USAID/Guinea: What is Monetization?

Monetization is the selling of agricultural commodities to obtain local currency for use in U.S. assistance programs. The U.S. Government, through USAID, provides food assistance overseas under the Agricultural Trade Development and Assistance Act of 1954 (Public Law 480), or what’s commonly referred to as "the Farm Bill." The bill is an "Emergency and Private Assistance" program to provide agricultural commodities to foreign countries on behalf of the United States to: address famine or other urgent or extraordinary relief requirements; combat malnutrition, especially in children and mothers; carry out activities that attempt to alleviate the causes of hunger, mortality and morbidity; promote economic and community development; promote sound environmental practices; and carry out feeding programs.

The program basically allows the U.S. Government to buy food commodities from U.S. farmers, and "monetize" or sell them overseas in appropriate markets in developing countries. Congress votes in a PL 480 Title II budget every year, and the USDA goes and buys the food from farmers.

The proceeds from the overseas sale are then used by USAID-sponsored NGOs to carry out their specific development activities in developing countries. The NGOs can either distribute the food directly to food insecure populations, monetize, or sell the food. The proceeds are then used to undertake development assistance programs.

How Does Monetization Work in Guinea?

The Government of Guinea made an agreement in 1990 with USAID and Africare to accept the donation of PL 480 commodities from the U.S. and provide them to Africare, OICI, and ADRA, through Africare. The latter is responsible for importing the food aid, taking care of all commodity costs and freight charges, and making sure the commodity is delivered into the port in the capital of Conakry.

Africare has chosen to import vegetable oil for several reasons: 1) Guinea does not produce vegetable oil locally (it only produces palm oil); 2) there is a high demand, and there are often shortages of vegetable oil in the Guinean market; and 3) the sale of U.S. vegetable oil covers only about 10% of the market, not a significant enough supply to adversely affect local commercial suppliers.

Africare then conducts an open sale of the vegetable oil. Successful bidders must meet a number of criteria. First, they must meet or exceed the predetermined U.S. Government benchmark price. They must also demonstrate the ability to pay for the commodities. Lastly, they must show that they can correctly store, distribute and sell the vegetable oil. All of the funds generated from the local sale of all donated commodities are used solely to support the development aid programs of U.S. NGOs Africare, OICI, and ADRA in Guinea.

Where Does the Money Go?

Local food aid monetization supports food security assistance programs intended for the most food-insecure zones in the Republic of Guinea. Local populations in these zones are assisted by Africare, OICI and ADRA in improving health and nutrition practices, agricultural production, natural resources management, and in increasing incomes through micro-enterprise projects. Here’s a summary of what these NGOs are doing:

AFRICARE

In Guinea since 1989, Africare is presently working in 31 districts and 146 villages in the Dinguiraye prefecture of Upper Guinea. Africare chose to work in this region because the rate of acute malnutrition among children under five years old is estimated to be 17%, the highest rate in the country. The goals of the program are to improve household food security and health in rural communities. Africare's HEARTH nutritional education program for mothers with small children was the first in West Africa and was so successful that the Government of Guinea has included this activity in its national health program. By improving mother and child nutritional status, mortality is reduced, and family productivity is increased.

The Africare program is also helping rural agricultural communities reduce post-harvest losses, and to improve the value and conservation of food crops destined for household consumption. Africare foresees carrying out PL 480 activities in the Dinguiraye prefecture of Guinea through 2005.

OICI

OICI, working in Guinea since 1986, specializes in vocational training for Guineans. With an elected Board of Directors who represent diverse segments of Guinean society, the indigenous NGO’s goal is to encourage greater economic growth through increased participation in the private sector.OICI started its PL 480 Title II program Tolo in the Mamou prefecture in 1996, where it manages a farm, and trains local farmers in livestock production techniques and small enterprise development.

The farm currently produces eggs and chickens for sale in the commercial sector. The farm also works in cooperation with the Guinean National School of Agriculture and Animal Husbandry (ENAF), providing students with hand-on experience aimed at learning to improve agricultural productivity. The project includes a micro-enterprise component targeting women, in which clients also benefit from health education classes.

Men taking part in an OICI agricultural extension project.

In 1997, with funding from Food for Peace, OICI began the Profitable Agriculture and Village Extension (PAVE) project to improve food security in the Mamou region. In 1999, along with the Guinean Government, OICI aided in the resettlement of displaced people in the Garafiri zone when a large hydroelectric dam was constructed.

To date, OICI counts over 5,000 direct beneficiaries, including 3,150 (63%) women, who have received training in agriculture, animal husbandry, and health and nutrition. The PAVE project also includes an in-kind agricultural credit with a 99.5% repayment rate.

ADRA

ADRA has been working in Guinea since 1987, and has implemented numerous relief and development programs throughout the four agro-climatic regions of the country. A faith-based organization, ADRA promotes a holistic development of the individual in collaboration with its partners such as donors, and the clientele communities and individuals whom ADRA treats with outmost respect. With P.L. 480 title II funding, ADRA is addressing the problem of food availability and access through a five-year food security initiative in all the 12 sub-prefectures of Siguiri in Upper Guinea, a region where 60% of the population is reported to live below the poverty line of $226 per year.

Under this project, ADRA aims to improve household food security for approximately 35,000 beneficiaries through improved agricultural technologies and practices in such key areas as land preparation, use of improved seeds, post-harvest loss reduction, soil fertility renewal, and the promotion of animal traction.

In addition, ADRA is providing technical assistance and credit to 3,875 farmer-households to buy improved seeds, simple tools and oxen and ploughs. About 3,375 women are also being provided with training and credit to undertake gardening as well as petty trading activities with the aim of enhancing their incomes as well as access to food. All the 7,250 clients are being given functional literacy in view of the high prevalence of adult illiteracy (91.5%)in the prefecture.

With funding from USAID, ADRA is also implementing a 4-year Child Survival project in 6 out of the 12 sub-prefectures of Siguiri. This project is intervening in the areas of malaria, nutrition, vaccination, safe motherhood and family planning. Carefully designed synergistic programs have been put into place to enhance optimum benefits from the food security and child survival projects. Through literacy training, agriculture technical assistance, and credit, ADRA is using monetization funds to assist the population of the Siguiri Prefecture to improve the acute food insecurity in the region.