Opening Eyes
The Site
It is 4:30 p.m. when we arrive to Tamga situated near the Issyk-Kul Lake at the end of a Thursday afternoon. Bakyt Subanov quickly packs up his office files and rushes out onto the sizzling June air, running down the street toward the parking lot situated on Kurortnaia street. There sits our van and Tamga is the last stop on our weeklong trip to various Mercy Corps sites in the northern part of Kyrgyzstan. Bakyt Subanov is not an ordinary person in the Tamga village. He is the manager for The Apple Project run by Mercy Corps in the village and everyone knows him well.
Kyrgyzstan is one of the recent “revolutionary” countries in the former Soviet Union. It is a low-income country with a gross national product per capita of US$400 in 2004 (Atlas). The country of 5.1 million people is landlocked. Mountains, the highest in Central Asia, cover ninety-four percent of its land. The agricultural and industrial production base is small, leaving the country vulnerable to natural disasters and external shocks. Gold, agricultural products, and hydropower make up the bulk of the country’s exports. In 2005, a popular revolt, sparked by widespread allegations of government interference in parliamentary elections in February 2005 and fuelled by poverty and corruption, swept the country’s long-time president from power. The country has made considerable progress in attaining macroeconomic stability in the past few years. Average GDP has grown at about 5 percent a year since 1996, and the high rates of poverty have started to decline since 2000.
The countryside of Kyrgyzstan is glorious. The smooth highway wound through gritty red hills before entering the Issyk-Kul Lake region, a UNESCO zone encompassing the 130-mile-long freshwater lake and the surrounding Tian Shan Mountains. People often call Issyk-Kul the soul of Kyrgyzstan because of its gold beaches and beautiful gorges. In deep gorges, there are blue waterfalls and Tien Shan fir tree’s forests and above all this you can see snow peaks. There are not so many places in the world where you can see mixture of all these things.
But Tamga is a little different. Its access to the beautiful lake is intertwined with an eerie forsaken old Soviet sanatorium used by the Soviets to train Soviet astronauts in the 1980s.
Between the regularly spaced oaks, stood pedestals on which classical marbles – draped and undraped, male and female, stained by weathers and leaf acid and encroaching lichen looking as though they had sprouted dully out of the clinging black-green humus below them – stared out at the passer-by with the faintly pained, heavy, incurious amazement of cattle. The gaze of those marble eyes must have been the first stage in the treatment the austronauts got when they came out to the Sanatorium. It must have been like smearing a cool unguent of time on the hot pustule and dry itch of the soul.
Then, at the end of Kurortnia street, one reached the Sanatorium, which graciously promised peace beyond the white columns.
The village of Tamga is the site of the Apple Project, the success story of Kompanion Financial Group, a subsidiary of Mercy Corps International. The 1990s were a period of transition, from a command economy where social protections were in place to a free market democracy, where the government was providing an adequate level of assistance to those in need. Kyrgyzstan is one of the poorest countries in the region, education is on the decline, infrastructure is falling apart and the national psyche is damaged and replaced by alcoholism. Hopes that the country would be the oft-quoted ‘Island of Democracy’ are disappearing and have been replaced by cynicism. However, perhaps the most damaging factor that brings the society deeper into despair is the almost complete lack of optimism for the future. Tamga is a feast for anyone looking for a representative village on the Issyk-Kul lake. The main challenges facing the Tamga community prior to the start of The Apple Project were: cynicism, lack of business initiative, ineffective local governance and corruption, high unemployment and uncertain agricultural revenues from sales of fruits.
In the spring of 2005, Catherine Brown, a managing director for Mercy Corps Kyrgyzstan met Robin Currey, a Fulbright scholar in ethno-botany from the University of Florida who was working in two small villages on the southern shore of Lake Issyk-Kul in northeastern Kyrgyzstan.
The host group in the Tamga village is a group of two families that collectively manage the office overseeing the Apple Project. There are another 200 household beneficiaries in the group both women and men. Upon the break-up of the Soviet Union, government farms experienced many years of lost production. Most of the orchards have been in a state of decline since the early 1990s.
The purpose of Ms. Currey’s work is to conduct research and implement agronomy-based improvement to the apple orchards of peasant farmers. Although many credit Almaty, Kazakhstan as the genetic birthplace of the apple, Ms. Currey believes the apple tree originated in the area of Kyrgyzstan.
Although not originally a part of Ms. Currey’s thesis, she noticed anecdotally that the village householders had no idea of their monthly cash flow and so she hired several villagers to help her gather monthly household income and expense statistics. What she found from the statistics, as did the household heads, is that they had more revenue than they thought and spent money in a way that was not helping them move forward. Through her work in these small land plot orchards, she learned that the owners had little knowledge of agronomy and were faced with decreasing apple yields, aging and diseased trees, and no market power. With orchards as a lead in, MC and Kompanion have targeted the agricultural sector in Kyrgyzstan for development interventions and market approaches that would improve the economic performance of local farms.
