Verdict: “difficult”

16. May 2017 Fair Trade Insights

We ourselves say that we operate in particularly difficult regions of the world. But what does that actually mean?

When we speak of the “difficult countries” in which we are active, we are mostly talking about our subsidiaries in West Africa. In 2006 we founded our subsidiary in Burkina Faso under the name “gebana Afrique”. 2015 saw the establishment of gebana Togo, and last year a subsidiary was also founded in Benin.

All three of these countries are among the poorest in the world. According to the World Bank, the proportion of the population in poverty in Burkina Faso is 40% (2014) on the basis of the country’s national poverty threshold, and in Togo the level is higher than 55% (2015). In Benin, the level was 36% in 2011. In all three countries, over 43% of the population earn less than 1.9 dollars a day (2011, PPP). In these countries, the economy is heavily dependent on the export of raw materials, as there is very little industry. The world market is supplied to a large extent with unprocessed raw materials such as agricultural products, ores and minerals as well as other natural resources, often at low prices. The processing and refinement of the products mostly takes place in industrial countries, and it is in those countries that the value creation takes place and profits are made.

The significance for gebana

“There is a lack of infrastructure, administration and communication networks” says Christophe Toitot, the gebana COO who is responsible for production in the southern hemisphere. This statement is backed up by the “Doing Business” ranking produced by the World Bank, in which 190 countries are ranked according to how business-friendly they are. The rankings take into consideration the tax system, access to electricity, registration of property and many other factors besides. Burkina Faso, Benin and Togo are in the top third of the “most difficult countries” in the world in which to do business. “If you have a good product, all you need normally to set up a business is a road and a telephone — but in these countries, even those things are often not available in the rural areas”, continues Christophe Toitot.

This complicates the day-to-day operations of gebana. We buy our products from several thousand small farmers, some of whom live so far away that one needs very good knowledge of the area to get to the farms, which can often only be reached on foot. The people here are particularly poor, and are literally living “from hand to mouth”. Nevertheless, they still have to meet certain standards in terms of quality, certification and contractual obligations in order to work with gebana. This is a big challenge, as these are concepts and demands from the western world that bear no relation to the everyday reality of these people: When life is about surviving from one day to the next, longer term agreements for the months ahead have little importance. So how can such huge cultural differences be overcome?

Pre-financing of harvests plays an important role, as well as agricultural training and as much direct, regular contact with the farmers as possible. gebana is making considerable efforts to ensure that the latter takes place, as this personal contact is absolutely essential in building trust.

Organising all of this for so many farmers requires well-trained and reliable staff to be in place locally. Agriculture-related jobs are not seen as attractive, however. They are considered as low-status jobs, and wages are lower than in other sectors. Moreover, gebana employees are caught in the middle of two very different paradigms One the one hand are the demands of the western customers, who expect perfect and timely deliveries, and on the other hand is the day-to-day life in a country where power cuts — affecting internet and telephone connections — are a frequent occurrence, where roads can be made impassable within hours due to heavy rainfall, and where the family also expects preferential treatment in business transactions.

“The customers in the north always want everything to be perfect and on time. They can’t understand that sometimes things can be at a standstill for three days because there is no internet connection. A lot of misunderstandings arise therefore, when it comes to international trade with” “difficult” countries. It is easy to accuse the people here of being inefficient, lax, forgetful or slow. But very often things happen that are outside our power to do anything about.”

Linda Dörig, Managing Director of gebana Afrique

“We need to offer good salaries and cast our net wide in order to find good staff. If we manage to appoint someone, then a long induction phase begins, during which we unfortunately often have to reckon with setbacks. At the end of the day, we have to maintain Western standards for certification - and this in regions where even the basic sanitary facilities are lacking, and where corruption is rife.”

Christophe Toitot, gebana COO

In the first section we highlighted the reasons why doing business in Burkina Faso, Togo and Benin is difficult. So what is it that motivates us to operate in those countries?

We do it anyway

We have made it our mission to create access to world markets for small farmers in disadvantaged regions. This goes hand-in-hand with our intention to create as much value at source as possible, and to invest for the long term. It was more or less by chance that we opted for Burkina Faso at the time. We were looking for dried mango and pineapple. In Burkina Faso there are a great many mango trees, and drying facilities already existed there too. And in neighbouring Togo we found a partner for dried organic pineapple — with whom we are still working today.

This leads us to a second, important point: We select producers and countries which already have a certain degree of experience in processing their fruits and nuts. Starting from scratch makes it very difficult to establish a value creation chain, and it takes too long for us to be able to achieve a stable business operation. In order to have economic stability, investment in infrastructure, certification, quality and training is needed — as well as investment in good staff.

Nevertheless, it is still classed as a “difficult” environment, as the expectations of European customers are getting higher, while competition with producers in more favourable countries is on the increase. However, our patience and stamina have paid off many times before in tense market situations, and what applied then applies now: We’re here to stay!