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The power of partnerships: Investing in sustainable rural development

Posted by RimaAlcadi Thursday, February 14, 2013

by Rima Alcadi

The event, held in IFAD’s Plenary Hall on the 13th of February 2013, epitomised the title which was given to it. It was powerful. And it was an enormous partnership among several different people, from different sectors and different nations – all interested in sustainable rural development. David Nabarro, Special Representative of the United Nations Secretary-General for Food Security and Nutrition, was an excellent moderator and the two hours whizzed by, perhaps as fast as the bubbling stream of tweets on the twitter wall.

Our chief guest

We were all very much inspired by our chief guest, James Mwangi, CEO and Managing Director of Equity Bank, Kenya. Mr. Mwangi was named Forbes African Person of the Year 2012 and has won numerous international accolades, including an award shared with Nobel laureate Professor Muhammad Yunus for their efforts to improve the livelihoods of the poor through microfinance. Mr. Mwangi has come a long way. He is the CEO and Managing Director of Equity Bank, Kenya – with more that 8 million accounts opened mostly by people that other banks would label as “unbankable.”

James Mwangi and David Nabarro
picture: B. Gravelli
What made him become who he is today? He comes from a very disadvantaged and humble background – and perhaps thanks to this, he started learning about the importance of access to credit and of partnerships from a tender age, when his community pooled together resources to provide him with an education. He saw he was given an amazing opportunity and he thought “I can also help provide other millions of disadvantaged people the same great opportunity that was given to me.” He says that there was a lot of pressure for Equity Bank to focus on the “mainstream” customers – and avoid serving the rural poor. They of course fought this pressure, highlighting that the other banks were servicing a “niche” clientele by focusing on the top of the pyramid only, and that in fact the rural poor (i.e., the bottom of the pyramid) are the real “mainstream” customers! He argued that focusing only on the top of the pyramid was equivalent to pursuing a myopic strategy. We are told that it is precisely thanks to the partnerships formed that Equity Bank was able to expand its business, to go beyond the “brick and mortar” retailing model that is not financially viable in rural areas. Thus, Equity Bank worked in partnership with retail shops and micro-finance institutions. Only a few years ago, Equity Bank was insolvent and ranked 66th out of 66 banks in Kenya. Today, Equity Bank ranks number 1 and that is due to partnerships – at all levels and particularly in rural areas.

The Panelists

Our panel discussions were also very interesting, each bringing out diverse aspects and experiences that relate to the role of partnerships in the quest for rural poverty reduction. Estelle Biénable, from the Agricultural Research Centre for International Development (CIRAD), spoke on the basis of her experience in developing pro-poor value chains. She highlighted that sustainable partnerships and linkages between farmers and business for rural poverty reduction require: receptive businesses; trained farmers; and an enabling environment. It is fundamental to understand the various partners’ differing perspectives, to identify the “room to maneuver”, i.e., the common grounds and the limits. She stressed that the role of doubly specialized intermediaries, that are sensitive to development as well as market requirements, cannot be overemphasized. She described these intermediaries as “business-oriented and development-motivated.”

Next came Odacir Klein, providing insight from the perspective of cooperatives’ work in Brazil. For historical reasons, there is a deep-seated partnership between the public sector and cooperatives in Brazil. Cooperatives are by definition a form of partnership, and indeed he highlighted that the greatest partnership seen from the stance of cooperatives is that among their members. Just to put the importance of this partnership with regard to rural poverty reduction in perspective: 84% of the cooperative in Brazil are owned by smallholder farmers. This involves approximately 1 million members. And if you consider also the members’ families, this means over 3 million people.

Our final panelist was Ingmar Streese, Director of Global Programmes and Partnerships at Mars, Inc. Now, one may wonder why should a confectionary company be interested in rural poverty reduction? Well, because it makes good business sense. Of course, I am not referring to smallholder farmers as consumers of Mars bars. Although this would also be a benefit - as we have seen from Equity Bank, reaching the bottom of the pyramid means penetrating an enormous new market. However, in this case, Mars focuses on building partnerships with smallholder farmers because they are key suppliers, and there is thus a real commercial and social need to do so. Smallholder farmers, we are told, are the backbone of many agricultural products Mars needs as basic ingredients for confectionary products. Looking at cocoa, for example, the suppliers are represented by 5 million smallholder farmers - there is no big cocoa plantation. “Our future is connected to the future of smallholder farmers,” Mr Streese says. The increase in demand for chocolate is estimated at 25%. To meet this demand, Mars needs farmers to become more productive and more entrepreneurial.

What were the key messages?

I think there were several interesting observations that came out of the high-level panel. No doubt, a clear message was that partnerships are proven to be powerful instruments for development.

Partnerships need to championed at the top and, for them to succeed, it is necessary to share both the risks and the benefits. It is important to agree on clear principles on how people come together and frameworks for engagement. Partnerships are not cheap – they require time, grit as well as money. For example, for the private sector, the amount of time donors require for taking decisions may be too onerous. Partnerships require trust, which can only be built over time. Also, I would add that sometimes partnerships are actually not possible – perhaps due to excessive power asymmetries, or to lack of common objectives. So there must be a right time and reason to partner.

Another key message is that each partner has a distinct role to play. Each partner comes with different obligations and perspectives, and this can be both a challenge and a benefit. Intermediation is typically fundamental to get different partners together, and help partners identify and pursue their common cause. For example, governments have an essential role in providing the infrastructure and an enabling environment – that is definitely not within the purview of the private sector. Indeed, as highlighted by the delegate from Cote d’Ivoire, the Mars success story in Cote d’Ivoire also benefited from a good partnership established with the state, that allowed a more enabling environment to develop to support both Mars and the smallholder farmers.

Finally, I cannot conclude the blog without mentioning the video which was shown during the panel session, on quinoa. The video was produced by James Heer, and it is on activities implemented in Bolivia through an IFAD-funded grant programme to Bioversity International. Please see it, as it is an excellent example of partnership – with IFAD, Bioversity, NGOs, the private sector, government and last but not least smallholder farmers as main protagonists: Bolivia: crazy for quinoa
Happy St Valentine’s Day and Happy International Year of Quinoa to all !

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