CREATING JOBS

Before growing pigeon peas, my life was miserable. I used to rely on my parents for most things. After I realised that in pigeon peas there is profit, I started growing pigeon peas, and now I am no longer reliant on my parents.

EXPORT TRADING GROUP (ETG), PAN-AFRICA

CATHERINE CHIBWANAFARMERCatherine's pigeon peas will be exported all over the world by ETG

INCREASING INCOMES

The earth is dry and dusty in southern Malawi – but the short rains are imminent. It is harvest time for pigeon peas.

Catherine lives in Magombe village and has five children. She is a farmer and grows pigeon peas in between her usual maize crops. She has discovered that pigeon peas are a useful cash crop and has recently found a local procurement centre which buys her bags of pigeon peas. Today she has sold her bag for 910 kwacha (around US $2.40). She gets around 0.45 cents per Kilogram. The extra cash is useful for school fees. Her oldest daughter wants to become a nurse and the second an agronomist.

Nearly 70 per cent of farmers in Africa are subsistence farmers – they only grow enough food for themselves. The extra cash earned form selling crops such as pigeon peas is crucial for paying for school and medical fees and household items. The local procurement centre where Catherine sells her pigeon peas is owned by the Export Trading Group (ETG), one of Africa’s largest agri-businesses.

ETG buys commodities such as pigeon peas, chick peas, soya beans, cashew nuts and sesame seeds from millions of smallholder farmers all over Africa. It cleans, processes and then places them in bags ready for the local market, for neighbouring African countries and also for export to the rest of the world including India, China, the Middle East and Europe and the UK.

The pigeon peas are cleaned and processed at a factory in Limbe, just outside Blantyre.

5 millionsmallholder farmerssell their produce to ETG

“If the farmer gets more money,” says Ketan Patel, Managing Director of ETG, “He's able to consume more and this stimulates industry and is important for Africa's growth.”

Malawi is one of the poorest countries in Africa where over 80 per cent of its 16 million inhabitants live on less than US $2 a day. According to the World Bank Group, it ranks 171 out of 189 of the most difficult countries in which to do business. Foreign investors face particular challenges in Africa including red tape, weak infrastructure and governance issues.

Pigeon peas ready for export to India, China, Middle East, Europe and the UK.

2003300 employees

2013 7,000 employees

nearly

DEVELOPMENT IMPACT AND FINANCIAL RETURN

ETG demonstrates business success and development impact. Stable jobs and livelihoods are essential to development and, according to a recent World Bank report, nearly 90 per cent of such jobs are created in the private sector.

ETG is a major provider of good, stable jobs in countries such as Tanzania (35 per cent of its workforce), Mozambique (21 per cent) and Malawi (10 per cent). ETG is committed to equal opportunities with women making up over 40 per cent of the local workforce in Mozambique, Uganda, Ethiopia, South Africa and Rwanda.

As well as expanding the workforce, the aim is to raise awareness and train thousands more farmers as well.

It has set up set up ETG Farmers Foundation to help with growing cash crops such as pigeon peas, green gram and sesame seeds. Many farmers are keen to learn so that they can sell them for cash to ETG.

Poorva Pandya (left), Head of ETG Farmers Foundation at a demonstration project of pigeon peas, works with a farmer and a government liaison officer, Tanzania

CDC’S INVESTMENT IN ETG

CDC provided a finance facility of US $32.5 m to the founders of ETG.

Although ETG has been successful, many businesses in Africa struggle to find the invest-ment they need to grow.

CDC decided to invest in ETG as agriculture is a very important sector in Africa. Historically, Africa exported unprocessed farm produce. ETG has embarked on a strategy to increase its food processing plants across Africa and this enhances local economies through a new class of job being created and higher income for processed farm produce.

Peter Maila,Investment Director, Equity Investment Team, CDC Group

BUSINESS EXPANSION CREATES MORE JOBS

ETG has expanded rapidly over the last few years. One of the key components of its strategy is expanding infrastructure all over Africa where it has built more than 300 warehouses, procurement and distribution centres.

Employees have risen from 300 in 2003 to 7000 in 2013 and ETG provides an additional income to millions of smallholder farmers such as Catherine.

But it has not been without its challenges.

There are many challenges to operating in Africa, for example infrastructure is extremely poor.

Ketan Patel, Managing Director, Export Trading Group

CDC is the UK's development finance institution. Our mission is to support the building of businesses throughout Africa and South Asia, creating jobs and making a lasting difference to people's lives in some of the world’s poorest places.

Many businesses in poorer countries struggle to get the finance they need to grow and expand. CDC helps meet that need by providing patient, long-term risk capital in all its forms. Working through local experienced fund managers and directly by providing equity investment and debt, CDC is making a vital contribution to private sector development in Africa and South Asia.

Responsible investing is also important to CDC. Improving environmental, social and governance standards is a vital part of managing a sustainable business and goes hand-in-hand with being profitable.

Although owned by the UK government's Department for International Development, CDC is self-financing. The profits made from successful long-term investing are recycled to finance further investments. In this way CDC is able to help businesses grow and provide jobs.

CDC is a pioneering institution. It has more than 1,100 investments in businesses across the developing world with nearly 590 investments in Africa.

Find out more about our work at www.cdcgroup.com

Year of commitment

2012

INVESTM

ENT IN

FO

Investee Company

Export Trading Group

Location

Pan-Africa

CDC commitment to ETG

US $32.5 m

ETG’S DEVELOPMENT IMPACT: DIRECT AND INDIRECT JOBS IN MALAWI

Food processing is a priority sector for investment for CDC because of its high potential for job creation. Given the scale of its operations, it’s no surprise that ETG has become a major employer in Africa and globally.

Of the 30 African countries in which ETG operates, Malawi is one of the most important. It is home to four processing centres, procuring each year around 80,000 tonnes of pigeon peas, soya beans and maize. To manage this level of agricultural processing, ETG now has a team of 500 employees in Malawi, operating a rapidly growing network of 48 procurement centres to serve smallholder farmers.

Most pigeon peas are grown in the Southern region around Blantyre and Machinga. Here, a smallholding of just half an acre can produce 150 kilos or more of pigeon peas in a year, intercropped with maize. Selling that produce can bring in an additional 25,000 MWK (US $64), providing they can access the market and get reasonable prices. ETG’s Malawi network of procurement centres serve smallholder producers that were not previously supplying for the export market.

Some 350,000 Malawian smallholders are now benefitting from ETG’s pigeon pea procurement network, increasing their farm income by as much as 25 per cent.

“Impressive as its direct employment effect is, it is the focus on smallholder farming that really multiplies ETG’s development impacts so significantly,” says Alex MacGillivray, Director of Development Impact at CDC. “And ETG and others have helped deliver a 60 per cent rise in crop productivity in the last ten years in Malawi.”

Roystock Samuel, Head of Cleaning Department, ETC Cargo in Tanzania. Here women make up 45 per cent of the workforce.

CDC December 2013