Andrew Rugasira: Using Coffee to Transform Uganda

Andrew Rugasira was born into a wealthy entrepreneurial family in Uganda. Educated in London with degrees in law and economics, he decided to return home instead of living comfortably in the U.K. With abrupt changes taking place in the school chalk business in which his father had succeeded, Andrew looked to new investments in Uganda’s Rwenzori Mountains, where he spent two full years studying the plight of the coffee farmers. Uganda is a rich coffee-growing nation, but Ugandans do not own a single processing plant. Rather, international brokers buy raw coffee beans from middle men and ship the beans overseas for processing, only to send it back to Uganda as finished product at premium prices with the profit going to the international concerns. Economists term this process “extraction.” The local middle men made small cash advances to each farmer, which the farmers quickly consumed. As a result, the farmers became obligated to sell their crops at a price that did not allow for the farmers to get past the survival level. Andrew decided to change all that. Trekking the length and width of the rich coffee-growing region in western Uganda, he organized over 14,000 farmers into 280 co-ops and guaranteed them the best price for their product. Instead of shipping the coffee bean overseas, Andrew set up the processing system to clean, roast, grind and package the coffee in Uganda, creating more jobs for less cost and returning 50 percent of the profit to the farmers in the form of grants for projects that the local co-ops could choose. As the co-ops generate sustaining income, the grants make available start-up capital for interventions in healthcare, education and community development. Most businesses have only one bottom line: the shareholders. Andrew’s has four: the farmers, the communities in which the farmers live, Andrew’s employees, and the shareholders of Andrew’s business. His employees get 10 percent of the company profits in addition to their salaries. This means that the shareholders (in this case, Andrew’s family) get to keep only 40 percent since the farmers and their communities are slated to receive 50 percent through community grants. Andrew uses a GPS system to track the condition of the coffee fields, in order to help the farmers improve their yields. He also monitors their social evolution through a management information system by which he can tell how many who lived in thatch-roofed huts last year now dwell under sheet-metal roofing, and how many were able to buy their first bicycle or upgrade to a motorcycle. And it is happening! Andrew is now seeking to resolve another flaw in the system. In the old days, the coffee brokers paid the farmers in cash, which was subsequently and rapidly squandered. One of the most challenging propositions for people who live from hand to mouth one day to the next is the concept of saving money. To people who for generations barely subsisted from one crop to the next, the notion of setting money aside is as foreign as rain was to Noah’s audience before the Flood. Andrew tried as best as he was able to communicate the idea, but to no avail. Finally, realizing that he was dealing with a mindset that blinded them to the notion of saving, he decided to demonstrate it so that once it became tangible it would be more easily assimilated. To that end he plans to pay the growers another 10 percent above what he is paying them (which would come out of his 40 percent), but he will deposit the increase in a savings account in their name in their own village bank. Andrew has already developed banks in six areas of the region. A solar-powered ATM system will employ a “smart card” supplied to each farmer onto which the payment for the crop will be loaded. The village banks will then make these funds available as loans to their fellow farmers at a reasonable rate, with a large portion of the net profit going to the investing farmers. By reasonable rate, Andrew quotes 15 percent a year, as opposed to the prevailing rate of 35 percent to 45 percent. By doing this, not only would the farmers benefit, but also many people who presently are being systematically subjugated by such atrocious rates will instead be empowered in the form of affordable loans and in the process will have witnessed a solid example of a fair practices business system. Andrew’s coffee enterprise (named Good African Coffee), while still in its beginning stages, is already an exciting and inspiring example of what can happen. Ed Silvoso Taken from Transformation —ch. 13 "Really Good News to the Poor"