KOAIBU, a local cooperative linked to finances
and market
Story synopsis
KOAIBU, a local dairy cooperative in the Rubavu District at the foot of
the misty Virunga Volcanic Mountains in the rural northern Rwanda,
used to face difficulties in finding a stable market for their milk.
Despite being located near Rwanda’s top tourism and foreign
exchange earner, the mountain gorillas, the underdeveloped
infrastructure in this area makes for a challenging operating
environment. Like many businesses in Rwanda, KOAIBU was not able
to access loans from financial institutions and had limited knowledge
on best dairy practices and improved technologies.
Photo: Emmanuel Nsekanabo
The woman, pictured above, is one of the 76
women who formed a cooperative to collect and
transport milk in Northern Rwanda
We are very glad that the situation
has tremendously improved. We can
now go a whole month without
rejecting even a single liter of milk,”
says, Mr. Christopher Gahimano, the
Cooperative founding member and
President.
As part of the U.S. Agency for International Development (USAID)’s
Rwanda Dairy Competitiveness Program II (RDCP II), support was
provided to KOAIBU to improve members’ dairy technologies and
best practices, secure a reliable market and build financial backing to
enhance business efficiency and effectiveness. This initiative is part
of a larger USAID RDCP II effort to increase the competitiveness of
Rwandan dairy products in both domestic and regional markets.
Adoption of best practices and technologies
In November 2013, RDCP II provided hands-on training on milk
testing, handling, and quality management, and Seal of Quality milk
testing kits at the KOAIBU Milk Collection Center (MCC) and its seven
milk aggregation points. Prior to receiving training, 120 liters of milk
was being rejected by buyers every day. “We used to register
significant losses before we were given the testing kits and trained
on the economic significance of milk quality management. We are
very glad that the situation has tremendously improved. We can now
go a whole month without rejecting even a single liter of milk,” says,
Mr. Christopher Gahimano, the Cooperative founding member and
President.
Reliable market secured
As a consequence of unreliable buyers who often failed to collect
milk, sales and profits were inconsisent. RDCP II linked the
cooperative with Rubavu Dairy Company Limited, a milk bulk buyer
that supplies the country’s largest dairy processor, Inyange
Industries. The buyer now offers a stable milk market to the
cooperative. As a result, in July 2014, KOAIBU landed a lucrative
contract to supply 2,500 liters of milk every two days. The
cooperative, which collects milk from 149 farmers, now supplies
37,500 liters of milk to Inyange Industries per month. This market
linkage resulted in the milk price per liter increasing from just 80
Rwandan francs (11 cents USD) per liter to 140 francs (20 cents USD)
per liter – a massive 82 percent increase. Because of the increased
price and milk quantity sold, the cooperative is now realizing an
average gross revenue of 5,250,000 Rwf (7, 641 USD) per month.
Building financial muscle
With support from RDCP II, KOIABU was able to identify various
need-points for the cooperative to expand and position itself as a
strategic pillar in dairy development in surrounding communities.
One of the key strategic intervention involved linking the cooperative
to a partnering financial institution – Urwego Opportunity Bank
(UOB). In fact, UOB was one of the banks that was previously trained
by RDCP II to develop financial products for the dairy value chain. In
addition, UOB provided a loan of 26,615,371 Rwanda francs (38,741
USD) to 64 farmers to buy dairy cows. The cows will substantially
increase milk supply to the KOAIBU MCC and contribute to business
growth and farmer livelihoods.
Women at work
In addition, RDCP II linked a women’s cooperative – Tuzikamire
Kabumba – to the KOAIBU MCC. This cooperative, whose core
business is to collect and transport milk, supplies 2,000 liters of milk
per day to KOAIBU. Going forward, RDCP II will procure a tricycle to
help enhance the transportation of milk collected by these women.