries (a breakdown of which is found on Table 1 on page 6). This access to finance is estimated to have reached 31,620 members through their co-operatives and a further 1018 employees.

The total amount of payments made to producer organisations as a result of this project is £3,198,000 as some of these facilities have been increased since the original application and others have been repaid and borrowed again.

In addition to this the project team knows of 3 organisations who have accessed loans from other social lenders and 2 from local or commercial banks, though the amounts of these loans cannot be known due to commercial sensitivities. The average size of an approved loan application to Shared Interest Society is £110,000. Of the 24 organisations with new loan accounts 79% are performing well and 21% are currently in arrears. However this compares well to the Society’s average arrears rate of 25% and does not necessarily equate to the organisation’s ability to manage its finances. Often it is an issue of market performance or a technical problem in the lending process. For example one group in arrears is having issues with the local arm of its European buyer who are expected to make the payment to the lender on their behalf and have not been doing so.

20 organisations are still in the process of applying as the project closes, with one organisation from Tanzania having applied in April, just after the end of the project. The total amount requested from these groups could contribute a further expected £1.5million to the final total from the cohort under the programme. This sum also includes the additional amounts provided to the 3 organisations that have been granted an increase to their original loan facility during the course of the project, showing that they fully understand and are complying with the terms of the lender.

Interest rates: The average interest rates offered to the applicants over the course of the project is 11.2%. However this masks a difference between rates offered above the baseline premium set by the Society for each currency. For those accessing funds in dollars (12 organisations) the average is 10.8% which is 4.3% above the USD standard baseline % applied to all dollar loans. For Euro loans the average is 11.2%which is 4.2% above the average Euro % baseline applied. The interest rates applied however depend on many variables to do with the business (e.g. commodity UK Organisation name: Shared Interest Foundation

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risk, country context) and do not necessarily reflect the quality of the application. For comparison Shared Interest Society reports a rough average figure of 10.5% across their entire producer lending portfolio.

This project also saw the Society’s first ever lending into a local currency with a loan of 4million Kenyan Shillings (roughly £27,000) to a Kenyan coffee co-operative. The interest rate applied to this loan was slightly higher than the average, at 15% reflecting the increasing risk of lending in a soft currency. The case study on page 10 goes into more detail about this lending and its impact on the producer group.

Indicator 5 (intermediate outcome) 45 businesses have improved business outcomes which would meet minimum considerations for social lenders This indicator looks at particular skills measured by the financial profiling tool for the participant businesses 1) financial reporting and management skills and 2) management and business plans in place. Table 2 below shows the results of the organisations profiled in East Africa in year 2. This highlights that, for the core skills reviewed, Kenyan organisations scored lower than expected. However the project team did deliberately chose the weaker co-operatives for the mentoring support from the Kenya workshop as it was felt that other organisations could apply for loan finance directly without this, after attending the workshop.

Table 2: Financial profiling tool results East Africa Total # Business Organisations number plans in mentoredprofiled place overall score Tanzania 3 2 3.8 Kenya 4 4 3.1 Uganda 3 3 2.6 Total 10 9 3.2 (average)

Organisational management score 3.7 2 2.3 2.7

Financial management score 3.7 2.5 3 3.1

As previously discussed we know that 85% of those businesses mentored would now meet minimum considerations for social lenders. Across the whole programme 48 businesses ( including those trained but not mentored) have proven this by having their initial applications for loan finance considered. In addition the 3 businesses that have applied to other social lenders also demonstrate that they would meet these minimum requirements.

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Case study: Local currency lending

Name: Kabuboni FCS Type of organisation: Coffee farmers co-operative Loan accessed: 4 million Kenyan shillings Interest rate: 15%

Established in 2007 Kabuboni FCS is a coffee co-operative near Mount Kenya with 1150 members. They took part in the training programme in year 1 and were then selected for mentoring support and assisted to apply for a loan. Kabuboni’s history of accessing finance was difficult. They had only ever accessed a small loan from a local bank and some pre-financing from coffee buyers. But they often found the security demands and the interest rates too high. Bank staff had even been to their homes to appraise what assets they had that could be used as collateral for the co-operative.

