A Man and a Beauty without a Map: Months of sweat in Mozambique, Africa
This summer has been a summer filled with dirty clothes and empty gasoline tanks, my wife Chelsea and I have done many trips all across the lower half of Sub-Saharan Africa in our work trying to help establish a few business and humanitarian projects here in Mozambique, Africa. We have had much success and much tribulation and we feel highly privileged for the lessons that we have learned in the midst of our trials.
I have been changed by the time that I have spent here in Mozambique. I feel that my wife and I have grown closer, our hearts beating side by side as we have not left each other’s site for months; not for an hour except once when I ran an errand, and we both have felt very comfortable with that. We have been side by side in this effort to establish a means by which many Mozambicans who’s culture has damned themselves can be employed in the future by healthy business. I believe in ethical business as it is in my veins. I know that there is no other way by which Sub-Saharian Africa will be saved from poverty; only thru ethical, healthy business. That is what we have tried to promote as we have been here. Not long ago Chelsea and I saw a stencil on the side of a building that had a man with a gun pointing at another man who’s head was blindfolded by the word “capitalism” ; and I just laughed to myself because I knew that that was the very thing which would save Mozambique from their plight, largely due to their cultural short comings.
I will now discuss 3 small things that I have learned since I’ve been here in Mozambique for the 2nd time:
1- There are no bigger barriers in this world than cultural barriers. Two subjects from their respective cultures will look at the same circumstances and draw two COMPLETLEY different conclusions because their cultural upbringing is different one from another’s. Here in Mozambique even the people living in high-rise luxury apartments have very many tribal cultural patterns woven in their blood. They are still ancestors of the great Bantu tribe or Ndinginduane Nation and those tendencies passed down from their parents for centuries are still ever so present in their day to day lives. For example, one of them is being the boss. Regardless of who you are or how important you are in your country, you must let the Mozambique Government Officials think that they are still in power over you—even if it is to your damage sometimes, they have their tribal culture in tact and you must not cross them and doubt their line of authority. This understanding has been particularly helpful to me in the acquisition of land within Mozambique.
2- I have learned that I must distance my emotions from the logic in business. I must not become too emotionally involved with the business decisions that are being made and I must allow room for opposition. I am very passionate about what I do, and I do not want to lose the passion that I possess, however I must never let that passion turn in to detrimental emotion where I am a lion on a rage because I do not get my way (even when I know that I am in the right!) I have learned that I must take a deep breathe, and make a logical decision based on facts. In my time here in Mozambique I have come close to burning some very essential business relationships that I needed due to may lack of patience and involvement in the work emotionally and not necessarily logically. Along with this I have learned that one must not be all about business 100% of the time. They say that ‘all work and no play makes jack a dull boy. In business and life it is very important to maintain great social rapport with those around you.
3- I have learned that often one must look at the tasks at hand and take a step back; and allow hope to sink in one’s soul; that the project will prosper and grow into all that it is intended to be. Many times so many obstacles gloom over our outlook that our natural reaction is to get cynical or pessimistic about that which is happening. I have found that I must be hopeful! I must be filled with hope that there will be a brighter day and much good is to come!
Some Goals as I have been in Mozambique, May ’11 – Aug ‘11
1-Negociating a 2,000 Hectare contract with HICEP and the Chiguidela community for the production of rice.
Since May 2011 Chelsea and I have been traveling from Maputo, Mozambique to Chókwè, Moçambique to negotiate the terms of a contract for a property located in Chiguidela, Mozambique, within the HICEP irrigation area jurisdiction. Land acquisition within Mozambique is a very sensitive subject. 80% of Mozambicans live off of the soil they own. This country is primarily an agricultural country. Many in Chiguidela produce their own food and bartar and trade their excess rice or corn for other goods and services or money, using their crop as money. Their land is the one thing on this earth that hasn’t deceived or turned their back on the people. When Mozambicans put a seed in the ground, they get a crop. Natives here understand this concept, and for this reason land acquisition is a tricky subject. We need 3 parties to sign a contract with land acquisition in Mozambique –1) the business that intends to use the land (us) 2) the local government body (HICEP) 3) the local community (Chiguidela). We have spent months evaluating the land and negotiating the terms with local government and tribal leaders. It has been extremely difficult because the leaders here have not been honest with us. They have wanted to change the terms that we have agreed on and use terms that they invented. A small portion of this trick can be attributed to misunderstanding and a large part is attributed to the locals taking advantage of the investor’s skin color. This has been very frustrating for us, however we have a strong hope that the contract will be signed before the first week of October. It has required many meetings and much patience to work with the natives of the Chiguidela village. They are a very simple people.
