South-South Trade Helping Countries During Economic Crisis

Weathering the global economic crisis is testing the stability of countries across the global South. But many countries are finding South-South trade and catering to their domestic middle classes can lift incomes and maintain growth rates despite the global turmoil.

A decade of boom in global markets as they became more integrated has brought rising incomes and created growing economies in the so-called emerging markets of the global South. Finance and investment from developed countries flowed into the global South and helped bolster growing economies, boosting incomes and bringing millions of people into the middle classes. But since the start of the global economic crisis in 2008, more and more countries in the global South have experienced turmoil, chaos and crisis.

The export-driven model that had served many Asian countries well – creating products for developed Western markets – is being tested by high unemployment in developed economies and declining purchasing power for the Western middle classes. Two trends that have grown in the past 10 years may offer a solution to this economic crisis. One is to build on the growth in South-South trade, and the other is to tap the growing middle classes of the global South by expanding the products and services available to them and further improving their quality of life.

It is well established that one of the key elements to securing sustainable prosperity is a thriving middle class. Middle classes in many countries in the global South are still classified as vulnerable – at risk of returning to poverty if the economy experiences a short-term crisis. Their resilience to an economic downturn needs to be strengthened, and this can be done by improving the quality of products and services available to them.

Building this market can also strengthen domestic job growth and help reduce a country’s dependence on imports.

One country facing up to this challenge is Indonesia. The New York Times recently reported that ports in Indonesia and other resource-exporting countries are quiet, as China’s demand for resources slows.

But while export markets are experiencing a slowdown, investment is going into Indonesia’s agricultural food-processing industry. Agricultural multinational Cargill (cargill.com) is building a cocoa-bean processing plant in the country, and the PT. Suprama (suprama.co.id/en/) instant-noodle factory is running at full capacity to meet the needs of the country’s growing middle class.

Many countries have experienced significant inflows of investment money as a result of stimulus measures led by the United States Federal Reserve (http://www.federalreserve.gov/faqs/about_12594.htm) to counter the economic contraction caused by the global economic crisis. This money, however, is uncertain and can just as easily disappear as it leaves to chase the next opportunity. Wise countries take measures to avoid being dependent on this fickle and fast investment funding.

Unlike in the Asian Crisis of 1997-1998 (http://en.wikipedia.org/wiki/1997_Asian_financial_crisis), many emerging-market countries now have large foreign currency reserves and robust stock markets. They have also built up their middle classes and increased consumption. Trade links with other countries in the global South have grown enormously since the late 1990s. For example, the trade between China and Africa, as announced by Chinese President Xi Jinping (http://en.wikipedia.org/wiki/Xi_Jinping) in early 2014, has surpassed US $200 billion for the first time, turning China into Africa’s largest trading partner

Despite a raging global crisis, in many emerging economies domestic spending is holding up and, in some cases, has never been stronger.

China now plays a key role in maintaining global economic demand. According to the global bank HSBC, Chinese growth adds “twice as many dollars to annual global demand as growth in the United States economy and far more than the economies of the European Union.”

An article in The New York Times (http://www.nytimes.com/2014/02/13/business/emerging-markets-in-asia-in-a-delicate-limbo.html?_r=0) suggested that global South countries can benefit from these trends by becoming an alternative to China’s “own increasingly high-cost producers of coal, aluminum, and other minerals” – as well as of clothing, shoes and electronics.

China is also in the process of altering its economy, from being the low-wage workshop of the world to an increasingly high-tech, high-value economy with growing science, technology and innovation sectors buoyed by heavy investment in research and development, for example China’s Xi’an Hi-tech Industries Development Zone (xdz.com). As China changes, other countries can step in and replace the industries that no longer find China an affordable place to manufacture their goods.

As an example, the Indonesian vice minister of trade, Bayu Krisnamurthi, announced that the Foxconn Technology Group of Taiwan (foxconn.com), which makes components and assembles devices for the popular Apple (apple.com) computer brand, is looking to set up a large factory in Indonesia.

