Public private cooperation to enter new markets
New markets don’t grow on trees. Especially in Africa it can be difficult to get anywhere. Infrastructure is not comparable to that of Europe, and there are a handful of other obstacles as well. Nikolet Zwart from BioLegal advocates a private public cooperation to disrupt markets, for which the public sector would start and the private sector would take over projects to guarantee sustainability. “That would create a win-win situation.”
The classic image of development cooperation is giving a bag of money to the meso-sector, such as the Chambers of Commerce, universities, libraries and similar, which would spend the money ‘at the bottom of the pyramid.’
“Nowadays, the macrosector is also involved. That never happened in the past,” Nikolet explains. “The public private cooperation is used like a kind of magic formula for many sectors. I think this public money can be used to change something that’s good for the population, and participation of the private sector makes a project sustainable. So that the project doesn’t stop when the money runs out, but continues because it’s been embraced by the private sector. That’s a win-win situation,” Nikolet continues.
Africa virgin territory
Traditionally, development cooperation and trade were two separate worlds, although trade as development cooperation has become increasingly important in the Netherlands. “What we’re seeing now is that the private sector is looking into ways to make the growers stronger, by training them, for example, or making growers part of cooperatives. That can be made stronger by digitising this.” With a background as lawyer in the agricultural sector, Nikolet is familiar with the opportunities offered by this model, in which money is spent on social entrepreneurs that work with local partners. That way, the ‘bottom of the pyramid’ is involved from the very start. “That creates a bottom-up market, so that this market becomes appealing to companies.”
The European and American markets are fairly saturated, while the market in Africa is still very open. “The African market is still very new and virgin territory, all major players in agribusiness are actually looking into how to take steps in Africa,” Nikolet explains. “If we connect know-how from major companies to the companies in Africa, it’s a win-win that creates new markets.” According to the ‘bottom of the pyramid’ theory, companies can earn money on the people at the bottom of the pyramid, if products are adapted to that. The billions of people living off one dollar a day combined represent a large amount.
Data sharing important
The use of satellite data is new for agribusiness, Nikolet knows. “Many applications are now being developed by NASA and ESA of which the sector doesn’t yet realise how useful they can be when used by contract growers in Africa.” Precision agriculture is one example of this, but there are also other applications. “The sector consists of a limited number of chains. By giving the growers additional knowledge, production can be increased, and satellite data can help with that. The major established companies are already using these techniques, but the smaller ones aren’t yet.”
Intellectual property plays an important part in Europe, but that’s different in Africa, Nikolet says. “That market is still open, and it depends on whether you cooperate on data sharing or you give away all of your information.” For that matter, it’s not about actual research results that are shared, but, for example, data about growers, the location of companies, production and area. “So that a grower can also offer his service on websites more transparently,” Nikolet continues. “New markets are still lacking in infrastructure. In the past, you could take care of that top-down, but in Africa things are done very differently.”
The development of Africa hasn’t stagnated. Digitisation is occurring at full speed. “It’s all happening very quickly, phones are an important necessity of life in Africa,” Nikolet knows. Information or paying via text message are popular, and steps towards smartphones are rapidly taken. Not just seed improvers see the use of their potential, but other companies in processed and fresh fruit and vegetables see their chances. One example is the CHEETAH app, which provides access to a product's transport time by mentioning roadblocks and other obstacles. According to Nikolet, there are many chances here that can help the entire pyramid.
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Publication date: 10/11/2017
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