A month ago Chelsea and I had a tribal meeting (as is Mozambican and Changana custom) where we participated in the ritual of the investor (us) giving the locals a goat and some alcoholic drinks; showing the tribal members that we greatly appreciate their acceptance of our proposed investment. There have been a lot of tribal hoops that we have had to jump through to please all three parties.
The proposed piece of land that we will be investing in at one point in time was actually considered the “Celeiro de Mocambique” or in English: “the Bread Basket of Mozambique”. However, this land has not produced much since the 
independence of 1975 of the country when the Portuguese nationals abandoned the irrigation infrastructure and left it to the Mozambicans to tend, who then in turn went through a civil war until 1994 which left the irrigation infrastructure in ruins for that amount of time. To make matters worse, the proposed area was affected by a dramatic flood in the year 2000; which absolutely destroyed the 50 km of canals, dykes, and drainage systems that are half way in tact until today. This baron land of Chiguidela looks like a savanna now, however not long ago it was producing much rice for the Mozambican people and the rice was even exported to Portugal and other European and Asian countries. Our rice project will rehabilitate the 50km of drainage canals after we have signed the contract, giving the more than 100 people living in Chiguidela access to irrigation infrastructure in their communities once more. It has taken hours of meetings and hours of travel to come to a general consensus of the proposed land area and contract terms, and we feel very confident that soon we will be able to put our tractors in the ground and start working.
2-Evaluation of Land- Chiguidela property in Chókwè district, Moçambique
The land selection process for our agricultural project was one that took much of our time in visiting many different proposed sites. Each site had it’s advantage and disadvantage: some had damaged infrastructure but legal issues with the land, others had next to no canals or irrigation systems but there was potential for much growth, and one had damaged agua-infrastructure and perfect electric infrastructure with a good location for flood irrigation. We chose the latter after much evaluation and a few trips to the land with the professionals. After taking the trips and choosing the land, we now were left with the task of evaluating and studying the land.
I am no Agronomist. I have however, learned much about agriculture and agricultural land acquisition in Mozambique. After choosing the land we started with the task of evaluating the piece of land that we had. We spent days measuring the land and took team of irrigation specialists from the Ministry of Agriculture in Mozambique to evaluate the costs of rehabilitation of the canals that we would like to rehabilitate. After many trips and meetings we made the decision that the cost of entry was minimal in comparison with the future potential for income, so we decided to go ahead with the land acquisition process.
Former Minister of Agriculture to Swaziland, Roy Faranaukus evaluating the land with Alex, Mauricio, and John. June 2011
A picture of the Village of Chiguidela, that will benefit from our 2000 hectare project
Our evaluation of the land has essentially led us to the phase of negotiation. We have been making solid progress and recently I had the task to employ a farmer named Shaun de Klerk, from South Africa. We negotiated a contract for a house for him to live in in Chokwe, Mozambique and he will take care of most of the administrative tasks that I have been in charge of in Chokwe until we sign the contract, thereafter Shaun will be our farmer on the ground, in charge of everything from the rehabilitation of the canals, fertilization and sowing of the crops, to the great harvest of the crop.
EAVL's final map after a GPS study was done by me
3-Supervising the Mães de Moçambique egg co-op
I was faced with the task to supervise the Cooperativa Maes de Mocambique, which is a non-profit egg co-op in Marracuene, Mozambique. I spent much of my time helping the management of the Egg co-op with issues like mortality, egg sells and general business management. We have had an extreme amount of problems with theft and other issues of dishonesty. A few months ago a woman was put in jail for stealing 40 eggs from us, I am sure that she stole much more than 40 eggs.
