(SUMMARY: Tanzania and much of Africa is blessed with significant resources. The potential of this opportunity is often unrealized. We drill into the value chains and find an example: food grown in a village is not available to be used only 25 Km away even though both buyer and seller want to link up.)
In our last installment we laid out our basic business strategies to address the broken food value chain in Africa. There are three basic concepts: Unite Farmers, Preserve Food, Add Value.
These three are built upon a common strategy: find places in the value chain that are broken. This is where the opportunity lies.
One of the questions I most often hear from locals is, “What do you think of Tanzania?” They want to know what a westerner sees – what is our point of view. As a business person, what I notice first is business. I can’t help it; it’s what my eyes are trained to see. In the case of Tanzania, what I have noticed most is the lack of businesses. Things we take for granted are missing from the landscape.
For example, although there is instant coffee it is very difficult to find a cup of fresh brewed; this in a country that grows some of the best coffee in the world. If you are a Starbucks or Caribou addict you would notice this immediately. (I’m not because I’m sensitive to caffeine.) Missing businesses may mean there is opportunity. To continue the example, a carefully located coffee shop might do very well.
More accurately, need usually equals opportunity. (This is the basic reason why there is a link between business and helping people.)
When Tanzanians ask me what I think of their country, I tell them that there is opportunity everywhere.
This is not a polite way to say a hard thing. It’s the truth. Tanzania is blessed with substantial resources:
· Perhaps 6% of the fresh water on earth, including large amounts of hydroelectric power, and lakes to rival the US Great Lakes.
· Enormous mineral reserves.
· Coal was recently discovered.
· It is rumored that oil was just discovered.
· Some of the most beautiful areas on earth including the Serengeti, Mt. Kilimanjaro, Goro Goro Crater, wildlife in abundance, etc.
· Huge tracts of arable land and eco-diversity that can support the raising of nearly any agricultural crop.
· A peaceful, hardworking people that have lived in a stable democracy since 1961.
Tanzania is not alone. Africa is blessed with abundant resources across the continent. The problem is that the value chains across nearly every industry are broken. Three notable exceptions: soda pop like Coke and Pepsi, beer, and cellular phones. These three are available everywhere – even remote villages. Soda, beer, and cell phones are not exactly life’s key staples. It’s ironic that sometimes the only clean drinking water you can get is a bottle of pop. However, it’s proof that given a focused effort, things really can work. You can get a bottle of orange Fanta® even in a remote village!
As a business person, what I see is business; in this case, broken value chains. Opportunity is created when you can serve a need. That’s why “necessity is the mother of invention.” The most important needs are in the middle of value chains because they serve so many people by connecting products from source to user. Therefore, when you follow the value chain and see where it doesn’t work it’s like following the rainbow to a pot of gold. These are the real key business opportunities. And this is where you can really change a lot of lives.
(Picture: meeting with a maize mill owner in Iringa.)
When I went to Tanzania, I started by speaking to a number of factories, including food factories in the first few weeks. The food factories I visited were running at about 20-30% of capacity. (Actually, this was common in factories of every type.) Without exception, food producers said that there number one problem is getting enough input. Everything that they make they sell that day. I sat with the CEO of a leading food producer while she took call after call from people wondering why they aren’t receiving the orders they have placed. The problem isn’t lack of market; its lack of input. Management often puts a majority of their effort into sourcing their raw food stuffs.
As I explored the country, this problem replayed itself over and over for every type of food. The caterer at Tumaini University in Iringa is struggling to feed students and staff because she can’t source enough chicken, eggs, vegetables, etc. She is now opening her own truck farm to grow her own vegetables. Chickens were such a problem that she wanted me to invest in a chicken farm for her. In fact, the 2nd largest chicken farm in the country is owned by a caterer in Dar es Salaam. Sourcing food is incredibly difficult and one of the value chains that is most broken.
Because hunger is such a terrible problem, I kept digging.
The Iringa area is one of the four largest maize growing regions in Tanzania. Iringa town is surrounded by hundreds of villages where fields of maize are ubiquitous. I have been in many, many of these villages and literally met with hundreds of farmers. The farmer’s number one problem: they can’t sell what they produce. In the village of Ilambilole, we spent time quantifying the maize production. This village of 1000 families probably produces about 2000 tons of maize per year.
Back in Iringa town I met with four simple operations whose primary business was to purchase maize and mill it into flour. Each of these businesses had the same number one problem: they couldn’t get enough maize!
And they are in the heart of maize country! 25 kilometers away, one village could supply much of their needs. One of these mills was sending trucks 600 kilometers to get their supply!
I like cross word and other puzzles. Getting my head wrapped around this problem was one of the most compelling challenges of my life. Not because it is so tricky but because it is so important. We are talking about the heart of the hunger problem in Africa. Remember, there is no shortage of food production and 40% of what is produced rots. Although not that complex, it took me about a week to see what was happening.
Getting to the ‘aha’, ‘eureka!’ moment is really satisfying. I think it will be for you, too.
To continue this series go here: http://cheetahdevelopment.blogspot.com/2009/07/food-part-9-the-hunger-puzzle.html
As I explored the country, this problem replayed itself over and over for every type of food. The caterer at Tumaini University in Iringa is struggling to feed students and staff because she can’t source enough chicken, eggs, vegetables, etc. She is now opening her own truck farm to grow her own vegetables. Chickens were such a problem that she wanted me to invest in a chicken farm for her. In fact, the 2nd largest chicken farm in the country is owned by a caterer in Dar es Salaam. Sourcing food is incredibly difficult and one of the value chains that is most broken.
Because hunger is such a terrible problem, I kept digging.
The Iringa area is one of the four largest maize growing regions in Tanzania. Iringa town is surrounded by hundreds of villages where fields of maize are ubiquitous. I have been in many, many of these villages and literally met with hundreds of farmers. The farmer’s number one problem: they can’t sell what they produce. In the village of Ilambilole, we spent time quantifying the maize production. This village of 1000 families probably produces about 2000 tons of maize per year.
Back in Iringa town I met with four simple operations whose primary business was to purchase maize and mill it into flour. Each of these businesses had the same number one problem: they couldn’t get enough maize!
And they are in the heart of maize country! 25 kilometers away, one village could supply much of their needs. One of these mills was sending trucks 600 kilometers to get their supply!
I like cross word and other puzzles. Getting my head wrapped around this problem was one of the most compelling challenges of my life. Not because it is so tricky but because it is so important. We are talking about the heart of the hunger problem in Africa. Remember, there is no shortage of food production and 40% of what is produced rots. Although not that complex, it took me about a week to see what was happening.
Getting to the ‘aha’, ‘eureka!’ moment is really satisfying. I think it will be for you, too.
To continue this series go here: http://cheetahdevelopment.blogspot.com/2009/07/food-part-9-the-hunger-puzzle.html
Posts
No comments:
Post a Comment