Prior to the mentoring Kabuboni was keeping financial records but were not preparing a business plan or any financial projections. They found the mentoring very useful in demonstrating how to implement the things they learnt about at the workshop. Kabuboni received their loan in July 2014, the first ever local currency loan in the history of Shared Interest Society. The funds enabled them to begin a project to strengthen the diversification of their livelihoods in milk production. The proposed milk cooling plant was a popular project among members and one that had been awaiting financing for 2 years. The nearest cooling plant was currently 20km away causing many difficulties and loss of earnings for the farmers. The project is now enabling the farmers to earn revenue from a source besides coffee, making them less vulnerable to global coffee price shocks. Since its launch in October 2014 1.1millions KES (around £7500) has been earned directly by the farmers from this income stream. Dairy provides a regular source of income, it is not seasonal like coffee. The impact of this is significant. One member noted ‘Monthly income from milk has made us smarter, we are like employed people now’. This steady income is allowing the members to buy inputs, pay school fees and contribute to savings schemes.

The men also talked of the potential for opening up access to more formal forms of local finance.

Kabuboni are now producing so much milk that the cooling plant may not be big enough. They have plans to expand their operations and even create more value added by packing raw milk on site. Many of the farmers benefitting from this are women, as dairy is seen as an activity that is part of a woman’s livelihood strategy. Now Kabuboni anticipates the number of its female co-operative members will increase as a result.

Asked if they would recommend the programme to future participants Kabuboni representatives stated ‘Yes we would. The achievements we have been able to get from the funding. It’s an additional income that we are adding to the pocket of the farmer. We would recommend other organisations to apply to social lenders for support.’

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Indicator 6 (intermediate outcome) 150 businesses have increased confidence in their financial capacity Confidence levels post workshop were already improved. In year 2 the evaluation feedback showed that those trained moved from a self-rating of 3.4 (across 5 topics) to 3.7. This is further explained using the example of the Kenya training workshops in Table 3 below. Combined feedback from years 1 and 2 of the project show the detail of the improvements in confidence levels as a result of the workshop.

Table 3: Kenya workshop - confidence of participants Knowledge of social lenders Knowledge of accounting & fin management Quality of financial statements Quality of business plans Ability to negotiate with financial institutions

Baseline score

Post-workshop score

3.4 3.7 3.8 3.7 3.6

4.1 3.9 3.9 3.8 3.9

In Uganda the trainer noted that the 3 mentored organisations were impressed with what they had achieved by the end of the process and that they could now tell the story behind those financial statements. He felt that their confidence had improved.

In addition this indicator looks at the number of applications for loan finance as a sign of increased confidence. Here we can combine the number of applicants to Shared Interest Society with the number known to have applied to other social lenders or commercial banks. This gives a total of 53 organisations who have applied for finance during the project period, over-achieving our initial target of 30 organisations.

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B3 Have you brought about the changes you expected by this stage of the grant? Please provide a rating from 0-3.

(3-fully achieved, 2-mostly achieved, 1-partly achieved, 0-not at all/not yet started.)

3

Please provide an explanation for your rating.

The project has hugely over-achieved against its main aim – enabling access to finance for producer groups. The values of lending that have resulted from the project have exceeded all expectations and we have been delighted with the stories of the impact that opening up loan finance is having on these businesses. We managed to increase the number of businesses we mentored above the target of 45 and saw lending into the first ever local currency loan for the Society. 48 applications for loan finance also outstripped our target of 30 applications. Following the learning from year 1 we reprioritised our activities in year 2. We focused on the quality of the mentoring interactions, making sure that the building blocks were in place for capacity building in Ghana and trialling on-site training as a new method of delivery that we could learn from. All of these changes have enabled us to learn vast amounts, a discussion of which can be found on pages 21-25.

B4 Please tell us about the numbers of people who have benefited directly (and only where relevant or possible indirectly) this year and to date in terms of outcome 1. Please refer back to the information you provided in your grant start up form.

Outcome indicators (including targets where appropriate in Predicted relation to baseline data) number to benefit directly

1.

2.

3.

4.

