Guests follow proceedings during Kenya Road Show for Intra-African Trade Fair 2023 meeting in Nairobi on August 30, 2023.
As was clear in last week’s piece, unlocking sustainable supply chains is as much about the supply of raw materials as it is about whether there is a market for the finished goods.
As any entrepreneur is wisely advised: Know your market. Are there ready buyers for Cecilia’s products?
Going back to our manufacturer Cecilia, who chose to go into bamboo farming, a green industry, her ‘pathway to market’ experience for bamboo products was not easy. Cecilia had to determine who would buy her finished bamboo products and how competitive they were.
Entrepreneurs want to make money, regardless of which industry they choose to pursue.
Within the continent, there has been a signalling by African governments to boost the competitiveness of products and open up access to a wider regional and continental market. The African Continental Free Trade Area (AfCFTA) is a classic example of this, ratified by 44 African states, it provides great opportunities to boost intra-African trade, promote sustainable development, and expand the markets for green business.
Today, intra-Africa trade stands at a mere 18 per cent, meaning that the majority of our trade happens with countries outside our own continent. In contrast, Europe boasts a staggering 80 per cent intra-regional trade, while Asia enjoys around 60 per cent. This stark difference highlights a golden opportunity for businesses like Cecilia’s to tap into a vibrant marketplace right at her doorstep! Imagine the potential of connecting with a continent rich in resources, creativity and innovation.
Intra-African trade
By embracing intra-African trade, we can unlock endless possibilities that boost our economies, both locally and regionally. A 2023 UNEP report projected that by 2030 AfCFTA would have increased intra-African trade demand for transport and logistics by 28 per cent and intra-African agricultural trade would increase by 574 per cent. For entrepreneurs like Cecilia, AfCFTA could be instrumental in them gaining easy access to this wider market at an affordable rate.
In today’s vibrant and competitive landscape, every business needs scale and profitability to survive. A ready and robust market is crucial, and the government plays a transformative role in nurturing local entrepreneurs, empowering them to thrive and flourish.
One of the most exciting opportunities for growth lies within government initiatives themselves. I would boldly assert that for Kenyan and African entrepreneurs to gain the momentum they need, government incentives are not just beneficial, they are a prerequisite.
The Affordable Housing Programme in Kenya is already part of the Big Four Agenda, aiming to uplift lives by providing decent housing for low- and middle-income families. Initiatives like these offer a ready “market” and could unlock the potential of local entrepreneurs.
Assuming a goal of the Affordable Housing Programme is to create inclusive opportunities, especially for local Kenyan entrepreneurs, imagine the immense demand for doors, tables, chairs and countless other wood-based products that this scale of investment will create!
This is not just a chance to supply materials; it’s an invitation to be part of a transformative journey that will create jobs, spur innovation and uplift lives.
By harnessing this opportunity, businesses can unlock new avenues for growth while contributing to a brighter future for all Kenyans. For countries like ours that face a significant debt burden, growing our economy is not a “nice to have” but rather a “must have”.
Buy Kenya, Build Kenya' strategy
If Cecilia had a guaranteed order from the government, it would be easier for her to secure funding from investors or loans from financial institutions, spurring a positive feedback loop that would encourage more entrepreneurs and build and grow the industry.
Picture the impact of genuine public-private collaboration, like the 'Buy Kenya, Build Kenya' strategy, which mandates that government agencies reserve 40 per cent of their procurement budget for locally produced goods and services.
Like Cecilia, many aspiring entrepreneurs, including green industries, face a daunting reality: the market is often controlled by brokers and middlemen who exploit them. These entrepreneurs encounter predatory practices that threaten their investments through unfair pricing and exclusion from lucrative markets.
Obviously one of the ways entrepreneurs can curb this type of exploitation is through the formation and strengthening of co-operatives which negotiate a minimum price for farmers. There have been successful cooperatives in Kenya which green industry entrepreneurs can use as a template to develop new ones or leverage the infrastructure within existing cooperatives to market their products.
Entrepreneurs also face difficulty accessing markets due to corruption in certain government agencies, there may be officials who will prioritise imported goods that are of a poorer quality over better locally produced goods, in order to benefit personally. This is so especially in the green industry which is experiencing global growth.
The truth is that, as Cecilia learned quickly, without a market, there is no business. And in the end, for green industries to flourish, cultivating an enabling environment, supported by government policy, and in partnership with both the public and private sectors, is non-negotiable.
Wanjira Mathai is the MD for Africa & Global Partnerships at the World Resources Institute and Chair of the Wangari Maathai Foundation
