Industrializing East Africa through Co-operatives ...
Transcript of Industrializing East Africa through Co-operatives ...
Industrializing East Africa through Co-operativesConference on Harnessing East Africa’s Industrial Potential
29th Feb. – 2nd March 2016Laico Regency Hotel - Nairobi
Unlocking Human Enterprise Potential to realize the industrialization dream
Speaker: Prof. Henry M. Bwisa (PhD)
[email protected]; www.professorbwisa.com
Full professor of entrepreneurship @ Jomo Kenyatta
University of Agriculture and Technology (JKUAT)
Chairman: African Agribusiness Incubation Network (AAIN)
Director- Sorghum Value Chain Development Corporation
(SVCDC)
TZ2025
R2020
UG2040
K2030
THIS CONFERENCE IS
ABOUT EAST AFRICA’S
INDUSTRIALIZATION AND
EVERY EAST AFRICAN
COUNTRY HAS A VISION
B2025
INTRODUCTION
Source: http://www.coolgeography.co.uk
NIC= Newly Industrialized CountryLEDC= Less Developed Country
My focus5th coop principle
But wait a minute... What is industrialization? SEVERAL DEFINITIONS…
slideplayer.com
Let’s read between the lines.Large scale introduction is NOT NECESSARILY large scale industries. Mahatma Gandhi warned ... poor countries will not develop via mass production but via production by the masses. I need not tell India’s story of SMEs
www.haikudeck.com
Industrialization
occurs when industry
is introduced on a
large scale to a region
or country www.vocabulary.com/dictionary
This conference is saying that the cooperative way is a good path to East Africa’s industrialization. This, in some academic jargon, will read...
e.a.ind. = ƒ(coops) East Africa’s industrialization is a function of cooperatives
We are saying.... cooperatives are
east Africa's important......
....variables in the process of
industrialization
Coops CAN
Coops CAN
Independent
variables
Dependent
variable
Intermediary
variable
Some facts about east AfricaCountry Rural
population(%)
Contribution of agriculture to GDP (%)
Contribution of agriculture to employment (%)
Burundi 73 30 90
Kenya 75 24 75
Rwanda 72 35 80
Tanzania 69 25 75
Uganda 84 23 60
East Africa 75 27 76
Message = we can ignore the rural and
agriculture sector at our own peril. Rural
and agric coops are a necessity for E.Africa
• To unlock the human enterprise (coop principle 5) potential to realize the industrialization dream for east Africa we cannot afford to sideline the rural scene.
The hope for
rural
transformation:
A
rejuvenating
cooperative
movement in
Rwanda
Espérance
Mukarugwiza
The cooperative
model as an
alternative
strategy for rural
development : a
policy analysis
case study of
Kenya and
Tanzania
Awuor Dondo
We need more of this type of talk
Some benchmarks for the power of rural cooperatives: Milk Vita Coop model Bangladesh, Anand Model in India, kibbutz coops in Israel
Message: we need vertical diversification of agriculture and the cooperative sector has that ability
Cooperative participation largely mean agriculture-led
industrialization
NOW
AND
NEEDED
•Lets talk a little about cooperatives and challenges they face
IF YOU KEEP DOING WHAT YOU HAVE ALWAYS DONE YOU WILL KEEP GETTING WHAT YOU HAVE ALWAYS GOT
• Collective action has been the logical cooperative strategy to achieve the integration of smallholders into dynamic markets. Small scale farmers have been organized into producer organizations to increase their bargaining power vis-à-vis other actors in the value chain.
• Challenge 1:
Value addition to the
context in which farmer
Cooperatives operate
• Observation confirms that many coops have impressed conventional features of entrepreneurs. Innovations are observed e.g. product innovations, process innovations etc
• But cooperatives also require the capacity to build new partnerships and to make strategic use of networks and relations with other stakeholders.
• I am aware that such a transition towards a more entrepreneurial mindset is also conditioned by the socio-political context. For example, cooperatives that were created according to restrictive models, were under government control or operated in a protective environment may find a move towards more entrepreneurial performance much harder.
• Challenge no. 2: formation of effective partnerships outside the cooperative sector
IF YOU KEEP DOING WHAT YOU HAVE ALWAYS DONE YOU WILL KEEP GETTING WHAT YOU HAVE ALWAYS GOT
IF YOU KEEP DOING WHAT YOU HAVE ALWAYS DONE YOU WILL KEEP GETTING WHAT YOU
HAVE ALWAYS GOT
• Observations show that cooperatives are today operating amidst emerging consumer demands, global standardization processes, market concentration, stricter market requirements and price instability.
