Entrepreneurship in Africa – Part 2
There is good news: fewer people across the world are suffering from hunger. But there is still much more to be done. The international community has set itself the goal of ending hunger by 2030. In order to achieve this goal, however, 795 million people, the total number currently malnourished or going hungry, need better access to food and a more balanced diet. Three quarters of these people live in rural areas. Many of them are small-scale farmers living at subsistence level – or below. Investing in rural development is therefore an important way of combating hunger and poverty.
A German entrepreneur in Ethiopia
The agricultural business set up by German lawyer Lutz Hartmann lies around 11,000 kilometres from his home town – in Ethiopia. Agriculture is an important part of the country’s economy, with four out of five Ethiopians working in the sector. Many are also subsistence farmers, lacking the funds to develop large agricultural enterprises with corresponding irrigation systems.
Many foreign companies are investing in Ethiopia. Some of these are accused of buying up fertile land and thus depriving the local population of their livelihood. Lutz Hartmann and his business partner Oliver Langert take a different approach. For them, it is not only the profitability of their company, Fruitbox Africa GmbH, that is important, but also the creation of much-needed, well-paid jobs in rural areas.
Can you tell us why you chose to set up your business in Africa?
Lutz Hartmann: Because Africa is the continent where development happens! Africa has immense potential that needs to be developed. Realising this potential is in everybody’s interest, but is also an exciting challenge from an entrepreneurial perspective.
You currently employ 100 staff and are aiming to expand to 500. How big do you want Fruitbox Africa to become?
Lutz Hartmann: 500 employees is certainly a good size to aim for. But as entrepreneurs we can always see further potential, for example in the processing of our vegetables or in the prospect of setting up a farm in a different climate zone.
What makes your company stand out?
Lutz Hartmann: We are not doing anything spectacular. We are simply doing what people around the world have long been talking about: investing in Africa in accordance with the principles of the social market economy. You can call it “impact investment” or “social entrepreneurship”, but at the core of our work is the conviction that companies only thrive when adequate attention is given to three key local factors: our staff, our environment and the community within which we operate.
Ethiopia’s population is growing rapidly and, as in other countries, there is increasing migration to cities. Do you have difficulty finding local staff?
Lutz Hartmann: Finding staff locally is still not straightforward, but our project has managed to bring people back into the area. We also want our farm to promote the establishment of other small businesses in the area, such as cafés, trades and crafts businesses, and petrol stations. This creates local economic growth that can keep people in the region.
What obstacles do you face? In what areas is further investment required? Agricultural infrastructure? Services? Schools?
Lutz Hartmann: One rather formidable obstacle in our path is the amount of bureaucracy we face. For us, the problem primarily relates to process reliability: the ability to make accurate predictions at the beginning of a process on what needs to be done and when a result can be expected. This is often lacking in Ethiopia. In answer to your question about where investment is needed: always first and foremost in people; in practical education and know-how.
Practical experience is the most important thing. I often observe a significant discrepancy between theoretical knowledge and practical experience, even in more academic jobs such as accounting. University students often struggle if they have no real-world experience. We also have difficulty finding service providers who meet our standards, for example tax advisors, accountants and lawyers.
As the saying goes, you are what you eat. So who are you when you eat (almost) nothing? In three out of four cases, you are a smallholder, a livestock breeder or a rural worker, probably in Asia or Africa – the regions where most people are starving. What needs to be done to bring about change? Ten facts on hunger and food security around the globe.
Your staff is made up entirely of Ethiopians. Who is responsible for training your experts?
Lutz Hartmann: We consider training to be primarily our responsibility. We send staff to seminars provided by the chambers of commerce. We have our own in-company English teacher. Some members of staff also choose to attend university courses. Unfortunately, our limited resources restrict our ability to provide structured educational programmes. We would be grateful for support from state-run development organisations in this area.
Are there significant differences between Germans and Ethiopians in terms of the way they work? And do you have any Germany-Alumni among your staff?
Lutz Hartmann: We don’t currently have any Germany-Alumni working for us, but are on the look-out for suitable candidates returning from Germany. The most significant difference between employees from Germany and those from Ethiopia is a cultural one. The management style in Ethiopia is still generally patriarchal. This can clash with our own emphasis on transparency, discussion and collaboration. We have found that staff with a low level of education are especially responsive to this.
There are more reservations among middle management, however, as this approach gives staff not only more responsibility but also more power. The process of adaptation takes time and sometimes turns out to be beyond certain staff members, but in the long-run there is no other option than to allow progress to take place.
Foreign investors are sometimes viewed with suspicion in Ethiopia due to the problem of land grabbing. Does Ethiopia need more or less investment from abroad?
Lutz Hartmann: More, without a doubt. There will inevitably be conflicts, but the government needs to learn to manage them, possibly with the help of experts from abroad.
Our initial models were based on offering land-owning farmers the option of entering into a partnership. However, the concept met with little understanding and there was no willingness to cooperate on the part of the government. For a farmer, becoming a partner in a new company with, let’s say, a ten per cent share, is much more beneficial than simply selling or leasing a hectare of land.
If you could be granted a wish for your business and for Ethiopia in general, what would it be?
Lutz Hartmann: More political freedom, more independence from the decisions of individual government officials, which can lead to pressurised situations, and a well-developed service sector.
It is clear from listening to these two entrepreneurs that the 17 Sustainable Development Goals are in many ways interconnected and cannot be viewed in isolation. Both of our interviewees are making an impressive contribution to food security, both are dependent on adequate infrastructure and both invest significant sums in training their staff. The global community needs people like Halatou Dem and Lutz Hartmann; people who take the initiative, rather than waiting for leadership from high-level politicians.
Gluten-free grain from Mali
Halatou Dem is a young Malian entrepreneur. In 2011, she took the reins at Danaya Céréales, a company founded by her mother in the early nineties. Danaya Céréales mainly produces the gluten-free grain fonio (Digitaria exilis), one of West Africa’s most important food crops.
Opinion on the subject of entrepreneurship in Africa
As a guest at the Rural Future Lab event in Bonn, I was impressed by the courage and enthusiasm of the 30 young African entrepreneurs in attendance, who have taken up the challenge of setting up successful businesses in rural areas. Their activities not only secure their own economic standing but also represent a significant contribution to the development of their regions. But I was also struck by the large number of problems and obstacles young entrepreneurs face.
I know that many Germany-Alumni, having returned to their home countries, have started their own businesses or set up projects that have a positive impact on their country’s development. We can all learn a great deal from these experiences – so I would invite you to write about your activities and post your comments in the comments below.