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Home > Featured Stories > Engaging Society > April 2009 > Planting a Future in PeruPlanting a Future in Peru
This is the first time I had the opportunity to interact with the people in the area. They were so genuinely happy and grateful that we were there. We (learned) that little things can have a great impact.
MBA student Shelly Sabhikhi
Karen Bell (center) and other Jenkins MBA students from NC State planted trees and installed water spigots on a recent service trip to Peru.
By Anna Rzewnicki, College of Management
Intensive and humbling. That is how a group of 15 MBA students in the Jenkins Graduate School of Management at North Carolina State University College of Management describe their 2009 spring break experience.
They planned a trip that took them from Raleigh, N.C., a city known for its abundant trees and parkways, to a fledgling barren desert community on the coast of Peru, where they hand-planted over 100 trees to create a protective windbreak and mark the path of the community’s primary roadway.
Tree-planting was the physically intensive part of their experience. The students also had an intensive immersion in the culture and economic development needs of a group of people that is building a new community with minimal resources.
As part of their pre-planning for the trip, the students had raised funds that enabled people in their destination community – the shantytown of Clementina, located in a desert outside Trujillo, Peru – to install four new water spigots. The water spigots provided the residents with more equitable access to water for household uses and to water the new trees.
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Karen Bell |
Fundraising, which also covered the cost of the trees, was just one part of the students’ pre-trip activities. Karen Bell and other MBA students in the group worked with Marianne Bradford, associate professor of accounting in the College of Management and one of the MBA students’ instructors, to get all the details pulled together. That included not only making travel arrangements but also developing and getting curriculum approval for what had evolved into a three credit hour short course with real-world and academic deliverables.
The idea of the short course grew out of the involvement of several of the students, including Bell, in the college’s chapter of Net Impact, a global non-profit organization whose mission is to make a positive impact on society by growing and strengthening a community of leaders who use business to improve the world.
“The Net Impact team started a dialogue earlier in the academic year about how we, as an organization, could make an impact on a global scale,” Bell said. The group decided to partner with Sequoia Helping Hands, a non-profit agency based in Durham whose board secretary is also a Jenkins MBA student. Net Impact committed to help raise funds for water tanks that would be installed in a rural village in Kenya served by the non-profit agency.
“Out of this initiative, we discovered that other students were interested in taking this project a step further, to conduct a corporate social responsibility (CSR) focused trip abroad,” Bell said. When travel restrictions took a trip to Kenya off the table, the group continued its fundraising but decided to explore other options for a CSR trip.
Bradford suggested the project in Peru, as she had contacts with individuals serving the desert community and knew that the community and a microfinance institute (MFI) in the area could benefit from the MBA students’ energy and business skills.
In the past week, the students reported on the business side of their experience through written papers and oral presentations. Attending some of the presentations were Richard and Norma Sawyer and George and Claudia Wilson, who provided insight about the region.
Wilson, currently professor of horticulture at NC State, served for more than a decade in Peru, including in a leadership role for an NC State University Research, Extension and Education project there funded by the U.S. Agency for International Development (USAID). Sawyer is adjunct professor of international programs in NC State’s Department of Horticulture and director general emeritus of the International Potato Center in Lima, Peru.
Sawyer explained that Peru’s high mountain ranges have divided the country into very dramatically different societal and economic sectors. The geography, he said, varies from “monstrously high mountains with year-round glaciers to jungles. The terrain separates the people and it’s going to take time before you have the roads built that will bring them together.”
Thomas Pash, one of the students in the short course, reflected on the regional differences when commenting on the trip.
“I have been telling people that (this trip) was one of the best experiences of my life,” Pash said. “The fact that we got to see Lima, Trujillo, and Cusco all on the same trip was amazing as all three regions are completely different from one another,” he said.
“Lima is a big city, almost like an American city. Trujillo definitely is not like anything I’ve seen. It is an extremely poor city even in its nicer areas. On the outskirts of Trujillo is where we did our work and it was amazing to me how these people live, how happy they are, and how they don’t miss the things that we take for granted,” he said.
“We also visited Cusco and Macchu Picchu, which again is a totally different culture than the rest of the country. They have parades nearly every day in Cusco and mountain culture is very prevalent,” he said.
Expanding Options
Pash also spoke about what he gained from his team’s work with Sinergia, the MFI that provided small business loans to residents of Clementina.