• Challenge number 3: a SWOT analysis to identify coping strategies
Challenge no.4 attracting the youth into the cooperative movement
• Global youth unemployment is affecting more than 73 million young women and men. East africa is not spared
Country Youth unemployment (%)
Source
Burundi 10.70 World bank 2013
Kenya 67 Kenya country report 2014
Rwanda 0.7 World bank 2013
Tanzania 14.0 World bank 2016
Uganda 64 The Uganda Bureau of Statistics - 2012
The import of the challenges• These challenges will require different roles and capacities
from cooperatives operating in agri-food value chains .
• Instead of holding on to the defensive role they used to play in the past (such as trying to set more favourable prices for producers by reducing the market share of intermediaries, for instance), cooperatives are now challenged to take on a more pro-active role in marketing, updating their organizational structure and engaging in value chain integration.
• A successful transition to this new role requires the unlocking of Human Enterprise Potential through acquisition of particular managerial capacities, especially in the domain of ‘collective entrepreneurship’.
THERE ARE HUMAN CAPITAL RELATED TOOLS
COOPERATIVES CAN USE TO FLOURISH• Capacity building especially in the relevant
technical areas;
• Entrepreneurship and business
development, to energize improvement of
old and formation of new coops.
• Management training to promote and deploy
collaboration.
• Consulting services to meet standards and quality.
•Back to the four challenges mentioned
earlier
•Challenge 1/4: Value addition to the context in which farmer cooperatives operate
•Value addition calls for a more entrepreneurial approach to doing business: such may be entrepreneurial networking
WITHOUT LIFTING YOUR HAND /PEN OFF THE PAPER AND WITHOUT TOUCHING ANY SINGLE DOT TWICE USE ONLY FOUR STRAIGHT LINES TO JOIN ALL THE NINE DOTS HINT: TO SUCCEED
THINK FORWARDS,
BACKWARDS, THINK
VERTICALLY,
THINK
HORIZONTALLY,
THINK
DIAGONALLY, THINK
BEYOND THE DOTS
THINK OUTSIDE THE
BOX
Pliz do me an
exercise
WITHOUT LIFTING YOUR HAND /PEN OFF THE PAPER AND WITHOUT TOUCHING ANY SINGLE DOT TWICE USE ONLY FOUR STRAIGHT LINES TO JOIN ALL THE NINE DOTS
THIS IS A
DEMONSTRATION
OF THE POWER OF
NETWORKING. THE
SOLUTION OF
YOUR PROBLEMS
MAY NOT ALWAYS
BE WITHIN YOUR
OWN BOUNDARIES.
YOU MAY NEED TO
LOOK FOR IT
ELSEWHERE.
1
2
3
4
START AT
HOME IN
KENYA AND....
.....GO BEYOND KENYA
TO TZ TO FIND OUT HOW
THEY DO IT THERE
COME BACK TO KENYA AND TEST THE SOLUTION
YOU MIGHT NEED TO GO AND BENCHMARK IN RWANDA AS WELL
FINALLY YOU WILL SOLVE THE PROBLEM USING INPUTS FROM
YOUR NETWORKS
LET US SAY YOU ARE A KENYAN LOOKING FOR
AN INNOVATIVE COOPERATIVE APPROACH
1
2
3
4
WITHOUT LIFTING YOUR HAND /PEN OFF THE PAPER AND WITHOUT TOUCHING ANY SINGLE DOT TWICE USE ONLY FOUR STRAIGHT LINES TO JOIN ALL THE NINE DOTS
SO, CAN THIS CONFERENCE DECLARE AN EAST AFRICAN COOPERATIVES NETWORK???
The entrepreneurship challenge for cooperatives
• Due to its multiple owners and purposes, the entrepreneurial function within a cooperative tends to be less clearly allocated than in an investor-owned firm.
• First, members have a greater incentive to devote time to private entrepreneurial tasks on their own farms, since the returns to entrepreneurial efforts at the cooperative level will always be distributed among the group.
• Second, capital accumulation tends to be a problem in cooperatives, due to the fact that dividends have to be paid to a large number of members. Capital constraints could mean that wages offered to managers are not high enough to attract the most entrepreneurial ones.
