Work trip to Uganda: Visit NUCAFE on the occasion of research and expert meetings ‘Finance for Smallholders’

Blog Josien Sluijs, Director NpM Platform for Inclusive Finance

24 July 2016

I leave early with my local colleague Richard Mugisha from AgriProFocus, Alan the cameraman and Kaga of NUCAFE to Masaka; we want to beat traffic. It is always challenging to drive through the capital of Kampala. Once we are outside the city, things are moving fast. It takes us 2 hours to reach the coffee farmers of NUCAFE. On the way back, we are stuck in a traffic jam and the same distance takes us 5 hours. But in fact, I am not bothered and enjoy everything I see: the activity along the road, products being sold that I have not seen before, the impressive red soil, tea plantations and endless fields of sugar cane.

In the car we discuss how best we can investigate why the coffee farmers have decided to join NUCAFE. Firstly, we meet Sanyu Kakoza: she became a member of the organization a couple of years ago. One of the first things she tells us is that the training by NUCAFE has benefitted her a lot: knowledge on coffee, on when to harvest, how to dry the coffee and how to keep a proper administration has made her stronger. She has more ownership of her life now, for instance she discusses with her family how they can best spend their money: how much they should re-invest in their company, how much should be spend on school fees and what is left for other purposes. Previously, only her husband decided what the money was used for.

Sanyu Kakoza has also invested in a machine which measures the moist levels in the coffee beans that will be dried later. When the beans are dry enough, she brings them to the common storage facility where they are peeled so that she can then sell them for a higher price. By storing them she can wait with selling until prices are better. NUCAFE takes care of the marketing of the coffee. Because coffee farmers now sell their products together in larger amounts, their negotiating position has improved drastically. And because the quality of the coffee is better, they also receive a better price.

Farming organizations, like cooperatives, usually have to face the challenge that not all products are sold to the cooperative. When farmers need money and a trader comes that wants to buy part of their harvest, they will go for it. But for a cooperative it is essential to have a constant supply of good quality produce. After all: their buyers expect that. To prevent farmers from side selling, NUCAFE gives them financial advances and loans. These are paid off at the time that the farmers sell their harvest.

Sanyu Kakoza hires on average 6 people who work for her throughout the year, they pick the coffee beans and transport them to the storage facility. In her village, she hereby contributes to employment creation and higher levels of income.

Currently, 170,000 farmers have joined NUCAFE. They have invested in their own roasting factory, of which the end product is sold on the local market. For export purposes they sell unroasted coffee beans, majority of which is called Robusta and the rest Arabica coffee. Moreover, they meet the international demand for fair trade coffee.

In the expert meeting about finance for smallholders, which NpM Platform for Inclusive Finance organised in the same week, the Director of NUCAFE, David Muwonge, stressed the importance of collaboration and organization of farmers: ‘We must organize ourselves, so we can do business together’.

I have met him twice now, it is a very kind, modest and knowledgeable man. Each time I am impressed by how passionately he runs his organization. When you hear him talk it becomes clear immediately that improving the situation of coffee farmers is an issue close to his heart.

On the way back we have enough time to discuss what the success factors of NUCAFE are and how they have tackled major problems such as side selling. I hope my Ugandan colleagues will use our research to organize other food chains as well and hereby make access to finance for smallholder farmers possible.

When I am back in the Netherlands, I will share with the investors what farmers in Uganda mention as the effects of our work, and that we truly have an impact when joining these kinds of collaborations.