The elusive quest for defining a business case

If defining and executing a business case was easy, many farmers and traders in developing countries would have become business people. In spite of persistent emphasis on agribusiness from development organizations and academic institutions, business schools are not producing entrepreneurs able to translate agricultural resources from ground zero into reliable jobs, incomes and better lives for poor communities.

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Missing the essence of business

Although those promoting top-down development initiatives have hijacked farming as business, they continue to miss the fact that the main essence of a business is building it around a product or service and a niche market. The more the products the more the business models.  Which means a community that produces more than 50 agricultural commodities should have diverse business enterprises as opposed to copycat businesses where everyone tries to do what everyone else is doing.

If properly thought through, some models can become separate business units, making it easy to assess the viability of each business model. Contrary to views from financial institutions, money is just a catalyst or additive like salt in relish. Without meat or vegetables, salt is useless. The salt owner should cultivate relationships with those who produce meat, potatoes, tomatoes and other products. While some commodities need salt, there is an increasing number of consumers who no longer need salt in their food for different reasons including health issues.

 Confusing a business model with a business plan

The majority of agribusinesses promoted through value chains and the notion of farming as a business lack robust models. Promoters confuse a business plan with a business model yet a plan just assists in executing a model. A model is an attempt to turn your innovation into a profit or your business into economic value. As a reminder, the following pillars are fundamental in building a business model:

  1. The owner – who will supply the product or provide the service.
  1. Value proposition – What need or solution do you want to address? Have you addressed a need? Absence of a value proposition is the main reason developing countries are awash with copycat entrepreneurs who just watch what another person is doing and try to imitate rather than focusing on the customer. A need is a value proposition.  Financial institutions tend to compete in the same sector without taking time to understand loan needs from the customer’s perspective. To what extent is a reasonable interest rate a solution to farmers?  What if loan amount is the real need?  Or the main issues could revolve around unfavorable conditions that insist on collateral that is not in line with the business.

 

  1. Who are you targeting? – Market segmentation. Are you targeting farmers, traders, transporters and other specific actors? Answering these questions will enable you to model in line with business behavior.  Most models, especially financial ones, are locked in bureaucratic and compliance systems that may divert from the essence of the business.  Sometimes it is important to create your own market niche that can inform what products to provide.

 

  1. Distribution channel – What is your distribution channel? How are you going to reach your customers cost-effectively? While some banks have put up brick and mortar structures in agricultural markets in order to establish presence, other channels like mobile money could effectively support the entire value chain. If Point of Sale (POS) machines are missing at other value chain nodes, clients get stuck. Loan disbursement will not be useful if traders cannot transact from rural agro-dealers where they stay.  Neither can loan repayment be smooth.  When clients get money, they want to use it somewhere. That is why it is critical to understand the destination where money will end up being used and main uses.  Grasping the destination enables financial institutions to build on other networks like between farmers and agro-dealers who also know what farmers need. Concentrating on the immediate client is a big mistake, particularly in the current networked economy.

 

  1. Have you identified niche markets? Invest in building relationships or ride on partners who have already built networks. That is how you can build more models and networks.

 

  1. Best use of resources – resource configuration. Should you go and rent a building or work through agents?

 

  1. Core competencies – What are the skills, knowledge, abilities, expertise and attitudes available for supporting all other pillars?

 

  1. Networks – You cannot work in isolation. Which partners are you going to collaborate with?

Concentrate on few benefits and a core message

Key aspects of business modeling include not capturing everyone.  Start with early adopters who can assist you in refining your model as you go.  Do not dream of creating wealth if you are not creating wealth for others. Starting with others provides a sustainable base for your wealth.  From early adopters you are able to refine your strategy. Most business models have too many messages which end up confusing potential clients.  Concentrate on a core message and few benefits.  Should you go the revenue route or the gross margin route (what is your pie)?  Or the operational route (how can we reduce our expenses?) or the working capital route (should we have cash all the time?) or the finance model route (what is our source of finance?).