“The biggest thing I took away from the MFI came when we interviewed a woman who runs a bakery out of her home. We asked her how her life has changed since acquiring microloans from Sinergia. She said that she has been motivated to learn new baking skills and learn more about how to run a business to make sure she uses the money wisely. This shows me that the organization is actually making a positive social impact on the community,” Pash said.
Other students reported on the immediate economic gains resulting from their microloans. The baker that Pash mentioned reported that her $100 microloan enabled her to buy additional pans, allowing her to increase the variety and quantity of bakery products she produces for sale. Another woman, who ran a café, was able to grow her business from serving seven plates a day to 24. Yet another purchased a sewing machine that she used to sew automotive seat cushion covers that her husband installs in buses.
One of the student teams reported on the role of women in the community and its informal economy. Because the men typically travel to find work, the women run the household, raise their children, help other family members, and run small businesses that serve the day-to-day needs of the community. To become more self-sufficient, the women needed greater access to business tools, education, capital, and skills-building, the MBA team members said.
This could be gained by expanding beyond their local economy through participation in the fair trade market. Fair trade organizations, such as FINCA Peru Exports, strive to combat poverty by providing an export market channel for the work of artisans in developing communities around the globe. The community residents need to identify what kinds of products they could develop, drawing on their local skills and material resources.
The students met with representatives of the Ten Thousand Villages store in Raleigh’s Cameron Village shopping center and with one of its corporate leaders. They learned that it had a need for alpaca wool garments and carved stone products. This might become an outlet for the Clementina residents if they chose to participate in fair trade.
Another student team suggested taking a popular Peruvian liquor, Pisco, into the corporate marketplace. The Pisco Sour is a popular cocktail in Peru and the student team members said they felt that, if introduced through Peruvian restaurants in the United States, it could become as popular as Margarita cocktails. Also, because the product is hand-crafted following traditional methods, it could potentially create a new product line for one of the four major distributors of premium liquors.
For the uninitiated, Pisco is a brandy or aquardiente distilled from the white muscat grapes grown in two main regions of South America: the area around Pisco, Peru, and in central Chili. It has been produced in the region for centuries, stemming back to when the region was under one Spanish viceroyalty. Pisco produced in the two countries has different alcohol content and sweetness levels, and both Chili and Peru claim national ownership of the drink.
A third student team researched options for MFIs like Synergia to better manage risk related to exchange rate volatility. As long as transactions are handled in the local currency, they are shielded form exchange rate volatility, they reported. MFIs like Synergia, whose seed funds came from donations with no repayment required, are also shielded because they do not need to exchange currency to repay funding sources in another country.
However, if the seed funds were a loan, the MFI would need to take steps to protect itself against fluctuations in the exchange rate between its local currency and the currency of the lender. Steps they could take include matching assets to liabilities, hedging, and maintaining a cash reserve.
Dollarization – the use of the U.S. dollar instead of the local currency – could also increase Synergia’s exposure to risk, but working only with U.S. dollars would mitigate the impact of exchange rate volatility.
Creating a Community out of a Desert
The shantytown of Clementina has been evolving for about two years. The residents are living on land that is owned by the government, but if they sustain their community for five years, including establishing a board of directors and electing a mayor, they can apply to the government for permanent community status. They already have the board of directors, a woman mayor, and an MFI that is helping them develop a sustainable economy. The new grove of trees and additional water access contributed to the community’s infrastructure.
“I didn’t realize how large an impression (planting the trees) would have on me, said Carol Nuygen, one of the MBA students. “I was excited about doing the business plan with Sinergia and working with the microfinancing model. But the whole part of incorporating the trees into the community development, working hand-in-hand with the Peruvians and getting to meet the children … I was very surprised by their appreciation for the trees. I think, in North Carolina, we take trees for granted.” She noted that the desert soil is very fertile and with the water access, the trees are expected to thrive.
Shelly Sabhikhi, another of the students, said that she had traveled to developing countries before, but ‘‘this is the first time I had the opportunity to interact with the people in the area. They were so genuinely happy and grateful that we were there. We (learned) that little things can have a great impact.”
“This was a great learning experience, from the initial planning to seeing it all come to fruition,” Bell said. “It also was a very humbling experience. The people we met were very gracious, pleasant and kind to our group. And, as future leaders, it is important to understand how other people view the world and business. It was good to step outside of the business practices that we were used to and become entrenched in another community’s way of doing business, something that is so different from what we’re used to.”
