Case Study
An international development agency operates with only a small staff.
They need assistance from an experienced international project management company to plan and manage a project that would assist them in meeting one of their key agency objectives — poverty reduction.
The agency asked AMIS to: i) develop a project concept; ii) prepare the project proposal, detailed work plan and budget, and iii) manage the implementation of the new project.
What is the issue?
Many of the worlds poorest countries obtain a significant portion of their income from only three or four commodities. Depending on the country this could be maize, bananas, coffee, cotton or another similar agricultural crop. The prices paid for these commodities is determined in the world market. As a result the prices changes significantly from year to year and local farmers often receive almost nothing for their efforts.
Not only must farmers in these commodity dependent countries take what ever price they are offered, they often do not have access to credit. Thus they cannot escape the cycle of low prices and the sale of their crop for a low price at harvest. If farmers can keep ownership of their crop until prices rise then they can improve their livelihoods and increase both their own incomes and those of the community.
One of the regions of the world where this is a problem is in Africa. CFC was particularly interested in extending previous work done in Tanzania, Ethiopia and Malawi.
Who are the Players?
The Common Fund for Commodities is an intergovernmental financial institution established within the framework of the United Nations headquartered in Amsterdam, the Netherlands. The Common Fund focuses on projects “which are demand driven and which have been developed on a participatory bottom-up approach based on the interests and aspirations of commodity stakeholders. Such projects should give primary focus to the improvement of the livelihood of stakeholders and to the progressive alleviation of poverty.”
The Common Fund had supported previous projects in Tanzania and Ethiopia that lead to the establishment of legislation and the introduction of a credit system based on the use of warehouse certificates. The warehouse certificate is a document issued by a certified storage facility that confirms a farmer’s ownership of a designated amount of a commodity stored there. The farmer can then take the certificate to a lender and obtain short term financing using the certificate as a collateral document backed up by the product in storage.
While the base system was in place further work was needed to extend the system to farmers and new regions in each country.
In addition to AMIS and the Common Fund, government agencies in Tanzania and Ethiopia as well as farmer organizations and industry associations are involved in implementing the projects.
What was the proposed solution?
The agency needed assistance to develop the concept, prepare the detailed project plan and budgets and act as Project Executing Agency to manage project implementation of a proposed project in Africa.
What did we at AMIS do?
AMIS specialists developed the project concept, project operating plan and full project bugets. This began by contacting government agencies and potential country partners in Ethiopia, Malawi and Tanzania to identify support for a new project.
At the same time an initial written concept was developed through discussions with the in-country partners, potential funders and project partners. Extensive research on the issues and the region were done and crafted into the project background and justification sections of the project proposal document.
Further work was done to identify the project activity areas and the specific tasks required to complete these activities – for example, doing a baseline survey of issues related to farmer’s access to credit for use in measuring progress on project objectives and reporting in the final project reports.
The activity areas and budgets were then developed into a full project proposal including Logical Framework Analysis tables, project implementation schedules (Gantt Charts) and detailed budget documents.
The proposal and budget were submitted to the Common Fund for Commodities for funding.
What was the outcome?
The project was successfully funded and the outcomes will help farmers in Tanzania and Malawi obtain short term financing by providing a system for them to use their crops as collateral to obtain short term loans from banks or other lenders.
The Common Fund for Commodities along with the European Union and the Dutch Trust Fund have provided just over USD$ 3,000,000 to fund the Grain Farmers’ Access to Warehouse Inventory Credit in Malawi And Tanzania.
This project is currently being implemented in Tanzania and Malawi.
The WIC Project is funded by the Common Fund for Commodities, an intergovernmental financial institution established within the framework of the United Nations head quartered in Amsterdam, the Netherlands.
With Funding from the European Union.
