El derecho a la resistencia en la perspectiva

Africa Felix Juice LLP is the first commercial fruit juice concentrate manufacturer in Sierra Leone. Launched in January 2011 it provides a very high volume market to smallholder farmers and villages, providing trucks for pick up and immediate payment of the goods, with juice exported to European markets. It is an example of an inclusive business model involving an agribusiness

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manufacturing SME that promotes the inclusion of fruit farmers in the formal (regulated) agribusiness value chain. The entrepreneur described the origins of the business as follows:

When I got married to a Sierra Leonean living in the UK I began to visit the country. I was really struck by the abundance of fruits that farmers were producing that could not be sold. It is a beautiful country that has suffered from long years of poverty, destruction of infrastructures caused by civil war. With my experiences as an engineer in the oil and gas industry in several European countries and knowledge of the country, I started thinking about the possibility of manufacturing business. I spent a few years [between 2005 and 2008] to develop the business idea for manufacturing start-up. Our market research suggested that high quality juice that is branded ‘Made in Africa’, well packaged and fair trade certified to international standards will sell in European markets.

A manufacturing start-up is a high risk project in post-conflict Sierra Leone for venture financing and technical assistance providers, let alone working with farmers in an environment characterised by a very high proportion of informal sector activities (Ngoasong et al., 2015). Despite these challenges, the realisation that high quality juice that is branded ‘Made in Africa’, well packaged and fair trade certified to international standards is attractive to European buyers (FAO, 2013) attracted international partners with an interest in inclusive development in Africa. Italy-based juice machine manufacturer, Tropical Food Machinery Srl provided a manufacturing plant on favourable terms. A newly-created Special Economic Zone (FIRST STEP Inc) and its parent US- based not-for-profit agency, World Hope International accepted to provide a land tenancy agreement and fair trade certification after judging the start-up as an inclusive investment. The business was also awarded a grant and technical assistance by the Dutch Government under its now defunct Private Sector Investment (PSI) programme. Added to the entrepreneur’s own capital led to the budget of Africa Felix Juice being estimated around US$ 2.5million in 2013 (FAO, 2013).

The business model of Africa Felix Juice is built around contractual relationships with stakeholders within the value chain. It consists of a manufacturing businesses that is supported by a network of contractual relationships with partners (investments, technical assistance and equipment providers), farmers’ cooperative (for sourcing tropical fruits from farmers), third party logistics providers (transporting fruits to the factory) and European firms (sales of Fairtrade certified fruit juice). Various government of Sierra Leone has also been credited for the opportunity spotted by the founders of Africa Felix Juice – a country-wide tree planting project in the 1970s, the refurbishment of the main roads during post-war rebuilding to ease logistics and distribution channels and authorisation of First Steps Inc as the country’s first Special Economic Zone, with the aim of promoting economic growth and development by attracting ethical foreign investment into the country. The tenancy agreement has specific requirements for Africa Felix Juice to ensure that it minimises the risks and costs by developing the capacity of local groups (e.g. farmers’ cooperatives and farmers) to benefits from inclusion the agribusiness value chain.

The business model’s infrastructure of Africa Felix Juice promotes value chain inclusion for fruit farmers. Evidence of inclusion of BoP communities include accessibility, affordability and availability (Prahalad, 2005). Initially, through the PSI development grant, a network of extension workers was set up to work directly with small and large farmers to make decisions on the quality, quantity and timing of delivery of fruits, including farmer development training on productive and sustainable farming techniques (e.g. phasing-out of slash and burn routine, best practice pruning of trees and preservation of the organic nature of the fruits) (FAO, 2013). Subsequently, a partnership agreement signed with World Hope International. Through this agreement, farmers’ cooperatives were provided with technical assistance to achieve Fairtrade certification and improved governance. By working with development partners, Africa Felix Juice is able to overcome the problems associated with the informal sector in Sierra Leone. This helps address the problems of lack of record keeping, non-ownership of bank accounts which make payments difficult for the poor in a country such as Sierra Leone (Ngoasong et al., 2015).

Each certified cooperative that adhere to the governance standards received premium payments made directly to its bank account via mobile banking to improve social impacts on the community (e.g. termination of child labour practices, refurbishment of schools and clinics and

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improving local community relations). Direct financial incentives are also provided to help cooperatives reach farmers located in the most deprived fruit growing regions. In relation to financial inclusion (Allen et al., 2012) this scheme contributes to creating formal accounts that can be used to serve farmers in a transparent manner. Fairtrade certification and adherence to these quality control requirements then qualifies cooperatives for supply contracts with Africa Felix Juice. The supply chain effects resulting from the above linked value chain activities promote social inclusion in that it provide new opportunities and income to thousands of farmers as well as employ a number of factory employees. Farmers now have access to a local buying market for fruits that would have been left to rot, while third party logistics provides have benefited from being able to transport pineapples to a local factory at considerably favourable terms due to high volume contracts. This help overcome the lack of access to markets due to poor logistics and distribution networks (e.g. Porter, 2014).

