UGANDA: Education Loans

We learned on this trip that fifty percent of Uganda’s population is fifteen years old or younger. That’s a lot of children to educate. Law requires that all children complete primary school, but the government has not been able to keep up with demand. The public schools typically have large class sizes, poor facilities and many ill-prepared teachers – that is, when they show up. Further, the schools are typically located where the population is most dense, requiring many children living in farm villages to walk one or even two hours to school.  

As a result the government has sanctioned and encouraged small private schools, run in the immediate communities where the children live. These are not at all what you and I envision when we think private education. However, though these schools can be pretty primitive, and staffed by teachers who may not have completed college themselves, the children often receive a far superior education than those attending public schools. By funding the expansion of these small private schools, we get a double whammy. Not only do we make business loans to proprietors who operate self-sustaining enterprises, but needy children receive an education. Because of this extra value, and because of the number of people schools employ, we have agreed to make relatively large loans to school proprietors.

Before going into the field to visit the schools, we visited the Opportunity Uganda Bank in the morning for orientation on “Edufinance.” The director of this initiative, Freda, explained that we made our first two edufinance loans in 2008, each for about $13,000. This year we have more than 100 schools, receiving a total of $2.2 million in loans.

Freda explained that private schools typically charge about $10 per three-month term. In many cases we’ve made arrangement with the schools that the families deposit their school fees in our bank and then we transfer the funds into the teachers’ accounts each month.

After the orientation we visited the “Rise and Shine” primary school and kindergarten. Dorothy met us at the front gate with a contagious smile and hugs for everyone. She is the proud director and co-founder. In 2000 when her mother died, Dorothy converted the family home into a school for seven children, using her life savings of $250 to get it started. Later that year she borrowed $150 from us. Successive loans have been for $200, $250 , $2,500 and most recently $4,000. With these funds she has partitioned and equipped classrooms, built a fence, and constructed toilets and running water. Today she has a team of nine teachers and 150 students, many of them refugees. She charges $25 per term, and for an additional $12 per term she feeds the children lunch.

For the next half hour the students entertained us by singing songs they had written for “the visitors.” We didn’t drill down on the numbers as we did with the agriculture loans, but let our right brain take over and learn from these young lives—and possibly future leaders.

—Mark Lutz, Sr. VP, Global Philanthropy

RWANDA:  After dinner several of us visited  the Hotel des Mille Collines “Hotel Rwanda” where in 1994, after the white European staff had been evacuated, acting manager Paul Rusesabagina used his wits and bribes acquire food and water to hold off the radical Interahamwe death squads long enough to save about 2,000 Tutsis and moderate Hutus from certain death.  They were rescued eventually by the UN troops who evacuated them across the front to RPF lines.

Paul’ s heroic story of saving these souls from the genocide is played by Don Cheadle in the Oscar winning movie Hotel Rwanda.  The Hotel today offers a quiet refuge on a hill over looking Kigali much the same as it did in 1994.  There are no plaques or momentos commemorating the historic events that occurred here.  

— Fred, Insight Trip Traveler, Hillsborough, CA

EXPERIENCED GUIDES LEAD OUR JOURNEY

While venturing into the field, our group of eleven was always accompanied by several local Opportunity staff members, including the loan officer who was directly responsible for the clients we would visit that day. These additional companions taught us much about the local people and their context.

Monday’s loan officer for instance has been with Opportunity for four years. Prior to that he taught high school. When asked why he made the shift to banking, he said he is still a teacher, only now he teaches adults and loves to see people grow and be transformed.

He has five children of his own, and is personally responsible for 17 Trust Groups which represent 600 borrowers. He meets with three or four groups each day for about 30 minutes when they collect payments and discuss challenges, as well as holding monthly meetings with each group for one to two hours for training.

One of Opportunity’s team who travelled with us several days was John Magnay, who oversees Opportunity’s agriculture program in five African countries. Having lived in Uganda for the last 35 years John was a wealth of knowledge and offered insightful perspectives.

Africa is home to one billion people, of which 60% are directly involved in agriculture, yet they import some $40 billion per year in food. Most of the farms are tiny—many less than one acre—and grow food for their owners, many of whom live on one to two dollars per day. Few have cash crops that they can sell, and hardly any export produce. Obstacles these farmers face include farm size, mechanization, efficiencies, droughts, and poor seed and fertilizer. Another part of the challenge is that there is no farm bill for Africa and no efficient channel to bring their produce to market.

Zimbabwe proved that when it was home to large modern farms it could feed much of southern Africa, consuming only 20% of what they produced. Now with President Mugabe’s confiscation and division of large farms, this breadbasket of the last century is now importing food like all its neighbors.

Part of the answer on a macro level is for African countries to work together in regions, which they don’t currently do. Governments can’t be stable without agricultural policies and food security for its people. These farmers must get beyond simply feeding their own families to producing surplus for sale.

