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    Buy in Africa, Sustain Local Communities

     

     
     
    © International Trade Centre, International Trade Forum - Issue 3/2006

    © ITC/ S. Betemps

    A Côte d'Ivoire food company's contracts with aid agencies has provided jobs and income for local communities. ITC's buyer-seller meetings for the aid sector played a part.

    When Marie Diongoye Konaté first encountered ITC at an exporters' association meeting in Bamako, Mali, in March 2005, she was very much struck by the "Buying from Africa for Africa" initiative it was promoting. It was an idea to which Ms Konaté wholeheartedly subscribed. It was also a primary motivation behind Protein Kissèe-La (PKL) S.A., the Côte d'Ivoire food processing and trading company that she set up in 1994 and of which she is currently Chairman and Chief Executive Officer. The company is located in the Vridi industrial zone, near the port and airport of Abidjan.

    Ms Konaté's story seemed to provide a useful model of how the Buying from Africa for Africa initiative could work in practice. She had already gained experience of making available emergency supplies to relief agencies through her work with the European Commission's ECHO programme and French non-governmental organizations Action Contre la Faim and Médecins sans Frontières. So ITC invited Ms Konaté to share her experience with other Africa-based firms and international relief agencies during an ITC-organized buyer-seller meeting held in Dakar, Senegal, later the same year.

    The Dakar event proved to be a turning point for PKL, with each agency given the opportunity to define its contracting requirements and each firm the possibility to present its products, while ITC provided on-the-spot back-up documentation and information for participants. According to Ms Konaté, immediate direct benefits for PKL included meetings with ten buyers from the aid agencies, having her company listed on agency databases and gaining valuable insights into supplying food aid for the African market.


    African firms can supply quality products that meet international satandards.
    © PKL

    Since then, PKL has won seven invitations to tender in a period of 11 months. It also supplied some 5,000 tonnes of food aid to the World Food Programme (WFP), valued at €1.8 million, of which €1.1 million has been returned to the local communities in payment for raw materials, with other spin-offs including €200,000 for services such as transport and €20,000 in PKL regular employees' and daily workers' salaries. Further, the WFP contracts have provided direct benefits to hundreds of local farmers and indirect benefits to some 80,000 people in local communities.

    According to Ms Konaté, for each €100 of food purchased by the WFP, €60 was returned to the local rural economy and the remaining €40 to the national economy. She says the real strength of the Buying from Africa for Africa initiative is to guarantee local firms' long-term economic viability, allow them to create jobs, train staff, develop their activities and customer base and have a positive impact on the quality of life of local communities.

    Barriers to local sourcing



    Aid agencies agree that buying goods and services through local field offices makes good business sense because it lowers transaction costs and shortens delivery times. Currently, however, local sourcing accounts for just 10% of the total humanitarian aid in Africa. PKL's Marie Konaté says constraints exist within the system, not least the prejudice against local products and the difficulty in gaining direct access to aid agency decision-makers. She says this is why it is important to get to know ITC's Buying from Africa for Africa initiative and its buyer-seller meetings. "If I'd known ITC sooner, I would probably have added five years to my life," she says.

    Once a firm becomes an established agency supplier, the likelihood of getting further contracts increases significantly. Even then, cautions Ms Konaté, the contracts themselves often reveal little understanding of local conditions and often stipulate unrealistic conditions, for example, a caution of 100% of the value of the contract and payment upon delivery - if not 30 to 60 days after delivery!

    "Get real," says Ms Konaté, "this is the Third World. We don't have that kind of money to pay up front. And I can't see myself asking my local growers to give me six months' credit on the produce they are delivering today until the agency pays me. Can you imagine me asking a poor farmer to wait six months to be paid?" Get-togethers with the aid agencies, for example at ITC buyer-seller meetings, provide an opportunity to debate such issues.

    For their part, says Ms Konaté, local suppliers should, in their international contacts, behave with professionalism, reject corruption and only offer what they are in a position to supply. They should not cut corners on quality and should make known in good time any difficulties in executing the contract and be ready to replace any non-compliant product immediately. Further, she says, it is essential to have good management practices (her own company is ISO 9001 and 2 certified), respect national and international laws (for example, not employing child labour) and, above all, be loyal to suppliers, employees and partners. In this way, local firms in Africa can become valued partners in the effort to provide relief aid.

    "When you start from the idea that people have nothing," says Ms Konaté, "ensuring that part of the costs of a programme are spent in Africa is already a contribution to development. The opportunities are there but you need motivation, perseverance and energy."




    Trading with the aid agencies

    Every year, the United Nations spends $3.6 billion in aid in Africa alone. It buys just 10% of supplies locally. Many agencies are trying to reform their procurement practices to buy more from local firms, but they can have trouble finding the right suppliers. ITC matches suppliers of aid items with international aid agencies through programmes such as Buying from Africa for Africa. These contacts and resulting sales help firms gain experience in transacting with international buyers who require high standards of service. Since 2001, ITC's buyer-seller meetings in this programme have generated new business worth about $35 million between international agencies and firms.

    For more information about the Buying from Africa for Africa programme, contactbetemps@intracen.org

    Christopher Simpson, ITC consultant, interviewed Marie Diongoye Konaté during ITC's annual meeting in April 2006, when she helped present its poverty-reduction programmes to stakeholders.