Where does 2Scale work?

Or, better, in what regions and/ or countries is the approach of 2SCALE most relevant (and where not, of course). To start answering this question, I first want to define the 2SCALE approach. Let me give it a try.

2SCALE essentially promotes transformative change in agri-food industries by developing partnerships with private entrepreneurs committed to inclusive business. At the risk of explaining too much, we see inclusive business in the context of 2SCALE as a business that involves low income communities as suppliers of inputs and services, farmers, employees, processors, traders or consumers, in a way that benefits them. There are good reasons to support private companies in Africa (but beyond Africa as well!) to implement an inclusive business agenda: establishing a viable business is often difficult enough, let alone to develop a viable business that nurtures solid relations with farmers and other small-scale enterprises, and supplies nutritious food products to local (BoP) markets. The social benefits of inclusive value chains justify public support. It can also be an efficient form of public support; part of the total investment is privately funded; the private stakeholders, and co-investors, also ensure to a large extent the sustainability of the effort.

The major principles on which the 2SCALE approach rests are the following:

• 1. Championship of companies and (professional vertically integrating) producer organizations committed to inclusive change.
  
• 2. There are no blueprints. Partners work together on jointly identified priority areas (leverage points) to accelerate inclusiveness, while maintaining or even improving competitive edge in a target food industry.
  
• 3. Inclusive value chains require strong local networks at the grassroots level. These networks (agribusiness clusters!) ensure that small-scale farmers have access to adequate inputs and services (finances, information); develop the (collective) capacity to innovate and to negotiate contractual arrangements, or better, to influence their terms of inclusion.  

While many other programs focus on inclusiveness, and inclusive business, with many of them doing excellent work, the 2SCALE program has been its own unique features:

• 2SCALE develops partnerships from the bottom up, progressively bringing all relevant (local, international) stakeholders together to co-invest in competitive and inclusive value chains; hands-on support to facilitate partnership governance, and to design, and pilot-test (support activities for) inclusive business models, is provided through dedicated partnership facilitators.
  
• By fostering agribusiness clusters, farmers develop the networks and capacity to make informed decisions, i.e., farmers do not get “locked” into any one-sided contractual arrangement. Agribusiness clusters are also critical in facilitating innovation and change at the grassroots, for instance through sons and daughters of farmers that specialize in service provision (e.g., mechanization, sprayer services) or local-level value addition (sorting, grading, storage).
  
• By focusing on local (including BoP) markets, we not only optimize impact on food and nutrition security, but maximize also opportunity for value addition and market differentiation, all critical elements in food system transitions. 
  

Back to the question: where?

First, 2SCALE requires, even depends on, at least some sort of private (or cooperative) sector; and companies that are committed to inclusive change: 2SCALE incubates inclusive business, not just any business. There are other programs that provide training and seed money for starting entrepreneurs, often located in Universities and other schools. Countries without much of a private or professional cooperative sector, and regions without comparative advantages that attract private investment require other programs. That is also why we left a country like South Sudan in the early years of 2SCALE. The same often holds for regions that are flooded with NGOs and easy money, as 2SCALE requires championship, and co-investment.

Second, 2SCALE focuses on inclusive business in the agri-food industry; business that in principle can help bring about transformative changes. Obviously, this means that 2SCALE is most relevant in countries where agriculture is still the backbone of the economy and where smallholder farmers still dominate the production (farming) segment. Thomas Reardon and a whole lot of co-authors recently wrote about food system changes (Reardon et al., 2018, Rapid transformation of food systems in developing regions: highlighting the role of agricultural research & innovations. Forthcoming in Agricultural Systems): they make a difference between traditional, transitional and modern systems. In the traditional systems, food industries are characterized by simple, labor-intensive, technologies, the distance between farmers and consumers is generally short, and spot markets link the various segments in the agricultural value chains. In transitional systems, the distances are getting longer, core (i.e., from farmer to consumer) and supplier value chains more complex and more technology-driven; market differentiation and value chain coordination is not yet dominant, but emerging.

I believe that exactly in this economic context of transitional food systems, the 2SCALE approach has the largest value added. This because of its emphasis on value chain coordination, on developing business models to supply affordable nutritious foods to local (including BoP) markets, on market differentiation (e.g., to enable farmers to get premium prices for better quality products) and related opportunities of (local-level) value addition. Transformative changes, while often driven by local and regional business champions in processing and retail segments, are knowledge-intensive, and innovation-hungry. This also justifies the brokering role that 2SCALE plays, to link local champions, and value chain stakeholders, to international (often Dutch!) organizations, specialized in seeds, warehouses, logistics, mechanization, biological pest management, post-harvest and processing technology etc.

2SCALE has been able over the past 5 years to show its relevance in countries like Benin, Ghana, Ethiopia, Mali, and Nigeria; and it will be able to develop inspiring partnerships and examples of inclusive business in Côte d’Ivoire, where we only recently started …

The “where” however does not just concern countries, it also relates to regions and industry choice. in the 1^st phase of the 2SCALE program we have accepted partnership proposals from every company or cooperative with a good story; mistakes aside, most of our partnerships have successfully contributed to changes (and capacity for change, see my blog on Monitoring and Evaluation) in farming systems (productivity, resilience), value chains (co-innovation, coordination/ efficiency, and access to services), and local markets (availability and affordability of nutritious foods). We are grateful for these results. At the same time, “our” partnerships are – partly as a result – scattered all over Africa, with only few of these partnerships driving larger-level (institutional) changes. I believe that we can still gain a little, maybe even more than a little, by developing partnerships that build on the most relevant industry trends and on the comparative advantages of specific regions, that fit national and regional policy priorities, and by focusing on innovative solutions that have maximum potential for scaling and replication.

Something to take on board, when (if) we get the green light for a 2^nd phase.