M 150 businesses have improved understanding of key 36 financial concepts and how to apply them in their business 150 businesses have improved knowledge of social 36 lenders, their services and their requirements 45 businesses have clear business plans including sound 30 financial projections 30 businesses make good quality applications for loan 20

UK Organisation name: Shared Interest Foundation

Actual number benefiting directly this year

Actual number benefiting directly to date

Estimated number to benefit indirectly (if possible)

F 18

M 63

F 23

M 149

F 45

M 0

18

63

23

149

45

15

58

15

98

10

31

4

69

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Actual number benefiting indirectly to date (if possible)

F 0

Actual number benefiting indirectly this year (if possible) M F 0 0

M 0

F 0

0

0

0

0

0

0

26

0

0

0

0

0

0

15

0

0

0

0

0

0

This version valid at 27/10/11

funds with a combined total value of ÂŁ1 million over2 years 5. 45 businesses have improved business outcomes which 30 would meet minimum considerations for social lenders 6. 150 businesses have increased confidence in their financial 36 capacity B1

15

58

15

98

26

0

0

0

0

0

0

18

63

23

149

45

0

0

0

0

0

0

Project outcome 2 – please state (if applicable). Delete if not applicable.

Shared Interest Foundation, Fairtrade Africa and other African business support networks have more well developed plans of action for future support for businesses regarding accessing appropriate sources of financing B2

What progress has the grant made towards this outcome this year, including the achievement of any intermediate outcomes? ( Please refer to

your outcome indicators in your grant start up form)

Indicator 1 (short term outcome) Increased engagement by SIF with the global social lender network, leading to sharing of best practice approaches to in-country capacity building Following positive interaction with the 7 recognised leading global social lender organisations in developing the training for this project, we have continued to develop these relationships. We disseminated a summary of our findings from the first year of the project to the contacts we have developed in these other organisations, and plan to repeat this following the completion of the project evaluation. Individual conversations have been held with representatives of Alterfin and Progresso (who work in conjunction with Rabobank) on their views of technical assistance and the challenges of lending in West Africa. Some training material has also been shared. One co-operative was also referred on to Root Capital for potential funding by the project when they voluntarily de-certified from Fairtrade and thus were no longer eligible to apply to Shared Interest Society.

Through Shared Interest Society attendance as part of the Committee on Smallholder Agricultural Finance (CSAF), we have lobbied to have the topic of approaches to technical capacity building discussed. This was on the agenda in May 2014 and provided useful information on each other’s approaches and current projects. We had hoped to build on this with the establishment a CSAF sub-group on capacity building. However this was judged to be too early in the development of the group and not an immediate priority for members. Joint projects are expected to come out of the group but the initial focus has been on price risk management and joint lending discussions. We plan to take a lead in continuing to push for cooperation in this area and have agreed with Fairtrade Africa that Shared Interest Foundation will host an event to which social lenders will be invited as part of the forthcoming Africa Fairtrade Convention in Nairobi in February 2016. This will disseminate learning gained as part of this project, as well as

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ongoing research being carried out jointly by Fairtrade Africa and Shared Interest into financial management capacity needs of Fairtrade Africa members. The intention is that this forum will provide an opportunity for social lenders to discuss together how we are responding to these needs and to share learning in this area.

The continued success of this project in exceeding its targets to facilitate loan finance has been instrumental in enabling Shared Interest Foundation to re-position itself in line with our strategy to focus more on the financial capacity building elements of our work. It has enabled us to demonstrate that financial capacity building, delivered in the right way, supporting the right organisations, can lead to significant opportunities to provide increased lending. This has enabled us to test elements of our theory of change and to confirm that financial capacity building will form a key part of our work moving forward. In line with our strategy, this has enabled a closer working relationship between Shared Interest Foundation and Society. The success of this project has led to Shared Interest Society members agreeing a £50k donation to the Foundation in order to fund similar work in South America.

We have also secured trust funding to deliver a small scale financial capacity building project in Malawi, and are partners in iDE UK’s plans to work in Ethiopia, delivering a financial capacity building element of that project.

The learning from this project is directly shaping those future financial capacity building projects that are currently being planned. For example, following learning from this project, we focused our forthcoming work in Malawi on just two sectors – sugar and tea, in order to be able to focus on the particular financial dynamics of these commodities. We have also made arrangements for an experienced business in the sector to provide mentoring which will be appropriate in the local context. We have taken the decision that our future financial capacity building project will focus on specific product supply chains rather than simply on Fairtrade producers in a given geographic area, and are currently undertaking further needs analysis to support project development. The relationships we have developed with other social lenders will be important in informing this.

Indicator 2 (intermediate outcome) 10 members of staff from business support networks/partners in project countries show improved understanding of issues involved in accessing finance and can signpost to relevant support more effectively 8 Fairtrade Africa staff vastly improved their knowledge of the key issues surrounding smallholder producer finance needs throughout the project.