“The other brands will come in their footsteps,” Krisnamurthi told The New York Times.

Other countries are bucking the crisis trend and using greater freedom to boost economic growth.

Cuba has been able to bounce back with free-market reforms. The Caribbean island has had its ups and downs economically since its revolution in the late 1950s. After the revolution, the country had several decades of impressive human development gains and built up enviable education and health care systems. But with the collapse of the Soviet Union in the early 1990s, the country lost its trade relationships and subsidies and was pitched into a major economic crisis.

During the Cold War, the USSR hoovered up almost all of Cuba’s exports of sugar, nickel and citrus fruit, and sold Cuba two-thirds of its food and 98 per cent of its fuel.

What was termed the “special period” after the collapse of the Soviet Union saw petrol become scarce. Many had to turn to cycling and walking to get around. Factories closed and food production declined.

One estimate by Hal Klepak of the Royal Military College of Canada, reported in The Observer newspaper, found the economy collapsed by 50 per cent in the five years to 1993.

Since then, Cuba has endured significant austerity and has struggled to regain its trade relationships and restore economic growth. Tourism has played a key role in keeping the country going.

And since 2008, various economic reforms have started to shift the economy away from over-dependence on the state and towards a more mixed market model.

Its capital, Havana, is a UNESCO world heritage site and is a popular tourist destination with one of the best-preserved former Spanish colonial architecture in the Caribbean.

When President Raul Castro took over from his brother Fidel, he began to slowly experiment with reforms to test how much market freedom could boost the economy and increase incomes. This has included allowing paladares, or privately-run restaurants, which are now flourishing and benefiting from the steady flow of tourists to the island.

The state now allows people to set up as independent traders in 200 occupations. Some have established entertainment businesses such as paint balling, others are running bars, or bookshops. It is now possible to easily change money in Havana and to find accommodation in private homes. Cash machines are spreading throughout the capital and more and more businesses will accept credit cards.

Registered businesspeople rose from 157,000 in October 2011 to more than 442,000 in 2013.

By being flexible, it is possible to discover new ways to grow economies and increase incomes, even in hard times. And increasing South-South trade is the way to go.

By David South, Development Challenges, South-South Solutions

Published: June 2014

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Women Empowered by Fair Trade Manufacturer

There is sometimes a great deal of negativity surrounding the issue of manufacturing in Africa. Some claim the risks of doing business are too high or that the workers are not motivated enough. But one garment manufacturer is out to prove the skeptics wrong. It pays decent wages and gives its mostly female workforce a stake in the business in a bid to drive motivation and make it worthwhile to work hard.

Liberty and Justice (http://libertyandjustice.com), one of Africa’s newest fair-trade garment manufacturers, is drawing attention for the way it is transforming women’s lives. It is also giving opportunities to a group often ignored by employers: women over the age of 30.

Liberty and Justice has factories in Liberia and Ghana, and 90 per cent of its workers are female. The company says it pays 20 per cent higher wages than the industry norm, and gives employees collectively a 49 per cent stake in the enterprise.

The global fair trade market – in which producers are guaranteed a minimum fair price and goods are marketed under the Fairtrade logo – has been growing year on year since it was established in the late 1980s.

The brand and certification process is managed by the Fairtrade Foundation (fairtrade.net) and is considered the most recognized ethical mark in the world.

More than 1 million small-scale producers and workers around the world participate in the Fairtrade system. As of 2013, fair trade has become a 5 billion euro-a-year (US $6.79 billion a year) global movement.

The label can be found on more than 30,000 products, ranging from tea to bananas to sugar and chocolate. It benefits more than 1.35 million farmers and workers around the world.

Liberty and Justice specializes in “high-volume, time-sensitive, duty-free goods for leading American clothing brands, trading companies, and other importers who care about exceptional quality, on-time delivery, social and environmental impact, and geographic diversity.”

The company wants to “transform the apparel supply chain from worker exploitation and environmental degradation to partnership and sustainability.”

