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Stimulating production through public-private partnerships

Entrepreneurship

Field report Benin

By creating stronger value chains around ‘champions’ in agribusiness, the incubator programme, 2SCALE, is helping small-scale farmers enter local and regional markets and enabling an increase in the scale of production.

In Benin, 61,000 farmers – including 20,000 women – are involved in public-private partnerships built around local small- and medium-sized enterprises (SMEs), thanks to support from the agribusiness incubator, 2SCALE. Present in nine sub-Saharan African countries, and financed by the Dutch government, 2SCALE is committed to creating networks around local ‘champions’ (producer organisations, traders, processors, suppliers of agricultural services, etc.) in order to help them produce, process and supply high-quality food produce for local and regional markets. The aim is to increase the scale of the entire value chain by responding to the needs and ambitions of the companies, whilst still involving local producers and other rural entrepreneurs, in addition to reaching low-income consumers.

“Our approach is focused on the market,” explains Éric Lakoussan, head of 2SCALE’s horticultural sector in Benin. “We work around the business idea of one company in order to develop an inclusive value chain, and we are using 2SCALE funds from the Dutch government to cement a partnership with this ‘champion’ and the other parties in the value chain.” In Benin, 2SCALE partners with just over 350 SMEs.

A fruitful approach

One of 2SCALE’s success stories is Promo Fruits. In 2013, 2SCALE helped the regional leader for fresh Pineapple juice to negotiate a loan of €697,000 from Oikocredit International to invest in new machinery and enable the 2,500 small producers who supplied the company to increase their productivity and access finance. The following year, Promo Fruits negotiated further loans in order to invest an additional €3 million in their factory in Allada, 56 km north of Cotonou.

In partnership with 2SCALE, the company co-financed a network of technicians who train and advise farmers on agricultural best-practices. This enabled an additional 12,000 farmers to join the Promo Fruits supply network, which increased the quantity of fruit supplied from 11,200-21,500 t/year and Promo Fruits doubled the volume of juice sold, from 5.2-11.5 million l/year. As a result of this increase in scale, the company was able to self-finance all of the costs of the technician network.

At the start of their partnership with pineapple growers in 2016, Promo Fruits also organised meetings with the farmers which enabled them to discuss specific challenges linked to transportation, and to find solutions. These included providing transport to producers, and organising initial processing in situ, before transportation to the factory. “It is important that all of the parties involved understand that working together creates improvements in productivity and competitiveness,” concludes Lakoussan.

Success with soya

Another SME 2SCALE partners with is the soya cooperative, Coopérative de Transformation d’Approvisionnement et d’Écoulement de Soja (CTAE), which commits to purchasing minimum quantities from producers to supply its production units for oil and soybean goussi(a condiment). With 2SCALE support, CTAE has strengthened its supply chain and doubled the quantity of soya it processes from 6,000 t in 2016 to 12,000 t in 2018. To strengthen their partnerships with farmers, 2SCALE partners, including CTAE, are committing to developing services at the upper end of the supply chain – such as logistical support to transport the soya to the nearest factory in order to reduce post-harvest losses – to increase and improve their production capabilities, and the productivity of farmers.

The main challenge: access to credit

Bernard Dedjelenou, coordinator for the cooperative, Union régionale des producteurs de l’Atlantique et du Littoral (URP-AL), considers his top priority to be increasing soya production. This is why URP-AL, a 2SCALE partner, is training growers to enable them to produce high-quality foodstuffs and to store and transport them under optimal conditions. To achieve this, URP-AL requires finance to enable them to contribute to the travel costs of farmers attending training sessions. “To maintain this in the long-term, and to entrench the training process, it is important to have access to credit,” explains Dedjelenou. “This remains our principal barrier.”

This concern is shared by the farmers who benefit from 2SCALE’s operations in Benin. Many believe that the solution is to find more businesses to commit to buying their produce, which would provide microfinance organisations with a guarantee to encourage them to extend credit to farmers. However, according to Dedjelenou, URP-AL has already lost partnerships with microfinance companies due to payment defaults by some farmers. Without this credit, upscaling operations are simply not possible.

One of the main challenges in establishing partnerships that can help in scaling up value chains is finding companies that wish to be both competitive in their markets and have a lasting social impact on the other members of their supply chain. “A lot of companies that operate in the agribusiness sector do not have a desire for inclusion,” laments Lakoussan. “There are companies which simply wish to buy raw materials without any contact with the producers.”

The importance of working together

The same logic holds for partners operating on a more modest scale. “The main advantage of 2SCALE is that we are now able to manage our production as a small company would,” explains Bénédicte Ahouansou, a Beninese soya processor and member of a cooperative of 20 women, which sells cheese, milk, flour and pancakes in local markets. “Thanks to 2SCALE, we have managed to identify four farmers who produce high-quality grain. We purchase from them either in cash, or on credit, and produce cheese, milk, flour and pancakes.” This strategy allows Ahouansou, and the other members of the cooperative, to earn around CFA30,000 (€45) a month, compared to a little less than CFA 10,000 (€15) before they started their processing activities in 2017.

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