•Need arises for national entrepreneurship policies to unlock the human enterprise capacity of cooperatives
No, the existing small and medium
enterprise (SME) policies are not
entrepreneurship policies
Definition of Entrepreneurship
Policy
• Policy measures
– Aimed at the pre-start, the start-up and post-start stages of the entrepreneurial process
– Designed and delivered to address the areas of motivation, opportunity and skill
– With the primary objective of increasing the supply of entrepreneurs and new firms• t-n to t+42 months
SME policy
1. Help existing
SMEs to overcome
problems currently
faced
2. Focused on firms
(existing
enterprises) and
Business
environment
3. Applies after a
firm comes into
existence
Entrepreneurship policy
1. Encourage people
to set up business to
think entrepreneurial
2. Focused on
people
(entrepreneurs) and
Entrepreneurial
culture
3. Operates to assist
an individual bring a
firm into existence
The interconnection between SME and entrepreneurship policies
Pre-start up
period
Nascent
period
Start up
period
Post-start up -42 months
period
42+ months
period
Entrepreneurship
policy
SME policy
BUILD AN
ENTREPRENEURIAL
CULTURE
CREATE NASCENT
ENTREPRENEURS
CONVERT
NASCENT
ENTREPRENEURS
SUPPORT SURVIVAL
& GROWTH PATH
The three pillars of an entrepreneurship policy = MOS (MOTIVATION, OPPORTUNITY, SKILLS)
ObjectivesDevelop entrepreneurial climate and culture (Favorable attitudes to entrepreneurship to increase business start-up rate)
1. MOTIVATIONPROMOTION OF AN ENTREPRENEURSHIP CULTURE; PROMOTION OF ENTERPRISE; REDUCE STIGMA OF FAILURE, USE OF ROLE MODELS
3. OPPORTUNITYBUSINESS START UP SUPPORT (INCUBATION, MENTORING,
NETWORKS), START-UP FINANCES, REDUCTION OF
ENTRY BARRIERS ETC
2. SKILLSENTREPRENEURSHIP
EDUCATION AND TRAINING AT ALL LEVELS OF EDUCATION
1. GIVE PEOPLE
THE DESIRE&
WILLINGNESS
TO GO INTO
SELF-
EMPLOYMENT
2. GIVE PEOPLE THE
ABILITY TO
SUCCESSFULLY OPERATE
AS SELF-EMPLOYED
3. REMOVE
OBSTACLES TO
START UPS AND
SUCCESSFUL
OPERATION AS
SELF-EMPLOYED
INCLUDE COOPERATIVE EDUCATION
•Challenge no. 2/4: formation of effective partnerships outside the cooperative sector
• I am trying something in Bungoma – one of the 47 counties in Kenya
SUNFLOWER FARMER
ON LAND FISH PONDS
CAKE PROCESSING
VEGETABLE OIL PRESSING
KILN ROOF/RUNOFF RAIN WATER HARVESTING
MARKET
SEED
CAKE
CHARCOAL BRIQUETTES
BIOGASORGANIC MANURE
OIL
THE BUNGOMA 4F (FOOD, FEED, FUEL, FERTILIZER) CLUSTER APPROACH TO INDUSTRIALIZATION: DEMONSTRATIONAL RESEARCH
(On-going research)
DIGESTER
ZEO GRAZING &POULTRY
STALKS
FISH/ANIMAL
FEED
MARKET
FOOD
FEED
FERTILIZER
FUEL
How many value chain based coops can you see?
How are they networked and linked? Any cluster?
Some preliminary lessons learned from my demo research:
• Expand to other organic crops besides sunflower; e.g. sesame, soybean and ground nuts ( crop rotations practiced by farmers) i.e make it a sectoral approach – the oil crop
• On-time, full payment to farmers creates “trust” that is crucial for any partnership.
• Include technical support and other transaction costs, particularly for threshing, packaging etc
1. Private sector e.g. private practitioner/company
• Support of:
Input supply, production, marketing & trading, quality control & certification, processing capacity
2. Consortium of public sector e.g. government/university
• Capacity strengthening for:
Organizational management , Intermediation with service providers (e.g. credit, R&D) , Monitoring for learning
Support to producer organizations can
take a two tracks approach
I propose a PPP cooperative model
Private processing
(value addition) company
Public consumer
institutions e.g.
Government departments
, schools, hospitals,
etc
Cooperative society
Co-operators
co-operators
Co-operators
The governmentIncentives, training, conducive policy,
R&D, regulations etc
Appropriate buying modes
e.g. Pay on order
Appropriate buying modes, subcontracting,
quality control etc
Goods
Services
The AAIN can help.