Through attending the course workshops, interviewing the participants for the evaluation and engaging with the trainers they have seen clearly the needs of the producers and the potential for supporting them. One staff member in Ghana noted how the project has brought him closer to the cooperatives in his area as he understands them more and knows their needs better.

Fairtrade Africa is now in the early stages of planning a supplier’s database which would provide their membership with preferential access to contractors and trainers for support services. They have had initial discussions with the trainers on this project about being on this database.

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This year 32 new organisations have received guidance on financial support and lending through their interactions with either Fairtrade Africa or WFTO-Africa. As a result of the internal recognition of the importance of access to finance for their membership, Fairtrade Africa have now agreed to host a dedicated strand of their next pan-African conference to this (as mentioned above) and will continue to work together with Shared Interest Foundation to assess financial needs amongst the membership in other countries and commodities.

B3 Have you brought about the changes you expected by this stage of the grant? Please provide a rating from 0-3.

(3-fully achieved, 2-mostly achieved, 1-partly achieved, 0-not at all/not yet started.)

3

Please provide an explanation for your rating.

Shared Interest Foundation is now in a good position to talk to a range of social lenders about our experience in financial technical capacity building, and to offer our experience for others to learn from. We have built the basis of productive relationships with the other global social lenders and will continue to seek opportunities to engage them on a regular basis. Fairtrade Africa are now able to identify the key financial needs of their membership and know clearly where to signpost any member for further support.

Both organisations will consolidate the learning from this project with the dedicated evening at the Africa Fairtrade Convention in February 2016. This event, to which a number of leading social lender representatives will be invited, will clearly demonstrate the partners’ understanding of the issues surrounding producer organisation access to finance.

B4 Please tell us about the numbers of people who have benefited directly (and only where relevant or possible indirectly) this year and to date in terms of outcome 2. Please refer back to the information you provided in your grant start up form.

Outcome indicators (including targets where appropriate in Predicted relation to baseline data) number to benefit directly

Actual number benefiting directly this year

Actual number benefiting directly to date

Estimated number to benefit indirectly (if possible)

Actual number benefiting indirectly this year (if possible)

Actual number benefiting indirectly to date (if possible)

1. Increased engagement by SIF with the global social lender M

M

M

M

M

M

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F

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F

F

F

F

F

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network, leading to sharing of best practice approaches to 2 in-country capacity building 2. 10 members of staff from business support 2 networks/partners in project countries show improved understanding of issues involved in accessing finance and can signpost to relevant support more effectively B5

3

2

3

2

3

14

18

15

18

15

18

8

4

6

4

6

3

13

4

14

4

14

Have there been any unexpected outcomes, either positive or negative?

We had not originally anticipated the need to cover governance training within this project but it has been key learning for us that this does need to go hand in hand with financial management training. Levels of governance is something that we will ensure we check for in future projects that we plan and, where there is a clear gap, we will provide the training, working with relevant partners.

The project has also highlighted the need to look at commodities to understand more how lending works within each product. Some feedback from the training highlighted how a more product focused training content would help aid producer understanding. It would also help the project partners design the training from the outset. For example more needs to be understood about the way in which the cocoa sector operates in West Africa to understand why loan finance worked well there and how it should be adapted for other places where the circumstances are not the same.

For future projects we intend to explore this idea in great detail to see how it can improve the quality of the support service provided.

B6 Please describe any internal or external factors, not already highlighted, that have influenced the achievement of your outcomes either negatively or positively. Please explain what effect they have had, and any actions you took in response.

The project had been under-budgeted from the original application, due in part to the difficulties of estimating the costs of trainers. This underbudgeting has caused some internal issues in the management of the project and led both delivery partners to contribute their own funds to achieve the stated targets. For example Shared Interest Foundation estimates that,alongside our financial contribution, an additional 50% of the time budgeted for was spent on the project.

One significant challenge as a result of this was the inability to conduct a full financial profiling assessment in year 2 as the costs of this exercise were high. Therefore only mentored organisations were profiled. Furthermore the profiling in West Africa was incomplete due to challenges with the trainers recruited there and staff shortages. This has led to some incomplete comparisons.