During my time here, a man named Daniel Hunguana confessed to “misusing” about $10,000 USD of company funds. He claims that he made poor business decisions and lied about where the money went and how it was used. It was my task to investigate the matter and give my findings to the President. I learned two things- 1) Disclosure and complete transparency in most aspects of my business relationships. If I make a poor business decision in the future I will take accountability for it and not try and cover it up. 2) Internal controls must be put in place to protect the person who is handling the valor, as well as the company/owner. Daniel had no real internal controls on the $10,000 USD that he had stewardship of. That was a mistake by the person who gave him that money. We must have internal controls to protect ourselves and those around us. One may say “I’ll never steal, I am honest” that, in my opinion, is the first step to white collar crime. A friend of my told me a story of his mentor who once told him “If you give me your car keys and $1000 and tell me to hold them for you while you’re on vacation, I’ll be here when you get back and so will your possessions, but if you give me $100,000 and leave on your vacation you’ll never see me again.” To be a realist, our integrity likely has a price, and that is not cynicism. I know now that I must place heavy internal controls and ways of accounting checks so that money is not mis managed and temptation is diminished or near inexistent.
In the end, I ended up writing a letter in Portuguese which accused Daniel of theft of $10,000 USD, misuse of funds, and theft of 50 boxes of eggs ($1,333 USD). Myself, Chelsea, Dave Hamblin (President of the Egg Co-op) and Roy Feranaukus (Vice President) took the letter to the investigatory police in the city of Marracuene and presented to them the evidence of the mismanagement of funds and theft, and we had Daniel put in jail. He awaits his trial. I thought it very interesting how that chastisement was actually something to help him. He needed to go to jail so that he could be honest and not a thief. The anterior happened and the latter is yet to be seen. He is out on bail which was a ¼ of the money stolen, where did he get this amount?
Selling eggs is a tricky thing. They are a product that must be sold fresh. Our eggs are in bakeries or literally already in a cooked cake within 24 hours of the egg being hatched. I have supervised the selling of over 700,000 eggs. It has been fun to learn about how they are sold and oversee the production process.
One big problem that we’ve had with the production side of the product is that the Chicken’s ration is inconsistent here in Mozambique. We have to import all of our feed from Swaziland. Chickens are a very fine tuned machine. They must be fed the exact amount and type of Chicken feed. If you feed a chicken a touch less than that which they are supposed to be fed, they will go 2 weeks without producing one egg until things are back to normal. If we get one bad batch of Chicken feed our production leg could come to a stand still in two days. That would be crucial to our 15,000 chickens and that would literally make us lose all of our clients and the business would likely go bankrupt. Our feed has not been constant, one week it will have a 70/20/10 mix of Corn:Protien:Fill and the next it will be 60/10/30. This creates a huge problem. This is business in Africa isn’t it? Supply chain demand problems at its finest. So what we’ve had to do is double up on our inventory of feed and mix the feed that we have in stock (a week old) with the new feed, to try and ensure more of a balance. If the feed company runs out of a feed element than they will just not include it in the next batch.
Last July the feed company did not include the element in the feed that puts a dioxide in the chicken’s feces so that flys will not eat the feces. Since the feed company forgot to put this in the feed the flies ate the Chicken’s feces, the flies also laid their larva within the feces which instantly led to an invasion of worms in our chicken houses eating the fly’s larva. You can imagine a 1000 square meter chicken house floor covered with flies. We got a discount on our next batch of feed.
4-Market Study of Cashew Nut exportation from Mozambique
In the world today there is a huge demand for Cashew nuts. No matter where you go in the world, you will pay relatively the same price per kilo for processed cashew nuts for each respective quality type. Right now that price is very high due to the massive lack of Cashews, so my boss and I decided that it would be a good business venture here in Mozambique, since it used to be the world’s leading producer of Cashew nuts in the 1970’s when the Portuguese ruled this place.
