Partnerships as a Stepping Stone for Developing Sustainable Inclusive Businesses
What do a fertiliser company, an industrial sack manufacturer and a construction group have in common?
[photo] LINK brokers partnership between Stefanutti Stocks Construction Company and ADPP NGO in Mozambique to create a network of training/certification centers.
Most companies in Mozambique don’t talk about inclusive business (IB), and initial conversations might give the impression that the notion is virtually non-existent. But this is mostly a question of terminology. Once you begin to speak the language, (both Portuguese and partnership) it becomes clear that many actors in the private sector are, for all intents and purposes, practicing IB, and always have been. By definition, base of the pyramid (BoP) categorises most of rural Mozambique, and in these immature markets, the basic nature of daily business involves many of the components that comprise the IB concept. To local companies though, this is business as usual rather than a conscience choice to implement a socially beneficial and inclusive model.
Regardless of what the businessmen or development professionals call it, one of the main challenges these companies face, across all sectors, is knowing where to go for advice, technical expertise and funding for their IB model, and for partnership support. This is why in 2014 The Partnering Initiative, funded by DFID, joined forces with SNV Mozambique – a Netherlands development organization working on equipping communities to break out of the poverty cycle – to investigate the local market demand for an Inclusive Business and Partnership facility called LINK.
Of the 120+ organizations we surveyed as part of this landscape analysis, almost 100% indicated that a successful IB required successful cross-sector partnerships. They perceived reaching out to others (partnering) as the first logical step to gain new knowledge, access new resources and innovate new business solutions that could begin to address many of the challenges facing their IB. But as one might suspect, it was much easier said than done to engage in the right kind of conversation with the right organization(s) following an effective partnering path to eventually realise mutual gain. This became clearly evident as LINK attempted to ‘fast track’ three partnerships while the facility was still forming; in the process demonstrating the added value that experienced partnership brokers (with sector expertise) offer by being a stepping stone for developing sustainable inclusive businesses.
Let’s start with GreenBelt, a medium sized fertiliser company located in Beira that found themselves overwhelmed by potential partners without any framework to prioritise and organise productive partnerships. While their present business model focused on developing and producing 50kg bags of fertiliser for export to neighbouring countries, they realised their greatest growth potential was to also target small holders, local farmers with a product adapted to their income levels and farming needs. By working with the local community, GreenBelt developed a family pack of small seed, fertiliser, measuring cup and pictorial instructions to enable the small holder farmer to begin using fertiliser to drastically improve yield. In a mature market, the company could simply sell direct into distribution channels and focus on the production. But in Mozambique, customising a product for the BoP was only the beginning.
GreenBelt’s Director knew it had to work downstream with many other organizations to conduct the distribution, marketing and training of extension agents in the field as well as upstream to find suppliers to produce smaller micro sized packaging and to negotiate lower price inputs that the smallholder farmers can afford. To address this overwhelming task, they were able to turn to LINK to provide the assistance of another kind (brokering) to sort through all the possible partners[1] and to provide some level of ‘formalized’ agreement among them to operate and coordinate towards a common goal. Wanting to remain very hands on with the process, GreenBelt internalized much of the technical advice and partnership tools from LINK to leverage the relevant partners’ niche expertise, connections and resources to launch their new product. GreenBelt’s success, achieved by collaborating and accelerating their IB through these partnerships, brought them to the attention of Yara, the 5th largest fertilizer company in the world, who have now bought the company.
Moving just across town one encounters AMAL, a manufacturer of 50kg industrial sacks for food/fertilizer products who wanted to partner with industry experts in building a new business line for recycling the 4-7% plastic waste bi-product they produced. Knowing that there is no local market for this waste, AMAL saw this as an inclusive business opportunity for which they were willing to invest in purchasing the necessary processing equipment, but they weren’t familiar enough with the recycling market to know where to source more plastics locally to maximize capacity of the recycling equipment or what products to remold the plastics into to sell to the BoP market.
Not knowing where to look for answers, AMAL was able to seek assistance from LINK to co-invest in an extensive market study which helped them formulate their IB model, employing communities at the bottom of the pyramid for both collection/pick-up of plastics as well as targeting them for product sales. But according to AMAL Director Mohsin Latif, the partnership brokered in this process with the Mozambican Recycling Association (AMOR) was all the more valuable as through this organization’s local market and sector expertise, AMAL can mitigate their risk and maximize their return in entering this new space. LINK convened these stakeholders to arrive at a set of common goals each bringing their ideas, experience and resources to the table to link to the local government sanitation agenda and begin discussing longer term investments and programming around proper waste management.
And finally, a snapshot of a partnership designed to address the extreme lack of basic skills among local Mozambicans to work in the construction industry. Leading South African construction giant Stefanutti Stocks (SS) were trying to address this business challenge independently by creating/operating their own training center in Maputo to graduate enough workers to meet their growing demand. But this came at enormous additional costs, and with ongoing poaching of employees by competitors, it was obvious a more inclusive and sustainable training solution needed to be found. Especially as every other construction company was also facing the same challenge.
Through an industry wide convening of construction and training companies by LINK, SS took the lead and received support among its competitors to partner with ADPP, a Mozambican NGO with a 30 year history of training vocational teachers, to establish a sustainable training network throughout Mozambique to educate and certify local laborers for the construction industry. From this each company could recruit qualified (and certified) talent without having to build and invest in their own facilities. Through a somewhat lengthy process, LINK was able to champion an industrywide support structure while brokering the partnership between SS and ADPP. In this way, each organization was able to bring their critical and complementary strengths together while gaining additional support from a key donor (DfID) and the national government to co-create an innovative solution that could be both profitable and sustainable.
These types of complex challenges can only be addressed through a multi-sector approach. Without a facility such as LINK providing a winning combination of offering partnership support and technical knowledge around inclusive business, sustainable success will be much harder to come by. As these examples demonstrate, critical partnership support can be as simple as making connections/sharing tools to complex industrywide negotiations and securing additional funding. Regardless of the level, knowing where to turn to in getting answers to the questions can make all the difference.
This post is a part of the May 2016 series on Partnerships delivering inclusive businesses. View the whole series for more business examples, research and insights on partnering for impact.
[1] GreenBelt had been approached by a wide mixture of development organizations including GIZ Beira program, Christian Care (demo plots and training), AFAP (fertilizer govt2govt organization), BAGC (DFID project), AMAL (packaging), CAR Foundation, a Seed Multiplier in Chimoio.