Widespread drought in Ethiopia has left many farmers without crops this harvest season, but through Oxfam’s rural resilience program, some growers are exercising new entrepreneurial muscle.
About six feet deep and three across, the storage pit in the dirt yard in front of Gebregiziaher Chago’s house in the village of Halde Alga tells you all you need to know about the drought now gripping Ethiopia. The pit, which at this time of year should be chock full of sorghum, a staple grain, is completely empty: the drought has wiped out the vast majority of crops here.
Farmers across Ethiopia, many of whom rely on rain alone to feed their fields, are now facing serious shortages of food, and as of early November, the government said 8.2 million people needed humanitarian aid. By next year, the UN predicts that number could climb to 15 million.
But here in Hade Alga in the rugged northern region of Tigray, farmers participating in Oxfam’sand the World Food Programme's rural resilience program, known as R4, have a secret weapon that will help them cope with some of the hardship headed their way: access to credit. It is one of the four components of an initiative designed to help families improve their means of earning a living while managing unpredictable weather. The other three tools in the program are weather insurance for crops, savings groups, and environmental restoration which can reduce the risk of disasters like floods—and even drought.
Skins for sale
This year, Mulata Atsbeha’s worries began in April—planting time for the sorghum many families in the area depend on as a main crop. When the rain didn’t come, he set his hopes on the corn and teff he planted next. But the absence of rain robbed him of those harvests, too.
“It all failed,” says Atsbeha, the father of seven children. “Even some of the crops are not good enough for animal feed. By August, we didn’t have food.”
So Atsbeha turned to a supplemental source of household income: the trading of animal hides. He started the small business about four years ago, but a shortage of capital hindered his progress. When the R4 program helped to make local loans available at reasonable interest rates in February, Atsbeha jumped at the chance, joining more than 100 others. A 3,000-birr loan—or about $143—and some technical advice along with training in business management from a program facilitator set him on the path to success.
“Since then, I have been doing well,” Atsbeha says. “I became profitable and paid the money back before the repayment time—all of it.” Now, he is planning his next steps.
Pennies of profit
As Atsbeha explains his salt-curing process, rows of goat and sheep skins dry in a mud-walled building next to his house. An orange light from a single bulb casts dim shadows beyond the skins. When times are good, he can buy goat skins from local farmers for 30 birr each—and sell them to other traders for 37 birr, or about $1.75 which comes out to a profit of about 33 cents. On cattle hides, he can earn a profit of up to 40 birr, or about $1.90.
But during times of drought, Atsbeha was finding the some of the hides he bought from farmers were of poor quality because the animals had become emaciated. He was paying the farmers a good price for them, but losing money when he sold the skins to the traders, who balked at their condition. After talking with the farmers and explaining his dilemma, Atsbeha was able to renegotiate the terms, substantially lowering the price he pays during drought.
Now, he’s planning to take out a second loan and grow his business further.
“It’s when you have enough capital to run the business that you can make a better profit,” says Atsbeha.
Getting over the fear of credit
When farmers aren’t struggling with drought and the terrible toll it takes on their incomes, having access to credit can help them build their long-term security. That’s what Getie Adugna, who lives in the hilltop village of Michael Debir in Amhara, has begun to discover—now that he is over his fear of borrowing.
The father of six children, Adugna didn’t have the chance to go to school as a child and is now making very sure that his sons and daughters do. He even invested the small payout he got from the R4 weather insurance program in school clothes for his daughter. He wants his children to be able to make their livings at something other than farming—a livelihood that is becoming increasingly difficult because of a shortage of land.
Adugna himself owns a little less than two acres of land, and rents about a half acre more, but he’s not able to grow enough to feed his family. So he supplements his harvests with other sources of income, and that’s where the value of loans comes in.
In the past, Adugna had not wanted to take out a loan.
“I’m afraid I’m unable to pay,” he said, noting that interest rates on available loan offerings were high. But through the R4 initiative and Oxfam’s partner, the Organization for Rehabilitation and Development in Amhara, or ORDA, Adugna decided to take a chance on a 2,000 birr loan—worth about $95 with total interest of about $14.
With training he got from ORDA, Adugna invested the money in two female sheep, both of which were pregnant, and one of which produced twins. Families use their livestock both as food and as a source of income, by selling animals when they reproduce. Adugna buys and sells both sheep and goats.
Quickly able to repay that first loan, Adugna took out two more smaller ones, one for improved potato seeds and the other for improved wheat seeds, both of which he has also paid back.
His success in managing the loans—and in producing potatoes significantly bigger than the ones he used to grow—has given him confidence that he may be able to make even bigger investments down the road.
“I am happy,” said Adugna. “In the future I can borrow money, since I’m creating wealth.”
He is now thinking, possibly, of investing in the construction of a house that he could rent out as a hotel in a nearby town.
“This is my dream,” said Adugna.
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