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The Lighter Side Of Doing Business In Africa

The Lighter Side Of Doing Business In Africa
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 cocoa

Ghana is considered by many experts, to be the producer of the best quality cocoa bean in the world. Large chocolate companies like Cadbury’s in fact position some of their chocolate brands as having been manufactured from the premium Ghanaian cocoa. Such is the power of the acknowledgement of quality for the cocoa bean from that country.

Unlike most of the agricultural commodities in Africa, the Ghanaian cocoa industry is regulated and managed by a government para-statal. Considered the pride of Ghana, the cocoa bean carries an emotional stamp on the Ghanaian psyche and is fiercely discussed and argued in many social gatherings. Policies and pricing in that industry is common knowledge in the country. The rich tradition of cocoa farming has been passed down the generations and continues to enjoy strict adherence by all players in the industry. The regulators are strict and sticklers for adherence to processes. Having said all this, it is reasonable to believe that the second largest producer of this bean in the world, carrying such a stamp and responsibility of quality must operate in a well- run and organised industry. That is indeed the case.

With over 700,000 mt of cocoa produced, bulk of which is exported to reliable, eager and consistent buyers across the world in the bean form, this cherished member of the chocolate industry passes through the hands of very well informed farmers, diligent quality controllers and careful handlers to reach its destination. The Ghana Cocobod is a collection of great experts in agronomy, quality management, processing, marketing and trading, storage and handling. The machinery works efficiently and process are adhered to diligently. Even private licensed buyers who buy, collect and transport cocoa beans from the small scale farmer totally swear by the Cocobod specified documentation and processes to escape the wrath of the officials in case they get discovered for their carelessness.

In this scenario, Licensed Buying Companies [LBCs] are mandated by the Cocobod to reach out to the small scale farmers and buy, handle, certify and transport the beans from the inland farms to the large collection depots of the Cocobod. Large teams are set up by the LBCs to efficiently manage this activity. Olam had the honour of being the first foreign company with a licence to be an LBC and rapidly grew its presence in the industry. By the 4th year of our participation, we were among the top three buyers taking on well-established competition that had reputation, experience and history behind it. We were winning in inches but given the size of the industry, we were moving miles rapidly.

One preseason activity in this year-long crop action, is meeting the farmers one to one by the team members to assess and discuss his performance. At this time, a new pre-season advance is agreed, on the basis of which the farmer begins to work on his crop harvests. Soon enough, the farmer receives his advance and the whole process of harvesting, crop management, quality assurance processes and sun drying starts. The crop is bagged and handed over to the LBC for him to store and transport.

During the preseason activity in the year 1999, when the farmers network had been addressed across the regions we worked, the team was in Accra consolidating reports and sharpening its pencil to get cracking soon as the Cocobod signalled the opening of the season. The waiting can be quite tense because full readiness for the battle in hand is achieved about three weeks prior to the expected date. The team is hence raring to go. And then the uncertain wait begins. One such day, I had a visitor from the heartland cocoa growing area called Obuasi. Being a distant but important catchment area for us, I would visit the branch there at least twice during the season and once before. The visitor had come unannounced and the fact that he had travelled all that distance was surprising. He could easily have met my strong team in Obuasi, and resolved his issues.

As he trooped into my office, I noticed a tall man, neatly attired with a confident stride. A firm but long handshake later, he sat down to table his issue. He was a loyal agent for one of our competitors and was now wishing to associate with us and become our supplier. Normally, this would have been welcome but such requests are handled carefully by my experienced team. So here was a situation to be cautious. The reason he wanted to switch, he said, was because some incentives committed had not been paid to him. And as a matter of principle, he didn’t want to continue when he couldn’t take their word anymore. On the face of it, it sounded a convincing reason and when I asked why he wouldn’t want to save himself the trouble of travel and talk to my team on the ground, he suggested that he was an opinion leader and could actually motivate his entire village to switch sides. Hence, he thought it would be better to see the head of the business.  Now he had me licking my lips. These were not small numbers he was talking about even if his personal contribution was not very large. Provided, of course he was saying the truth. I hoped his need to switch sides was not because of some unresolved accounts with the competition which meant that he might be unreliable I thanked him for his visit and promised prompt action. I called my local team on the ground and Kennedy in Obuasi was on top of his game. He said that this man was a principled and head strong local politician with some clout. While his claim of being duped by our competition was to be verified, Kennedy was aware that all wasn’t well in that relationship. Two days later he reverted that his inputs on the ground intelligence, normally gathered during the off hours meeting with competitors in the local watering holes and chop bars, confirmed that the fallout was due to a misunderstanding of commitments made. The farmer however, was reckoned to be honest and was standing by his side of the bargain.

That confirmation was adequate because now we knew that the farmer wasn’t playing us up against competition. We quickly engaged him and his village into a supply arrangement and installed a preseason advance. The money was swiftly transferred and work began in the village on our behalf. The farmer called me soon enough and thanked me for the swift and professional actions we took. Thereafter my team on the ground took over and the farmer and his village joined our fast expanding list of suppliers. I forgot about this incident and moved on to other things. Our cocoa season was a thumping success.

The next year was the national elections. A new government was sworn in as the opposition won that election. The robust democratic processes of Ghana had kicked in and a new team was under test. Soon enough the cabinet was announced and the country went back to normal routines. Three months or so, later, at a small compact periodic dinner organised at the residence of the CEO of the Standard Chartered Bank, the fiery and outspoken new Finance Minister was a special invitee. These dinners normally had a six member invitee list and conversations were very close. About 30 minutes after the regulars had assembled, the new Finance Minister walked in to a warm welcome and I almost fell of my chair. Here was my tall cocoa farmer now very much a member of the new cabinet. He still had a firm handshake and his confidence had only grown. He had definitely aged though.

When he shook my hand I could see he enjoyed my embarrassment. He recounted the tale of our previous meeting and the positive outcome of that for him and his village, for the benefit of the rest of the guests. He was appreciative of the swift and professional actions we took. He connected that outcome to the positive impact of competition and more so from foreign investors who were being welcomed in his country. He claimed that decisive action by us helped him re-establish his standing in his community and was thankful to us.

So here was a reasonable sized cocoa farmer in charge of the Finances of one of the leading and fast growing African economies. I learnt yet again, how this continent of opportunities can throw up surprises. As luck would have it he went on to be one of Ghana’s most celebrated Finance Ministers and did a great deal of good for the country. Our association remained very cordial but obviously the meetings were very limited. To date we remain associated with his village even as he remains a confident but much older cocoa farmer now.

The Lighter Side Of Doing Business In Africa
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About MD Ramesh

MD Ramesh
Mr Moochikal (Ramesh) has a Bachelor’s Degree in Physics and Masters in Business from University of Bombay and XLRI Respectively. Ramesh has established a distinguished career in the Agri/Food Commodities sector in Africa for the past 20 years. He has lived and worked extensively throughout Africa and is currently responsible for Southern and Eastern African operations. MDR has worked close to farmer groups, worked alongside government programs, set up and run logistics, processing operations and distribution structures in African markets. He is often consulted by banks, government structures, NPO's and by businesses. MDR lives in Durban with his wife and 2 daughters and enjoys weekend Squash and Cricket.

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