Export Trading Group supporting smallholders in Malawi

CREATING JOBS
EXPORT TRADING GROUP (ETG),
PAN-AFRICA
CATHERINE
CHIBWANA
FARMER
Catherine's pigeon peas will be
exported all over the world by
ETG
Before growing pigeon
peas, my life was miserable. I
used to rely on my parents for
most things. After I realised
that in pigeon peas there is
profit, I started growing pigeon
peas, and now I am no longer
reliant on my parents.
INCREASING INCOMES
The earth is dry and dusty in southern Malawi – but
the short rains are imminent. It is harvest time for
pigeon peas.
Catherine lives in Magombe village and has five
children. She is a farmer and grows pigeon peas in
between her usual maize crops. She has discovered
that pigeon peas are a useful cash crop and has
recently found a local procurement centre which buys
her bags of pigeon peas. Today she has sold her bag for
910 kwacha (around US $2.40). She gets around 0.45
cents per Kilogram. The extra cash is useful for school
fees. Her oldest daughter wants to become a nurse and
the second an agronomist.
Nearly 70 per cent of farmers in Africa are subsistence
farmers – they only grow enough food for themselves.
The extra cash earned form selling crops such as
pigeon peas is crucial for paying for school and medical
fees and household items. The local procurement centre
where Catherine sells her pigeon peas is owned by the
Export Trading Group (ETG), one of Africa’s largest
agri-businesses.
ETG buys commodities such as pigeon peas, chick
peas, soya beans, cashew nuts and sesame seeds from
millions of smallholder farmers all over Africa. It cleans,
processes and then places them in bags ready for the
local market, for neighbouring African countries and
also for export to the rest of the world including India,
China, the Middle East and Europe and the UK.
The pigeon peas are cleaned and processed at a
factory in Limbe, just outside Blantyre.
2003
300 employees
2013
7,000 employees
“If the farmer gets more money,” says Ketan Patel,
Managing Director of ETG, “He's able to consume
more and this stimulates industry and is important
for Africa's growth.”
Malawi is one of the poorest countries in Africa where over 80
per cent of its 16 million inhabitants live on less than US $2 a
day. According to the World Bank Group, it ranks 171 out of
189 of the most difficult countries in which to do business.
Foreign investors face particular challenges in Africa
including red tape, weak infrastructure and governance
issues.
5smallholder
million
farmers
nearly
Pigeon peas ready for export to India,
China, Middle East, Europe and the UK.
sell their produce to ETG
CDC’S INVESTMENT IN ETG
CDC provided a finance facility of US $32.5 m to
the founders of ETG.
Although ETG has been successful, many
businesses in Africa struggle to find the investment they need to grow.
CDC decided to invest in ETG as
agriculture is a very important sector
in Africa. Historically, Africa exported
unprocessed farm produce. ETG has
embarked on a strategy to increase
its food processing plants across
Africa and this enhances local
economies through a new class of
job being created and higher income
for processed farm produce.
BUSINESS EXPANSION CREATES
MORE JOBS
ETG has expanded rapidly over the last few years. One of
the key components of its strategy is expanding
infrastructure all over Africa where it has built more than
300 warehouses, procurement and distribution centres.
Employees have risen from 300 in 2003 to 7000 in 2013 and
ETG provides an additional income to millions of smallholder
farmers such as Catherine.
But it has not been without its challenges.
There are many challenges to operating
in Africa, for example infrastructure is
extremely poor.
Ketan Patel,
Managing Director, Export Trading Group
Peter Maila,
Investment Director,
Equity Investment Team, CDC Group
DEVELOPMENT IMPACT AND
FINANCIAL RETURN
ETG demonstrates business success and development
impact. Stable jobs and livelihoods are essential to
development and, according to a recent World Bank report,
nearly 90 per cent of such jobs are created in the private
sector.
ETG is a major provider of good, stable jobs in countries such
as Tanzania (35 per cent of its workforce), Mozambique (21
per cent) and Malawi (10 per cent). ETG is committed to equal
opportunities with women making up over 40 per cent of the
local workforce in Mozambique, Uganda, Ethiopia, South
Africa and Rwanda.
As well as expanding the workforce, the aim is to raise
awareness and train thousands more farmers as well.
It has set up set up ETG Farmers Foundation to help with
growing cash crops such as pigeon peas, green gram and
sesame seeds. Many farmers are keen to learn so that they
can sell them for cash to ETG.
Poorva Pandya (left), Head of ETG Farmers
Foundation at a demonstration project of pigeon
peas, works with a farmer and a government
liaison officer, Tanzania
CDC is the UK's development finance institution. Our
mission is to support the building of businesses
throughout Africa and South Asia, creating jobs and
making a lasting difference to people's lives in some of
the world’s poorest places.
Roystock Samuel, Head of Cleaning
Department, ETC Cargo in Tanzania. Here
women make up 45 per cent of the workforce.
Many businesses in poorer countries struggle to get the
finance they need to grow and expand. CDC helps meet
that need by providing patient, long-term risk capital in all
its forms. Working through local experienced fund
managers and directly by providing equity investment and
debt, CDC is making a vital contribution to private sector
development in Africa and South Asia.
ETG’S DEVELOPMENT IMPACT: DIRECT
AND INDIRECT JOBS IN MALAWI
Responsible investing is also important to CDC. Improving
environmental, social and governance standards is a vital
part of managing a sustainable business and goes
hand-in-hand with being profitable.
Food processing is a priority sector for investment for
CDC because of its high potential for job creation.
Given the scale of its operations, it’s no surprise that
ETG has become a major employer in Africa and
globally.
Although owned by the UK government's Department for
International Development, CDC is self-financing. The
profits made from successful long-term investing are
recycled to finance further investments. In this way CDC is
able to help businesses grow and provide jobs.
Of the 30 African countries in which ETG operates,
Malawi is one of the most important. It is home to four
processing centres, procuring each year around 80,000
tonnes of pigeon peas, soya beans and maize. To
manage this level of agricultural processing, ETG now
has a team of 500 employees in Malawi, operating a
rapidly growing network of 48 procurement centres to
serve smallholder farmers.
CDC is a pioneering institution. It has more than 1,100
investments in businesses across the developing world with
nearly 590 investments in Africa.
Most pigeon peas are grown in the Southern region
around Blantyre and Machinga. Here, a smallholding of
just half an acre can produce 150 kilos or more of pigeon
peas in a year, intercropped with maize. Selling that
produce can bring in an additional 25,000 MWK
(US $64), providing they can access the market and get
reasonable prices. ETG’s Malawi network of
procurement centres serve smallholder producers that
were not previously supplying for the export market.
CDC December 2013
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“Impressive as its direct employment effect is, it is
the focus on smallholder farming that really multiplies
ETG’s development impacts so significantly,” says
Alex MacGillivray, Director of Development Impact at
CDC. “And ETG and others have helped deliver a 60 per
cent rise in crop productivity in the last ten years in
Malawi.”
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Some 350,000 Malawian smallholders are now
benefitting from ETG’s pigeon pea procurement network,
increasing their farm income by as much as 25 per cent.
Find out more about our work at www.cdcgroup.com
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