Every week, Harm Edens of BNR radio interviews internal and external experts on how and why a bank is aiming to build a better world. In this week’s podcast, he speaks to Pim Mol of the Rabobank Foundation.
Listen to the podcast now (in Dutch) or read on for our synopsis in English.
The Rabobank Foundation started in 1974. Its primary goal has always been to help farmers in developing countries achieve economic self-sufficiency, though its methods have evolved. Pim Mol has headed the Foundation since February 2018.
“The traditional picture of a Rabobank Foundation customer is of a poor farmer with a single cow,” says Mol. “But most of the people we work with now are agri-entrepreneurs, consulting their mobile phones to check the best time to sow or harvest.
Co-op to co-op
“The co-operative structure is in Rabobank’s DNA and many of our customers are agricultural co-ops, producing anything from cotton to cocoa to coffee. Or they might be credit unions, because their customers are often the smallholder farmers we want to reach.
“Since I joined the Foundation in February, I’ve felt a growing sense of admiration for the work it does, for everything it has set up, for the items it manages to put on the political agenda, and for the risks it is willing to take in order to try new approaches.
“My role at the Foundation is all about connecting people in order to fulfill Rabobank’s mission of Building a better world together.
I’ve spent the first few months seeing the Foundation’s work with my own eyes and I found it a humbling experience.
“In Tanzania, we flew over the countryside in a small airplane to see areas hard-hit by erosion. The extent of the problem was clearly visible from the air. A third of the earth’s land surface is arable land, and a third of that arable land is threatened by erosion. There is real cause for alarm and we need to do more than we do now. A lot of farmland is devoted to monocultures. Taking a more integrated approach to agriculture would help, combining crops with animals and wooded areas to encourage biodiversity and slow erosion.
“A third of arable land is threatened by erosion”- Pim Mol, Rabobank Foundation
New ways of working
“I think it’s time for the Foundation to evolve into an impact hub, so that we can play a pioneering role in the Growing a better world together mission. That way we can help develop new business models, lending methods, and ways of working together. We already initiate a lot of projects, but we still use foundation methods, not those of an impact hub.
“We now have 5 million customers, but there are another 45 million farmers living in similar circumstances. And our influence should be more multifaceted. That way, we could impact the UN Sustainable Development Goals in many more ways. To achieve that, it’s important that we work with other parties rather than trying to go it alone.
“For instance, our Rural Fund works with Cordaid. A coalition between a bank and an NGO may seem unusual, but it adds value because we can share networks and knowledge, as well as money in the form of loans and investments. In fact, I want to work with a lot more NGOs.
Loans on realistic terms
“Rabobank Foundation has about EUR 16 million [USD 19 million] to spend each year, but it’s actually more, because much of it comes back to us as repayments on loans. We hardly ever make donations. Instead, we lend money on what I call realistic terms to SACCOs [Savings and Credit Cooperative Organizations] and agricultural co-operatives. They in turn make micro loans to farmers. The farmers may need as little as EUR 50 to EUR 100 to buy seeds or a cow in order to advance.
“Our kitty is made up of 0.5% of Rabobank’s annual profits, donations from customers who want a social return on their money, and donations from over 5,000 bank employees who give EUR 4 per month to the Foundation from their wages, which the bank matches.
Time to move forward
“I’ve been invited for coffee by many people inside and outside the bank since I started. They want to hear more about the Foundation’s work because our work is such a hot topic. The time is clearly right for us to take what we already have forward and accelerate.
“If we are going to be an impact hub, we need to be small and agile enough to be able to raise certain topics and bring different players together. In fact, I would like things to move forward more quickly, for us to reach the 45 million farmers whom we haven’t yet. And I hope we will have more funds at our disposal so we can achieve even more than we do now.
A social brand
“The Foundation is becoming a sort of social brand for Rabobank, helping to demonstrate the positive role it plays in society. But we don’t work in isolation. A nice example is a project the Foundation started 10 years ago for customers who couldn’t read or write. That educational role is now part of our customer service, helping customers look after their financial administration more easily.
“In Kenya we work with Apollo, an agtech firm that sends loan terms to customers’ smart phones rather than by post. The customer also receives information on his phone about when to sow his crops, about soil analysis, etc, either in the form of texts or by voice mail if he cannot read.
“95% of our projects has succeeded”- Pim Mol, Rabobank Foundation
Banking the unbankable
“The Foundation is present in 23 countries, funding mainly agrifood and agtech projects. Fully 95% of the projects in which we invest has succeeded. Now I want us to start working with an exit strategy always clearly in mind.
“Our role is to help bring unbankable agricultural organizations and co-operatives to a place where they are eligible for regular loans. If we work with impact KPIs from the start of a project, we’ll be able to find more partners willing to invest with us for five to 10 years before withdrawing. We have partner banks in all of the countries we work, and we should work even harder to make an organization independent, while the partner bank could take over the financing of projects more quickly than they do now.
“I hope to stay with the Foundation for the foreseeable future and make a real contribution, to fighting erosion for example. What more can we do to ensure all 50 million farmers have enough land to cultivate in future? It’s going to take time, but what I saw in Tanzania gave me a powerful sense of urgency.”