John estimates that most farmers are producing only 40% of what their land is capable of sustaining. In the five countries where Opportunity loans to farmers, the typical farm is only one to four acres. John’s goal for our agriculture borrowers is that they will increase their yield by 2 ½ times. To do this requires training in basic farming skills and practices (e.g. the spacing of seed, the right seed, correct use of fertilizer, etc.), plus access to quality seed and fertilizer. By making loans to the farmers and financing household food security, these farmers will free up part of their land for cash crops.

The other critical service that these farmers need is access to saving. When they receive their entire year’s income in two installments—immediately following two harvests—it is paramount that they have a safe place to save that income so they can live off it throughout the planting and cultivation seasons.

Further, these small farmers need a place to store their produce so they can sell it when prices are at their peak, rather than at harvest when they get the very least for their labor. Panic selling is typical, and if we can offer the farmers a safe place to save, and a place to store their harvest, we will go a long way to helping them become profitable.

These and many other lessons, given while bouncing along in the back of a bus, gave our group the background we needed to fully appreciate what Opportunity is doing and what we were seeing.

—Mark Lutz, Sr. VP, Global Philanthropy

RWANDA:  Our group traveled what felt like an eternity into the country to view its latest initiative—a marshland and loans to a group of rice farmers. Some 133 members of their co-op farm about 70 acres, some of them with plots as small as 1/20^th of an acre. With training and better seeds and fertilizer, over time these families will not only feed their own families better, but will sell rice in their neighboring communities.

Mark Lutz, Sr. VP, Global Philanthropy

DAIRY FARMER IN RWANDA 

 “Send a Cow” is a charity in the UK, similar to Heifer International, which after the genocide donated a cow to poor families in Rwanda, with the understanding that the recipient will give the first female offspring to someone in their community. In the case that we visited, the farmer doesn’t own farmland for grazing. Rather the animal is fed grass and other vegetation in a “zero grazing” environment.

Opportunity International is now walking along side these fledgling farmers to loan them additional money to expand their enterprises and make them more income generating.

One of the farmers we visited was a woman, Joseline, who is also a member of “The Association of Widows of Genocide.” The cow she received four years ago was worth about $600 because it was pregnant when she received it. Not only did Joseline give away the firstborn, but also the second calf a year later. She now has two other calves, one 16 months old and the other 4 months. Part of the program with “Send a Cow” is that they hire a local veterinarian who provides the insemination as well as shots and other needed services and advice.

The benefit to the farmer is daily income from the sale of milk, nutrition for her own family, manure for her other crops, and one calf per year that she can milk or sell. She does all this off of one acre of land where she lives and keeps the animals, plus a second plot one mile she leases to grow “elephant grass” for fodder.

Every day Joseline and her children make several one-mile trips on a bicycle to haul about 20 gallons of water to feed the animal. Her cow produces about 13 quarts of milk per day, half of which she feeds to the calf, and then splits the other half between her family’s consumption and selling to individuals and little restaurants in her community. At 50 cents per quart, for her labor she nets only about $2 per day. But she has new hope, knowing that the calf will soon be weaned, resulting in an increase of $3 per day—plus the other two will soon be producing milk of their own.

As impressed as we were by this first cow farmer, later that day we visited Etienne, who had won several awards for his ingenuity and effective farming techniques. He is what’s known as a lead farmer, in that he has been identified as a role model for others in the area. He too had been the beneficiary of “Send a Cow” and was being trained by them. Not only does he pass along the first offspring, but he trains others in his area on how to run a profitable small farm.

Etienne now has four grown cows, the best of which produces five gallons of milk per day. But dairy farming was only the beginning of his resourcefulness. He has created a gutter system on his roof that collects rain water in a large cistern so he rarely has to haul water manually.

At the back of his 2 ½ acres plot where his family lives and they keep the cattle, Etienne has constructed a trough and basin that collects the cow patties and urine. After blending the two together with a large pole, he channels the mixture into a large sealed underground tank where the released methane gas is captured. The gas then travels through a buried pipe and up into their kitchen. He proudly demonstrated how the gas is used to fuel the stove-top burner and an overhead gas lantern.

Once the mixture has fermented, and the gas removed, a trap is opened, releasing the residue into a stream that then flows into his field, fertilizing his crops. Needless to say, we were all amazed by his ingenuity and execution.

Opportunity is continually on the lookout for innovations like this that through micro loans can become replicated and sustainable. We believe we’ve found an enterprise worth funding. By tweaking our model slightly, for an investment of only a few hundred dollars we can launch small dairy businesses across Africa, empowering the farmers and helping all those they serve in the process.

Mark Lutz, Sr. VP, Global Philanthropy