The Rich Returns of Investing

The following is an email exchange between three people: a supporter of
Cheetah named Mark, a friend of his named Larry (name changed since I am
printing without permission) and myself, Ray. I thought the questions that
Larry raised were important and valid and so I wanted to make sure that
everyone had a chance to think about them.

Ray - Larry is good friend - very bright fellow. You'd enjoy meeting him
when you're back in MN.
All the best to you for a wonderful Thanksgiving holiday [a day late but
hope the glow flows over].
Mark
(Larry writes:)
Hi Mark,
Thanks for the introduction to Cheetah! These ideas look creative and valid.
Of course, when we consider investing, rewards must be commensurate with
risks. Being completely clueless as to the risks of doing business in
Tanzania, I did some quick research.
Source: "Doing Business 2009, Comparing Regulation in 181 Economies" The
World Bank
Tanzania
Ease of doing business rank: 127/181 countries (2008 rank was 124/181)
Category rankings:
Starting a business - 109/181
Dealing with construction permits - 172
Employing workers - 140
Registering property - 142
Getting credit - 84
Protecting investors - 88
Paying taxes - 109
Trading across borders - 103
Enforcing contracts - 33
Closing a business - 111
No reforms (positive or negative) in 2007/2008.
Property issues and employment look to be the worst problems. I hope Ray is
prepared to deal with frequent setbacks.
I signed up for the Cheetah newsletter. I'll bet it would be fun to meet Ray
at some point.
Enjoy the weekend!
Larry

(Ray writes:)
Mark and Larry,
Thanks for thinking of us! I will look forward to meeting you in January
when I am in the states.
Today I drove deep into the southern highlands of Tanzania working on our
project with poor tea farmers. I 'suffered the setbacks' of a flat tire and
then broke the leaf springs on the pickup. We found someone to start repair,
trusting them with adequate cash for spare parts and the keys to the truck.
We then hitched a ride another half hour deeper into the countryside with no
return ride arranged.
This is one of the most beautiful places on earth and I literally felt
almost a spiritual ecstasy at times. The emerald green mountains covered
with tea and eucalyptus forests can take your breath away. The people are
likewise beautiful. The area is so fertile that the trees reach 75 or more
feet in 5 only years. They grow so fast that they often lack bark and the
trunks look like giant bamboo.
I met with the tea processor and found a way to securitize our loan for
trucks to the tea cooperative farmers. Mkonge Tea Block Farmers is a coop of
523 families making about $1 per day, among the poorest people on earth.
Net, net, we expect to quadruple their income.
I'm familiar with the indexes you sent and they don't show how hard these
people work - it would take a small book to describe it. The way to change
these indexes will come more from engaging with people than from condemning
their failures.
You're right of course. Reward must be commensurate with risk. And we
provide the opportunity to dramatically change the lives of thousands with a
small investment. That's a high reward to risk ratio, indeed. Even better,
we have a reasonable and justified expectation that we will be repaid.
We give our investors the ability to diversify their portfolio so that part
of it is working to change the lives of the poorest of the poor. The type of
returns we offer are materially modest only to the investor. The net impact
is, well, how do you measure the value of changed lives?
By the way, I returned safely to my room, quite late but in good spirits
with a healthy appetite. If you appreciate tea, I will bring you some when
we meet in January. It's some of the very finest in the world.
Peace,
Ray
Postscript: (Please see the other blog on tea farmers - you can find it by
keyword 'tea' on the left.) Since we last met these farmers, there need has
actually grown more acute. They have worked hard to grow more tea, creating
their own nursery, expanding their fields, weeding carefully, etc. These
people work so hard! But the trucks are so far behind. Now they have been
restricted to having their tea collected only three days a week - so their
production is cut in half. We were there on a day when they were allowed to
pick. Yet we saw that at every collection center, they were waiting for
trucks to arrive. This degrades the quality of the tea and reduces their
income further. We must act to help these people who are working so hard!
And the investment we make is securitized by the tea factory. How could we
not do this?

Kibaigwa Market

Hi everyone,

Although some of these pictures may be less than interesting to you, there is a team of guys working on engineering problems around grain handling. I'm trying to get a couple of them to write a blog, as well. They are great guys. Hey Matt and Bob, how is it going?

If you would want to join the team please send your interest to info@cheetahdevelopment.org

At the bottom is an explanation of what you are seeing here...

A scale for filling bags. See the weights on the right?

The cleaning line that cleans maize, removing dirt, cobs, dust and rocks.