•Challenge number 3/4: a SWOT analysis to identify coping strategies
OPPORTUNITIES1. INTERNATIONAL
COOPERATIVE MOVEMENT2. POLITICAL WILL3. DEVOLVED GOVERNMENT
(KENYA)4. EDUCATIONAL INSTITUTIONS
THREATS1. STIFF COMPETITION2. GLOBAL INSECURITY3. GLOBAL WARMING4. STRINGENT NATIONAL
REGULATIONS
STRENGTHS1. Rich Natural Resources2. Fair infrastructure3. Cheap Labor4. Large markets
MAXIMAXI STRATEGIESSTRATEGIES GENERATED BY MATCHING STRENGTHS AND
OPPORTUNITIES (SO STRATEGIES) –OFFENSIVE STRATEGIESWRITE PROPOSALS TO
DEVELOPMENT PARTNERS
MAXIMINI STRATEGIESSTRATEGIES GENERATED BY
MATCHING STRENGTHS /OPPORTUNITIES AND THREATS
(ST STRATEGIES) –DEFENSIVE STRATEGIESFORM PPP
MINIMAXI STRATEGIES. STRATEGIES GENERATED BY
MATCHING WEAKNESSES AND STRENGTHS/OPPORTUNITIES (WO
STRATEGIES) –PARTNER WITH EDUCATION
INSTITUTIONS FOR TECHNOLOGICAL ACCELERATION
WEAKNESSES1. Inadequate Liquid Capital2. Slow Technological
Advancement3. Unexploited Sources of
Energy4. Inadequate new forms of
Business Organization
MINIMINI STRATEGIESSTRATEGIES GENERATED BY
MATCHING WEAKNESSES WITH THREATS (WT STRATEGIES) –
MERGE RS
SWOT ANALYSIS TEMPLATE
East African
industrialization
SWOT analysis
Overall recommendation1. Carry out national training needs analyses (TNA) in
the cooperative movement.
Objective: to construct Training of Trainers (ToT) for cooperatives e.g. cooperative entrepreneurship
2. Carry out regional, national, local SWOT and stakeholder analyses on cooperatives.
Objective: to design strategies to unlock human enterprise potential through appropriate strategies including networking models
3. Design entrepreneurship policies on “add-on to MSE policy” basis. Objective: make cooperative movement and agribusiness “sexy” for the youth
Some references
• Galor, Z., 1990, –Conditions for the Success of a New Moshav: The Stage-by-Stage Approachü, Hassadeh Quarterly, Israeli Review of Agriculture, Vol.1, No:2, March, Israel.
• Galor, Z., 1995, The Production Co-operative ” a Tool for National Development, Cooperative Dialogue, Volume 4, No 2, May-September 1995, an ICA ROAP Journal.
• Galor, Z.,1998, Small Scale Industries-Concepts and Realizations: The Israeli Case Study- The Creation of Non-Agricultural Employment (NAE), International Institute of the Histadrut, Israel.
• Galor, Z., 1998a, The Moshav, The International Institute of Histadrut, Israel.
BEFORE I FINISH...
• I HAVE JUST RETURNED FROM KISII COUNTY ENTREPRENEURSHIP SUMMIT WHERE I WAS A JUDGE FOR INNOVATIONS AND A PANELLIST
A chain is as strong as its weakest link
BANANA
PROCESSING
WEAKEST KISII LINK
100+ PRODUCTS
PACKAGING
ETC
FERTILIZER
FINANCE
TRANSPORT
EQUIPMENT
BOTTLING
CHEMICALSPROCESSING
MACHINERY
FARM
MACHINERY
KISII HAS A COMPARATIVE ADVANTAGE IN BANANA PRODUCTION
... AND FINALLY• I am the chairman of the continental African
Agribusiness Incubators’ Network (AAIN) a membership organization born in Rwanda and now registered in Ghana, Kenya, Uganda and soon in S. Africa as a company limited by guarantee. We partner with Forum for Agricultural Research in africa (FARA) and have MOUs with many e.g. The AU. Membership is open to organizations and individuals. Key benefits: agribiz incubation, networking & information sharing. Cooperatives can benefit immensely. Online registration enabled
www.africaain.org
02-Mar-16 H.M.Bwisa -- www.professorbwisa.com 42
THE END
THANK YOU 4 LISTENING and have an entrepreneurial
day – won’t u
Q & A
START COOPERATING WITH YOUR OWN DAUGHTER
I hope I
provoked
u