MICROCAPITAL STORY: John Deere Foundation Grants $1.2 Million to Opportunity International to Fight Hunger in Africa

Opportunity International, one of the world’s largest microfinance organizations, received a $1.2 million grant from the John Deere Foundation to provide increased access to financing for the hunger-afflicted in Africa. OI forecasts that the grant will have a $10.6 million economic impact over the next three years. The grant will be used to benefit farmers, food processors and retailers and their ability to provide affordable food to the rural poor in Malawi and Mozambique.

Malawi faced a severe food crisis in 2004, when an estimated five million people (40 percent of the population) suffered from a prolonged famine. To this day, millions of people in Malawi are struggling to cope with hunger and chronic poverty. Mozambique’s economy has been undermined by the aftermath of civil war and numerous natural disasters in recent years. Currently, 70 percent of the population lives below the poverty line and less than 20 percent have completed primary school. Approximately 80 percent of the population lives in rural areas. The rural poor constitute both the greatest unmet need and the largest underserved market for microfinance services in both Malawi and Mozambique.

The goal of the joint project is to create a sustainable framework in Africa to increase food production, food availability at local markets, and family income for food. Through the initiative, informal sector enterprises, ranging from fresh produce stalls at a local market to processing cooperatives to small farmers growing maize, will have access to microfinance services. OI’s banks in the participant countries will enter rural areas through multiple channels, which include satellite offices, mobile bank units, kiosks, and electronic banking technologies including ATMs and mobile phones.

OI’s research shows that the biggest barrier for the poor in remote areas is the time and money required to travel to a bank’s main branch office to do business. OI will use small low-cost satellite branches and mobile service centers to provide access in rural areas to financial services that can impact the profitability of clients’ microbusinesses, reduce transportation costs, provide convenient banking and increase the safety of savings deposits. The mobile service centers are armored vehicles that offer nearly all of the capabilities of a bank branch.

The grant will allow OI to open four new branch offices and finance 6,800 agricultural businesses. Entrepreneurs receiving the loans will create 3,500 additional jobs. Altogether, 62,000 family members will benefit from enhanced food security with the increased income derived from these enterprises.

Opportunity International was created in 1974 and began as an entrepreneurial microfinance initiative in Asia and Latin America. In 2000 OI expanded its lending capabilities by forming its own formal financial institutions. OI serves over 1 million people globally. They report to the MIX Market as Market Facilitators and their 2007 assets totaled USD 736 million.

John Deere Foundation is the philanthropic organization established by Deere & Company in 1948 to help improve communities and society through charitable grants for education, human services, community betterment and world hunger.

Both OI and John Deere are based in Illinois.

To read MicroCapital’s story on OI’s new OptINnow program click here.

MicroCapital also published stories on new funding to OI in 2008 here, and in 2007 here and here.

Scott Everett, Research Assistant