Regular contributor, Kerryn Krige, looks at an innovative dairy project in Kenya and discovers some hard lessons for civil society in South Africa. Funding is not the problem – we need to connect with our markets and raise the standards of our work and practices.
“It is not funding that is the problem. It’s access to markets. “
Sisa Ntshona, Head of Enterprise Development at Absa Bank, is speaking at the Impact Investing conference held by Greater Capital, and no-one is buying his line.
It’s a powerful argument, but delivered to an audience of NGOs and wannabee social entrepreneurs? It’s just not getting him the bout of applause he deserves. He bravely ploughs on, arguing that what struggles to transform organisations from small and struggling to stable is their inability to sell and distribute their goods. In other words, there is little that connects them to markets.
This was a few months back, and I’ve been toying with this logic for a while but just can’t see past the limitations that come with having no money.
And then I stepped into the world of dairy farming in East Africa, and suddenly it all made sense.
It all started with a mid-term report I was handed this morning called Milking for Profit. The report details a project that works to uplift subsistence dairy farmers in Kenya, Rwanda and Uganda run by a consortium of dairy experts called East Africa Dairy Development (EADD).
In 2008, EADD started its first project in Kenya. The collapse of the state owned processor in 1999 had opened the country’s dairy market to competition which suited large scale producers and further isolated the small farmer. These folk typically produced and sold an average of three to five litres of milk per day, generating insufficient income to invest in stock and good feed to boost yields. Compounding these problems was the lack of facilities to chill milk (it apparently needs to be cooled within two to four hours of being poured), low standards in stock and poor animal care.
This is a common scenario: households that own a goat, a cow and a few chickens dot rural landscapes across the continent. And the traditional social response to this picture is equally common: NGOs and donors sweep in with trainings on modern day farming techniques, funding for more animals, donations of quality feed.
EADD ignored the traditionalists and instead took a business approach to the problem. Instead of providing funding and support to their beneficiaries, they connected their participants to markets.
They did this firstly by building chilling plants – 22 to date – so that the quality of milk could be maintained. They signed up 90,000 farmers and ran extensive programmes to improve the quality of care for animals. They made the chilling plants accessible to farmers so that they could easily bring their milk to fill up the 10,000 litre tanks. Within two years, those signed up were earning an average wage of USD 4,500 a year from the sale of milk and Heifers – that’s USD 12 per day, six times more the previous income standard of USD 2 per day.
And the chilling plants were reporting an average monthly profit of USD1,300, giving investors a return on their investment within one year. Though they are keen to point out that this is not the primary reason for the investment.
This is a remarkable story, and clearly a strong model which EADD is replicating in Uganda and Rwanda.
And importantly, it validates Sisa’s theory. That we need to focus our energy on connecting to markets to grow our work, and not be blinkered by the limitations of no funding. Sure, in the complex world of delivering social services connecting to a market isn’t as simple as building bricks and mortar solutions like a chilling plant. And I understand the frustration of no funding.
But the tale of cows in Kenya shows us how we should be thinking.
Raising the bar
Because who are our markets? And how do we connect with them?
Our markets are of course our participants (a far better word than beneficiaries), our investors (far nicer than donors), government and our public. How do we connect with them?
Currently, I would say that largely we don’t. Not as a collective. Not in a way that forces us to improve our standards and raises the caliber of the work that we do. Not in a way that has us jostling to scale up, or carries the energy and voice of civil society. Yes we do it in sectors with different bodies. But really? Do they connect us effectively?
Connecting to markets
Instead we chug along as the subsistence farmer, locked in a hand to mouth mentality, happy when we get handouts, pleading poverty when we don’t.
It is time that we banded together. Built our metaphorical chilling plants. Raised the profile of agencies that represent us. Built the bridges to our audience. Marketed the work that we all do. Raised our standards. Raised our work.
It’s time to connect to markets.
Kerryn Krige has recently been appointed as Programme Manager for Social Entrepreneurship at the Gordon Institute of Business Science. She has a long history working with non-profits and is a regular contributor to this site. If you would like to continue this debate, please get in touch at email@example.com