Case Study 2: UMATI Capital

UMATI Capital is a non-bank financing business that uses proprietary technology to provide financial services microbusinesses within the agricultural value chain in Kenya. It provides microcredits to smaller farmers and suppliers who are otherwise constrained in their ability to borrow sufficient funds from traditional funding sources (e.g. commercial banks). By enabling processors to pay farmers’ invoices early and at better rates using a digital platform (M-Trader), UMATI Capital is an example of an inclusive business that promotes financial inclusion for small dairy farmers.

The co-founders of UMATI Capital saw financial exclusion as an attractive market opportunity right from the start. One of them, is a former senior manager at Citigroup with experiences of financial services in Kenya and Nigeria and was fully aware of the challenges rural farmers face in sourcing financing from traditional banks. The other co-founder had a background in digital technology haven co-founded RUPU, a fast growing e-commerce website in East Africa. This combined financial services and digital business background is at the core of the business model of UMATI Capital, which is built around a digital invoice discounting solution aimed at addressing working capital shortages for small Kenyan firms. One of the co-founders described the business model as follows:

We started by using a digital platform to track the sale of dairy products from rural to urban areas. Based on the data collected we began to provide loans to dairy farmers and processors. We borrow additional funds from institutional investors and high net worth individuals and get it as fast as possible to our customers, what I call faster disbursement … noticing that many insurancefirms are keen on profitable ways of accessing BoP customers, we seized the opportunity to insure the whole value chain of our activities. Our entire notebook is insured. We utilise our insurance policy to solve the issue of lack of collaterals and this attractive to institutional investors. (Interview, Co-Founder).

Examples of investors that have put money into UMATI are ApexPeak, a Singapore-based firm that aims to address cash flow problems for SMEs by buying invoices before they are due (Acquisition International, 2014) and Accion Venture Lab, an ‘initiative dedicated to providing seed capital and management support to innovative financial inclusion start-ups’ (ACCION, 2014). The African Trade Insurance Agency is one company that provides a credit risk cover to UMATI Capital, a plan that offers ‘SME financing without collateral or the high interest rates that accompany unsecured lending’ (ATI, 2014). One of the co-founders explained that these investments and insurance service allows UMATI Capital to ‘partner with upstream value chain processors and buyers to quickly and efficiently provide up-front cash to producers that are typically unable to secure financing from banks and other providers’. One of its major processor client is Eldoville Diaries Ltd, ‘a small family owned enterprise that specializes in the production of dairy products’.

Crucial to the success of UMATI Capital’s business model is the role digital technology play as the infrastructure for managing the entire value chain activities of the firm. The business uses M- Trader, a mobile app that enables suppliers to receive payments through their phones. The digital platform has a tripartite operating system to capture value (extending loans and receiving payments) and is linked to a digital processor that facilitates monitoring and tracking of activities along the entire value chain. The same mobile app enables UMATI Capital to extend loans directly to cow farmers but

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repayments are collected from processors (process collect from farmers through payments for supply of dairy products). All the data is recorded in the digital processor allowing UMATI to track demand and supply, timing of repayments and instances of defaults.

Evidence of social inclusion in the business model of UMATI Capital is the fact that dairy farmers whose payments for milk deliveries come in monthly cycles by offering daily payments on behalf of dairy processors without asking for the types of collaterals that traditional financing agencies would ask. This is related to financial inclusion (Allen et al., 2012) in that although formal bank accounts are not created for each dairy farmer, they are still above to access working capital for their business through the formal (regulated) accounts of UMATI Capital and partner dairy processors such as Eldoville Diaries Ltd. Digital factoring is a new concept in Kenya and education is needed to enable farmers to become investors. Farmers are able to access banking services using digital platforms using prequalification that give each farmer a digital card to facilitate faster disbursement of funds. In terms of market access (Golja and Požega, 2012) daily farmers play their crucial role in economic development in Kenya as suppliers of larger agribusinesses.

Case Study 3: AGRO-HUB

AGRO-HUB, a profit-oriented farmers’ cooperative that aims to develop Cameroon’s agricultural markets by connecting rural farmers to urban consumers of fresh foods. Launched in 2010, it operates as a social enterprise, sourcing agricultural products directly from farmers at point of harvest and selling directly to the general public either through its own local stores (called AGRO- MART) or directly to business customers at their premises (e.g. hotels, restaurants and schools). AGRO-HUB registered as a complex cooperative. Under the OHADA Law, adopted by French- speaking African countries, there are two cooperative models, simplified cooperative (informal non- profit community groups) and complex cooperative (with formal Board of Directors and a General Assembly). As the following quotation from a co-founder illustrates, AGRO-HUB is an example of an inclusive business that promotes inclusion for rural food crop farmers by connecting them to the urban consumer markets for fresh food.