Appropriate knowledge and skills are important in capturing opportunities offered by existing resources. In the majority of developing countries, value chain actors and government departments like extension services do not have the advanced analytical capabilities needed to get maximum value from data collected on different agricultural commodities for years. As a result collected datasets are not used to help farmers in building robust agribusiness cases.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

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What if big organizations no longer have monopoly on knowledge?

Unprecedented disruption affecting the food retail sector across the globe is also spilling over into the knowledge industry. For some of the world’s biggest knowledge brokering organizations, gone are the days when a logo was enough to lure funding and command brand loyalty. For example, sources of agricultural and financial knowledge have become so diverse and deeply rooted that famous organizations are now fiercely competing with new smaller knowledge brokers in churning out innovative ideas, methods, models and tools.

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As the war for talent intensifies, boundaries between formal and informal knowledge ecosystems are blurring. Small and previously unknown knowledge brokers are challenging assumptions and taking bold action. Rapid changes on the knowledge landscape are forcing big traditional knowledge brokers to either adapt and innovate or lose relevance. Young knowledge seekers are now quickly switching from one brand of knowledge source to another.  Consequently, traditional knowledge brokers that sit on the fence risk getting outcompeted by aggressive, fast-moving and forward-thinking competitors. Government departments are also not immune to these trends as they are contending with patterns of community self-organization that are empowering people to seek and make sense of knowledge from diverse sources.

Brand loyalty no longer an asset

Some of the keen knowledge seekers are young researchers who tend to perceive newer knowledge brands as more innovative, transparent and approachable than traditional knowledge brokers. This young generation dislikes complicated bureaucratic processes which often hinder them from obtaining information from government departments and other traditional sources. New and fast knowledge brokers are launching themselves onto knowledge platforms and connecting directly with millions of knowledge users in ways that further reinforce the idea that traditional knowledge brokers are becoming stale.

In the agriculture sector, fast-moving knowledge brokers now have access to more operational data than ever and can conduct sophisticated analytics to inform knowledge seekers such as farmers and traders in real-time. Where a traditional knowledge broker would take more than a month to conduct a nutrition survey and release critical insights, a dynamic knowledge broker can quickly synthesize evidence before information gets stale and inform traders, farmers, processors and consumers about food demand and supply patterns in time for decision making.

Competing through partnering

Realizing the fact that knowledge is now the most powerful intangible asset, some agricultural processing companies in developing countries are joining forces with dynamic knowledge brokers to rapidly amass consumer data and insights for quick decision-making.  For instance, a number of food processing companies are waking up to the importance of accurate information on different crops – availability, pricing, volumes, competing markets, payment terms and other factors. Since a lot of useful insights are found in competing spheres like open markets, dynamic knowledge brokers assist processing companies in understanding the entire market by availing data which shows where to play, how and if to play.

Food processing companies require an intelligent system that can be used at the hour of need. Such a system can avail data for planning and educating shareholders, most of whom are far removed from the action. The companies also wants to know invisible and intangible facts like the behavior of competitors, producers, competing markets, traders and other dynamics. Besides providing real-time evidence, fast knowledge brokers build relationships between processing companies and farmers, most of whom do not want to move from pillar to post looking for markets.

In addition to making the entire market ecosystem visible to processing companies, knowledge brokers provide interpretations like why prices are behaving the way they are. Without fast-moving knowledge brokers, processing companies risk missing multi-million dollar opportunities. Due to absence of efficient knowledge brokering services in some countries, many companies condemn commodities from farmers and suppliers when the ideal thing will be investing in educating value chain actors. A quick buck mentality often sacrifices long-term profitable relationships.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

How can the predatory nature of development efforts be tamed?

Many rural communities in low income countries are fed up with the predatory nature of external development initiatives. According to the WordWeb dictionary, a predatory animal is one that lives by catching and preying on other animals. Predatory tendencies also include living by or victimizing others for personal gain. When development agencies move into rural areas, local communities often have no reason to suspect that such agencies have a predatory agenda. Suspicions start rising when development agencies continue to recycle the same ideas under different names when rural people who continue to wallow in poverty in spite of millions spent in their name by development agencies.