So Chelsea and I set out on a very intense study of the market of Cashew nuts within Mozambique. We wanted to employ many Mozambicans thru our exporting efforts, and we were excited for the promising future, however I will sum up our plight in the following words uttered by my friend and boss, Ed: “the market was not where we thought it was.”
After doing an immense study of the Cashew industry here in Mozambique, after visiting many factories and speaking with many producers, we concluded that a lack of government control of illegal exports and poor third world banking practices are the two main reasons why 23 of the countries 30 Cashew factories are completely out of production and currently abandoned, with machinery inside them and unemployed Mozambicans living all around them.
The illegal exports problem is very simple. Mozambique does not inforce it’s own law that reads “every unprocessed cashew nut must be processed in Mozambique before it can be exported.” Each cashew season (October to December) The rural cashew tree rich areas are filled with rented trucks driving around the country picking up each cashew that they can get their hands on. These trucks are rented by Indian entrepreneurs (or thieves if you ask some Mozambican cashew processors) who come to Mozambique with Mozambican passports that they bought from the government, and export the unprocessed cashews illegally to India for processing. This stunts the Mozambican industry because the Mozambican processors can not compete with the high price that the Indians will pay for the raw material, and thus most unprocessed cashews are sold to the Indians.
Bad banking practices are dominant in the 3rd world and especially through Mozambique. It is not uncommon for an interest rate on a $1000 loan to be 20%. Can you believe that? That’s worse than the loan sharks! The same people that own the banks run the government, so all sorts of laws are put in place to over value the national currency and protect the kingpins interests who are at the top of the totem pole. Many would consider banking practices here in Mozambique theft. There is a great lack of fair banking services to help many have access to capital at a reasonable price. Dishonesty is a reason why the rates are so high, however there are many evil money-loving people at the top who are oppressing and make Enron and Arthur Anderson look like Mother Teresa.
The owners of the cashew factories were getting $230,000 USD loans from the bank with interest rates just under 20% to buy 20 tons raw unprocessed cashew nut. Surprisingly 100 tons of unprocessed nuts only give about 19 tons of processed cashews and cashew kernels, so that is a 19% yield. Imagine if you paid transportation costs of collecting the nuts from 500 kilometers away and when the product gets to your plant you lose 81% of the transported product because it is waste. There are opportunities for a bi-product industry here, however the logistics of the processed nut are a misnomer. Local processors have so many obstacles in front of them—low infrastructure, high transport costs, low yield, high theft in factories, 19% yield, amongst other things, so when you throw in high bank interest rate loans with no national protection from unfair and illegal competition the business of cashew nut processing in Mozambique under these conditions is nearly unprofitable, or if it is profitable it is a “headache 24/7” according to local processors.
I spent hours thinking about and studying the cashew market in Mozambique. It is so fascinating to me that it is almost unprofitable, and the people to blame for its unprofitability are the very people who run Mozambique, and anyone who tries to blame poverty or a lack of internal controls is misinformed. It is neither. The Chinese have been exporting wood illegally for a decade in Mozambique. By Mozambican law exporting wood is not illegal, but you can not export one trunk of unprocessed wood. Why would Mozambique, a country with over 50% unemployment, let their wood leave the country unprocessed? They wouldn’t. That is why the law states that every trunk that leaves Mozambique must be processed in Mozambique by Mozambicans. What an industry that would create. However the Chinese found a way (how? Who knows?) to bypass the law and have been exporting hundreds of thousands of tons of wood illegally from Mozambique for a decade. It took 10 years for the Mozambican press to do something about this and publish what was happening in the newspaper. Last August (2010) there was a lot of upheaval about the subject in the media, but nothing happened. Just today I read a headline today on a newspaper that shocked me: “ Customs confiscate 501 of the 561 containers of wood leaving the Nacala port for China.” It took a year, but eventually Mozambique’s customs did the right thing to confiscate the containers. What I found was hilarious was as I was reading the article, the head of customs in the country said that “We will now revise the law so that the Government can tax wood being exported.” Therefore, they don’t want their people to be employed, they just want the bureaucratic system to absorb more money, which will directly help very few Mozambicans.
