2019 marks ten editions of the European Microfinance Award, launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, as a biennial Award – the first of which took place in 2006, and after considerable interest and exposure, became annual after 2014. The Award serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others.
The Award’s influence and prestige has grown, and its €100,000 prize for the winner (and €10,000 for the runners-up), attracts applications from many organisations that are innovating in a particular area of financial inclusion. As well as the significant prize, an important additional benefit to winners is the exposure that they receive, and the opportunities for expansion and replication that the attention of the sector can provide.
To celebrate ten editions of the Award, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published in the order we receive them throughout 2019, to look at what they have been doing with their initiative since they won, and how the winning of the Award has helped, and what plans they have in store.
In 2010, the theme of the Award was Value Chain Finance, focusing on stimulating and promoting inclusive financial schemes that contribute to the evolution of value chains in developing countries. A value chain is a vertical alliance between different independent enterprises, collaborating to achieve a more rewarding position in the market.
Harbu of Ethiopia won for its initiative to finance the soy bean value chain as a response to market demand generated by a shortage of cow milk in Jimma city, in Oromia state. The initiative sought to strengthen horizontal linkages with farmer marketing organisations and vertical linkages with retailers and women's associations that are processing and producing soy milk. The initiative created market opportunities for producer-farmers and employment opportunities for urban women and youth. At the same time, it improved families’ nutrition, especially for children and women. Harbu provided financial services to most of the actors across the value chain, from the individual producers all the way to retailers.
e-MFP: How has your initiative evolved since you received the Award? What have been the biggest changes?
Harbu: In 2015, the soy milk value chain project was fully handed over to Jimma Kera Women Association, the members of which now run the business. They have a business management team comprising five members who are accountable for the overall management and administration of the project. This includes the managing of the milk processing enterprise and, on top of this, the women’s capacity has grown with the expansion of their individual micro and small businesses. This growth has meant that they can take larger (and more useful) working capital loans than in the earlier stages of the project.
The women also continue to collect the raw materials (soya beans) they use for processing the final output from the Farmers Marketing Organization (FMO) as usual. Even while supply is limited, soya bean demand is increasing – from large cafes, bakers, and factories that are using it. The FMO is becoming more productive in response to this, and larger scale soya bean producers are being linked to larger factories like FAFA- the biggest food processing body in Ethiopia.
Despite the shortage of soya bean grain, the women have also started processing too, meaning they are currently able to produce milk powder in addition to liquid soy milk as a new product line.
e-MFP: What did winning the Award mean to your organisation? Did anything change as a result of winning, both within the specific initiative for which you won and in the organisation more broadly?
Harbu: As a result of winning the Award, Harbu MFI became better recognised by many local and international development organisations that contributed a lot to the institution’s recent growth, both in terms of general operations as well as specific to the Value Chain initiatives. Currently, Harbu’s financing needs are met by various World Bank-affiliated financial development packages such as WB-WEDP (Women Entrepreneurs Development Program), WB-RUFIP (Rural Financial Intermediation Program), WB-SME (Small & Medium Enterprise Development Program), and WB- RSMEP (Rural Sustainable Micro Energy Program), all programmes managed by Development Bank of Ethiopia (DBE).
Besides this, the institution is also backed by International loan fund guarantors such as Rabobank and ING investment groups, which are providing guaranty facilities for Harbu to access funds from local banks for its agriculture and value chain product lines. Harbu is also working with the French company SIDI in the same area of facilitating local bank financing via guaranty. Harbu sees all this support as directly or indirectly a result of winning the 2010 Award, and it has translated into significant growth in the institution’s activities: since 2010, Harbu has grown from 13 to 21 branches, 18,000 to 46,000 clients, deposits from ETB 5.3 million (USD 182K) to ETB 57 million (USD 2 million), and a gross loan portfolio from ETB 13.8 million (USD 475K) to ETB 160 million (USD 5.5 million).
With respect to innovation and the respective value chain trajectory, Harbu continues to have a leading position and financing role within the various value chains. Harbu has been included in the Malt Barley Value Chain Program currently promoted by global NGO ICCO Cooperation and funded by MasterCard Foundation to reach 200,000 family farms in four countries within five years timeframe. Harbu’s individual target is 9780 family farms over the course of the program, and it has currently reached 4904 family farms at the three-year mark.
The Malt Barley value chain also includes a new initiative with Boortmalt Inc., one of the biggest malting plants in Europe, currently constructing a big malt plant in Ethiopia with capacity of over 60,000 tons of malt per annum. Because of Harbu’s experience in the malt barley value chain, BoortMalt Ethiopia invited Harbu to work with them. Over the 2019 planting seasons, Harbu plans to reach 2,000 smallholder farmers under this relationship, via the opening of a new branch office in the North East of the country.
Finally, Harbu’s value chain interventions are not limited to soya bean milk and malt barley alone, but honey too. The Honey Value Chain initiative is under the Food Security & Rural Entrepreneurship (FSRE) program, involving Oxfam GB as promoter, the farmers as honey producers, various local cooperatives as processors, and Harbu as financer. Within this honey program, Harbu has been able to finance 950 family farms under its two rural branch offices.
e-MFP: Are you aware of any impact your initiative has had on other organisations?
Harbu: Yes, Harbu has shared its rich experience with organisations in Rwanda, and Tanzania as well as various local development organisations. Several of these parties have adopted Harbu’s know-how and begun replicating the same initiative.
e-MFP: What do you see in the future for your initiative and for this area of practice more generally?
Harbu: Using the same milk producing raw materials (soya bean), Harbu plans to enable women to diversify the product lines. This means, among other things, expanding the powdered milk processing activities and supplying powdered milk as raw material for bakeries, cafes and snack makers that have such high demand for this product.
From the farmers’ perspective, Harbu has a plan to facilitate the soybean cleaning and packaging process that helps the FMO deliver sub-processed grains to certain end users such as factories and processors. This enhances the income of the FMOs by adding value to the soya bean grains.
The European Microfinance Award is jointly organised by the Luxembourg Ministry of Foreign and European Affairs, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu). For more information on the 2019 Award on "Strengthening resilience to climate change" , visit the Award website.