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Saturday, 29 December 2007

Cash and carry


African-made cloth bags are economic benefit for villagers while keeping plastic shopping bags out of US landfills

Four years ago, Todd Petitt first learned about the Rwandan genocide from a documentary.

“It really bothered me that I hadn’t know about it when it was happening,” he said.

But once he learned about the tragedy, which occurred in 1994, he couldn’t forget it.

He and his wife began studying Africa, which sparked an overwhelming urge to help poverty stricken countries. They wanted do more than just discuss the issues, which “is so easy to do,” Todd said.

They couldn’t find an established nonprofit that fit their needs, so they created their own nonprofit called Africa Bags in January 2007. The organization employs citizens of Malawi to create reusable, cloth shopping bags which are sold in the United States.

The benefits of the project are twofold. It provides sustainable, economic opportunity for Malawi and helps eliminate plastic waste in the United States. On average, the United States uses 100 billion bags annually, according to the Wall Street Journal.

“We wanted to do something that had a use, other than jewelry, and that helped the environment,” Holly said.

Malawi

The Petitts were interested in working in Rwanda or Sudan, but they decided on a more stable country where most of the population speaks English. Malawi was suggested to them by family friends Helen and Marty Wilson of Loveland.

The Wilsons have been volunteering in Malawi with Marion Medical Mission for four years. The mission is a nonprofit that installs shallow wells to provide drinking water. The Wilsons recommended Malawi to the Petitts, because they know it is a nation that needs economic opportunity.

“Malawi is in a difficult circumstance, because they have very few natural resources and a high population density,” Marty said. “There is very little tourism. They haven’t had the money to develop game parks like Tanzania or Botswana.”

Malawi is slightly smaller than Pennsylvania and has 13.6 million people. The median age of citizens is 16.7, the average life expectancy is 43 years, and AIDS affects 14.2 percent of the population, according to the CIA World Fact Book.

“The villages are absolutely elementary,” Helen said. “They just live in a very small room, with usually just a dirt floor. When we say they have nothing, they have nothing. What Holly and Todd have done for them is just enormous.”

The average person lives on 50 cents a day, according to the Petitts.

Getting Started

The Petitts traveled to Malawi on a 10-day trip to set up their project in May 2007.

“It was nerve-racking,” Holly said. “We had never been there, and we didn’t know anyone. What could take a day here could take one to weeks there.”

The Wilsons put the Petitts in contact with the McGills, missionaries in Malawi, who gave them a place to stay and helped them make contacts.

By 7 a.m. on the Pettits’ first day, representatives of the tribes that would be making the Africa Bags were already waiting to talk to them.

“They were ecstatic,” Holly said.

Africa Bags are made in the villages of Kamweko, Viweme, Nkhata Bay and Chintheche. The village chiefs oversee the employment of Africa Bags.

For supplies, the Petitts purchased cotton cloth at the one remaining textile mill in Malawi. They also they bought Singer treadle sewing machines, because the villages have no electricity. The sewing machines had to be balanced on top of a bus to transport them from Lilongwe, Malawi’s capital, to the villages.

Once the supplies were purchased, the Petitts went into each village and trained them to use the supplies, which was a long process.

“It took half an hour to teach them how to use the measuring tapes,” said Todd, who explained that they tried to measure cloth diagonally.

“They were so proud and meticulous about the project,” Holly said.

Todd returned to Africa in July 2007 to make sure the operations were running smoothly. While there, he was surprised at the rate of progress, which was a big relief.

“They are making the bags so fast,” Todd said.

In July, he also got to see the first stages of production of a 1,000-square-foot community center that will go up in Kamweko, funded by Africa Bags supporters. The chief of Kamweko donated the space, and the citizens are building all the bricks by hand.

Finished Product

For each bag that is sewn, the workers are paid $1 up front, and they are paid the remaining profit after the bag is purchased, minus shipping costs, which are the biggest challenge in the operation.

“We want to make sure we give 100 percent of it back to the people who need it most,” Holly said. “We’re not in it to make money, but to help people.

The Petitts estimate that they have spent $15,000 out-of-pocket to start the nonprofit.

Africa Bags are on sale at the Wilson’s church, Mountain View Presbyterian, and at Diana’s Drop-off Laundry in Loveland, which is owned by Holly’s aunt, Diana Schmick.

Schmick supports Africa Bags because “It’s a nonprofit that is helping people help themselves. It’s one way of giving and getting back at the same time.”

The Petitts have also begun to sell woodcarvings, art and jewelry from artisans in Malawi.

Lasting Effects

Most Malawians are subsistence farmers, so some of the profits will be used to purchase fertilizer.

Also, some money will be put towards mosquito nets to protect people from illnesses.

When the Malawians are paid, the Petitts have been amazed at their spirit of sharing.

“If they get money, they are helping each other,” Todd said.

“There is always a pressing need that is more important than a personal need,” Holly added.

The Petitts hope that the spirit behind the project is passing on to their own children.

“It’s teaching them an invaluable lesson to help others,” Holly said. “What we spend on a $5 Starbucks would feed someone there for a week.”

City scores a goal with Africa kits


THEY have had to make do with a handful of strips between 1700 youngsters. But soon, young footballers in one of Africa's poorest countries will be fully kitted out – thanks to an Edinburgh appeal which has resulted in around 1000 strips being collected across the city.

The kits will soon be sent to Malawi,where a special project is giving children a chance to play and learn together.

The community initiative allows youngsters to develop their football, social and life skills, and offers support and education to those affected by HIV and Aids, tuberculosis and malaria.

