AGAINST THE GRAIN: JIM TEAGUE IN TANZANIA

WAC ASSIGNMENT

SUBMITTED BY: GROUP 3

SECTION: C

MEMBERS: ABHINAV DOOMRA (2018PGP011)

KRITI JINDAL (2018PGP479)

URVASHI SINGH (2018PGP411)

MANU AGRAWAL (2015IPM059)

TANAY BHAGAT (2018PGP095)

REETURAJ BAIDYA (2018PGP296)

LADE ASHWIN SURESH (2018PGP190)

Executive Summary:

Jim Teague currently interning in Tanzania for AgriFund is faced with an ethical dilemma of whether
to disburse loan to KiraFlour, a major client, or not given that the presence of E. Coli bacteria and
products being unlicensed has come to Jim’s notice. If he assumes that the TCA and TCF are corrupt
and gives out the loan, then he is putting the health of thousands of consumers on stake and also
the mission for which AgriFund stands will be violated. On the other hand, not giving the loan will
affect the various stakeholders such as the farmers and employees.

Keeping these developments in mind, Jim may recommend giving a partial loan to the company and
giving the rest of the loan only on the conditions that safety standards, licenses and the necessary
machinery upgradations are carried out. For keeping a check on the same, he recommends Allen to
hire an external agency to carry out the implementation and audit the same.

Problem Statement:

What recommendations should Jim give to AgriFund in light of the TCF and TCA issues surrounding
KiraFlour

Situation Analysis:

Jim Teague is a student at the Harvard Business School who is keen on doing an internship in the
agricultural sector, given his past experience of being raised in a similar setup and the drive to bring
about a societal change. He therefore joins AgriFund, a social impact investment fund which requires
him to explore the investment opportunities in the agro-processing sector in Tanzania. The company
aims to create financial, social and environmental value.

On reaching Tanzania, Jim recognizes Kira funds as its major client out of the four major players in
the market. He gets assimilated in KiraFlour’s work environment and fondly calls the owners “Baba”
and “Mama”. While working, Jim comes across the possibility of contamination of Kirflour’s products
due to the presence of bacteria E.Coli. Furthermore, Jim discovers that many of the KiraFlour’s
products are unlicensed.

Presence of E.Coli is a potential health hazard to the thousand of consumers of Kiraflour. Also, TFC
(Tanzanian Food Commission) has the rights to levy fines or shut down the company due to
unlicensed products.

On one hand, Jim wants to believe Baba’s claim that the TCA and TFC agency are corrupt and is
inclined towards giving them the loan but on the other hand he is also sceptical that if the findings of
the agency is true, AgriFund’s mission would be affected and would result in a bad investment
decision by the company.
Criteria:

Having considered the situation, following criteria can be used to evaluate all the possible options in
depth to come up with the best possible alternative.

1. Extent to which the decision is aligned with AgriFund’s mission

Jim is taking a decision on behalf of AgriFund, a company which believes in investing in triple
bottomline, considering financial, social and environmental ramifications of the investments
it makes. Therefore, the decision should not jeopardize the core values of AgriFund

2. Jim’s professional growth

Since the sole purpose of pursuing an MBA for Jim was to make a leap in his career and
AgriFund offered him an opportunity he always wanted, all the decisions he would make
should be aligned with this objective.

3. Number of people affected

The commodity being manufactured is consumed by a large number of people and is being
supplied by a large number of farmers, the stakeholders that would be affected by this
decision is considerable. Hence, all our decisions should be made considering the greater
good for everyone involved.

4. Jim’s personal relations with Mr. & Mrs. Kiravu

During his internship, he developed an intense relationship with Mr & Mrs Kiravu. This was
to the point that Jim used their car and was treated like their son. He treasured this relation
to a great extent and hence possible solutions should try not compromising this bond.

Alternatives:

1. Partial loan disbursement with certain conditions

Since it is AgriFunds’s major client in Tanzania, this option can be pursued to help maintain
the existing relationship with the client and align it with the company’s mission
The financial risk involved in this option is minimised to a great extent.
2. Don’t disburse the loan
E.coli outbreak affecting hundreds of people who will consume KiraFlour’s products
Non-compliance with TFC licensing standards may lead to levy of fines and may even cause
KiraFlour to shut down.
3. Disburse the loan
KiraFlour is the major client of AgriFund in Tanzania.
Not just limited to the business, it will also affect 450 farmers, two dozen KiraFlour
employees if loan is not provided.

Alternatives’ Evaluation

1. Partial loan disbursement with certain conditions

 a) AgriFund values- which are financial, social and environmental are getting satisfied.
The financial risk involvement is lower as a problem of moral hazard is mitigated. It
will also create a positive social and environmental impact.
b) Jim’s career- In this situation of ethical dilemma, Jim is making a correct choice by
choosing an option that is not only aligned with the company’s interests by mitigating
the default risk involved in a full loan disbursal and the social and commercial personal
values are also fulfilled
c) Jim’s relationship-By choosing this plan, it will not only provide a good business
solution to the client but also help Jim to maintain a long term relationship with Baba
d) Affected people-The livelihood of the farmers and employees of KiraFlour are
dependent on the fundings. So they won’t be affected.

2. Don’t disburse the loan

a) AgriFund values- which are financial, social and environmental are getting satisfied.
The financial risk involvement is least as a problem of moral hazard is mitigated and
there is no problem of bad debt even if KiraFlour shuts down. It will also create a
positive social and environmental impact
b) Jim’s career- In this situation, Jim is making a good decision by not disbursing the loan
to KiraFlour as he is looking at a bigger picture and making a good career decision keeping
in mind the consequences of the same
c) Jim’s relationship-By choosing this plan, Jim’s relationship with Baba will get affected
d) Affected people-The livelihood of the farmers and employees of KiraFlour are
dependent on the fundings. So they will be affected to a large extent

3 Disburse the loan

a) AgriFund values- which are financial, social and environmental are not getting
satisfied. The financial risk involvement is maximum as the company may go out of
business if the TCA and TFC come hard at them. It will also create a negative social and
environmental impact as it puts at risk the lives of hundreds of people
b) Jim’s career- In this situation, Jim’s career is at risk because his decision may have long
term repercussions on his career growth if the company defaults
c) Jim’s relationship-By choosing this plan, it will help Jim to maintain and nurture a long
term relationship with Baba
d) Affected people-The livelihood of the farmers and employees of KiraFlour won’t be
affected

Recommendation

Based on the alternatives and the criteria evaluation of the alternatives, “the partial loan disbursal
with certain conditions” is the best possible feasible alternative
Action Plan:

In order to proceed with the best alternative, we suggest that Jim takes the following course of
action:

As decided, he should first discuss the recommendations he is going to make to AgriFund with Mr.
Kiravu and later inform Allen about the same. Jim should try to explain to Mr. Kiravu about the
seriousness of the issues and why resolving them was important for AgriFund to invest in KiraFlour.
He should recommend Allen to hire a team of independent auditors to ensure that all the conditions
of the loan are being met. Also, some resources should be spared to help KiraFlour obtain licenses
for all. Once all the conditions are met and licenses are obtained, remaining loan amount to be
dispersed.

Contingency Plan:

If Mr. Kiravu does not agree to any of the conditions of the loan, as decided, a tough decision of not
disbursing the loan has to be taken, in order to act in the best interests of AgriFund, Jim and most of
the consumers of KiraFlour. Other options apart from KiraFlour to be evaluated for further
investments in Tanzania.