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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 Rl0 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.
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