When asked what she found out about how the processing system worked in the village and how it works to get to processors, Ms. Curry responds:
“I can describe the general system of how people sell their production. People themselves take their products to the road to sell to motorists passing by. There is not as much tourism here on the south shore as there is on the north shore. I have gone around the lake asking people similar questions. Some households on the North shore can sell their whole production just on the main road. They can just dump buckets of fruit into the trunks of the tourist’s cars that are coming by. That’s not a real option for folks on the south shore because there are not as many tourists.
But they still go out to the road, and if the village is right next to the main road, it works okay. This village, the village of Tamga, is up a bit from the main road. It’s about a 20-minute walk to the road so you are carrying all of your production down there.
The other system that’s in operation here is that some entrepreneurs will take their production to sell in markets in Karakol, Bishkek, and even Naryn. They bring it to the market themselves and sell it at a slightly higher price. Some of these folks will buy production from their neighbors that they also resell at a higher price. And then the last way that is in operation right now is that these trucks come into the village. Some of them are Kyrgyz- owned trucks, some of them are Kazakh and some of them are Russian trucks. They come into the village unannounced, but everybody knows that now is the time to sell their products and so people will madly start collecting and harvesting their fruits. There are other parts to this system. They don’t exactly know when the next truck is coming, so then an individual is faced with a management decision: do I harvest now, even though my products are not necessarily fully ripened, and try to sell them, or do we leave them on the tree hoping that another truck will come sometime soon and that we will hopefully have a chance to sell them when they are ripe. Or a truck doesn’t come and they are over-ripe and they won’t be able to sell them.”
Strategic Philanthropy
Most local communities anywhere are not completely satisfied with the performance of their local economies. Some want more job opportunities or income growth for all their citizens or for specific groups such as women, minorities or youth. Other communities want manageable economic growth so they can carefully plan their sewers, streets, schools and other parts of the local infrastructure. Some communities are concerned primarily with their environment and quality of life and want economic growth to reflect those concerns. Other communities are faced with economic decline and wish to alter the current trend.
In fact, few communities choose to remain completely passive. What remains different is the method: boosting local economic development can be done in a number of ways. For example, via chambers of commerce, economic development commissions, zoning laws, promotional efforts, government grants and or various financing tools to influence economic change.
And here we reach the heart of the matter: what exactly are the innovative aspects of The Apple Project? What is the big idea? The Mercy Corps project in Tamga, Kyrgyzstan takes on a new approach for community initiatives called strategic philanthropy. The term covers virtually any kind of charitable activity with a connection, however vague or tenuous, between the charitable contribution and Mercy Corps’ business environment.
Philanthropy comes from the heart—as the Greek word connotes, from the love of humankind and social change. It is love or passion that that leads the Mercy Corps Tamga project staff to determine a mission and set ambitious goals for change in its community. But once we determined these goals, mind and muscle come in to design and implement a strategy to achieve them. Strategy is not a substitute for these values but the vehicle for achieving them. A strategy comprises the unromantic, nitty-gritty working out of the means to achieve objectives. It is never an end in itself, but only a tool to aid Mercy Corps in achieving our goals and ensure sustainable development.
Mercy Corps’ strategic approach in Tamga entails improvement in three general business areas for the village community:
- Factor conditions
- Demand conditions
- The context for strategy
Factor conditions are defined as the resources used in the production of goods and services that our clients offer. Conditions that are irrevocably linked to quantity demanded for our micro credit loan products by communities locally and nationwide constitute demand conditions. Context conditions incorporate the overall business environment factors that influence day-to-day operations.
The availability of skilled and motivated employees; the efficiency of the local infrastructure, including roads and telecommunications; the size and sophistication of the local market; the extent of governmental regulations-such contextual variables have always influenced and will continue to influence companies’ ability to compete. Navigating increasingly complex local regulations and reducing approval times for new projects and products are becoming increasingly important to competition.
Strategy is no less important for achieving community-oriented objectives such as providing workforce placements for the chronically unemployed and improving the opportunities for disadvantaged village youth programs.
The concept of strategic philanthropy lead the project team in Tamga to develop the following activities (also illustrated in Figures 1 and 2) related to each one of the three strategic factors (factor conditions, demand conditions and context for strategy):
- Agronomists
Mercy Corps hired two agronomists who train 129 households in Tamga and 71 households in Tosor two times a month. Horticultural skills associated with apple growing and selection of apple variety was underdeveloped among rural populations.
