The story of SHALEM is an inspiring one, and it starts with Ruth herself. Ruth is a real-life example of the social entrepreneur, with emphasis on both words: social and entrepreneur. A few months before the conference Ruth called me, while I was in Nairobi, just to say hello and, as always, to insist that we were not finished with her yet. She stressed once again in just a few minutes how she had developed from the simple aggregator that she was when she found us to the leading business lady she was that day. At the time she was collecting sorghum and occasionally some other commodities from farmers nearby Meru; constantly struggling to make ends meet, fighting to access some working capital, and praying to get a reasonable price for the sorghum from East African Breweries, her main client. Ruth had received some support and was progressing slowly (not so surely though) to develop a network of agents, to organize and train farmers and to get them growing (more) sorghum. Today however, she is a confident entrepreneur, an aggregator and a processor, with a vision and a solid business and investment plan. She has access to various sources of finance, and is related to a strong network of agents, community leaders, and extension staff, who are ensuring SHALEM of a sustainable supply of sorghum, soybeans, green grams, etc.
According to Ruth, 2SCALE played a decisive role in this transition: 1) with support of 2SCALE, SHALEM developed a business plan, to get grip on cash flows. The plan allowed her to implement and grow a financially sustainable local sourcing model, based on cautious service provision, and prudent pre-financing of trusted local agents to purchase and sometimes store the sorghum, until SHALEM would come to collect the produce; SHALEM’s business plan got an award at an international conference, which helped her to gain confidence, and to access working capital; 2) when the Kenyan government decided (October, 2013) to put a levy on sorghum used for the beer industry, Ruth decided to continue buying sorghum. The tax on sorghum inevitably led to a substantial reduction of demand for sorghum from EABL and SHALEM’s cash flow became severely constrained again. While Ruth was again struggling to make ends meet, the simple fact that she felt responsible for “her” farmers turned her into a local hero; 2SCALE supported Ruth in these difficult times, by maintaining farmer field schools, supporting extension, and by linking SHALEM to markets for other produce (beans, sunflower, green grams); 3) better times arrived quickly, when the tax was removed. SHALEM however had already initiated contacts and plans to differentiate away from serving just one big client for its sorghum. New clients entered. But the boldest move, beyond doubt, was to finally invest in her own processing line, to produce nutritious flours based on sorghum, other products (soybeans), and additions.
When I visited her last year, just after the conference, she showed me SHALEM’s new products. They were labeled as Asili (which means “the source” in Swahili) porridge, with different formulae for families and juniors. A market activation was taking place, and we spoke to wholesalers and retailers about the new product. They seemed to like it. One retailer had put the product on a special shelf, near the cashier, to draw the attention of customers. At the market a team of young skilled ladies (I did see a young man, but he turned out to be the DJ) were inviting customers to taste the product, to give information, and to hand-out samples. Customers were appreciative (“well-packaged”, “attractive”, “tasty” …). To me, the smiles of Ruth and Janet, our BoP marketing specialist, were worth a million.
The SHALEM partnership in Kenya shows that making local sourcing work requires careful maneuvering, including smart ways to navigate between the business interests of SHALEM and those of the farmers and the agents; it requires careful design of contextualized service provision models that do not try to “lock” farmers into one target value chain, but allow farmers to grow as well, as business men and women; transparency and communication are critical too, and I could continue for some time. What I want to stress here however is the championship of SHALEM. While we, the 2SCALE team, were enthusiast about Ruth’s dream of BoP marketing from the beginning, she first had to go through a series of intensive and decisive learning moments before effectively starting this business. Her rhythm, one step at a time … it served Ruth, and our partnership, well.
In Ethiopia and Nigeria, the context and issues are quite different. In Ethiopia, we are working with producer cooperatives and unions to grow sorghum as a rotational crop, and also as an alternative source of income. Support therefore focuses on two major intervention areas: the production of sorghum, including access to good seeds; and market development. A linkage with DIAGEO, a large international brewery, was established. DIAGEO is an off-taker, they do not participate in governance meetings or so. In Nigeria, we are working closely together with Nestle, who sources sorghum in the northern part of this country, through a large number of local aggregators. Focus here is on good agricultural and past-harvest handling practices (also to reduce aflatoxin levels), service provision models, business models and skills of the local aggregators, and supply chain logistics.
In both regions there is also interest from local small-scale processors (women) to produce and sell sorghum-based products within the region. In Ethiopia, local processors could target the market of seasonal workers, coming to the region to harvest the sesame; in Nigeria, there are plenty of rural and urban markets for sorghum-based flours. While the two situations are entirely different from the SHALEM case, in terms of region, industry and market opportunities, and business models, we apply many of the lessons that we learnt in Kenya; we also progressively foster local processing and BoP markets.
To conclude, sourcing of raw materials for larger scale enterprises, often seen as the ultimate goal of a value chain development program, can be a starting point for much more; allowing SMEs and producer cooperatives to further nurture the technical and the business skills to start new – complementary – entrepreneurial strategies, with significant impact in local economies.