Liberty and Justice was established by Chid Liberty (http://libertyandjustice.com/#about), the son of an exiled Liberian diplomat. His life had been a privileged one living amongst Africa’s overseas diplomatic community.

“I thought Africans drove (Mercedes) Benzes and dressed up every day and went to the best schools,” he told Fast Company magazine. “It even messed up my orientation on things like race, because we had all different kinds of people working in my house as a kid – German, Indian, Turkish – and all of them were serving us in some way. So I just kind of grew up thinking that Africans were at the top of the food chain.”

Living in a prosperous bubble in Germany, he had an awakening to the real conditions in Africa when he was in the seventh grade: “When I read only 2 per cent of people have a telephone, I was so confused,” he said. “I started to really understand my place.”

After the death of his father, Liberty started to wonder about life back in Liberia. He had moved on to working in Silicon Valley in California, helping technology startups get funding. Inspired by Liberia’s President Ellen Sirleaf (http://en.wikipedia.org/wiki/Ellen_Johnson_Sirleaf) and the end of the country’s 15-year civil war, he thought: “‘All right, well, I think I can apply that skill to providing economic opportunities for women.’ And decided to come here and try, in an industry that I knew absolutely nothing about.”

In 2010 he and Adam Butlein founded Liberty and Justice fair-trade apparel manufacturer. The company now makes tops and bottoms for brands such as Prana, FEED Projects, Haggar and others in the US.

“We really try to be worker-focused,” Liberty said. “And we actually think that’s what gave us a cutting edge at the end of the day: having really devoted workers. People don’t really believe in these types of factories in Africa, because they believe that African workers aren’t motivated. I think that’s hogwash.”

The company faced a dilemma common to any manufacturing enterprise trying to make goods for the highly competitive global export markets. How to produce the garments fast enough? A consultant had advised them to only hire young women. But Liberty and Justice had hired women in their 30s, 40s and 50s. Rather than firing everyone, the company decided to invest in the workers’ skills and get productivity to where it should be.

“These older women really set the culture of the Liberian Women’s Sewing Project, our first factory,” Liberty said. “They come to work an hour early – we never asked them to do that – they pray and sing together before they get on the machines, they’re very serious about the details of how your uniform should look, and you just wouldn’t have gotten that out of a bunch of 19-year-old girls the first time.”

Liberty and Justice expanded to Ghana in 2012 and launched the Ghanaian Women’s Sewing Project. It had to adapt to how things are done in Ghana, and that was a steep learning curve.

But the company has learned a great deal about how to succeed in Africa as opportunities increase alongside growing wealth and incomes.

“You could easily get squashed in Africa if you don’t know the right people. You’ll just get sent down rabbit holes every day,” Liberty said.

“In Liberia, the World Bank reports that about 40 per cent of children are enrolled in school. Among the women for whom we provide jobs, 98 per cent of their children are in school. So to me it’s very clear: You give a woman the opportunity to work, and her priority will be putting her kids in school.”

And he believes this is just the beginning of something big. As LIberia recovers from civil war, it will lead to an economic and innovation renaissance that will filter out across West Africa.

“I really think that the opportunities for innovation are right here. And once we get the social finance opportunities right, I think you’ll see a little West African impact renaissance happening. There’s still a lot of work to do. I hope Liberty and Justice can be a small part of that.”

By David South, Development Challenges, South-South Solutions

Published: March 2014

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=xIzkBgAAQBAJ&dq=development+challenges+Cheap+Farming+Kit+Hopes+to+Help+More+Become+Farmers&source=gbs_navlinks_s

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India 2.0: Can the Country Make the Move to the Next Level?

With the global economic crisis threatening to cause turmoil in the emerging markets of the global South, it is becoming clear that what worked for the past two decades may not work for the next two.

For India, the legacy issues of poverty still need to be addressed, and the country’s impressive information technology (IT) industry – which has driven so much of India’s growth – will face stiff competition from other countries in the global South. Some argue that if the IT industry hopes to keep growing and contributing to India’s wealth, things will need to change.