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Any development agency that has spent more than three years in one community has become a predator by becoming part of the local community furniture. A simple comparison between rural communities that have been working with NGOs for years and those that have not been working with NGOs reveals marked differences in terms of autonomy and self-determination. Very few communities have transformed from subsistence to commercial agriculture through development interventions. Instead, it is communities that rely on their own resources such as remittances that have a sustained presence in agricultural markets. Those supported by NGOs often stop producing surplus commodities for the market as soon as a development project comes to an end. To the extent development agencies use rural communities to get money and not fully develop those communities, such predatory tendencies are worse than money laundering. Unknown to development agencies is that rural people desire the good houses, health and nutrition associated with cities.

Predatory rural finance

Predatory patterns are more prevalent in rural finance initiatives. While it is said funding targeted at improving rural finance has increase, the majority of rural people remain outside formal financial ecosystems.  In fact, the majority of rural dwellers associate banks and other financial institutions with exclusion rather than inclusion. Many smallholder farmers, traders and rural entrepreneurs have nasty experiences with financial institutions. Some of the financial inclusion models have been introduced as contract farming arrangements where farmers receive inputs and other support services instead of real money.

Innocence and decency has proven fatal for most borrowers as they soon realize that private companies contractors working in cahoots with financial institutions and development agencies will have calculated their gains using tools whose underlying parameters are not made visible to farmers.  “When you think you have done what is needed, you are asked to provide more information. After signing off every document, most promises are not met and you are compelled to supplement agricultural activities with your other income sources.” The above lamentation is now common across Africa.

In several conferences and workshops, commitments to avail finance that can catalyze other sources of finance at the local level have been announced and documented for decades. There are even dozens of books and university courses on rural finance but on the ground the situation has remained the same. Local innovations like village savings and lending associations are not adequately used to anchor and stimulate local economies. Instead, such bedrocks of self-reliance and resilience are being cannibalized into mobile money through ICTs. This does not improve financial circulation in the local economy as  most of the money is drawn away to big cities, leaving the local economy resorting to traditional barter systems.

Harnessing multiple sources of evidence

If development agencies and financial institutions shunned predatory tendencies, they would be able to assist local communities in generating more income and better lives from local resources. They would realize that there is a difference between charity and transforming local communities through agriculture. They would also not waste money on policy making because they would know that policies can only go so far because they are tied to political regimes. No matter how brilliant a policy document is, a new political regime would dumb it and creates its own policies. They would learn from experiences in Mozambique where a development agency that thought mobile money was the solution was surprised. A local mobile network operator in Mozambique had even distributed 5000 mobile phones for free to a local community hoping people would automatically embrace mobile technology for financial inclusion. It soon became clear that local people preferred visiting the market and chatting to each other than just communicating through short message service, Whatsapp or calling over the phone.  Many people also changed sim cards frequently such that they could not be reachable.

Evidence should come from different scenarios and not be aligned with decision-makers’ needs. For instance, while millions of dollars have gone towards addressing post-harvest losses in Africa, food losses are said to be as high as 20% in developed countries, mainly in the form of food that is thrown away into bins and not eaten. This means all people, whether in developed or developing countries need a new attitude towards food. Perhaps the whole world does not have a food production problem but a food handling challenge. Solutions may not just be about policies but changing the way everyone looks at food through institutions, financial means and other positive practices. Post-harvest technologies are never enough because new challenges keep emerging.  Every action must be sustainable.

By treating smallholder farmers and rural people as victims or beneficiaries, most development interventions miss local people’s roles as active economic actors in their own right. Rural people are not just waiting for donations but busy analyzing their options, managing risks and making their own decisions even in the face of information asymmetries and unfavorable policies. When ordinary people finally realize that they have been preyed upon by government departments, financial institutions and development agencies, it becomes difficult to get new ideas accepted. There are limits to living by preying on unsuspecting farmers and rural people.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Of premature technology and information overload

Hundreds of mobile applications and technology platforms are launched in Africa almost every day, thanks to the promise of digital-fueled progress. Unfortunately most of the platforms (including those owned by famous mobile network providers) are trotted onto the market prematurely before sufficient pre-testing. There is also confusion between a platform, a portal, a Whatsapp group and a mere website. Instead of generating new insights badly needed for socio-economic development in many African countries, the proliferation of platforms is leading to unbearable information overload.