I hope that this wood example illustrates at least part of the problem with their government’s customs regulations. In the words of my friend Elias John Mucavel “Querem comer.”
5-Importation, Branding, Marketing, and Commercialization of 13 metric tons of Macadamia, Pistachio, Walnut, Cashews, Brazil, Pecan, Almond, and Hazel nuts.
My boss, Dave Hamblin, came across an opportunity where he was able to get a 20’ container full of mixed nuts for 20,000 USD. This price comes out to be around a dollar a pound on average shipped to Durban. The accounting on the program looks great, I am excited to develop this market and see if we turn a profit when all is said and done.
One thing that took me back with our nut program was the cost of custom duties for the container of nuts. The Mozambique Customs charged us 17% VAT (Value Added Tax) with another 20% in duties. To import $20,000 worth of nuts (to be processed in Mozambique) we were charged 37% customs taxes and duties. Keep in mind what I mentioned earlier regarding the laws being violated within Mozambique concerning cashew nut processing within the country. As irony would have it, some of the nuts that we imported to be processed and sold in Mozambique for humanitarian benefit were cashews. Currently we have the nuts in our warehouse and they will be processed and sold within the next few months.
Something that I found very exciting was doing a cost volume profit analysis on our costs and potential profits with the nut program. Our investment of nearly $70k USD will be recovered when we sell 132,000 packets of 100g packed nuts. We aspire to sell the nuts quickly with little resistance.
A task that lies in front of me now is coming up with a efficient way to account for each and every nut in our warehouse, from raw materials, then work in process, then finished goods. Due to pilferage, I will have to create an air tight information system , a system that must be easily audited as well by a third party.
I have had to hire employees while I have been here in Mozambique. It has been a great learning experience for me, and I have learned first hand that Human Capital is generally a huge risk factor in a business. However, it appears to be a double edged sword because having one great employee is worth 5 mediocre. It has been a struggle for me to do monotonous tasks like revise contracts and negotiation with many employees, but after doing so it has taken burdens off of my shoulders.
Chelsea and I have put over 10,000 kilometers on our Toyota hilux surf in the last 4 months. I have had very fond memories with Chels next to me as we’re cruzin to Durban, Manzini, Johannesburg, Chokwe, Xai Xai and every place in between, always side by side. In the last week since she has been gone I have felt an empowering vacancy next to me, but the work must go on.
6-Supervision of a small Agri-finance loan program with Chicken broilers
Trinita and Zuculi at their monthly meeting where all see
the money change hands and together they do simple math
The Debits and Credits
Their Journal Entries
We've been supervising a small Agrifinance Loan program that has a portfolio of a little over $1000 and has done much good:
2 and a half months ago two 18,000 Meticais ($600 USD) loans were given to two women to establish a small chicken raising project in which each woman was to raise 200 chicks each, and then after raising the chicks to chickens in her home, would sell them on the local streets. One woman, Trinita, already knew how to raise chickens to sell, and the collateral for her loan was to teach another woman, Lurdes to do the same.
They are now raising their third flock, and have each paid back 5,400 Meticais ($180 USD,17.6% of their loan) in just two months time. (they chose to expedite paying it back, that is why they are paying it back so high).
They have made an average of 2,337 Meticais monthly monthly, ($80 USD, just above the countries minimum wage of $73/month.) Since the start of the project. This number will nearly double when Trinita and Lurdes do not have to make the loan payment.
In 5 months time the loan of 18,000 Meticais will be paid off, and these two women will be making 2.3 times the minimum wage of $73/month. Then Lurdes will have to pay her "interest rate" and teach another woman her newly found trade, and this new woman's business will be financed by the $180 that Lurdes and Trinita have paid back and the $820 outstanding.
Good Business is what will bring these people out of poverty, I am convinced.
7- Build NPAU’s website at www.npau.org
Building this website was a great task and it is still a work in progress, but it is one way to show that there are 1,000 ways for each person who desires to get involved to do good, every Jessie Lacey needs a great guitar tech.
