Cooperative League of the USA : rural group business program evaluation

Interim evaluation covers the period 5/96-5/00. The Cooperative League of the USA (CLUSA) is the implementing agency. The project has made an important contribution to the Mission's strategic objective 1 (SO1) of increasing incomes of selected groups by organizing, training, and developing marketing channels for selected groups of Zambian farmers. CLUSA has also benefitted Zambia by developing a program with strong linkages to small farmers, other donor- funded programs, and the private sector. This relationship has benefitted CLUSA's partners, which include the World Bank/SIDA-funded Conservation Farming Unit (CFU) and the privately owned Credit Management Services (CMS) of Kabwe, Zambia, while improving CLUSA's own sustainability potential. CLUSA also has links to private agribusiness firms in the grain trading, paprika, and high-value horticultural sector; these links have opened CLUSA's RGBs to markets never before available to them, increased farmer profits, and given the agribusinesses the raw materials they need to grow. Food security (hunger) is an important problem for most Zambian farmers. To address this problem, CLUSA has implemented programs that address hunger along with training in, and production of, cash crops. In Mumbwa, one CLUSA-RGB member told the evaluation team that since starting to work with CLUSA, he no longer fears hunger. CLUSA has achieved this largely through its partnership with the CFU, which has resulted in an estimated doubling of maize yields for CLUSA RGB members. Some improvements are needed. The CMS crop-credit program requires considerable attention. In the 1998/99 crop year, the average loan recovery rate was 60%. At these loss rates, USAID's investment of about $900,000 in the capitalization and operation of CMS's small farmer credit fund is at risk. CLUSA and CMS predict an improvement in 1999/00. Whether this is the case will be known by 9/00. Lessons learned are as follows: (1) RGBs are an effective conduit for providing training and information to rural populations. They also allow for a supply-side economy of scale large enough to serve the needs of the Zambian agribusiness community. (2) Interest rates must be tied to risk. If an RGB has had problems repaying loans, the risk is higher and this should be calculated into a higher interest rate. On the other hand, RGBs with good credit histories should be rewarded with lower interest rates and down payment requirements, as well as with other incentives. (3) A non-profit project such as CLUSA should not choose the markets in which a private credit provider firm (such as CMS) must do business. The for-profit firm must make the decision of who they will loan to and under what terms and conditions. (4) Cut losses. Do not throw good money after bad, especially in the Zambian micro-credit sector. (5) Conservation farming works and should be promoted. (6) It is important to have a well designed and systematic internal monitoring and evaluation system. (7) Farmers in areas where other donors and government projects have focused in the past have a higher credit risk than do farmers with lower exposure to government and donor programs. (8) There seems to be some correlation between the distance an RGB is from a main road and its willingness to repay loans. This observation was not proven statistically, but a number of persons the evaluation team talked with believed this relationship existed. (9) Develop an internal mechanism to keep focused on deliverables. (10) Have clear channels of communication between implementing partners. CLUSA has been meeting SO1 goals, and as long as these remain unchanged it will have a contribution to make to USAID/Zambia's goals. To end CLUSA after 4 or 5 years of operation would not be a good use of funds or a rational strategy.