How a Tanzania NGO scrapped grants to build markets that last

Value Chains

How a Tanzania NGO scrapped grants to build markets that last

Like this farmer in Kenya, the challenge in Tanzania is connecting smallholder farmers to larger markets. Photo: <a href="http://www.flickr.com/photos/ciat/5366702717/sizes/z/">CIAT International Center for Tropical Agriculture</a>
Like this farmer in Kenya, the challenge in Tanzania is connecting smallholder farmers to larger markets. Photo: CIAT International Center for Tropical Agriculture

When it comes to solving poverty, sometimes the best way to get more done is to move out of the driver's seat.

At least that’s what the Rural Livelihoods and Development Program (RLDP), a Tanzania-based nonprofit fighting poverty among smallholder farmers, is banking on. Four years ago, the group scrapped a program that provided direct services to farmers for one that instead focused on creating a market that could pay farmers to provide those services to each other.

The collaborative was formed in 2005 among the Swisscontact and Helvetas Swiss Intercooperation with a mission: “to make market systems work better for rural producers to improve their welfare.”

RLDP’s first phase—June 2005 to March 2008—focused on supporting market-linkage programs between small rural producers and buyers. The group took applications from farmers who needed capital to expand their farms, build storage facilities or improve their yields. In short, if it seemed like a worthy cause, they’d bankroll it.

Towards the end of the initial phase, however, RLDP realized their strategy was critically flawed. The multi-sector buckshot approach of trying to connect farmers to markets was doing bits of good, but not enough.

"RLDP was involved in a large range of sub-sectors, with interventions limited in size," RLDP concluded in a 2008 strategy document. With numerous, poorly targeted interventions, RLDP was failing to make a systemic impact on rural poverty in Tanzania.

But even more importantly, RLDP's efforts to choose projects for farmers to work on and partnerships for them to form with specific corporations were likely displacing local actors that could do the same work more efficiently. In other words, by taking an active role as a broker connecting buyer to seller, RLDP was essentially prioritizing its own organizational sustainability over the long term success of the rural Tanzanians they aimed to support.

According to the Springfield Centre, a consulting firm specializing in inclusive development through access to markets in low- to middle-income countries: "In creating linkages between producers and markets, RLDP took a too active stance in which it assumed the role of a market actor, putting sustainability of the interventions at risk."

Instead of helping markets work for the rural poor, RLDP had been making it harder for them to do so.

This is a central dilemma many humanitarian organizations face. Assuming the role of a market agent might prove successful in the short term. Initially, a dramatic intervention directly linking a small farmer with a large business will help a village economy, but these interventions don’t seek to understand how markets fail the poor or, ultimately, correct these failings.

If a development organization like RLDP plays an overly active role in the market—for instance, finding and selecting corporate partnerships for farmers to participate in—the sustainability of the entire antipoverty campaign is in jeopardy. As soon as the organization leaves the scene, the function of establishing partnerships between farmer and corporations would likely stop, too. An organization like RLDP would better serve the community if it simply helped teach farmers and corporations how to build partnerships.

So for phase II, RLDP left the driver's seat and decided to do less.

RLDP focused on understanding exactly where markets are failing to serve the poor and identified agricultural subsectors that could best address systemic poverty. It decided to focus on cotton, sunflower, dairy, poultry, rice and rural radio.

RLDP's catalytic role wouldn’t risk displacing local actors. Rather than directly introducing farmers and buyers, RLDP instead supported small farmers developing better business strategies and management practices. They helped small farmers identify the most competitive crops and how to ensure quality of services.

With this more facilitative role, RLDP helped rural Tanzanians establish 68 business partnerships with private companies on their own—creating jobs and expanding business.

According to RLDP’s 2011 annual review and under this new strategy, “Incomes of enterprises in the sunflower [sub-sector] increased by 25 percent.”

Rather than serving as brokers and extension agents themselves, RLDP instead trained 632 lead farmers to provide agronomic, market advice and other extension services to neighboring farmers. Over 60 percent of these lead farmers who were later interviewed mentioned that they were contacted by farmers looking for agronomic advice and services. For its next (and final) act, RLDP wants other farmers to start paying that first crop of highly trained farmers for help and advice.

If this happens, when RLDP leaves Tanzania, farmers will have financial incentives to keep spreading those crucial skills and information.

The Rural Livelihoods Development Program serves as an excellent case study on how to better use market driven approaches to solving poverty.

Ultimately, development organizations need to work more as facilitators, encouraging the rural poor to form cooperatives so they can identify the best markets for their goods; providing access to technology and extension services so they can make informed decisions; and to help find incentives for corporations and businesses to partner with small farmers.

If Tanzania and many other African countries are to meet their 2015 Millennium Development Goals, organizations and governments should take the lesson of RLDP to heart: Sustainable antipoverty campaigns can only work when humanitarian organizations displace fewer local actors and interfere less.

Doing less in this sense encourages and facilitates local farmers and enterprises—locals who can more efficiently address their own problems then an outside group or organization—to initiate private public partnerships; helping famers form associations and cooperatives; and focusing on large-scale, systemic change.

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