Unlike China, where heavy investment in infrastructure and a strong link between government and the private sector has driven the impressive manufacturing boom in the country, in India the government has de-regulated and taken a back seat, leaving the private sector and entrepreneurs to drive the change and do the innovation.

Many believe various areas need urgent attention if India is to continue to enjoy good growth rates in the coming years. Areas in need of attention include infrastructure, healthcare and education (thesmartceo.in), in particular the knowledge to work in the information technology industry of the 21st century.

One of the founders of Indian outsourcing success Infosys (infosys.com), executive co-chairman Senapathy Gopalakrishnan, told Britain’s Telegraph newspaper, “So many people’s lives have been changed by IT in India.

“People from the middle class and lower middle class have become global employees and have the opportunity to work with some of the best companies in the world. But the challenge for India is that this industry can only create so many jobs. IT is not going to solve the unemployment problem in India.”

But the coming next wave of change in information technology is an opportunity to be seized to reduce unemployment if enough people are educated to handle it.

According to Gopalakrishnan: “I strongly believe, and it’s backed up by data, that there is a shortage of computer professionals everywhere in the world, including India. The application of computers is growing dramatically and will continue to grow dramatically over the next 20 to 30 years. We have to train and create the workforce necessary to grow this industry.”

Various media stories have called this next phase India 2.0. If India 1.0 was the highly successful information technology outsourcing industry developed in the late 1980s, through the 1990s and 2000s, then India 2.0 is the next wave of IT innovation being driven by Big Data, automation, robotics, smart technologies and the so-called “Internet of things.”

Big Data is defined as the large amounts of digital data continually generated by the global population. The speed and frequency with which data is produced and collected – by an increasing number of sources – is responsible for today’s data deluge (UN Global Pulse). It is estimated that available digital data will increase by 40 per cent every year. Just think of all those mobile phones people have, constantly gathering data.

Processing this data and finding innovative ways to use it will create many of the new IT jobs of the future.

“We are living in a world which is boundary-less when it comes to information, and where there is nowhere to hide,” continues Gopalakrishnan, “If you have a cellphone, somebody can find out exactly where you are. Through social networks you’re sharing everything about yourself. You are leaving trails every single moment of your life. Theoretically, in the future you’ll only have to walk through the door at Infosys and we’ll know who you are and everything about you.”

Unlike in the late 1980s, when India was the pioneer in IT outsourcing for large multinational companies and governments, competition is fierce across the global South. The mobile-phone revolution and the spread of the Internet have exponentially increased the number of well-educated people in the global South who could potentially work in IT. China, the Philippines, Kenya, Nigeria and Ghana are just some of the countries heavily involved in this area.

If India fails to meet the India 2.0 challenge, it risks seeing its successful companies and entrepreneurs leaving to work their magic elsewhere in Asia and the new frontiers of Africa, just as many of its best and brightest of the recent past became pioneers and innovators in California’s Silicon Valley.

India’s IT sector contributed 1.2 per cent to the country’s gross domestic product (GDP) in 1998; by 2012, this was 7.5 per cent (Telegraph). The IT industry employs 2.5 million people in India, and a further 6.5 million people indirectly. IT makes up 20 per cent of India’s exports and, according to the National Association of Software and Services Companies (nasscom.in), the industry has revenue of US $100 billion.

India is now the IT and outsourcing hub for more than 120 of the Fortune 500 companies in the United States.

Out of India’s 3.5 million graduates every year, 500,000 are in engineering – a large pool of educated potential IT workers. India produces the world’s third largest group of engineers and scientists, and the second largest group of doctors.

IT has become a route that catapults bright Indian youth into 21st-century businesses and science parks and to the corporations of the world.

One visible example of the prosperity brought by IT services in India is the booming technology sector based in the city of Bangalore (also called Bengaluru) (http://en.wikipedia.org/wiki/Bangalore).

