Making Markets Work: Strengthening the Role of  Small and Medium Enterprises in the Kenyan Mango Value Chain

Categories: Featured

 

 

 

 

 

 

 

 

 

 

Smallholder mango farmers in Kenya only earn  about half of their income potential due to post-harvest losses each season. This also means that almost half of harvested mangoes are wasted before they reach the market to be sold to consumers.

Since 2013, IGD has leveraged its pan-African network to bring private sector solutions to inform the Rockefeller Foundation’s (RF) YieldWise Initiative, a multi-year program that seeks to cut total food loss in half by 2030. The YieldWise Initiative, launched in 2016, has engaged partners to address gaps in the entire agricultural value chain, taking a unique market-led approach.

In Kenya, Yieldwise partners work directly with smallholder farmers to provide training on practices that protect mangoes from pests. By improving poor harvesting practices,  more mangoes will make it to market at a  higher quality and in greater volumes, reflecting an emerging market demand.

 

Bolstering SMEs’ Market Access

Small and medium enterprises (SMEs) in offtake, processing, manufacturing, transportation, and distribution are the crucial links farmers need to access markets for their products. But, just like smallholder farmers, these SMEs need more resources, networks, and market linkages to grow their capacity.

In early-May, IGD and the YieldWise Initiative co-hosted a convening in Nairobi, Kenya with leading Kenyan agribusinesses to tackle this next critical phase for mango value chain growth – understanding and addressing the needs of the SMEs that buy from smallholder mango farmers.

The convening built on months of one-on-one engagement and brought together nearly 30 key business leaders operating in the Kenyan mango value chain for an action-focused workshop in Nairobi. Business leaders gathered  to find market-based solutions that address the challenges faced by SMEs in order to drive development of the Kenya mango market, and ultimately reduce the post-harvest loss.

The “Making Markets Work: A Private Sector Workshop on Reducing Post-harvest Loss and Unlocking Potential in the Kenyan Mango Value Chain” sought to lay the foundation for a stronger partnership between companies to catalyze effective collaboration and address challenges to business growth. Together, stakeholders explored opportunities for reducing post-harvest losses through collaboration across financial access, achievement of international market standards, and development of the Kenya mango brand.

 

Key outcomes from the convening included:

 

Informing Smallholder Farmer Aggregation

For smallholder farmers and SMEs that buy from them to cooperate more effectively, both sides need to understand each other’s needs. TechnoServe, a YieldWise partner,  leads the initiative’s farmer training and aggregation in Kenya. Isaiah Kirema, Program Manager for this partnership, attended the workshop and credited business partnerships with local markets as a critical to improving the livelihoods of smallholder farmers.

“Linking to technology companies, farm-supply retailers, and exporters allows us to introduce farmers to the standards required by buyers and innovative post-harvest technologies that offset their production costs through higher prices and offtaker contracts that guarantee market sales,” said Kirema.

 

Understanding the needs of SMEs: Access to Finance

Across the board, one of the most critical issues that came up for SMEs in the mango value chain was access to affordable finance.

Sessions at the convening highlighted existing resources including working capital, lease financing, early stage investment vehicles. Business leaders drew attention to  the importance of patient impact investment and alternatives to commercial banks, noting that banks often overlook small business due to high levels of perceived risk and lack of collateral.

 

What’s next?

For smallholder farmers to reduce their crop losses, they need buyers ready to immediately take on their products. But, as we learned from May’s convening, the SMEs that buy mangos from smallholder farmers cannot  take on more products, if they don’t have access to financial resources to grow their capacity. Without asset financing, working capital, debt facilities, growth investments, and the knowledge necessary to access said resources, SMEs become roadblocks for market access instead of the facilitators they should be.

For next steps, IGD will be diving deeper into the financial needs of SMEs in the mango value chain. We’ll host on Oct. 16 in Nairobi, a dynamic convening of SMEs, financial service providers, and business advisory service providers  to share existing resources and explore gaps where new, innovative solutions are needed.

 

Learn more! For more information on IGDs Yieldwise efforts contact Helen Mant, IGD Senior Advisor, at hmant@igdleaders.org. To participate in the SME finance gathering, reach out to Lia Mayka of IGD Advisory,  at lmayka@igdleaders.org

 

Lia Mayka is a senior consultant with IGD Advisory.