Livestock Cooperative In Ethiopia Doubles Its Capital Reaching One Million Birr

The UNCDF team conducted a monitoring visit to the Davah Livestock cooperative in the Ararso woreda. This cooperative has its origins in nine livestock income generating groups established with UNCDF support during the first year of the UN Joint Programme on Public Service Delivery and Accelerated Development in the Developing Regional States. The groups received training in basic business skills, value chain analysis and later benefitted from UNCDF startup grants (US$ 2,000) and technical assistance delivered in collaboration with the regional and woreda implementing partners, including the offices for women’s affairs and agriculture. Each group opened a bank account and started making monthly savings to accumulate enough initial capital to launch their chosen business. At the same time, UNCDF assisted the groups in establishing relations with other partners through MoUs and in setting up their management structures by designing specific by-laws. The groups were assisted in market analysis and assessment to decide on a business that would make most profit given the existing market conditions and local comparative advantages.

During the second year of the programme, the income generating groups decided to unite into one cooperative, which they called Davah (“Moon” in the Somali language). This cooperative brought together 42 women and 21 men who decided to start a livestock business to fatten goats and sheep. Ali His Mahamud, chairman of this cooperative explains it as follows: “The objective of our unity as one cooperative is to increase profitability because we all come together and make a big investment while at the same time only a few members of the cooperative are engaged in buying and selling livestock, which reduces cost.”

The initial capital of the cooperative came 30% from the members’ savings and 70% from the grants provided by UNCDF. The cooperative bought 896 animals (sheep and goats) and resold them profitably after fattening, increasing its net capital almost twice to ETB 730,500 (US$ 37,000). Initially, the members decided not to distribute any profit until their capital reaches ETB one million (more than US$ 50,000). Now the cooperative is eventually on target with ETB one million on its account through a combination of profitable business management and prudent saving techniques. One third of this amount has been used to buy another 204 animals for fattening while 14% was paid as dividends and each family received ETB 2,222 (about US$ 130).

The amounts may not look very impressive but this is a lot of money for rural Ethiopia where the average monthly household income is about US$ 30. “The cooperative is making changes in our lives. It helps us to buy books and clothes for our children, to get better food and make other improvements in our lives,” says Ali His Mahamud.