How to support sustainable income growth for destitute women in Cambodia, subsistence farmers in Kenya, and indigenous people in rural communities of Bolivia? Those are among the challenges of a new joint Bank/IFC “Grassroots Business” initiative that recently held its launch event in Washington.
So far, the joint initiative has been working on projects with six Grassroots Business Organizations (GBOs)—
a new term that applies equally to for-profit companies and nonprofits organizations committed to providing jobs and training for the poorest.
In late June, President Jim Wolfensohn and IFC Vice President for Operations, Assaad Jabre, signed agreements with the first of two grass roots partners in this initiative. The two groups receiving support are Hagar, a Cambodian charity, and Honey Care Africa, a beekeeping concern in Kenya.
Several destitute women in Cambodia now have a new lease on life and independence thanks to Hagar, which is receiving support from the Bank and IFC. This grassroots business arm of the Swiss-based Cambodian NGO has grown from nine to 41 women who work in a soy milk producing factory.
In 2003 Hagar shifted from producing soy milk on a small scale to using IFC finances to build a $1.2 million dollar soy milk factory. Former residents of Hagar’s homeless shelter and foster homes now work in the factory. “I like to work here because I had no other work to do and this job helps me send my children to school,” says Kem Sreina, a Hagar Soya employee.
Honey Care, in turn, helps hundreds of Kenya’s rural poor raise their incomes by providing them with the skills and training needed to enter beekeeping, then buys their honey at a guaranteed price and sells it commercially. Under the new GBO initiative, it will be receiving Bank Group support to increase its Kenyan operations, enter the Fair Trade export markets in the US and Europe, and expand into Tanzania for the first time.
The Bank and IFC have joined in an initiative to help people like Hagar’s Sreina, by providing business assistance to the GBOs they work in. These GBOs are socially conscious business ventures that work with the really poor and marginalized. This joint initiative will provide technical assistance and long-term capital investment in partnership with other organizations to these grassroots businesses.
Technical assistance and long-term patient capital investment are difficult inputs for GBOs to obtain. Long-term patient capital investments are intended to help these businesses transition from receiving grants from international donors to eventually borrowing from commercial banks, by first borrowing from IFC in a transitional phase at softer financial terms. Several other leading foundations, donors and technical assistance providers focused on micro/SME issues are also taking part in the initiative.
“With our support in adopting greater business discipline and obtaining the right kind of financing, we anticipate that these groups will be able to do more to help some of the world’s poorest people move from the economic margins to the mainstream,” said Harold Rosen, IFC’s Director of Grassroots Business Organizations.”
With these agreements, Hagar Soya Ltd., will scale up its business and be able to employ more destitute women. Hagar Design, another arm of the GBO, is converting its small-scale silk handicrafts workshop into a legally registered company producing high end silk products for tourists and export purposes.
Honey Care Africa is the other company that will receive technical assistance and capital investment support. It is a 2002 Development Marketplace winner that helps over 2,500 subsistence farmers in Kenya to become honey producing beekeepers. It also markets the high quality honey produced, and thus increases the incomes of these businesses.
The IFC recently hosted a Strengthening Grassroots Business Organizations workshop attended by staff from IFC’s SME Project Development Facilities, partner GBOs, donors, investors and partner organizations. The workshop was to plan how these grassroots businesses can create new ways of working with the IFC over an extended period of time.
