3. Rural-Based Enterprises

TLC is undertaking a value-chain approach to investigate income opportunities from community-based eco-tourism ventures and enterprise initiatives with local producers and entrepreneurs in producing, processing and marketing economically viable agricultural and natural resource products.  Assessments of ventures and enterprises with the greatest promise include: bee keeping, mushroom production, fish farming, cage culture, tree crops such as coffee, macadamia and Jatropha, small livestock, eco-tourism, agro-processing of cassava, oil seeds, groundnuts and soyabeans, and drying of fresh produce such as mangoes and mushrooms.  Success with these enterprises depends on targeting points of intervention where there are critical weaknesses or gaps in the value chain. In some cases, the undeveloped state of the market may define a situation where the investment is not worthwhile. In other cases, the producers targeted may not have the mindset to operate the venture as a business.  Conversely, they may not have received proper training.  These scenarios argue for a strong value-chain approach that incorporates a business mentality to support an enterprise initiative. Building on the initiatives and results of TLC initiatives and others, a key objective is to provide training to communities in business and marketing skills as follows:

  • Capacity building to support entrepreneurs, including access to market information, market awareness, business skills, and access to microfinance facilities.
  • Capacity building for producer groups on technical issues including harvesting, processing, storage, packaging, marketing, distribution, certification and standards.
  • Improvement and strengthening of market linkages among producer groups, entrepreneurs, the private sector, government, NGOs, academic institutions, credit schemes and trade associations.
  • Establishment of model enterprise projects for evaluation and potential replication.
  • Monitoring performance in terms of management, financial returns, market linkages, and ecological impacts.

The current focus is on products that are environmentally sustainable in areas where Malawi producers have a clear competitive advantage with strong market demands and high economic returns along the value chain. The objective is to enhance food security and incomes with the aim to transform livelihoods from subsistence to market led enterprises that are self sufficient and independent. Enterprises that show special promise include:

  • Mushroom Production: Mushroom production is a lucrative business but limited in scale due to lack of technical knowledge and business skills combined with undeveloped market channels. TLC is providing support to interested households and clubs to produce and sell mushrooms as a business. Targeted groups and individuals receive support with materials in the form of loans, and training in construction of mushroom houses, substrate formation, substrate processing, spawning, incubation, fruiting, harvesting, packaging, micro-financing and marketing. Outlets for producers to sell fresh mushrooms are a major constraint to this enterprise.
  • Fish Farming and Cage Culture: TLC is evaluating the production and marketing of fish and fingerlings in sites with suitable terrain, water and market outlets.  The task is to assess production constraints, gross margins, cost-benefit ratios and marketing opportunities for producers to realize a significant return from this enterprise. Training focuses on technical and business management skills.  Results will determine the potential for scaling up.
  • Bee Keeping: TLC is working in collaboration with the Parks and Wildlife Department to support the formation and training of bee-keeping clubs. Many areas are ideal locations for bee keeping because of the presence of a wide range of tree species and plants with flowering characteristics attractive to bees. The planting of many species of trees, including Moringa, Faidherbia albida and Tephrosia will increase yields from abundant flowering. TLC provides bee keeping equipment and hives on loan with training on technical matters as well as business aspects of producing, processing and marketing quality honey.  In addition, local carpenters are being trained to produce hives of good quality as a business venture for sale to honey producers at competitive prices. 
  • Value Added Processing:  The main focus is to promote value added processing of cassava for flour, groundnuts for oil and peanut butter, and drying of fruits and mushrooms to reduce losses from their short-shelf life.  TLC is supporting the establishment of selected producer groups with links to local entrepreneurs to produce these products for sale at the upper end of the market.  Evaluations will provide information on the potential for scaling up each enterprise, as well as the challenges that need to be addressed to make this a reality.
  • Draft Oxen:  The main objective is to promote the use of ox carts for more efficient and timely transportation of farm inputs and produce to and from the field and to market; b) to reduce labor requirements for these activities, especially child labor to improve opportunities for children to attend school uninterrupted. 

Improved Access to Input/Output Markets

A critical element in support of rural-based enterprises is to improve access to inputs for production and processing, as well as to outlets for marketing. Although there have been great strides in the production of various products, linkages to other support systems such as markets need development. TLC is identifying key interventions to improve the integration between production and marketing. The following activities are being carried out to support the development of various enterprises:

  • Sub-sector analyses help to ensure that communities select the best enterprises for investment of their time and meagre resources. This approach also identifies the most appropriate market and production opportunity as well as key constraints that may exist. The assessment will help to identify business services that can best address the constraints of the sub-sector.
  • Research on input supply chains and output markets provide a sound basis to evaluate demands for specific products and to develop strategies for communities to penetrate markets. This includes the ability to add value through basic processing and packaging of products involving the organization of special interest groups/economic units for increased efficiency and competitiveness. It also leverages opportunities to become more vertically integrated into the market chain through links with other producers groups and private firms, including small medium entrepreneurs (SMEs).
  • Facilitate market linkages by providing information such as market trends, prices, names & addresses of buyers. Facilitate meetings between the producers and large production chains, intermediaries and other players for market access.
  • Design, develop and promote communication strategies through newspapers, radio, TV, trade shows etc. for publicity and promotion of the finished products.
  • Support formation of business associations to enable them development of self-management and business knowledge/ skills, increase their (member) income.
  • Support the development of market information system for both communities and buyers.
  • Provide technical support in business administration through one-on-one business counselling, business health checks and business and marketing skills development.

Loans and Revolving Funds:

For households or groups that meet established criteria, loans may be offered through TLC or finance institution to meet the costs of inputs, materials and equipment.  Typically, a 25-40% down-payment is required upon delivery of the materials with the balance due within 6-12 months.  All payments are made into an interest-bearing revolving account to allow access to funds for expansion.  Defaulters are handled by several means: a) encouraging peer pressure to honor the loan; b) canceling membership in the club and all related privileges; and c) confiscating equipment or produce to cover any outstanding balance.