Former Liberian president Charles G. Taylor’s recent conviction for war crimes in Sierra Leone’s civil war was a rare moment of justice served. For me, it was especially fitting that just as an international tribunal in The Hague found Taylor guilty of orchestrating atrocities that killed 50,000 people and displaced countless others, Root Capital closed on its first loans in Sierra Leone with two Fair Trade certified cocoa enterprises that are helping rebuild the country.
Balmed Holdings and Kpeya Agricultural Enterprise are helping small-scale farmers reclaim and rehabilitate the cocoa farms that were abandoned during the 11-year war. Balmed is a private company that buys from 12,000 small-scale farmers; Kpeya is a cooperative that buys from 350 member farmers. Both enterprises are breathing new life into the shattered countryside while providing employment for youth in a country with staggeringly high unemployment.
They are also helping revitalize the cocoa industry, which is historically Sierra Leone’s most important cash crop. During the war, when farmers were forced into hiding to avoid the bloodshed, production plummeted. Today, at 26,000 tons per year, cocoa exports are about half of what they were before the war and are rising steadily.
Root Capital lending will help the enterprises expand their production dramatically while allowing the smaller Kpeya to take advantage of its Fair Trade certification and connect to international markets. Balmed is already selling to international buyers and has been spending a portion of its profits to build new roads and community centers and to offer adult literacy classes.
To learn more about how these businesses are helping rebuild Sierra Leone, read the interview with Barbara Ghansah, Root Capital’s loan officer for that country.
Though our loans to Balmed and Kpeya are only newly approved, I am confident that they will facilitate our clients’ ability to grow rural prosperity. Economic reconstruction in post-conflict areas like Sierra Leone helps consolidate peace after war, and investment in agriculture is truly one of the best opportunities for absorbing former combatants, for strengthening household incomes and food security, and for stimulating economic growth in these war-torn lands.
Thank you for your support.
William Foote, Founder and CEO
Video: Recovery After Conflict
The Rwandan coffee cooperative Dukundekawa, also known as Musasa, became Root Capital's first client in Africa in 2005. Since its founding, Musasa has grown from 300 members to more than 1,800—among them many women who were made widows by the 1994 genocide. In this video, Musasa cooperative members recall the genocide and describe how the cooperative helped them rebuild their community. They also explain the importance of Root Capital financing to Musasa.
Interview with Barbara Ghansah, Root Capital Loan Officer for West Africa
We spoke with Barbara about cocoa production’s role in helping Sierra Leone rebuild after the war, and about the specific contributions of Root Capital’s two new clients, Balmed Holdings Ltd. and Kpeya Agricultural Enterprise.
RC: What role is cocoa playing in reconstruction in Sierra Leone?
BG: Cocoa is the biggest cash crop in Sierra Leone now, but production levels are much lower than before the war. After so many years of conflict, most of the cocoa farms were abandoned and overgrown with weeds. But with the help of [non-governmental organizations], development agencies and farmer organizations, they’ve been able to clear access and rehabilitate a lot of these plantations.
Cocoa is playing a big role in helping the country recover from the war because most of the new cocoa organizations started by farmers coming together, regaining access to their land and contributing labor to help each other on the farms. Usually the farmers raise money from the sale of cocoa and then use it to reconstruct houses. One farmers’ group asked each farmer to contribute a few bags of cocoa every harvest season. It then selected four farmers by ballot to receive the proceeds from the sale of these bags to finance the reconstruction of their houses.
RC: How is cocoa helping with youth employment in the rural areas?
BG: There’s very little employment for the youth in Sierra Leone. At the end of the war, you have young men with no job to do and all they have is farmland left behind. Their parents are either dead or too old to reclaim the land.
A lot of these youth are former child soldiers who’ve put down their guns, but they need another option. You also have a whole generation of children who didn’t go to school for eight to 10 years. You need to find a way for them to be productive without formal education. Agriculture is the best way to get them working. So with more interest in cocoa, they are able to go back, reclaim their farmlands and make an income. Balmed, one of Root Capital’s new clients in Sierra Leone, organizes rehabilitated soldiers into farm management groups to get them jobs in rural areas and reduce mass migration to the cities.
RC: How is Fair Trade certification helping the farm communities rebuild their livelihoods?
BG: Fair Trade certification is a relatively new concept in Sierra Leone. Kpeya was the first cocoa cooperative to get certified in 2008, and for a couple of years sold its product directly onto the export market. Before certification, Kpeya was limited to selling to the bigger traders who really didn’t have the farmers’ interests in mind and didn’t pay them a good price. With Fair Trade certification they get an extra $200 per ton, and individual farmers receive 65 percent of what the buyer pays the cooperative. They’ve used the extra income to help rebuild their homes and communities.
Balmed started pursuing Fair Trade certification just two years ago, and about half of its membership is now certified. It’s using the premium for building roads and community centers, gaining access to potable water, offering adult literacy classes and making cocoa seedlings available to farmers.
Fair Trade certification is also helping improve cocoa quality. Before the war, cocoa was very high quality. Now it’s sold as cocoa butter substitutes. After so many years of not being managed, the cocoa farms have low productivity. Farmers don’t have the resources to buy tools or use fertilizers to improve productivity, but Fair Trade is helping to change that.
New and Noteworthy
Root Capital is featured in Private Wealth magazine. The article, “Investing in the Food Chain,” describes our value chain finance model and the impact our work has on connecting farmers and consumers.
Root Capital's Catherine Gill, vice president of investor relations, and Saurin Nanavati, director of financial advisory services, attended the Social Capital Markets (SOCAP) European conference, where the theme this year was Designing the Future.
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