Reflective of the contradictions of India, Bangalore has 10 per cent of its workforce now working in IT, but also 20 per cent of its population living in urban slums.

The nearby Electronics City (elcia.in) is considered “India’s own silicon valley and home to some of the best known global companies.”

To date, aspects of India 2.0 are already taking shape.

One company is called Crayon Data (crayondata.com). It uses Big Data and analytics to help companies better understand their customers and increase sales and deliver more personal choices.
Edubridge (http://acumen.org/investment/edubridge/) is helping to bridge the gap for rural youth with varied education backgrounds and long-term jobs. Edubridge trains youth for the real needs of employers to increase the chances they will get a job. This includes jobs in the IT business process outsourcing sector and banking and financial services.

Infosys is working on innovations for the so-called “Internet of things,” in which smart technologies connect everyday items to the grid and allow for intelligent management of resources and energy use. Infosys is developing sophisticated software using something called semantic analytics – which analyses web content (http://en.wikipedia.org/wiki/Semantic_analytics) – to sort through social media and the Internet to track customer responses to products.

Elsewhere, former Infosys Chief Executive Nanden Nilekani is involved in a Big Data innovation to address the problem of social and economic exclusion of India’s poor. Called Aadhaar (http://uidai.gov.in/), the government-run scheme is gathering biometric data on every Indian to build the world’s largest biometric database. After being enrolled and having fingerprints and iris scans taken, each individual is given a 12-digit identification number. So far 340 million people have been registered with the scheme, and it is hoped 600 million will be registered by the end of 2014.

The idea is to use a combination of access to mobile phones and these unique ID numbers to widen access to all sorts of products and services to poor Indians, including bank accounts for the millions who do not have one. Many people, lacking any identity or official acknowledgment they exist, were prevented from engaging with the formal economy and formal institutions. Being able to save money is a crucial first step for getting out of poverty and it is hoped information technology will play an important role in achieving this.

By David South, Development Challenges, South-South Solutions

Published: March 2014

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=xIzkBgAAQBAJ&dq=development+challenges+Cheap+Farming+Kit+Hopes+to+Help+More+Become+Farmers&source=gbs_navlinks_s

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Global South’s Middle Class is Increasing Prosperity

The global middle class is on the rise – and this is creating both challenges and opportunities. As poverty rates have come down across the global South, many countries have seen a rise in the proportion of their population categorized as “middle class”. Globally, being middle class is defined as a person able to consume between US $4 a day and US $13 a day (ILO).

According to the Organization for Economic Cooperation and Development (OECD), most of this growth will be in Asia and the region will soon make up 66 per cent of the world’s middle class. Historical experience shows that members of the middle class quickly become absorbed in spending their accumulated capital on housing, equipment, industry and business, health and education. In countries with a growing middle class, policy makers need to show a strong interest in creating stable economic conditions to encourage this expanding consumption and domestic demand, the OECD advises.

Growth of the world’s middle class took off after 2001, with an additional 400 million workers joining this group. The McKinsey group of consultants found the total number reached 2 billion in a dozen “emerging nations” in 2010, collectively spending US $6.9 trillion every year (McKinsey).

Forecasters predict a further increase in the middle class across the global South will bring with it a surge in consumption (a combination of spending and demand). Areas being highlighted by various studies and reports include China’s small and mid-size cities, other areas of East Asia and Africa.

Middle class spending in these dozen emerging nations could reach US $20 trillion during the next decade – twice the amount of consumption occurring in the United States right now (McKinsey).

The result is a re-shaping of populations, with growing numbers of people now neither rich nor desperately poor, but landing in the middle of the income distribution.

And local competitors in the global South are fighting hard for these consumers on their own turf.

The Hangzhou Wahaha (http://en.wahaha.com.cn/) beverage maker in China has been able to compete against multinationals such as Coca-Cola and PepsiCo, according to McKinsey. It has turned itself into a US $5.2 billion business using a multi-pronged strategy: targeting rural areas, catering to local needs, keeping costs low and positioning itself as the patriotic choice.

