Andrew Rugasira: ’Good African’ banks on the feel-good factor
Thursday, November 22, 2007
Good African Coffee, available in Waitrose supermarkets across the UK, has not taken off as quickly as founder Andrew Rugasira would like. But, among coffee farmers in Uganda?s remote Rwenzori Mountains, it is an easy sell. The mountains? farmers have spent generations at the grubby first stage of the coffee production chain, lacking education, market knowledge, and electricity in their small farms at the base of the clouds.
One farmer, Charles Kahitson, had never tasted brewed coffee until two years ago.
Until Good African Coffee arrived, he says, local farmers had not even known the use of the arabica beans they picked. Many surmised they were used as bullets for the Congolese guerrilla armies that camped in the border regions around the Rwenzoris. A poverty of information led farmers to sell their beans to “the middleman”, says Mr Kahitson, at whatever price he quoted.
Good African Coffee, available in Waitrose supermarkets across the UK, has not taken off as quickly as founder Andrew Rugasira would like. But, among coffee farmers in Uganda?s remote Rwenzori Mountains, it is an easy sell. The mountains? farmers have spent generations at the grubby first stage of the coffee production chain, lacking education, market knowledge, and electricity in their small farms at the base of the clouds.
One farmer, Charles Kahitson, had never tasted brewed coffee until two years ago.
Until Good African Coffee arrived, he says, local farmers had not even known the use of the arabica beans they picked. Many surmised they were used as bullets for the Congolese guerrilla armies that camped in the border regions around the Rwenzoris. A poverty of information led farmers to sell their beans to “the middleman”, says Mr Kahitson, at whatever price he quoted. “The key issue for this country?s farmers is getting them value out of the supply chain,” says Mr Rugasira, an entrepreneur, economist, and lay preacher. “They need to be empowered, and to do so they need better skills.”
Good African Coffee, the venture he established in 2005, follows a business model that blends capitalism with developmental assistance. The company has invited Rwenzori Mountain farmers to form production groups of 50 people. It then trains the groups’ farmers how to harvest arabica beans through the higher-value “washed” technique rather than the ?dry? technique that prevails on the mountainside. Washed Ugandan Arabica was commanding a 33 per cent premium to Dry Ugandan Arabica in the Rwenzori market town of Kasese in early November.
Good African Coffee has committed itself to investing half its profits in sustainability projects to create a virtuous circle of higher yields leading to better lives. It teaches the production groups husbandry skills such as mulching and pruning, grants each group a USh426,375 ($250) pulping machine to accelerate the harvest, and sponsors HIV awareness classes.
In the process, it has encroached on space traditionally held by the galaxy of non-governmental organisations (NGOs) that operate in Uganda and is openly derisive of their efforts. “We believe that ’trade not aid’ is the only viable strategy for African economic and social development,” reads a statement on Good African?s coffee packages. “Aid handouts stifle creativity and lead to crippling dependency.”
The company?s profits are negligible: it made a mere USh3.8m (?1,100) on turnover of ?107,000 in the two years to December 2006. Its business model, however, has paid off. Since 2005, Good African has formed more than 250 production groups in the Rwenzori Mountains. They constitute an informal co-operative of 14,000 coffee farmers.
Its revenues come from UK supermarkets, where it has been able to tap developed-world tastes for socially conscious consumption. “The thing that?s getting us distributed in Waitrose, Tesco, Sainsburys,” says Mr Rugasira, “is the feel-good factor.”
He sees the Good African brand expanding like a socially principled version of Richard Branson?s Virgin enterprises. “We?re starting Good African Chocolate and Good African Tea,” he says, “and in the future there should be Good African Fruit, Good African Music ?”
In Kampala, Mr Rugasira owns one of the capital?s trendiest cafes ? a favourite of the NGO community. Two more outlets will be opened in March, when they will be rebranded as Good African Caf?, featuring Afro-beat music and cups of brewed Rwenzori arabica.
So far, however, few venture capitalists share in his vision of a wholesome business empire. Grofin, a VC firm backed by the Shell Foundation, has invested a modest amount. “There?s a lot of good money trying to find good projects like this,” he says,” but in Africa there is huge information asymmetry.”
His own financing difficulties, he points out, are part of a larger issue. African entrepreneurs need access to capital at non-usurious rates, he says, especially small entrepreneurs like sawmill operators for whom a $10,000 tool could double productivity.
Alongside Bob Geldof and other Africa pundits, Mr Rugasira has argued such points in television appearances in Britain. There, his articulate, University of London-trained bearing has earned him a condescension-edged reputation as a “Good African”.
If Uganda?s “Good African” is not winning venture capital ? or even receiving phone calls ? then who is? The question, Mr Rugasira says, is frustrating. Without significant financing, the Good African enterprise could be a case of good intentions proving unviable.
The most capital-intensive part of Good African?s growth plan is to build factories that will process its coffee and tea.
“We?re seeing if we can scale up a sustainable business model that features local processing,? he says, ?but the hard time we?re having in finding capital makes me wonder if the idea of local value addition being positive is just rhetoric.”
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