One of the key reasons for the over-achievement of the project’s key aim, approved lending, has been the lending environment in Cote D’Ivoire. As well as the regulation of the cocoa sector providing a requirement for a reasonable standard of financial accounts in order to trade, the project also

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created the unique partnership with the RICE network as mentioned in the year 1 report. The arrangement that RICE brokered facilitated loans for smaller co-operatives who do not have an export licence (a normal requirement of a social lender) by using the large co-ops with licences to act as their buyers. This has opened up access to finance for a much wider group of co-operatives in Cote D’Ivoire as only a handful of co-operatives actually have a licence. It has made a huge difference to the number of applications coming through from this country and has been a real benefit of the project. The project assisted with this arrangement through the open, trusting dialogue that was created with the RICE network to develop this idea.

B7

Tell us what work you have done this year to ensure that the changes you are bringing will be sustained beyond the life of this project.

The mentoring element of this project was the most sustainable way that we could provide on-going support for the businesses that we worked with.

This was highlighted by the trainers at the internal project evaluation. By working with several members of the management committee and the board mentoring can ensure not only that the skills and knowledge imparted are spread across an organisation but also that buy-in for the work is achieved.

This is very important in a co-operative set-up. The mentoring also allowed the organisations to work on their own accounts and processes as examples of the learning, which was a very effective way to impart financial management knowledge.

In addition we have recognised the need for post-loan support from this project and we will closely monitor the account management performance of those who were granted a loan with Shared Interest Society to see what additional needs they might encounter and assess whether we will need to provide such support in the future.

Part C: What difference has the grant made – Outputs C1 Please summarise the outputs from activities undertaken in the past year, tell us about the numbers of people who have benefited directly this year in terms of your different outputs.

Outputs planned at the beginning of the year (including targets where appropriate) :

Actual outputs:

1. 150 businesses receive training in financial capacity building

32 new businesses received training in financial capacity building in Year 2. This gives a total of 122 for the project 66 overall against the 150 target. 86 individuals were trained this year.

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Predicted number to benefit directly this year M F 33

Actual number benefiting directly this year M F 63

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2. 45 producer organisations receive one to one mentoring In year 2 18 producer organisations (73 individuals) 30 on business plans and financial management (target: 24 received an average of 23 hours mentoring each (413 hours per producer organisation in Year 2) hours of mentoring were conducted in total).

15

58

15

3. 20 producer organisations receive one to one loan 18 organisations received support with loan application 20 application support (target: 12 hours per producer processes. Each one received on average 8 hours of loan organisation by end of Year 2) application support.

10

58

15

0

28

5

Outputs added to the work plan during the year

(including targets where appropriate)

Actual outputs:

1. 26 organisations receive training in co-operative good 26 businesses in Ghana received this training, supported 0 governance by the Department for Co-operatives

Part D: What difference has the grant made – Target groups D1 Please tell us how many women and men, girls and boys have benefited directly in total at both output and outcome level from each of your stated target groups this year, and to date, breaking this down by gender, age and disability where possible. If new target groups have benefited which you did not predict, then please include them here.

Target group

Predicted total no benefiting this year

M Fairtrade business management 66 Fairtrade Africa staff members 2 Shared Interest Foundation and 2 Society staff members

F 33 8 3

UK Organisation name: Shared Interest Foundation

Actual total no benefiting this year

Total no benefiting to date

Predicted no under 18 benefiting this year

Actual no under 18 benefiting this year

Predicted no disabled benefiting this year

Actual no disabled benefiting this year

M 63 4 2

M 247 4 2

M 0 0 0

M 0 0 0

M 0 0 0

M 0 0 0

F 23 6 3

F 71 6 3

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F 0 0 0

F 0 0 0

F 0 0 0

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Part E: Learning about how your grant has made a difference If you set your own learning questions (Please refer to Part E: Learning in your grant start up form) please tell what information you have gathered this year, if E1

any, in relation to these questions.

The two learning questions were answered at the internal evaluation of the project by a group of participants including the external trainers. A full write up of these sessions is available on request.

1) What capacity building methods and associated measurement tools provide the best support to producer groups to be in a strong position to apply for loan finance?

The project assessed the merits of workshop training, on-site training, mentoring and remote support.

Workshops: These provided an introduction to the topics but could not be expected to build capacity alone. It was seen by the trainers as an opening requirement, to engage staff, introduce them to what the programme requires of them and inform their board about what is expected. They raised curiosity and made participants aware of what they didn’t know about or weren’t doing. But there was not enough time to build their capacity to do these things, that is where mentoring comes in. It could also be difficult to get the right people to attend the workshop as the cooperative often chose to send the chairperson. Year 2 stressed the importance of sending someone with financial knowledge which improved this situation, but attending external training is still something that many co-ops wanted to reserve for their leadership.