The campaign was started earlier this year by former Edinburgh marketing manager Bob Stewart, who visited the country and saw first-hand the lack of resources.

The city council backed the campaign and posters were put up in all Edinburgh Leisure facilities urging users to hand in team strips and replica shirts.

Local football clubs including Royston Rangers Boys Club, Hutchison Vale and a youth team from Haddington, were among those to donate strips.

The city's sport and leisure facilities donated around 100 Scottish athletics running shorts and vests.

Hibs donated the first team's old training kit and ex-stock from the shop, while Celtic also provided jerseys. In all, 1000 football tops, 750 pairs of shorts and 400 pairs of socks have been collected in Edinburgh, as well as footballs, trainers, cones, bibs, boots and kitbags.

City sports leader Deidre Brock said: "The appeal has been a great success, with donations coming from individuals and organisations from all over the city.

"The kits will not only put a smile on the faces of lots
of young people, but they will be used in health promotion as part of the Play Soccer Malawi campaign, which is helping to save lives."

Dr Stewart, 54, first visited Malawi last year after Penicuik High School – where his wife Mary is principal guidance teacher – struck up a partnership with a school in the village of Thyolo.

The Play Soccer Malawi campaign for youngsters aged five to 14 is run by the country's football association, but despite huge demand, it struggles for funding.

Dr Stewart said: "I never thought we would get such a response – it's incredible. I have e-mailed the guys in Malawi and they can't believe it.

"When I went to Malawi, I couldn't believe the noise level when I saw the kids – but they had only seven strips between them.

"I felt we had to do something, so I wrote to various groups, and I was delighted when the council agreed to take this up."

Help Africa by investing in it

IS 2008 the time to invest in Africa? Jon Maguire, founder of Cru Investment Management, believes it is. Cru has pumped £2m of its own cash into Malawi since Maguire decided last year to take on the chronic problems of sub-Saharan Africa with a new approach: investment.

After visiting a subsistence village in Malawi, he set up a charitable feeding programme to save 250 villagers from starvation, but then went back and negotiated with the village chief.

"I realised that Malawi does not actually have an economy," Maguire says. "The private sector was so small as not to be noticed and, without an economy, how could she ever grow to be independent of donor aid?"

The deal with the chief was a 10-year lease for Cru on 120 hectares of land, at a cost of £250 per hectare, to create a farm big enough to justify investment and management.

Africa Invest now has four farms, and is already directly or indirectly supporting 80,000 villagers, with plans to increase employment to 10,000 on three times the country's standard wage.

It wants to acquire 20,000 hectares of land in the first half of 2008, and to build two plants to process 6000 tonnes of paprika from smallholders, who account for 80% of Malawi's agricultural output, in its own "outgrower" schemes.

Africa Invest is cutting out the middlemen, who inflate a factory gate price for herbs in Malawi of £1.62 a kilo into a UK selling price of £162 a kilo - a 10,000% mark up en route. It is investing to position itself as a major exporter of chillies and herbs to the UK, where it hopes to raise shopper awareness about the value chain and to secure 10% of the UK selling price for the farmers, which he says would lead to "an explosion of profits in Malawi".

Maguire says the key to the business model is that returns on capital are forecast to be 35% to 45% next year.

But Cru has a twin objective of helping to alleviate poverty, and Maguire says investment works better than aid.

"When I first went to these rural areas, the people and their villages had no money, some had never even seen money. Now it's different, money empowers them and this has significant knock-on effects on the local wider economy. If it can work in Malawi it can work across sub-Saharan Africa it is the discipline of investment that turns things round, rather than the largesse of donations."

Africa Invest is hoping to raise £30m from investors over the next few months, half of it from a special retail product for small investors with a minimum £3000 investment. Only 30% of the capital will be invested directly in the fund, the remainder used to provide a seven-year capital guarantee. The fund will be open for 100% direct investment by high net worth individuals, charities and institutions.

For those prepared to take on all the risk, there is now New Star's Heart of Africa Fund, launched last month, which aims to raise £100m. However, unlike Africa Invest, which charges small investors no initial charge or annual management charge, the New Star fund has a 1.75% annual fee, other charges on top, and a 20% levy if the fund outperforms its benchmark in any quarter.

Investec, manager of some longer-established Africa funds, says the continent offers "attractive returns at significantly lower risk levels than are commonly perceived".

Fund managers Chris Derksen and Roelof Horne say major advances in sovereign governance are propelling faster economic growth and improving the business environment. The estimated average growth of the African continent (excluding South Africa) reached 5.8% in 2006, up from 4.9% in 2005. Half the countries in Africa grew their GDP per capita by more than 3% per annum (real) in 2006. Established stock markets now exist in more than 21 African countries, including Malawi.

But the managers admit: "Most African capital markets are still in the frontier market stage of development - young, small and illiquid, even by emerging market standards ... The obvious risks are exchange rate volatility, political risk, country-specific risk, cyclicality and tradeability. Given these risks, it is important to realise that one can achieve significant diversification by investing on a pan-African basis.

"The African markets are characterised by a low correlation with each other and to other emerging and developed markets."

Duncan Glassey, founder of financial planner Wealthflow, comments: "The decision to invest at the country level should be based on a thorough evaluation of the local financial and legal structure and evidence of a commitment to freely competitive securities markets, fair treatment of both local and foreign shareholders, trustworthy accounting practices, and modern procedures for processing securities trades.

"Here, African countries have some way to go ... I believe that Africa is some years from attracting mainstream interest from wealth managers."