And this change is also occurring in Africa, where a growing middle class is fuelling sales of refrigerators, television sets, mobile phones, motors and automobiles across the continent, according to the OECD. In Ghana, for example, car and motorcycle ownership has risen by 81 per cent since 2006.

According to the African Development Bank (AfDB), Africa’s middle class has reached 34 per cent of the population, or 350 million people. In 1980, it was 126 million people, or 27 per cent of the population.

Countries with the largest middle classes in Africa include Tunisia and Morocco, while Liberia and Burundi have the smallest number of people in the middle class.

The economic growth that is fuelling this middle-class surge is coming from a combination of increasing investment in the services sector, the tapping of the natural resource sector and better economic policies in the past two decades. Africa’s middle class is driving growth in the private sector and boosting demand for goods and services, most often also provided by the private sector.

“The liberalization of African economies has resulted in improved efficiencies and led to a rapid growth in the service sector, which has spurred the growth of the middle class,” Lawrence Bategeka, a principal researcher at the Uganda-based Economic Policy Research Centre, told The East African newspaper.

How important the middle class is to increasing consumption levels can be seen in the cases of Brazil and South Korea.

According to the OECD, both countries had similar income levels and growth rates in the 1960s. But by the 1980s, high income inequality in Brazil capped the middle class at 29 per cent of the population. In South Korea in the 1980s, the middle class population reached 53 per cent. This larger middle class population enabled South Korea to switch from an export-driven growth strategy to domestic consumption.

While Brazil wasn’t able to do this at the time, it has since made impressive gains in reducing poverty – from 40 per cent of the population in 2001 to 25 per cent in 2009. This has seen the middle class grow to 52 per cent of the population and boosted domestic consumption.

While a rising middle class in the global South is good news for improving human development and living standards, the OECD found much of the new middle class was vulnerable and could easily slip out of that category. They also often lacked enough income to purchase more expensive durable goods such as automobiles (OECD Yearbook 2012).

The success of this fragile but growing middle class will be key to how well the global economy fares in the coming years.

A new report by the UN’s International Labour Organization (ILO) argues that the global South’s growing middle classes are just the thing to spur growth across the wider world economy.

“Over time, this emerging middle-class could give a much needed push to more balanced global growth by boosting consumption, particularly in poorer parts of the developing world,” said Steven Kapsos, one of the authors of the report.

In Indonesia, an example of the economic impact of the middle class trend in action can be seen in the surging life insurance business.

Association of Indonesian Life Insurance Companies (AAJI) chairman Hendrisman Rahim believes the growing middle class are potential customers for the country’s thriving life insurance industry.

“They are the ones who have the need to be insured and can afford to purchase a policy. Extremely rich people are financially capable [of buying], but may not have the need. Extremely poor people have the need, but require financial assistance to be insured,” he said to the Jakarta Post.

As the Indonesian middle class increases, the life insurance industry is expecting to see revenue rise by 30 per cent in 2013.

By David South, Development Challenges, South-South Solutions

Published: February 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Ugandan Fish Sausages Transform Female Fortunes

 

What to do when your food production enterprise is just not making much money? It is a common problem in the global South, where farmers and fishers often struggle to survive and can face the threat of bankruptcy and destitution when trying to provide essential food for their communities.

Some fish farmers in Uganda – many of them women – were caught up in this dilemma, unable to find a way to make a good income from the fish they were harvesting.

But a lucky hire for one fish cooperative, in the form of a humble secretary, has turned into a business and food success story that is getting set to jump across borders in Africa.

Lovin Kobusingya is the former secretary and university graduate who, through tenacity and ingenuity, has built a business selling fish sausages that has become a hit in Kampala, Uganda in East Africa.

Through trial and error, Kobusingya came upon the idea of turning the fish into sausages. The product, basically unknown in Uganda before, became a tidy solution to the dilemma of how to sell fish at a premium price that could boost the income of the farmers.

