Doing ethical business in Africa

rethink sustainability

Doing ethical business in Africa

Serge Michel - Journalist, co-founder and editorial director of the new Swiss media Heidi.news

Serge Michel

Journalist, co-founder and editorial director of the new Swiss media Heidi.news

The three minibuses stop under a large tree at the end of the dusty road. In the village square, the inhabitants are almost all there, standing around in a half-circle to welcome their visitors: the mayor in his best jacket, the manager of the dairy cooperative in a tie and grey hat, the farmers in their Sunday clothes and their wives in their colourful, church dresses.

Westerners are rare in Kapsitwet, at the foot of Mount Elgon in western Kenya. The region is poor, tough and politically unstable. The last time Westerners appeared here was during the Sabwani River floods, six months earlier, when they delivered tents for dozens of displaced families. And never before has this small agricultural village been visited by senior executives of world-renowned companies.

An innovative set-up

The man talking is wearing jeans, trainers and a white shirt with rolled-up sleeves. He has three-day stubble and a bottle of water in his back pocket. This is Emmanuel Faber, Danone CEO, the world's leading producer of fresh dairy products, with 100,000 employees in more than 60 countries. His speech is complex. He talks about agroforestry, erosion, carbon sequestration. A farmer steps forward and thanks the visitors for coming to see them. He has eight cows that each produce, at best, three litres per day (compared to an average of 28 litres per day in Europe). He asks Faber, “What should I do”? Sometimes, he explains, the motorcycle hawkers who immediately sell the milk on the local market, which doesn’t always have a water supply, pay better than the cooperative that has just received brand new equipment.

Emmanuel Faber isn’t taken aback by the question nor is he your average CEO.

The project he launched in Kenya in the autumn of 2016 is a minor revolution. It does not offer traditional aid in the form of a grant or loan, but rather social and environmental investment through the Livelihoods Carbon Fund created by Danone, Schneider Electric, Hermès, the Swiss company Firmenich and several others. It’s a sophisticated yet promising set-up that he attempts to explain, succinctly, to the interested Kenyan farmers standing under the midday sun.

The project Emmanuel Faber launched in Kenya in the autumn of 2016 is a minor revolution. It does not offer traditional aid in the form of a grant or loan, but rather social and environmental investment.

Nevertheless, he tries. The fund invests 3.5 million euros to enable a Swedish NGO, Vi Agroforestry, to help 30,000 small farmers in the Mount Elgon area gradually increase their production from three to ten litres of milk per cow, per day. To achieve this, Vi teaches them to care for and feed their animals and then to work with dairy cooperatives that have also received some investment. But above all, the NGO trains these farmers in agroforestry: planting trees in the fields to provide shade and retain the moisture in the soil, (and covering them with vegetable waste), digging small channels, avoiding chemical fertilisers, diversifying their crops and keeping livestock out of the way to prevent damage.

The fund invests 3.5 million euros to enable a Swedish NGO, Vi Agroforestry, to help 30,000 small farmers in the Mount Elgon area gradually increase their production from three to ten litres of milk per cow, per day.

Meanwhile, the Kenyan dairy giant Brookside Dairy Limited, which has been 40%-owned by Danone since 2014, has committed to buying the production of the 15 cooperatives in the region, which will increase from 5,000 to 135,000 litres per day. The Livelihoods fund will be repaid in ten years' time thanks to a share of milk sales but mainly thanks to the carbon credits redistributed to its members. These agricultural improvements have sequestered more than one million tonnes of greenhouse gases.

These agricultural improvements have sequestered more than one million tonnes of greenhouse gases.

“A triple success”

The architect of this project, who spent months designing and implementing it, is modest about his success. "It's not rocket science, but applied to 30,000 farmers, it does achieve something," says Bernard Giraud, president and cofounder of Livelihoods Venture, a social project that launched a fund comprising of 40 million euros in 2011 and a second fund comprising of 100 million euros in 2017. The latter supports similar projects in the production of vanilla in Madagascar, cocoa in Côte d'Ivoire and coconut in the Philippines.

"It's not rocket science, but applied to 30,000 farmers, it does achieve something," says Bernard Giraud.

Bernard Giraud's "something" is a triple miracle, rarely observed in development aid projects. Farmers are increasing their incomes, Brookside is diversifying and securing its milk supplies, and European investors are earning returns and progressing towards their goal of carbon neutrality. The cherry on the cake is that the agroforestry system also reduces erosion, which is dramatic in the Mount Elgon region as up to 70 tonnes of soil per hectare per year are swept away by the rivers to Lake Victoria. The cause of erosion has long been known: deforestation. Between 2000 and 2010, 3.4 million hectares of forest were wiped off the African map each year, an area the size of Belgium.

Farmers are increasing their incomes, Brookside is diversifying and securing its milk supplies, and European investors are earning returns and progressing towards their goal of carbon neutrality.

 

Business as a force for good

If the earth is in good health then so are those who inhabit it... Seen this way, the Mount Elgon project makes complete sense. But the Livelihoods fund is still a paradigm shift for everyone. First of all, this innovative investment model, which aims to resolve climate change and poverty issues at the same time, is a significant leap forward for investors. For a long time, business was business for many large companies, and financial returns, at any cost, was what counted. In the past, Corporate Social Responsibility (CSR) departments carried out projects. Some were good, others less so. Sometimes they were as much about communication as about having a real impact on the ground.

In this new paradigm, the business itself must produce beneficial effects. CSR considerations are integrated into strategic decisions and operational direction. This is the main purpose of the B Corp certification, to which companies like Danone aspire.

In this new paradigm, the business itself must produce beneficial effects. CSR considerations are integrated into strategic decisions and operational direction.

But it is also a minor revolution for NGOs in the field, which have been suspicious of globalised firms for decades. "We have had programmes in the region for 30 years," says Henrik Brundin, vice-president of Vi Agroforestry. "We helped farmers to produce beautiful vegetables, but we never helped them to sell their produce, especially not to multinationals. And it is true that their situation has not changed in 30 years. Now I no longer think that business is inherently bad and development is inherently good." The admission of this Swedish agronomist trained in the United States is sincere: "Yes, we had to convert to capitalism," he smiles. Even if Emmanuel Faber, for his part, says he is in search of "another form of capitalism".
 

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Margaret Muchanga, a farm worker from Kapsitwet, is not so interested in these theoretical discussions. Ever since she started following Vi Agroforestry's advice and working with a multinational, she hasn't felt short-changed. Instead, she sees a path to prosperity. The progress is clear to see: organic compost that allow her to do without fertilisers and pesticides, the barn and enclosed area that keep cows separate, and a much broader range of crops: bananas, coffee, courgettes, beans, sweet potatoes, sweetcorn, cabbage and fodder. "I can now sell some of my produce," says Margaret, who supports twelve people with less than a hectare and even provides work for neighbouring families.

Margaret Muchanga, a farm worker from Kapsitwet, (..) hasn't felt short-changed since. Instead, she sees a path to prosperity. (…) "I can now sell some of my produce".

Author’s note

If some companies can change to the point of devoting significant resources to mechanisms such as those described above and if NGOs can change to the point of overcoming their aversion to the market economy, then the media, too, ought to change. I am convinced that seeking out and telling constructive stories, investigating solutions and not just problems is one of the few options still open to the media to encourage lay readers to get involved and improve our planet. And such improvement is sorely needed.

© photo: Nicolas Lieber

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