- Loans for households
The Apple Project provides micro-loans to households on an ongoing basis during the harvest season for households to purchase apple seedlings and boxes for apple transportations. Average size of the loan is 100 dollars. The interest rates of the loans are lower than usual to ease the burden.
- Apple Storage
Mercy Corps renovated an old storage facility in Tosor. The storage house currently serves both as a storage place and a collection point between producers and wholesale food processors. The households bring their boxes of apples and store them in the storage facility until buyers and processors purchase them from the storage. The storage facility is wide 7.6 meters width and long 63.9 meters. The storage house is about 650 meters from the main Bishkek – Karakol road.
- Road repair
Mercy Corps paid for repairing the old road leading to the apple storage facility. In the beginning stages of the Apple Project, there were two ways to reach the storage facility: a road through the village and an old storage road. The old road to the storage was almost inaccessible. In addition, the road that goes through the village was ten times longer than the old storage road.
- Information/Marketing center
The Apple Project established a marketing center. The center plays an important role in advertising apples and attracting wholesale buyers and food processors.
Outcomes and learning
Often in the NGO and the Mercy Corps worlds, the missing puzzle piece in the process of learning what kinds of interventions are effective in community intervention is impact evaluation. An impact evaluation documents the extent to which changes in the well being of the target population can be attributed to the particular program (by measuring net changes over time controlling for a number of time-sensitive and contextual factors). An “evaluation gap” in the non-profit world has emerged because governments, official donors and other funding organizations do not demand or produce enough of impact evaluations, and because those that are conducted are frequently of poor quality. To eliminate this evaluation gap in the Apple Project case, Mercy Corps has a quasi-experimental econometric design study of the Apple Project to study: “(1) What percent of net wealth worth comes from apple sales profit; (2) Determine the net program impact on participants prior to and post The Apple Project (TAP) Participation; (3) Determine the net wealth impact of TAP for project participant vs. non-participants”. Successful features of the Apple Program will show statistical significance over time in improving the primary program objective: increasing household wealth.
While the project evaluation is still going on and will end in early 2007, preliminary analysis of the household data suggests that the following factors lead to success (i.e. have had a statistically significant impact on the key variable of interest, i.e. change in household wealth):
Community mobilization – The initial coordinated meetings, organized coalitions and educational activities for households, local institutions, media, and the general public in the two villages energized the entire village and laid out the foundations for all the other components. Without the village mobilization, attempting everything else would have been a moot point.
The Sector – We considered several possible sectors within Kyrgyzstan. The republic possesses a mountainous terrain, which accommodates livestock rearing, the largest sector within agriculture. The principal sector of the economy in Kyrgyzstan is agriculture, which contributes about one-third of the GDP and more than one-third of employment. This led us to believe that the right project would have to be agricultural in nature.
Outside help – We hired two agronomists who acted as Ms. Currey’s assistants and Mercy Corps applied for and won a $50,000 Phoenix Fund grant to implement a pilot project in coordination with Robin’s work. The agronomists’ help was key in additional seminars and educating households about various types of apples.
Timing – The timing coinciding with 2005 made a difference. Between 1991 and 1996, persuaded by foreign advisors, the Kyrgyz introduced radical changes into the management of their agriculture. The most daring of these was the dismantling of the entire system of kolkhoz and sovkhoz farms. They were replaced by a multi-ownership system in which the private sector plays a vital role.
Level of intervention – We selected households rather than individuals as the unit for our project. This was primarily because the main activity was agriculture and agricultural activities in Tamga are mainly a household business.
The overarching vision is consistent with why this kind of investment and development works: by improving Kompanion’s external market environment, it improves overall business conditions, which increases market opportunities and decreases risk. Agricultural credit is inheritantly risky and by using this approach of deep market knowledge (form of agricultural extension service) and community involvement, Kompanion will not only be able to serve this market with appropriate credit and cash management products but improve its own business environment.
As our minivan is about to leave the Tamga village, Bakyt Subanov sighs as he informs us of the challenges surrounding building a new storage place for the Apple project…”We should be able to renovate it this summer, if we find a contractor on time…”, he says.
I do not know if they will get a new storage place this summer or not. But Bakyt Subanov is certainly hopeful. His upbeat attitude about the project, project members and fellow villagers reminded me why I was “there” and what I was supposed to be doing, and how it gives these people something more lofty to aspire to. Having talked to the Tamga project participants, I noticed all were very thankful to Mercy Corps for providing them with credit and educational opportunities, activities at the heart of the strategic philanthropy approach, but what one of them said to us was particularly poignant “This was exactly what we needed and exactly when we needed it!”
All of the conversations made me reflect on the mission of development practitioners and how the Apple project has truly enabled each of the community participants and energized the whole community to take control over their life – an outcome at the core of an effective grassroots approach – to create entrepreneurial, savvy, optimistic and dedicated citizens.
