Murabah is resulting in more and better animals
The demand for Ethiopia’s lowland livestock breed and camels in neighboring countries and the Middle East is well recognized. The large volume of livestock resources and proximity to the export markets gives the country comparative advantages. However, the sector is beset with problems, including inadequate market infrastructure, and lack or absence of capable exporting firms.
Umer Abdi, an animal trader, who took advantage of a loan scheme facilitated by the Pastoralist Areas Resilience Improvement through Market Improvement (PRIME) project and implemented by the Somali Microfinance Institution (SMFI). A few years ago, Umer was a livestock trader who worked on trust basis. He used to buy animals from pastoralists on credit. Not a lot of pastoralists were keen to sell on credit for understandable reasons. Thus, Umer supplied to local markets only; he could barely meet even the demands of the local market. Umer struggled to make ends meet. None of his seven children went to school. He also lived in a small hut.
PRIME realizes that improving the financial capacity of livestock traders and exporters is the key to address the bottlenecks of animal trade. The project worked with SMFI to support the pastoralist communities in the Ethiopian Somali Region by designing a new loan product, known as Muraba, tailored to livestock traders and exporters. Umer is one of the traders who benefitted from the scheme. In October 2013, Umer secured a loan of 200,000 birr. That money changed his life. With the loan, he bought more animals and started to supply to Sheikh Musa, a livestock exporter, who has a contractual agreement with Aljabir, a livestock importer in Dubai, to export 2000 ruminants a month. Umer’s monthly transaction increased a lot, raising his monthly income by about 50 percent. His business is doing so well that life for his family and himself changed a lot. Today, five of his kids are in school; he built more comfortable houses for himself and for one of his wives. The recent change has make Umer optimistic about what the future hold for him. “A few years from now,” he says, “I’ll be a different person. I’m dreaming of helping not only my family but also a lot of small holder pastoralists.”
With this loan, Umer reaches 30-35 pastoralists, who are benefitting from the scheme in several ways. To begin with, now that Umer has a more lucrative and sustainable market, he can afford to pay more to the producers, about 50 percent more depending on the age of the animals and their body weight and look. Secondly, Umer goes to villages to purchase the animals, saving pastoralists a lot of time and money. Thirdly, the loan is encouraging pastoralists to raise more animals. For Somali pastoralists, livestock is the principal source of subsistence providing milk and cash to cover family expenses for food grains and other essential consumer goods. If pastoralists have a reasonably good market, they have the potential to double animal production and productivity, and that is what this scheme is doing. Fourthly, the scheme is contributing to improving animal productivity and quality. At the moment, Umer’s Dubai client has requirements; he is looking for two to three-year old animals that have good body weight.
Umer and other traders are sharing this information with producers, who in turn are working hard to meet market requirements.
Umer is just one of the dozens of livestock traders, who are benefitting from the scheme. With more financial products like Muraba, more livestock producers and traders will enter the market. The scheme will have an important role to play in enhancing animal production and productivity. It is an incentive for small holders to produce more and take a good care of their animals. Ultimately, it will contribute to building resilience among pastoralist communities and meeting Ethiopia’s GTP target in the livestock sector.