Sale of member shares for new Ethiopian flour factory

At the end of 2015, the Ethiopian union Raya Wakena opened its own flour factory with the support of Agriterra. One of the reasons this factory came to fruition was that farmers purchased member certificates for their own cooperative. The factory provides the farmers with a guaranteed sales outlet and creates additional employment opportunities in the region.

Agriterra has been involved with Raya Wakena since 2013. In consultation with the union, a plan of action was drawn up, the final result of which is the new factory. Various Agripoolers contributed their knowledge and expertise to this process.
The most important points in the plan of action that led to the new factory:

  • Creation of a business plan for the flour factory
  • Sale of shares to members
  • Securing of a loan for the factory
  • Reinforcement of organisational structure
  • Better mutual collaboration with members and other cooperatives

Raya Wakena union
The union was founded in 2004 by nine different cooperatives. Since then, the number has grown to comprise 44 cooperatives with a total of approximately 18,000 members. Far and away the largest number of affiliated farmers produce linseed and Niger seed, which are used to make flour. Raya Wakena takes care of the distribution and processing of the seeds and provides members with seeds for sowing, fertilisers and support.

2013 plan of action
With the help of Agripoolers, Raya Wakena was in a position to draw up its own effective business plan. To make the '2013 plan of action' a success, particular efforts were invested in training, coaching and consulting. This was supervised by Agriterra and led to the creation of a sound business plan for the factory. The focus here was primarily on reinforcing equity capital by issuing member shares and acquiring a fair bank loan. The factory was built using the extra money raised from the members. 

Above all else, the sale of the shares was a huge success. In addition to greater financial flexibility, it strengthens member commitment to the union. In 2014, one million ETB (around 38,000 euros) were raised via cooperative members. The potential production surplus for the next few years was also mapped out. A contract was concluded with the Ethiopian Grain Trade Agency (EGTA) on the basis of these figures. They purchase the surplus in production on a commission basis. This secured guaranteed sales of some 19,000 quintals of wheat.

Agripoolers make the difference
The success of Raya Wakena is partly down to the support of various Agripoolers. Jacqueline Niessen is just one of them. She's the head of Human Resources at Avebe and previously worked at FrieslandCampina. She visited the union in 2015 and 2016, giving advice primarily in the field of HR.

Niessen: "When I stood up in front of the group back in 2015, I was really thinking to myself: what's going to happen? Now, one year later, I see a completed flour factory with 80 employees. They've also taken on an HR manager, who has employed a performance manager and introduced selection commissions. Raya Wakena has made a huge leap forward in professionalisation, and the future's looking bright."

The Netherlands as an example
To make sure that this prospect really materialises, it's vital to gain the trust of the members. Cooperatives are made up of people with different interests and skills - management must be able to manage this successfully. Niessen: "That's why I used the success and failure of cooperatives in the Netherlands as an example.  It's often success stories that help you gain a group's trust."

This is confirmed by the Managing Director of Raya Wanka. He believes that it is important that Niessen comes from a cooperative herself and knows what goes on there. Niessen explained that Avebe also experienced problems in the past and was able to overcome them. At that point he thought to himself: 'If they can do it, so can I'.

This is sure to be the case if local people also get involved, such as the Ethiopian Agriterra business consultant, Ysakor. He accompanied Niessen during her visit to Raya Wanka. After gaining his MBA in England, he returned to his home country. The perfect recipe for success is a mix of local consultants, Dutch consultants and Agripoolers!

"It's often success stories that help you gain a group's trust."






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