Inclusive Business in Africa Part4- Value Addition at Source

This is the last installment of the Practitioner’s workshop in Uganda and so far we have introduced ourselves, looked at support required from others and measured the Impact of Inclusive business in Africa.

This post will consider the notion of Value Addition at source.

This part of the session kicked off with an invitation for  us to consider  what the United Nations has termed as systemic constraints faced by the poor both as consumers and producers

  • Lack of market information- what does the market we are trying to enter want?
  • Ineffective regulatory environments: it can take up to two month or more to acquire a business licence in some parts of Africa. The legal systems don’t always favour the poor, it took our textile producer in Tanzania 2 years to buy a piece of land to expand her business and in the end she handed the whole affair to lawyer to resolve
  • Inadequate physical infrastructure; inadequate transport and telecommunication systems, power cuts etc all make for a near impossible environment within which to conduct a business. How then can the poor become suppliers of large international businesses?
  • Missing knowledge and skills: poor education often means that the poor are excluded from formal employment, how can they take up business opportunities as producers/suppliers?
  • limited access to financial services : poor almost always pay more for everything especially when it comes to borrowing. Most are un bankable (that is development jargon for without a bank account) and a combination of lacking in skills and knowledge means that they cannot present projects at lending institutions to acquire credit.

I recall having that sinking feeling that these are all complex and challenging issues that must be addressed in order to stem poverty and encourage growth in developing countries. However donors, businesses and non government organisations cannot go it alone each party must do what it is good at for better development outcomes. And indeed that businesses must that look beyond the traditional Corporate Social Responsibility (CSR) if we we are to make inroads in as far as resolving poverty is concerned. Non one can deny that VALUE ADDITION at source isn’t a worthwhile undertaking

At the event we learned about an upcoming project by coca cola,  they have taken up a problem faced by fruit growers in East Africa and worked out a way helping them out of poverty without simply handing money out to them. Most fruit grown in East Africa ends up getting spoilt because there is no way of adding value to it or preserving it.

Therefore Coca Cola has teamed up with Techno Serve and the Bill Gates Foundation to provide a solution for the fruit growers. The result is a $15M facility is due to go up in Kampala Uganda and will work with 50,000 fruit farmers who will supply Coca Cola with fruit for their new brand of fruit juices made in Africa. As you can see this model brings together a business (Coca Cola) a Non government organisation (Techno serve) and a Donor ( Bill gates Foundation)  Coca cola is a donor here too as they paid in $5M ) reaching out to farmers to find them a sustainable solution to poverty. This goes beyond the traditional CSR and is the sort of development model that I find desirable

Will we see more models such as that of Coca- cola? This is becoming the desired way of doing things in fact SAB Miller a brewer based in Woking Surrey has adapted a similar model in Uganda and Zambia. The Uganda arm is based on sorghum growers supplying SAB MILLER directly, the Ugandan government gives them tax breaks and the locals end up with a beer they can afford made from ingredients grown in their country and I suspect some how somewhere the government has revenue from this set up!

My colleagues and I believe that value addition at source is a major way by which poverty can be stemmed. This involves the transfer of skills, knowledge and technology to producers/supplies in developing economies to enable them to compete in international markets. There is a urgent need to move away the view that Africa is simply a source of raw materials.

Other issues for consideration

· The image of Africa in particular- the popular press portrays Africa as

o a country, and not as a continent made up different countries with degrees of need

o a place with no good news- wars, famine, disease etc, this means that it becomes a less attractive place for potential investors- I wonder if this is the reason some companies just turn up for raw materials?

o Give Africans the space to tell our stories, involve us in the development agenda

By way of conclusion, it was felt that networking with like minded people and sharing skills and knowledge is a great way forward as it brings together producers, consumers, donors,  practitioners and provides space to discuss ways to address issue of poverty

So over to you folks! Have you got a view?


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