Strengthening Linkages and Facilitating Trade, Skills & Knowledge Transfer -- The Potential of the Diasporas Wanja Michuki CEO, The Highland Tea Company.

Strengthening Linkages and Facilitating Trade, Skills & Knowledge Transfer

--The Potential of the Diasporas

Wanja MichukiCEO, The Highland Tea Company

October 6, 2006

Facilitating Access of Local Companies to Overseas Markets

What Has Been Done…

Local Trade Assistance Workshops for Value-Added Products(e.g. USAID: Kenyan tea companies; textiles)

- Workshops educating local companies on:- Marketing strategies- price, placement, promotion- Distributors and retailers- US national trade regulations (FDA, Bio-terrorism regulations;

product classification coding, etc…)- Export Process (shipping clearing)

Overseas Trade Shows- Product exposure to the trade (consumers, brokers, distributors,

retailers)- Supermarkets and Foodservice tours- Pre-arranged meetings with distributors

Product Representation- No facility created to promote continual representation i.e. a

point person (s) to engage brokers, distributors and retailers in overseas markets after workshops and trade shows

Adequate Market Readiness- Trade assistance programs do not discuss marketing

budgets required to support products (demonstrations; promotional discounts; slotting fees; advertising fees)

- Limited partnership structures that can facilitate consumer product exposure (word of mouth; PR, or media campaigns)

- Sub-par local capacity to produce products at an acceptable standard for the American consumer

Inland Supply Chain Management- No contacts with warehouses; fulfillment centers; shipping

companies resulting in poor distribution systems

What Has Not Been Done…

Diaspora Participation in Trade Programs

- Diaspora are not included in trade assistance programs therefore no cross border linkages are established at the end of most trade assistance programs to create a foothold in target markets

Limited formal organization of Diaspora groups with aligned trade interests

- Diaspora groups must be self-selecting based on time, similar interests and capital availability to support ongoing marketing and distribution

- Diaspora groups need to be identifiable and easily accessible

Financial capital for effective marketing and product placement

Timely market-response information and ability to respond quickly to market trends (e.g. Fair Trade and Organic-mania)

Limited ability to compete with US-based peers due to lack of access to grants or concessions that are available to US-companies

What Is Missing…

Inclusion of Diaspora (entrepreneurs or otherwise) in Trade Assistance Programs

- Establish networks with Diaspora nationals when trade delegations come to the US for Trade shows

- Notify Diaspora members when workshops are being held in home countries

Identification and Organization of Diaspora Groups- Overseas representation of local company interests: tax

identification; marketing; trade associations - Lobbying groups for preferential treatment that reduces

capital costs of market entry (e.g. minority certification status provides exemption of slotting fees)

- Linkages to US-businesses in related industries through personal and professional networks

- Access to capital- Provision of a direct consumer base

What should be addressed in policy…

Collective organization of Entrepreneurs in Home Countries

- Enables economies of scale and shared costs of supply chain management e.g. consolidated shipping; warehousing; and fulfillment

- Create marketing and distribution efficiencies e.g. presentation of a “basket of goods” rather than specific products to brokers; distributors; and retailers

Industry promotion within trade missions of Embassies- Industry promotion in partnership with overseas marketing

agencies that know the markets and can position products adequately

Overseas Financial Assistance or Grant Programs - Enable effective industry-specific market penetration and still

promote healthy competition- Provide incentives for entrepreneurship

What should be addressed in policy…contd.

Tapping into the Diasporas….

Entrepreneurs

Diaspora Nationals

Create value-adding EX markets

Market intelligence, networks, markets, global partnerships; programs with governments and trade organizations

Repatriation of investment funds for entrepreneurial ventures and/ or value added to target communities e.g. MDG aligned projects

Success Stories

Value-addition in EX markets ….

Kenyan Tea

Ghanaian Chocolate

Zambian Pepper Sauces

Tanzanian Coffee

…and the creation of social equity in home countries…

Examples… Model Variety

Highland Tea Co. Incorporated in both Kenyan and USA; Fair Trade partnership with Kenyan tea farmers

Divine Chocolates Ghanaian-based Fair Trade farmer Co-operative in partnership with UK-based trading company

Elephant Pepper Zambian-based Fair Trade enterprise with US representation

Equal Exchange US-based Fair Trade company with farmer partnerships in Guatemala, Nicaragua and El-Salvador

Meeting MDGs by 2015 will require a more productive and profitable agricultural sector…

MDG 8: Global

Partnership

MDG 7: Environmental Sustainability

MDG 6: HIV AIDS & Malaria MDG 5:

Maternal Health

MDG 4:Child

Mortality

MDG 3: Gender Equality

MDG 2: UPE

MDG 1: Poverty & Hunger

Agriculture

Panel Discussion Points…

1. Placing Social Enterprises on the policy agenda of the UN members as powerful agents for the attainments of economic and social development goals

2. Create organizational structures to facilitate networking between home country entrepreneurs and the Diaspora (and amongst the Diaspora) for business partnerships; representation and sharing of market intelligence

3. Governments to create enabling start-up environments for social enterprises (e.g. ease of starting a business, facilitating exports)

4. Governments to provide financial support (e.g. small business loans; matching of funds) for industry-specific export-led growth as an incentive for local and Diaspora entrepreneurs

Discussion