However workshops were not dismissed, it is a forum where organisations can learn from the experiences of others which can be important to broaden horizons. It is also a useful point for the chairs or board to become exposed to what is involved in preparing financial statements so that they can know what to follow up on with their financial staff.

On-site training: In year 2 of the programme on-site training was carried out in Tanzania and Uganda, as well as mentoring. This proved to be very useful in better engaging the board and management. The trainers recommended that training targeted at the board and management’s role in overseeing finances should be included in any future training programmes. 2 of the 3 trainers in East Africa felt this was a more effective method of training that could be cost effective if you trained within very small groups (e.g one organisation hosts 3-4 others on-site).

Mentoring: The mentoring had a great impact. It went deeper on how to prepare financial statements not just to recognise what they are and what they were for.

Participants gained new skills which added real value. Mentoring begins to equip organisations with the know-how to do what was discussed in the training. It also allows the intervention to become more sustainable by spreading out the learning across a number of people within each organisation and by helping to implement UK Organisation name: Shared Interest Foundation Page 19 of 24

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systems and processes that remain with the organisation. As a sign of the value of the mentoring participants in Uganda have requested to keep working with their trainer and will pay to do so. In Ghana the same request has also been made and Fairtrade Africa have brokered preferential rates for the participants from the trainer.

It was generally felt that a small contribution to show commitment to the programme (say 5-10%) could be asked of all participants in future programmes. This way they are expecting greater value from the interactions as they are paying towards them and will therefore invest more in the process.

Remote support: The remote support was a necessary addition to the programme to back up the learning from the mentoring and increase the confidence as the participants began to prepare statements and plans on their own. This was an effective method but only after enough time had been spent face-to-face to build up a rapport and trust between trainer and participants. Given the high costs of mentoring this could be used more frequently to make future programmes more cost effective.

An ideal support package was suggested in discussion between all participants that should take place over no less than 6 months per organisation and would combine all of the methods discussed here. More emphasis would be placed on assessing capacity prior to the initial engagement with the trainer.

However it was noted that the support element should not cease once a loan has been accessed and that more support should be provided in the initial year of a loan to help the business factor in repayments and managing their commitments.

2) What difference does financial management capacity building make (in terms of understanding, confidence and awareness of opportunities) in preparing producer groups to access loan finance?

A good way to answer this is by looking at those organisations that went on to access a loan straight from the training and being made aware of a social lender. In Cote D’Ivoire a large number of participating organisations applied for and received loan finance without the assistance of the mentoring support. Cote D’Ivoire has a thriving cocoa sector where demand is rising. Because of this many co-operatives can afford to buy in accounting services which, while allowing them to access loan finance, means their in-house capacity has not necessarily been built. It is also still common to outsource finances in East Africa. However the trainer here felt that the support package, which trained on how to manage finances as well as prepare them, provided better preparation for eventually managing a loan within the business. It established a base of understanding which will allow the co-operatives to balance their finances and repay the loans.

The internal evaluation found anecdotal evidence of improved confidence as reported by the trainers and FTA staff, notably: - In Ghana those who underwent the training and mentoring are now more proactive, they have been noticed approaching banks themselves to ask to negotiate terms and not just accepting the first response they receive but having the confidence to discuss - In Uganda one handcraft organisation previously outsourced their financial UK Organisation name: Shared Interest Foundation Page 20 of 24

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accounts to an accountant who prepared and also audited them. Now the organisation can present the books for audit themselves and has the confidence to ask questions of the auditor - In Kenya the forecasts and business plans helped organisations to feel prepared and more confident that they know how to be flexible. Addressing key needs such as business planning really helped to build confidence more than just assisting to prepare required statements.

- The Tanzanian trainer felt that the focus of the project was confidence, making the businesses stronger to show their position and therefore making it very easy to access loans because they can negotiate terms better as they now understand their own figures. This will build capacity for the longer term.

We can see from the Ghana case study referenced on page 7 of this report that such support programmes can have a great impact in terms of confidence, understanding and crucially for membership organisations, hope and commitment.

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E2 How have you, local organisations or grant participants changed the way you do things, and your workplan for next year, based on learning gained from your experience this year?

