Aggregation key tool to accessing free trade area
A fortnight ago at the launch of the Kenya SME Competitiveness Report in Nairobi, a basic but pertinent scenario was posed to the chief guest during the Q&A session.
A passionate avocado farmer who adds value by extracting oil expressed to the cabinet secretary frustration over her inability to scale up and help her 30 group members move their efforts to the next level, thanks to a myriad of challenges.
Her situation rekindled a similar one posed to a panel I had participated in a week earlier at the Strathmore University’s Entrepreneurship Conference where a builder wondered how he would access contract opportunities under the government’s ongoing affordable housing scheme, one of the pillars of the Big 4 Agenda.
The two cases mirror those of the 445 million MSMEs found in Africa.
In the first instance, the CS offered an instant solution- relevant institutions under his ministry to hand-hold the lady-farmer to become a beacon to others.
In the conference case, I advised the contractor to join hands with colleagues and front a bigger enterprise to secure supply contracts.
In last week’s article, business format and micro-franchising came out as the easiest solutions to quickly seize opportunities under the African Continental Free Trade Area (AfCFTA) and that some models are better focused than others to address this. In answering the farmer, the minister reiterated that the government is setting up a permanent site where MSMEs can exhibit throughout the year.
While this is a good starting point and a take-home lesson for other African governments not already doing so, aggregating producers in different value chains in targeted platforms and marketing them under one strong brand, then franchising the brand across the 55 AfCFTA countries is the disruption needed to bring the 445 million African MSMEs to the dining table.
Individual MSMEs would produce and even individually brand their wares but the brand that hits the market is the aggregated franchise brand.
Whole Foods Market in the USA (www.wholefoodsmarket.com) has already proven the power of aggregation in accessing markets, there’s no need for African businesses to re-invent the wheel. Indeed, the Kenya Government seems to have got this right, at least in the housing pillar of the Big4 agenda.
Iron smiths, carpenters and wood fitters from three popular locations in Nairobi- Gikomba, Kariobangi South and Ngong Roadhave been aggregated into one entity which has been contracted to supply all windows, doors and wooden fittings to the thousands of low-cost houses currently under construction by government.
This is the way to go for African MSMEs hoping to access the AfCFTA market. Individually they are weak but together they are strong.
Each would remain the local player that they are always comfortable to be but the synergy between them in the aggregate franchise brand propels each one to the local, national, regional, continental and global markets.
When the aggregate brand franchises across the target AfCFTA market, using the micro-franchise model ensures they connect with their peers at the bottom of the income pyramid (the majority in Africa)in each market.
The aggregate franchise brand appoints a master franchisee in each country to run a chain of warehouses from which sub-franchised micro-franchisees get supplies to sell to the last mile.
Alternatively, the aggregated franchise brand sets up own warehouses and directly appoints the army of micro-franchisees to sell to the last mile in each territory.
AfDB has been considering an IT platform through which African producers of certified natural organic products can sell.
If and when this materializes, it will enable individual micro producers to access the big AfCFTA market under a common brand. There’s strength in numbers and African MSMEs hoping for a share of AfCFTA can only benefit through aggregation and franchising.
The writer is the Project Promoter and Lead Franchise Consultant at Africa Franchising Accelerator Project aimed at achieving faster African socio-economic integration under AfCFTA.
We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise. We turn around struggling indigenous franchise brands to franchise cross-border.
We settle international franchise brands into Africa to build a well-balanced franchise sector. We create a franchise-friendly business environment with African governments for quicker African economic integration.
