Appendix 7 ~ Malawi financial training project end report

Appendix 7

Shared Interest Foundation

Malawi Financial Training Project

1

Contents Project Overview .................................................................................................................................. 2 The Training .......................................................................................................................................... 2 The Mentoring....................................................................................................................................... 3 Project Aims .......................................................................................................................................... 4 Budget ................................................................................................................................................... 5 Conclusions .......................................................................................................................................... 6 Thank You ............................................................................................................................................. 6

2

Malawi Financial Training Project Project Overview In 2015, the Charles Hayward Foundation chose to support Shared Interest Foundation’s Financial Training Project in Malawi with a Grant of £10,000.

The project aimed to change the situation for smallholders in the country by tackling the challenge of accessing finance. Working with our partner the Malawi Fairtrade Network (MFTN), we planned to deliver training to eight of their members (six tea and two sugar cooperatives), followed by mentoring within each individual co-operatives.

The project aimed to:    

Enhance the capacity of eight smallholder farmer co-operatives in the tea and sugar sectors in financial management systems Equip farmer co-operatives with modern record keeping techniques to improve their compliance to Fairtrade standards Introduce social lenders as providers of fairer finance who will discuss the finance needs of the co-operatives on an individual basis Improve co-operative financial management leading to greater product efficiency and, in the longer term, increased farmer incomes

This report will detail the activity that has taken place, and evaluate the impact of the project on the businesses themselves.

The Training Initially we had planned to train eight co-operatives, however a ninth co-operative (sugar) requested to join the programme. This co-operative had recently been struggling with financial issues which had been brought to our attention by the UK’s Fairtrade Foundation.

After a discussion with MFTN, together we decided to allow them to join the programme, meaning that in total nine co-operatives received the training. They were:         

Satemwa Phata Eastern Outgrowers Trust Makandi Kawalazi Sukambizi LCGA Msuwadzi Kasinthula (additional co-operative)

The training was held in two separate locations: Dwanga HR training centre in central Malawi and Mulanje View Motel in the South, in June 2015. There were 47 participants split across the two training sessions, with the majority attending the session at Mulanje View Motel. The training was delivered in a participatory manner, with a number of exercises designed to equip participants with the ability to be able to perform the tasks on their own, whilst being actively involved in the sessions. The training covered the following key areas:  

Access to finance in Malawi – the barriers, challenges and possible sources Financial management

3       

Financial accounting Users and interpretation of financial reports Key financial statements Business records Budgeting Business planning Telling the story of your business – who needs to be able to do this and why

Whilst the co-operatives who participated had been identified as those who had the lowest levels of financial understanding amongst MFTN’s members, the trainers noted that there was still a lot of variation. This did impact on the training as it meant that the trainers had to try to ensure that the content was balanced and relevant to all the different levels. Whilst they were able to achieve this effectively, it did mean that they did not have enough time to complete action plans for each co-operative, and therefore this was set as homework to be completed prior to the mentoring stage.

Of the 47 participants, 44 completed an evaluation for the training. The evaluations showed that 100% of the participants either agreed or strongly agreed that the workshop objectives were met, and 95% either agreed or strongly agreed that the training content was adequate and well delivered.

The Mentoring The mentors were able to visit all of the co-operatives following the training, however some were unable to host the mentors for the full two days due to the co-operatives business commitments. Where this was the case, remote mentoring was carried out to ensure that these co-operatives still received the same amount of support.

The objectives for the mentoring were:    

To review the action plans drawn up by each organisation following the training and provide input into them where needed To find out if the basic understanding and knowledge gained during the training was being applied in the day to day management of the business To review how the organisations have understood the importance of financial record keeping by reviewing their transactions and accounting records To provide one-to-one support within those organisations who were struggling to produce accurate record keeping

The differing level of understanding among the co-operatives was again evident in the mentoring phase, in particular within those organisations being manned by farmer treasurers. The mentors were able to demonstrate how important it was that they have a trained person to do their accounts, rather than using the farmers.

The mentors were able to establish that the training had been successfully understood and was being put into practice. However, it became clear, especially within the larger cooperatives, that there was a need for further work to be done at the primary co-operative level as the learning was not being disseminated down to all the committee members.

Several of the organisations revealed that they do struggle with accessing finance, due in part to fluctuations in the tea market and also the very high rates of local lenders. The mentors stressed the need for the organisations to ensure that they maintained accurate financial record keeping and embed this within their organisations. Once they were able to

4 do this on a consistent basis then they would be in a position to seek further support to assist them with applying to a social lender.

Project Aims 

Enhanced capacity of eight smallholder farmer co-operatives in the tea and sugar sectors in financial management systems

Nine co-operatives participated in total, and all have enhanced their financial knowledge and ability. For some co-operatives, the change was more substantial because they were starting from a lower level. For those co-operatives with staff who could already prepare financial statements, they learnt the importance of non-finance staff being able to understand and interpret the information so that, across the business, managers had a proper understanding of the business finance and how to make decisions based on this.

Previously only those in the finance team could understand and this made it difficult for management committees to operate efficiently.

Key examples:  Eastern Outgrowers Trust, Msuwadzi and Sukambizi did not have their books externally audited prior to the training, but now they realise the importance of this and do get them audited externally.  Makandi have introduced a range of financial statements, however prior to the training they were not keeping any of these records in a systematic way.