Describe the key lessons learned that have influenced your thinking.

Mentoring is the most valuable form of support in financial management As with year 1 the second year of the programme has again proved how valuable the mentoring programme has been. 69% of those applying for a loan went through the mentoring process to assist them in applying.

What significant changes have you made to your strategy and/or activities during the course of this year or for next year based on what you have learned?

This year we focused on getting as many organisations mentored as possible. In Tanzania and Uganda we adapted our approach from year 1 and went directly on-site with 3 organisations in each country. They received on-site training and then mentoring. The trainers felt that this approach worked well, introducing the knowledge needed then embedding that within an organisation’s own context and systems. It also allowed more people to be involved in the process.

The internal project evaluation noted that the mentoring was expected to produce more sustainable results because more members of an organisation were involved in the process, including the board. Also it In future projects that the delivery partners design we will take into introduced templates and systems to organisations that could be followed account the need to budget for more mentoring as an essential part of in future. the process. Where possible we will set caps on travel budgets to control costs.

Governance training is a pre-requisite to financial management In year 2 we retrospectively introduced governance training in Ghana, the training Where organisations have a good basis in governance (more country which was scoring the lowest on the profiling tool in terms of cocommonly in East Africa) the financial training is effective from the outset. operative ability. Whilst this would have been better from the outset, we Where they do not the governance training should come first, to lay the did not recognise the need for this until we had completed year 1 of the foundations for financial management improvements. The two topics are project. At this stage we felt it was still important to return to this topic to closely linked as good governance hinges on transparency and trust, in leave any sustainable changes within the Ghanaian cohort. particular in the way finances are handled and dividends are shared.

Support for financial management should not stop once a loan is This project did not involve any official on-going support after mentoring. accessed To ensure that the learning is truly embedded within an Some of the trainers have agreed, through their own arrangements, to organisation the process of support should continue, at least for the first keep in touch and support some of their groups. We will monitor the year of their loan management. This would then make sure that financial effect of this support over the course of the next year.

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statements and accounts were being updated and used correctly through In future projects we would want to make sure that this element is also several financial reporting cycles, showing in greater depth whether or not built in to the programme to ensure that, once an organisation has the learning has been embedded. accessed finance all of their efforts are not undone by an inability to manage the loan and make repayments, thus risking their financial status Addressing communications within a co-operative is vital Shared Interest Foundation is currently beginning the process of Information flow down to the membership can often be challenging. The designing a training module particularly on communications within a coboard must represent the membership in the decisions they make and operative, to accompany the financial modules. The feedback from this taking on loan finance is one of the most important decisions they can evaluation will feed into this to strengthen the final output. make, particularly where examples are often given of co-operatives offering up farms as security.

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E3 Have you shared what you have learned more widely and with what results?

Tell us what learning resources, if any, you have produced this year.

Alongside the formal end of project evaluation several staff members are involved in the external evaluation for the project which is expected to conclude in June 2015.

We will then produce a learning summary from this to share amongst stakeholders in Kenya, Ghana and the UK. This will include the CSAF group of global social lenders, NGOs, other donor organisations and the Fairtrade Africa membership more widely.

It will be available to share with Comic Relief by August 2015. The Africa Fairtrade Convention 2016 and the social lender evening will provide a further opportunity to share the learning of the project.

Part F: financial report F1 Please provide a financial report on the grant for the past year, using the spreadsheet provided, based on the budget you presented to Comic Relief as part of your grant application, noting original budgeted costs and actual expenditure.

Describe the reasons for any major variance in the column adjacent to the expenditure column. Please also complete the proposed budget for next year taking any changes, underspends or overspends from this year into account.

Part G: communication information G1 Please provide any facts or statistics relating either to the achievements of your project, or the need your project is addressing, which you think may be useful to Comic Relief for communication purposes.

Overall this project has trained 122 businesses, mentored 47 and assisted 48 with the loan application process.

24 loans have been approved to date Over £2.5 million of lending has been accessed through the project G2 Please give examples of what a donation of, say, £1, £5, £30 or £100 will buy in your project. £300 can provide a training session for a Ghanaian co-operative to learn core financial management concepts £63 will provide an hour of dedicated financial mentoring for a Kenyan co-operative to learn how to improve their finances

Part H: Other information (optional) H1

Is there any other information you think we need to know?

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