Helping the hungry poor to feed themselves

Over the past year, rising food prices have placed basic foodstuffs out of the reach of the poor and threatened to drive 100 million more people into poverty. As families and national and global leaders struggle to address the complex factors behind the crisis, it is increasingly clear that all sectors will need to work together to meet the challenge of global food sustainability.

Nowhere is the situation more urgent than in Africa, where per-capita food production has stagnated for the past three decades. Leaders such as former UN Secretary-General Kofi Annan have called for a ‘uniquely African’ revolution in food production to drive economic growth and bring lasting solutions to poverty and hunger on the continent.

Realising such a revolution will require the commitment of all sectors, not least business. The market power of the private sector together with its capacity for innovation, execution and efficiency represent a powerful force for improving agricultural production and marketing.

However, the private sector faces substantial challenges when applying these capabilities in Africa, due to both the complexity of food value chains and also obstacles in the business enabling environment such as poor infrastructure or governance. Overcoming these challenges requires cross-industry collaboration as well as partnership between business, government and civil society. It also requires new and effective business strategies and models.

The Business Alliance Against Chronic Hunger was formed in 2006 by member companies and partner organisations of the World Economic Forum to catalyse the implementation of scalable business solutions to hunger. Led by a group of 30 global and local partners including NGOs, and with strong support from the government of Kenya, the Alliance initiated pilot work in Siaya District, a community with high levels of poverty and hunger, but strong potential for increasing food production. The aim was to increase local food production and income levels.

The lessons learnt from this pilot project should help companies to galvanise commercial and economic growth in regions previously seen as too difficult and unprofitable to be attractive to business.

Such business ventures must necessarily focus on meeting the needs of poor customers and doing business with small-scale producers and entrepreneurs in those regions. The result of this is that they can provide better quality, more affordable and more widely available essential goods and services in poor regions, and new opportunities for local producers and entrepreneurs to increase income levels. This, in turn, can help empower communities to reduce hunger and poverty.

A second goal of the work in Kenya is to strengthen private sector engagement in shaping and contributing to broader regional goals for sustainable development. Placing its work within a framework of locally driven efforts to meet the Millennium Development Goals (MDGs) has enabled the Alliance to engage the commitment and partnership of a broad array of stakeholders and to ensure complementarity with their efforts.

There will be 14 initiatives during 2008 to test business-led approaches along the food value chain. Pilot initiatives are undertaken by corporate ‘champions’ and relevant partners, with the Alliance playing a facilitating and monitoring role. The Millennium Village Project, which works with approximately 11,000 farming households in the Siaya district, is a key partner in a number of the initiatives.

The Kenya pilot work has informed a set of business models that strengthen food value chains and is defining strategies for scaling them more broadly. These include:

Expanding retail distribution networks for agricultural inputs and food products. This includes training, equipping and supplying small retailers, including agri-dealers, enabling diversification of retailers’ products and services and improving access to finance for customers, particularly farmers.

Sourcing high-value crops from small producers for direct retailing through supermarkets or for processing into food and beverage products. To achieve commercial-scale volumes, this requires organising producers into groups; training on production and quality standards is often also needed.

Developing value-added processing and packaging opportunities for small producers. This includes small-scale production of processed goods for retail sale, commercial-scale processing opportunities and the development of new packaging technologies for use in poor markets.

Expanding access to finance through innovative banking, insurance and investment models, and new technologies (such as SMS-based financial transfers) that extend services to poor rural areas.

As a complement to these commercial business models, this partnership approach engages both business and government in dialogue and collaboration around common priorities, including efforts to improve the business enabling environment through targeted public investment in infrastructure, public services and capacity-building for farmers and entrepreneurs.

The Alliance’s activities mirror a larger trend in the private sector toward seeking win-win solutions that generate both social and commercial returns. Social returns relevant to hunger can include improvements in household income; quantity, quality and accessibility of food supply; nutritional and health status; and capacity strengthening for food production or entrepreneurship.

Potential returns that are relevant to the business and its bottom line — in the near or long term — include generating profit and increased market share, expanding distribution networks, increasing supply chain efficiency, flexibility and quality, increasing innovation, securing brand-recognition and reputational gains and strengthening regional economic growth for the long term.

The Business Alliance Against Chronic Hunger is the first business coalition in Africa to focus on reducing hunger by improving food value chains. As such, it serves as a unique vehicle and potential model for mobilising broader-scale private sector support for agricultural development.

Its initial experience has demonstrated that a cross-industry, multi-stakeholder approach can facilitate business engagement in chronically hungry regions that are largely unserved by the private sector. Establishing market linkages and providing needed goods and services to producers and entrepreneurs can raise local food production and incomes.

Securing and expanding these gains requires innovative and collaborative approaches — and financing — to scale up commercially viable business models. When applied on a large scale they have the potential to substantially accelerate sustainable food production in Africa, while helping to reduce hunger and poverty.