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Myriam Sainz of TechnoServe draws on her experience rebuilding coffee communities with Nespresso to identify how best to invest in countries hit by conflict or crisis
In recent years, companies across a range of sectors have increased their investments in developing countries in an effort to reach new markets, develop new supply chains, and create positive, lasting impact in communities. Entering fragile or unstable regions, however, presents distinct challenges – like evolving political and security situations and gaps in infrastructure and vital services – and companies are often understandably concerned about the risks involved when investing in these economies.
In our experience, collaboration between business and non-government organisations is vital for addressing these risks. Over the past 50 years at TechnoServe, we have designed creative business models with several partners that have driven positive change even in the most troubled areas.
But what are the ingredients of successful shared-value initiatives in fragile economies? We’ve identified five key factors based on TechnoServe’s experience in this area, especially our partnership with Nespresso rebuilding coffee communities in areas impacted by conflict, economic crisis, or natural disasters.
1) The value proposition must be particularly compelling for all parties
Since projects in fragile economies are riskier and require greater investment, effort, and commitment, it can be easier to justify abandoning them as soon as anything goes wrong. Partnerships should, therefore, be predicated on a very strong business case for the company. The undertaking will not be successful if the organisation sees it as just a corporate social responsibility initiative or a marketing tool; rather, it must address a core business need. Similarly, the mission-driven NGO partner needs to ensure that there is also a strong business case for participating farmers and entrepreneurs, who may face particularly high rates of poverty or be particularly risk averse.
Before launching a new programme, we demonstrate the potential for tangible income gains for our low-income clients such as small farmers, as well as the viability of high-quality crops or other supplies for the sourcing company. This exercise was critical before launching our partnership with Nespresso in Puerto Rico, for example, because farmers there had lost their coffee trees to two devastating hurricanes, and faced the prospect of replanting their farms and then waiting three years for the first crop.
2) Partners must be committed for the long-term
Truly transformative results do not happen overnight – especially in the most troubled regions – and require patience. Critically, a company should plan at the outset for its commitment to extend beyond the traditional annual budget cycle. While continuous assessment of progress is important, the private sector needs to understand the long-term nature of the investment and be willing to overcome temporary setbacks.
Our partnership in South Sudan is a good example of this. When the resurgence of conflict interrupted the promising coffee Revivals programme a few years ago, halting on-the-ground training for coffee growers, Nespresso’s long-term orientation enabled us to pivot towards sharing coffee farming advice through a regular radio program. This allowed us to continue to reach farmers who were forced to leave their homes for safer locations, helping them to preserve their farming skills even during the disruptions and therefore enabling them to earn a good living once they returned. Now, with the security situation showing some improvement, we hope to resume on-farm training later this year.
3) Partners need to identify and address market gaps at the outset
Fragile economies lack some of the systems, market actors, and infrastructure that shared-value partnerships often rely on to succeed, so it is critical that partners identify these gaps and build solutions into their programme design at the beginning. In South Sudan, the domestic nature of the industry meant we had to partner with a firm in Uganda to provide export services to South Sudanese coffee farmers. In post-hurricane Puerto Rico, the critical gap was the availability of seedlings, so we joined ongoing efforts to boost seedling supply.
In places where working capital is difficult to obtain, the private-sector partner can help guarantee funding. And where certain equipment or supplies are unavailable, the partners have to help fill the gap by identifying which products are suited for local conditions, engaging suppliers abroad, and helping producer organizations do business with suppliers and develop equipment-maintenance capabilities.
4) The partnership must be flexible and adapt to changing situations
When working in unstable or post-conflict settings, it is essential to have good knowledge of the local context, but it’s also important to understand that situations can change very quickly. As a result, the business and NGO partners need to be in constant communication with one another in order to readjust and make rapid decisions when required. It is important to plan for a variety of contingencies and establish a decision-making apparatus that is not overly bureaucratic.
A few years ago, for instance, we were working on a program to benefit mango farmers in Haiti with Coca-Cola and the US Agency for International Development, among other partners. We had planned to work through the leadership of farmer co-operatives, but in a country with weak institutions, recovering from a devastating earthquake, a lack of capacity and systems made this difficult to achieve. So we worked directly with farmers to develop a new way to organise thousands of small mango growers (forming “Producer Business Groups”), which gave them better access to markets, information, and agricultural services, and helped them earn an average of 32% higher prices for their mangoes.
5) Partners should be ready to innovate
The challenges associated with operating in fragile economies inevitably force the partners to come up with new ideas to make things work. South Sudanese farmers, for example, were in a precarious situation and could not afford to make big investments that they might have to leave behind at a short notice, so TechnoServe designed a “wet mill in a box” costing a fraction of the cost of a traditional model, which could be disassembled and hidden within hours if they had to suddenly flee due to a resurgence of violence. Zimbabwean smallholder farmers had been impacted by long dry spells and incidence of pests and diseases, so we tailored the agronomy package to train them on simple, low-cost solutions that could help them achieve higher productivity.
Building these kinds of partnerships between NGOs and private-sector organisations is often challenging in fragile economies. But the payoff can be significant. Sharing risks among actors allows the investments necessary to rebuild an economy to be made available, helping to bring transformative, lasting change to the lives of thousands of people. In TechnoServe’s work with our partners, we have seen time and again that getting the collaboration right in these delicate situations is essential for raising community incomes and helping build a more hopeful future.
Myriam Sainz Stuyck is director of strategic initiatives at TechnoServeNescafe TechnoServe Nespresso coffee farmers South Sudan Colombia