January 02, 2024

Turning Tides: The Remarkable Recovery of Tsehay Multi-Purpose Farmers’ Cooperative Union through Technical Assistance

Soy and Oil Seeds

Ethiopia

The Indigenous Cooking Oil partnership in Ethiopia, a collaboration between 2SCALE and Tsehay Multi-Purpose Farmers' Cooperative Union (TMFCU), is more than just about producing cooking oil. It's about impacting lives, communities, and businesses. This partnership's approach of integrating smallholder farmers into a well-functioning value chain not only increases the production and productivity of oilseeds but also provides affordable and healthy cooking oil to the Base of the Pyramid (BoP) consumers.

Founded in 2000 with just 5 cooperatives, TMFCU has witnessed remarkable growth over the years, encompassing 142 member cooperatives spread across 12 districts, engaging a total of 120,450 smallholder farmers, including 27,703 women. However, the journey was not without its share of challenges.

TMFCU faced significant business management hurdles. These included severe working capital shortages that disrupted operations and staff salaries, key management departures that eroded trust among internal and external stakeholders, and plummeting staff morale. Consequentially, the union struggled to cope with the demands of rapid growth. Rather than letting these challenges define their fate, TMFCU and 2SCALE decided to tackle them head-on.

Overcoming the challenges

Facilitated by the partnership, Technical Assistance played a pivotal role in TMFCU's transformation, starting in 2020. This year marked the introduction of team building training sessions, fostering unity and a renewed sense of purpose among the staff. Additionally, a dedicated task force comprising experts from various organizations was established, formulating comprehensive recommendations to tackle TMFCU's challenges.

The impact of these interventions was nothing short of astounding. The union experienced a significant revitalization, with governance meetings involving officials from different authority levels laying the groundwork for recovery.

Yihune Dagnaw, General Manager of TMFCU, recalls,

Stepping into my role as Union Manager at TMFCU in early 2021, I faced a daunting reality- a fledgling union navigating precarious business waters. It was my baptism by fire leading a large social enterprise on the brink. I was much discouraged when staff salaries went unpaid, their faces reflecting mounting anxieties.

The task force's recommendations provided a roadmap for addressing debt relief, internal capitalization, and organizational restructuring. Furthermore, capacity-building initiatives throughout 2021 equipped the union's management and stakeholders with essential skills for effective leadership during times of change, ensuring TMFCU's recovery and readiness for future challenges.

A pivotal moment in this journey was the union engaging in discussions with bank management. This dialogue led to a crucial financial reprieve of the union’s overdue loan of over 54 million Ethiopian Birr (USD 955,420), being granted an extension of two years for its payment period. This significant gesture not only reflected the banks' renewed confidence in the union but also played a vital role in stabilizing its financial footing. Consequently, the union's relationship with the banks improved, leading to increased access to working capital.

Meanwhile, trust, teamwork, and confidence flourished among staff and stakeholders, and the business that once struggled to cover its monthly expenses began to turn a profit. This wasn't just a financial turnaround; it was a revival of hope and opportunity, marking a new chapter in the union's journey toward sustainability and growth.

Amidst the storm, our partnership with 2SCALE emerged as a beacon of support. The comprehensive technical assistance proved game-changing and TMFCU weathered the tempest.

Adds Yihune Dagnaw.

Lessons Learnt and the Path Forward

The story of TMFCU's transformation holds valuable lessons. Partnerships for inclusive businesses are powerful instruments for change, but challenges are inevitable. The ability to facilitate open discussions, adapt to changing needs, and proactively address issues can make all the difference.

Now, the union is committed to increasing its working capital and strengthening the financial foundation to support growth. They aim to professionalize management, elevate business operations to meet evolving demands and strengthen teamwork and collaboration, building a resilient, collaborative team.

As we look ahead, we celebrate the triumphs of TMFCU and anticipate the continued positive impact they will make on Ethiopian agriculture and the lives of countless smallholder farmers and other actors in the value chain. This journey is a reminder that with partnership, dedication, and strategic assistance, even the most challenging situations can be turned around for the betterment of the enterprise.

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