Filling the cleaning machine from the top.

The French maker of the cleaning machine.

A closer view of the cleaning machine. It cleans the corn and then drops into the trough. From the trough it is lifted and dropped into the bag scale on the right. The long pipe going left to right carries the debris out of the building.

An actual page from the day's maize sales.

Lot's of debris in the corn! See all the pieces of cobs? That because the remove the kernels by beating the cobs with a stick.

The equipment distributor. - The other side of Africa!

If the corn is not dry enough, it is spread out here in the sun.

The inside of the market with the really heavy bags (200-250 pounds).

The chalkboard with the previous day's prices.

The maker of the scales.

The loading dock for buyers. Notice these are not bulk trucks!

On November 15th I visited the Kibaigwa market. It's famous across the country for setting up a real commodities market. It serves maize (and a few other grains) farmers in a region near Dodoma, the capital of Tanzania.

When farmers and buyers enter they see a blackboard with the previous day's prices. Then there is a small negotiation room where farmers and buyers can meet. Buyers look at the product and bid prices. There is security for the money exchange - all cash. Then farmers unload, optionally it is cleaned (only 30% opt to clean thinking they are somehow paid for debris but buyers pay less for uncleaned maize), then it is bagged and loaded on trucks. There is a weigh bridge to track inputs and outputs. Current price for maize is
for 377 shillings per kg. (1330 shillings per US$) A typical farmer in Tanzania may only sell a few bags as income for the whole year. By coming to this market they get about twice the going rate because there is no
middleman. On this day it was about 45,000 shillings per day. But that's less than US $35. Some of the better small village farmers might have 15 bags to sell. That's still less than $1 per day income.

Notice that grain is not handled in bulk. Everything is bagged. The bags are so heavy - over 200 pounds - that it takes three really muscular guys to lift one and then one guy carries it on his neck! I wanted to take a picture but that often offends people here.

This is great to see developing in Tanzania because it is connecting farmers to markets.

Catching Up

Hello Everyone!

My apologies for not posting blogs for a while... We have been incredibly busy. So much is happening and Cheetah Development is no longer a newborn kitten.

Here’s a quick update catching you up until the current trip to Tanzania. In one page we will cover three months…

First of all our agricultural strategies are developing sophistication. This is the heart of our work in Tanzania and it needs to be: over 70% of people are subsistence farmers. Perhaps close to 80% of the country is involved in agriculture in one way or another. President Kikwete has introduced a development plan called “Kilimo Kwanza” or Agriculture First. This approach has been well supported by the Prime Minister Pinda, as well. Cheetah’s work is aligned with the national development approach and therefore we are not swimming upstream. Better, it appears we will have some local help, including: red tape reduction, supportive policies, incentives, and some financing.

In previous blogs we have written at some length about farming and food management. That writing was continued and is posted in a single document on our website at the following link: (will post soon!) Please take a look at it. We would appreciate any comments you have.

There is a much shorter read that in two pages describes the essence or our strategy. That is at this link: www.cheetahdevelopment.org/cheetah/docs/agricultural_investment_strategy.pdf You won’t get any of the local Tanzanian color but it summarizes our approach.

Second, we selected the projects we will support first and they are really exciting. (Check them out here: www.cheetahdevelopment.org/cheetah/docs/projects/project_cutsheets.pdf ) Our estimate of their impact is that a $25 FEEDS A CHILD FOR LIFE! Want to know how? Read our description here: www.cheetahdevelopment.org/cheetah/docs/white_paper_the_orphanage_dilemma.pdf In the coming weeks we will provide more information about each of these projects through our newsletter. Don’t subscribe? Sign up here: http://www.cheetahdevelopment.org/

Third, we have been in the USA for a few months. We have been focused on raising support, finding technical help, and getting our investment papers developed. It’s amazing: you can diversify your investments or saving to put part of it into helping the poorest of the poor! Some of your money can work for you and some can work to help others. This is a great opportunity; don’t miss it. Please go to our investor section here: www.cheetahdevelopment.org/cheetah/pages/invest.shtml

Now we are back in Tanzania working. Already many lives have been changed. We are teaching symposiums on business to hundreds of students, consulting with dozens of small businesses and helping them to find ways forward, and meeting with villages and showing them the opportunity in their midst. Much of poverty begins in the mind. As one local pastor said, “You are unlocking minds.” We will write of our time here in coming blogs.

Our deep gratitude to the many people who are faithfully supporting this work!

Peace,

Ray