Over lunch the other day, one of our hosts was happy to talk about the realities of doing business here as a farmer, and to share some family history.

In 1874, his 12-year-old grandfather ran away from his large family in India, contacted a friend working at the docks, and stowed away on a ship going to Mombasa. After arriving in Mombasa, he walked seven days to get to Tanga, and eventually became the postmaster here. He owned camels, and ran the Tanga-Mombasa route as well. He earned & saved enough money to bring his family from India to Tanga.

While our hosts's father also worked as the postmaster here, our host is a teak farmer. He employs people from the local villages to work on the farms. Average wage for a laborer in Tanzania is around 70,000 TZS (Tanzanian Shillings) a month; that equates to $43 US.

Our host provides several benefits for his employees because it makes business sense to do so - he can attract & retain workers, and it reduces theft. He pays 5,000 shillings a month (around $3, the cost of a goat, the weekly cost of the cellphone service we have here, 1/2 the cost of a hotel meal, or 5x the cost of a small bottle of water) to provide healthcare for the worker, his or her wife or husband, and up to three children - after they have worked for 90 days.

If someone requires medical care (dental care is "not so big here"), they would see the medical professional at the local dispensary, then would be referred to the district or regional hospital as needed. Ambulance service in a city (such as Tanga) is transport only, and is likely unavailable outside the cities. Without insurance, it's "pay as you go".

He provides porridge in the mid-morning for them. "Well-fed workers are more productive."

For every thousand trees a worker plants, the worker gets 10 trees for their family. It takes around 15 years for teak trees to mature; many of the workers will wait 3 or 4 years and turn the tree into charcoal to sell. Yes, teak charcoal.

He had tried several payment methods ... daily, weekly, and monthly. Each presented challenges, including the risks of traveling with a lot of cash. Daily was a lot of work to manage. If he paid weekly, the employees would often not show up for work for 2 days after payment because they would be out drinking. If he paid them monthly, they would often not have money for food at the end of the month. So he settled on a hybrid model: he pays them 50% of their wages weekly, and then the other 50% of their wages at the end of the month.

Payment is very technologically advanced. In my previous post, I mention that there are cellphone "shops" in each village where one can recharge (with usage credit) a phone, and transfer money. Employers can usually pay money in at a cellphone outlet, then transfer that (for a fee) to the cellphone of a worker using SMS text messages. The worker can then withdraw that money as cash, or (in turn) transfer (again, for a fee) funds to the hair salon or the fruit & vegetable stand. The cellphone company gets the use of the money while it's held in the accounts. It's called M-Pesa (mobile-money) and you can read more about it here.

Land is often farmed without holding title to it. The government owns the land but will sell a 99-year leasehold (UK model) of the land to an individual, and then expect payment of 4,200 - 5,000 shillings (~$3) a year per acre as a land use tax. The only reason someone would (and would want to go through the Byzantine bureaucracy to) get a title to the land is if they needed to use it as collateral for a loan. Even microfinance loans require some kind of collateral.

Business is good for him, and for farmers like him. Treating employees well seems to be a global constant for getting good results.

#ibmcsc Tanzania