This will enhance their financial systems.  Sukambizi only used to prepare management reports on their finances when there was a problem, now they are doing them regularly so that they can keep a better track of their business. 

Targeted farmer co-operatives equipped with modern record keeping techniques to improve their compliance to Fairtrade standards

The examples above demonstrate that several of the co-operatives have introduced formal financial statements into their regular financial practices.

A representative from Kasinthula commented: ‘With the Fairtrade Premiums we receive, trainings in financial management are so much helpful as Fairtrade auditors emphasize on the importance of proper management of our finances.’. 

Introductions to social lenders as providers of fairer finance who will discuss the finance needs of the co-operatives on an individual basis

Seven out of the nine co-operatives stated that they were not sure if they were interested in loan finance at this point, and only one said yes. This co-operative will be offered contact details for relevant social lenders operating in Malawi. The other co-operatives will need to time to fully embed the learning from this project before they are ready to take this step.

Through the project, MFTN have been able to improve their knowledge of the social lenders currently operating in Malawi and how they operate. The co-operatives now know that this basic level of information is available from MFTN should they chose to learn more. 

Improved co-operative financial management leading to greater product efficiency and, in the longer term, increased farmer incomes

The previous examples demonstrate some of the key ways that the participants have improved their financial management as a result of this project. Those co-operatives who

5 had the lowest level of understanding prior to the project were the ones who were previously using farmer treasurers to manage their finances. Through the one-to-one support of the mentoring they now understand the need for a trained person to carry out this function, and those with the available funds will now put this in place.

The longer term impact of the project cannot yet be demonstrated. The representative from MFTN was directly involved in the mentoring stage of this project, and the co-operatives are able to refer to him for ongoing support to ensure that they continue to put their learning into practice. This will continue over the next few months and we will then carry out a final evaluation of the project between June – September this year.

Budget The table below shows the original budget, alongside the actual costs. If there is a significant variance we have included an explanation as to why, alongside the relevant line.

Item

Budgeted Cost (£) 1,302

Actual Cost (£) 668

Preparation and adaptation of training modules Training delivery local trainer

930

392

744

1,022

Report writing Printing of financial management module

372 186

329 28

1,100 450

1,301 607

2,000 1,944

1,687 1,944

1,000

1,743

600 800 572

763 0 0

Follow up mentoring visits – not on original budget

0

1,011

Workshop delivery costs – not on original budget

0

1,720

12,000

13,215

Detailed financial needs assessments x8

Travel external trainer x 2 visits Accommodation external trainer x 2 visits External trainer Project co-ordination & admin.

Shared Interest Foundation Project Management MFTN

Monitoring and evaluation Final evaluation Contingency (5%)

Totals

Explanation of Variance Actual costs are based on the field visit costs, MFTN did not charge for their time Trainer charges came in lower than planned The increase in cost includes the trainers accommodation and travel at the training This was purely the print cost, MFTN did not charge for their time

MFTN included car hire for the project in this budget line Will be spent in Sept 16 This has been spent within the next two lines Unfortunately we did not include this in the original budget Unfortunately we did not include this in the original budget

6 There were a few variations within the budget lines, most significantly with the follow up mentoring visits and the workshop delivery costs. We had built in some contingency which we used to cover these costs, and Shared Interest Foundation covered the remainder.

Conclusions There were some delays to the start of the project as there was severe flooding in Malawi at the beginning of 2015, and some of the co-operatives due to participate were affected.

Shared Interest Foundation were able to provide support to replant crops that were lost in the flooding, and this helped to ensure that whilst the training was slightly delayed, all the co-operatives due to participate were able to.

We were pleased to be able to accommodate an extra co-operative into the project who had demonstrated a clear need for financial training. Their involvement benefitted the cooperative itself, without any detrimental effect to the overall project.

The training evaluations demonstrated that the participants found the material both useful and relevant, and the follow up visits to the individual co-operatives demonstrated how important the mentoring element was in reinforcing the training, making it relevant to the needs of the individual co-operatives and starting to embed it within the organisations.

One key learning from this project was that, even though a detailed needs assessment was carried out to determine what level of financial knowledge the co-operatives were at, they were then not grouped according to their levels of knowledge for the training itself. This made it harder for the trainers to deliver the sessions and meant that they ran out of time to complete all of the activities. This also impacted onto the mentoring as some of the organisations could have benefitted from longer than the two days allocated and quite differing levels of support were required.

For all but one of the co-operatives, accessing finance through social lenders was a step too far at this point. We have ensured that MFTN were equipped with the knowledge of the relevant social lenders so that they would be able to provide the necessary support as and when the co-operatives were ready to take that step.

Through this project we found that the appetite for support around financial management was very high, and MFTN have received several requests for further training. In particular from the larger co-operatives, who would like to see their primary co-operative members receive similar support. We are already starting to talk to MFTN about delivering a new project, building on the learning from this one, which would provide different levels of training, at different levels within the co-operatives.

The final element of this project will be to assess the longer term impact on the participants, and we will be carrying out a final evaluation between June and September this year. We look forward to being able to share the outcomes of this evaluation with the Charles Hayward Foundation, and would like to take this opportunity to thank you once again for your support for this project.

Thank You