She joins the growing number of female entrepreneurs in Africa. Africa has the highest rate of female entrepreneurship in the world, according to the World Bank, which says two-thirds of women in Africa are in the labour force.

The 29-year-old mother of two set up Kati Fish Farms (http://katifarms.org) and Kati Farm Supplies Ltd. and now sells 500 kilograms of fish sausage a day.

Located in the country’s capital, Kampala, Kati Farm Supplies Ltd. prepares and sells a wide range of food products made with chicken, beef, fish, pork, goat, lamb and honey.

Kobusingya is notable not only for her success as a food entrepreneur, but also for the way she has generated attention and excitement around her business and products.

According to Kenya’s Nation newspaper, Kobusingya boosted her profile by gaining customers in Uganda’s hotels.

She graduated six years ago from Makerere University in Kampala (http://mak.ac.ug) and originally planned to go into banking. Like many graduates, she found it hard to break into the sector and get a steady job. After a year of frustrating job hunting, she found a position as a secretary with a fish cooperative society.

“I got a job after a rigorous interview,” she told the Nation. “It was not well-paying.

“The most challenging part of the job was dealing with fish farmers, who were grappling with an unsteady market for their produce.”

Despite all the problems facing the fish industry, Kobusingya became inspired to do something about it. Rather than just hoping market prices would turn in favour of the fish farmers, she diversified the cooperative’s products to add value to the raw fish ingredients.

“Most of our members were women who had taken up aquaculture (fish farming),” she said. “At the time, this was still a novelty.”

It is a tale of trial and error, as Kobusingya tells it.

“We tried selling our products, such as fish feeds, and even selling directly to consumers. But I felt that there was something more we could do to help the farmers even more.”

Becoming frustrated with the constraints of her role, she decided to start the business on top of her day job. She started buying fish directly from the farmers, filleting it herself and selling it to customers.

Yet, still fish was not selling and going to waste.

Then the eureka moment came: make fish sausages. This had never been done in Uganda and she set about undertaking research on the Internet to learn how to do it.

“I assembled bits and pieces of information from the Net on how to make the sausages,” Kobusyingya said.

“Everywhere I went seeking more information, people thought I was out of my mind.

“Nobody had heard of fish sausages but I received support from the Uganda Industrial Research Institute in 2011. They helped me to develop a formula for the product,” she said.

With the new product developed, Kobusingya tried selling it to the hotels in Kampala. And this was the crucial moment when her fortunes changed: people were excited by the new and novel product.

The first orders earned her US $800 and with that jolt of cash, she was able to launch the product in February 2012.

Production started at 100 kilograms of fish sausage a day. By the third month, she was able to produce 500 kilograms a day. And because the product is so popular, she is running hard to meet demand from hotels, food outlets and institutions.

Expanding into selling smoked fish and frozen chicken and beef, she is now working with 470 fish farmers, most of whom are women.

“This business has motivated farmers throughout Uganda,” she said.

“The enterprise, now worth about Ush50 million (US $19,230), has 16 permanent employees,” she said.

She also took the fish sausages on the road and introduced them to the SmartFish trade event in Lusaka, Zambia, where they became a hit with attendees.

SmartFish (http://www.smartfish-coi.org/#!home/mainPage) is funded by the European Union through the European Development Fund and is implemented by the Indian Ocean Commission in partnership with regional trade organizations. The objective of the event was to increase trade within the region.

With her confidence further boosted by the positive international reaction, Koubusingya is exploring how to sell into Kenya, Tanzania, Rwanda and Burundi.

“I always knew I was a businesswoman,” she told The New York Times. “When I was in high school, I used to sell illegal sweets. And I made money.”

“I am very happy and proud” of being a female entrepreneur. “When I was young, they said: ‘A woman is a woman – a man should take care of you.’ But women are actually contributing a lot more than men. We always find ourselves multitasking,” when juggling work and a family.

By David South, Development Challenges, South-South Solutions

Published: November 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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