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Long road to digital maturity

In spite of the hype surrounding platforms, technology hubs and hackathons, these are not yet able to deliver the kind of world-class digital transformation that can fuel productivity and economic growth in developing countries. For instance, digital technology is far from addressing the aspirations, concerns and fears of farmers and entrepreneurs in remote areas. Farmers in marginal communities can only imagine how digital technology can test their soils and water without them taking samples to the capital city where laboratories are concentrated. The same applies to livestock farmers who are still travelling long distances to district or provincial towns in order to get livestock movement permits in the event of selling or buying cattle. Unless digitization addresses some of these practical pain points, it doesn’t matter how many mobile network boosters are set up in rural areas or how many farmers are using mobile phones.

Fragmented value chains

Some of the main reasons for low levels of digitization in African agriculture revolve around the fragmentation of diverse value chains as demonstrated by how individual farmers, traders and other actors focus on discrete commodities. Additional enduring challenges include the long cycles of agricultural experimentation, poor connectivity in rural areas as well as complex ecosystems affected by weather—genetics, nutrition, water availability, soil composition and seasonality, among others. Digital technology development is yet to crack these intricate issues and as a result, the majority of marginalized people are yet to find advantages associated with digital technology. In fact, they remain consumers of external information than producers of local content.

ICTs and power imbalances

Those promoting ICTs are doing do so without considering power imbalances that underpin different socio-cultural contexts and could be increased through ICTs. If farmers and traders become digitally connected, it doesn’t mean knowledge gaps are closed because knowledge is influenced by deeper issues than cannot be addressed by ICTs. For instance, converting information and knowledge depends on people’s capacity to understand, interpret and absorb information that is flowing to them through social media and related processes. Information receivers must possess some cognitive filtering and structuring mechanism to sort out relevant information from irrelevant information. To the extent most farmers and rural people have a deficit in these skills, they accept whatever is sent to them through WhatsApp groups that are mushrooming everywhere.  That is why fake news is now an epidemic.

Need for nuanced reflection on what ICTs can and cannot do

While African governments and development agencies have embraced ICTs and digitization as a catalyst for development, there is need for a more nuanced reflection on the possibility that a focus on ICTs could be preventing broader discussions on authentic local challenges which cannot be solved through ICTs. The increasing faith in ICTs like mobile phones, mobile applications and the internet is an extension of the historical tendency by development agencies to privilege technology transfer as a solution to poverty. Yet in reality, developing countries have several social, political, economic and cultural barriers that cannot be solved by digitization and ICTs. In fact, there is evidence showing that ICTs are exacerbating inequalities in some communities, towns and countries as well between rural and urban areas.

Importance of defining a national digital vision and strategy

It is possible that if deployed properly, digitization can improve the quality of life for citizens by fostering greater civic participation, providing access to information, and offering new tools for health and education. Software entrepreneurs can also present solutions to complex public-policy problems, such as the creation of drought alerts through push notifications on mobile phones. However, successful national digital transformation depends on having a clear vision and defined goals, and then setting priorities. For governments, this means intimately linking digital to public-policy objectives and viewing it as a lever for achieving them. To establish a clear link between its digital vision and public value, each government should consider revisiting the country’s ICT Strategy and aligning it with the country’s current and future needs and priorities. If that is not done, the majority of people will not see the value of ICTs.

 

https://oxfamblogs.org/fp2p/why-we-finally-need-to-face-up-to-information-fatigue-in-2019-and-3-ways-to-do-it/

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

 

Two hopes for African Agriculture and rural development in 2019

The fact that countries which have moved toward middle-income status have started by transforming their agriculture sector is no longer debatable. Unfortunately, out of 54 countries in Africa, Ethiopia is mentioned as the only one on the path to meaningful agricultural transformation. The rest are still running from pillar to post, chasing different prescriptions. During one of the endless talk-shows in Africa, an official from the Africa Development Bank (ADB) recently lamented that his institution had spent more than US$2 billion in the last decade trying to set up agricultural commodity exchanges in Africa with no success. Besides such a scandal resulting from top down approaches, lack of genuine collaboration between government departments, development agencies and the private sector has impeded agricultural transformation in Africa.