With our background in economics and computer science and growing up in farming communities we always knew that our parents [rural farmers] did not have access to a reliable market and reliable internet. So we started by trialling a digital platform for sending text messages using mobile phones to connect farmers to urban consumers. We now have been able to connect food-stuff farmers to consumers via web, mobile app & SMS and an e- commerce platform for online sales.

A major challenge that the founders of AGRO-HUB had to overcome was the lack of access to affordable financing and potentially high taxes, which are major barriers to facing small businesses in Cameroon (Ngoasong, 2015). After using their own funds to develop and test the business idea, the co-founders approached grant providers and private investors to raise start-up capital. In 2011, it was awarded a grant of £5,700 by Indigo Trust, a UK-based UK based technology-driven grant making foundation, for its innovative ‘networking platform for famers and buyers in Cameroon’ (Crellin, 2013). Indigo Trust also provided technical assistance through a tart-up incubator, ActivSpaces where potential entrepreneurs receive training and mentorship on technology-enabled business creation (Louisevickers, 2012). While at Active-Spaces, additional venture capital investment was raised by pitching to investors at bootcamps. One of the earliest employees of AGRO-HUB was selected for training as a Moremi Fellow by the Moremi Initiative for Women's Leadership in Africa, ‘a pan- African wide program develop and empower young women and girls to take on leadership roles in their communities’ (Moremi Initiative, 2013). During the training she presented the AGRO-HUB project and was awarded a grant which, upon return to Cameroon, was implemented in AGRO-HUB.

In terms of dealing with infrastructure challenges (logistics, modes of transport, poor manufacturing base) (Cho et al., 2008; Porter, 2014), AGRO-HUB started by going into warehousing, providing a warehouse for farmers to put their foodstuff, like a collection centre. In the early years of the business handling the entire value chain from rural farmers to final consumers in urban centres was a major challenge given the nature warehousing and logistical challenges associated with

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transport and local distribution. One of the co-founders described how the firm attempted to address this challenge as follows:

The model did not work initially because it was built around an ICT concept that facilitated information exchange but failed to actually make sales or trades happen – goods and money did not change hands. We realized that a physical player was needed that will facilitate logistics and actually getting involved in direct deliveries. We revised our model such that we now have warehouses where farmers take food to and shops were consumers come to pay and collect their foodstuff. We realized that our transactions do not qualify us to deal with large logistic providers and for small (self-employed) vehicle owners there were challenges with respect for time and no insurance. So we decided to have our own transport vehicles and transport facilities, which is obviously very costly.

The above description is related to the notion that the extent to which a business relies on the ICT infrastructure to manage the entire value chain of its activities affects its performance (Cho et al., 2008). AGRO-HUB have to deal with the additional challenges associated with poorly developed logistics and local distribution channels which constraint the delivery of market offering to end customers (Christ & Ferrantino, 2011). Physical products are picked-up from farmers, transported through warehousing centres and delivered to final consumers, a process involving in-house management of logistics and distribution channels.

As a complex cooperative, AGRO-HUB operates as a profit-making organisations. Any local consumer and farmer can register to become a member by paying a registration fee 10,000 Francs (about US$ 16.60) and receiving a membership card or a membership certificate which allows them to buy and sell food crop through AGRO-HUB website and food store outlets (AGRO-MART) at a discount (compared to non-members). This helps raise social inclusion (Blackburn and Ram, 2006) in that farmers are integrated in the formal agribusiness market mechanism as suppliers and beneficiaries of the production and sales of food crops. A senior board member explained in an informal interview as follows:

This is a good thing for government because it moves small farmers from informal sector to the formal commerce sector. The existing open air markets now are the informal sector, you cannot regulate let alone collect taxes from these informal farmers so in a way we hep the government to actually recover some of those money as taxes.

The above quotation is related to the benefits of raising social inclusion through government’s enterprise policies (Blackburn and Ram, 2006). In this case the government of Cameroon might have signed up to the OHADA Law and created a category of cooperatives that have the potential to operate in a commercial manner. However, as suggested in (Söderbaum and Teal, 2000), it is business models such as the one pursued by AGRO-HUB that will ultimately raise social inclusion. Net profits is divided in three parts: non-taxable patronage funds (shared among members), taxable income paid to private investors as dividends and the rest re-invested as retained profits. In addition to a change from open air market system to a formal regulated market that is clean, nice-looking, fresh and cares about food safety and food security there is a promise of making an excess profit from the transactions at the end of the financial year.