World Vision Award for Development Initiative
John Meadley Rural Investment Overseas
As a university lecturer in Swaziland in 1968-72, John Meadley decided that small and medium-sized private firms involved in agriculture could be the focus of economic growth in developing countries. Initiatives by public agencies received aid money but did not seem effective. The private sector, mainly smaller companies, was neglected.
Ten years later he got his chance to start remedying that neglect, after managing Minster Agriculture - working mainly on public-sector projects in over 40 countries - and then helping establish the Agricultural Genetics Company in Britain. In 1982-3 he travelled the world, talking to aid agencies and business men. Many of the agencies felt they could work only with governments, and they had no confidence in private firms. The business men saw developing countries as unprofitable to work in.
Using his own savings, he set up Rural Investment Overseas Ltd (RlO) to attempt to mobilise and blend public aid and private funds to support promising enterprises. He got an opening in Thailand. A civil servant there challenged him to rid Thai maize of aflatoxin which reduced its price.
This harmful substance is produced by fungus in moist grain. Thai maize was moist because the million farmers growing it sell to merchants in distant Bangkok. British aid financed a trial by RIO and Britain's Natural Resources Institute to show that drying the grain immediately after harvesting solved the problem. RIO persuaded an international trader, Continental Grain, to offer a better price for low-aflatoxin maize, thus making it worthwhile to invest in dryers.
A difficulty remained, however, and this led to RIO's and Thailand's first venture-capital project. Many people needing grain-dryers could not borrow the money to buy them. To meet this and other financing needs of small companies, RIO promoted the Thai Agribusiness Venture Capital Company in which several international organisations committed themselves to invest $1 million each.
Unfortunately some insisted on American-style venture capital management and this led to disputes, delays and finally the dropping of the scheme, leaving RIO with no payment for four years' work and a net loss of £189,000 for 1989.
RIO was turned round by severe belt-tightening, by a determination to succeed and by additional equity from a private development company, EDESA (Economic Development of Equatorial and Southern Africa), which now holds just over half RIO's shares.
Despite the setback, venture capital companies now operate in Thailand, at least one based on RIO's work and ideas. RIO itself, encouraged by USAID, turned its attention to Ghana and Tanzania where it has promoted venture capital companies now making their first investments. The Commonwealth Development Corporation is manager and major investor for both. Other money has come from international sources and local business men, making a total fund for Ghana of $2 million which will rise to $5 million.
The Ghana Venture Capital Company offers loans of $100,000 to $500,000. For smaller loans, RIO has set up an enterprise fund on behalf of the European Community.
Britain's Overseas Development Administration commissioned RIO to help a Ghanaian agency which assists small companies. The scheme includes technical help from British executive Service Overseas (BESO). One Ghanaian company bought equipment to retread tyres but could not get it to work. A BESO volunteer helped solve the problem.
Through a joint venture company involving DEG of Germany and EDESA, RlO manages farms. In 1989 the owners of an abandoned farm in Ghana sought its help in growing pineapples. It has pioneered the export of the fruit by sea instead of air, and is now managing a second Ghanaian fruit farm. In Tanzania it was appointed to manage the first substantial commercial pineapple farm and saw the number of employees there rise to 200. Co-op Farms, a group of farmers and business men on the Tanzanian coast, is getting help from RIO to invest in a plant to process cashew nuts.
John Meadley is helping the Agricultural Development Bank of Trinidad establish a fund to help farm students set up farming-based enterprises. He has just returned from assessing the potential for a development bank in Palestine. He has been interested in farming and the land since living in Derbyshire when his father was principal of Cliff, a Methodist college. He took a science degree at Durham and a doctorate at Wye College (where he also wrote a musical). He points out that RlO aims at enterprises in the formal sector which employ several people, have outgrown family finance and face problems of money, management, markets and technology.
"There is a dynamism in these small companies which, with modest assistance, could rapidly develop, meet local needs and generate jobs."
RIO has two farm managers and five other full-time staff: John Leech, formerly with CDC who plays a key role in the venture capital work, Malcolm Cutler, who heads the farm management, Sylvia Dunkley who runs the office, John Meadley and his wife Fiona Kam who works on the finance side. Meadley highlights the part played by the whole team. He says by keeping a company small you can be actively involved in field work. If you let it get too big, you become an administrator.