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If 2019 is going to open a new progressive page for African agriculture and rural development, eMKambo has the following hopes:

  1. Governments and development agencies will revisit their faith in value chain models

Given the scale of food insecurity and youth unemployment in Africa, it is a myth that these challenges can be addressed through a few value chains. No matter how well-intentioned, the current crop of agribusinesses will not be able to create enough employment for the majority of Africans, even within 100 years. Most contract farming arrangements and inclusive business models across Africa are not just working with a narrow minority of farmers and economic actors. They also tend to be rapacious   initiatives where smallholder farmers are preyed upon in the name of inclusion. In spite of all the rhetoric, there is no way irrigation schemes in a rural areas can represent the success of inclusive agribusiness modelling. Given their location in dry areas, most irrigation schemes have been set up to supplement local food and income needs not to lift people out of poverty, create meaningful employment and drastically change lives.

Beginning 2019, governments and development agencies should wake up to the fact that modern commerce is not responsive enough to the immediate needs of smallholders and rural people. They should carefully and thoughtfully learn from holistic socio-economic approaches used by smallholder farmers and rural economic actors including youths and women. Models that can lift millions of people out of poverty are required. In all developing countries, more than 90 percent of farmers, youths, women and other economic actors are excluded from value chains and inclusive business models.

If formerly employed people can moonlight and engage in side-businesses to try and meet their needs, why should smallholder farmers with even fewer income sources be locked in value chains where they do not get enough to sustain themselves? Like everybody else, smallholder farmers and rural people survive through juggling scarce resources and experimenting with several opportunities ranging from rural and non-rural to agricultural and nonagricultural. They do not see value in being stuck in a few value chains when diverse options exist in informal markets which are increasingly becoming sources of dynamic employment opportunities and nutrition.

  1. Policy makers will harness interdependencies between formal and informal markets

The proliferation of informal markets in all African countries is a clear reflection of the extent to which income diversification is more important for farmers and rural people than locking them in modern value chains which do not provide sufficient income.  Instead of pursuing development agendas that promote  formal and global markets, in 2019 African policy makers should invest in understanding interdependencies between formal and informal markets. That is how they can know the diversity of smallholder livelihoods combining formal and informal, farm and off-farm, urban and rural activities. They will also become aware of the role of traditional institutions, social structures influenced by religion or kinship ties and neighborhood relationships in shaping resilient rural socio-economic norms. Trying to modernize agriculture through commodity exchanges and warehouse receipt systems without taking these issues into account will be a waste of resources.

Rather than condemning informal markets, progressive policy makers should try to understand why the majority of farmers, youths and women are preferring to work at the intersection of formality and informality. It is also important to examine how smallholder farmers and rural people are responding to rapid economic modernization whose effects are being felt at community level through the fluid relationship between villages and towns. Livelihoods are becoming complex combinations involving multiple informal arrangements where youth are seizing opportunities to move in and out of agriculture in response to fluid economic opportunities rather than be chained to value chains.

Development agencies and policy makers will also realize that contrary to the so-called rural-urban divide, there is increasing interweaving between rural and urban economies across Africa knitted with  extensive kinship ties that strengthen rural and urban distribution of opportunities. An important component of the economic mix is the exodus of youths from rural areas to cities and neighboring countries and back. For instance, thousands of youths migrate between Malawi, Zambia, Mozambique, Zimbabwe and South Africa during certain seasons of the year when agricultural production activities are low in their home areas. When policy makers study these patterns they will realize the power of remittances in agricultural and rural development. Instead of easy of doing business incentives targeting foreign investors, they should also be extended to innovative local people who keep rural economies vibrant and resilient.

 

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

Mobile numbers: 0772 137 717/ 0774 430309/ 0771 859000-5/ 0716 331140-5 / 0739 866 343-6