Egypt: a lab for new ways to work in emerging markets

Summary

Danone has a fairly strong presence in Northern Africa, and especially in Egypt where it is the dairy products market leader. But the group, through its Ecosystem Fund, is also working to change both its supply chain and its distribution system in poor, rural areas of the country. Two Ecosystem projects thus provide a link between business goals and some of Egypt’s major challenges: poor nutritional education, youth unemployment and poverty among farmers.

08Jan.
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On down to Earth, we report on the best initiatives, inside and outside of Danone, that inspire our reflections on the future of sustainability, social business and our own activities. We thus figured it would be interesting, once in a while, to focus on one country, the various projects that are operating there and globally how it testifies to Danone’s commitments and experiences. So here is Egypt: a low-income country with a population of 83 million, regularly struck by food deficit. 19.6% of the population lives below the poverty line (US$1/day), 57% of Egyptians live in rural areas, and 11% of them are considered poor. The country presents some other alarming statistics: 48.5% of children under 5 and 34.2% of pregnant women suffer from anaemia. As a result of poor-quality nutrition and lack of exercise, obesity is starting to spread in the country, like other non-communicable diseases that appear in regions struggling to achieve a healthy nutritional transition. That describes the nutritional side of things. On the employment front, the figures are also worrying: in June 2011, the unemployment rate reached 11% – and youth unemployment stands at up to 25% in cities, and is even higher in rural areas. In a country where two-thirds of the population is under 30, these statistics demand action.

 

Strengthening the supply chain

 

Danone is present in Northern Africa through partnerships in Tunisia and Morocco, and through its subsidiaries in Egypt and Algeria: the company expects in the near future to achieve revenue of 1 billion euros in the region, making it a strategic area for its operations abroad. In Egypt, Danone is now the dairy products market leader. This strong presence has allowed the group to form closer ties with the population, understand its nutritional needs and deficiencies and develop a better perception of the employment market. Through its Ecosystem Fund, Danone is now supporting two projects that address, in different ways, Egypt’s two main issues: poor nutrition and low employment.

The first of these is the Milk Connection Communities project: in Egypt’s rural areas, Danone partners with CARE International to empower small milk producers. They suffer from decreasing milk prices and the local dealers’ monopolization of the dairy trade, which leads to them not being paid fairly, and to a reduction in milk production and quality, due to a lack of dedicated resources.

The initiative Support and Empowerment of Small-holding Milk Producers was thus launched in October 2010, aiming to contribute to a better quality of life for poor households in two governorates.

Additional goals are to increase milk production and quality, improve the access to veterinary services, distribute revenues in a fairer way, etc. The idea is quite simple: open milk collection centres (MCC) and provide the producers who go there with a range of services (weighing, milk analysis, storage, etc.) to help them improve their production. For Danone, it provides access to better-quality milk and ensures a healthy and sustainable ecosystem around the supply chain. Two MCCs have already been opened, and by May 2012 they were collecting 4.5 tons of milk every day. The project also has a social impact: local managers are trained and employed to run the centres, and over 200 households are directly impacted by the project – their incomes have increased.

 

Reinforcing local distribution and nutritional education

 

The second Egyptian project is called Omda-Sahteen, and it provides an even better balance between the production, nutritional and employment issues. It was put together by Danone Egypt and Ashoka and started in April 2011. It was endorsed by the Danone Ecoystem Fund in July 2011. The project has two major components: the Omdas and the Sahteens, for whom the programme is named. The “Omdas” are local entrepreneurs that the project identifies and helps to extend their activity: the 85 Omdas have to employ a sales representative who will cover over 100 local retailers in the area. The sales representatives must be young and previously unemployed; the local retailers are also given new opportunities, with their business being supported and their product range broadened. The other part of the project is in the hands of the “Sahteens”: local “health champions”, mainly women, who are selected, trained and employed to create, with the support of selected local retailers, a health promotion team.

The idea is simply to spread better nutritional information through health awareness campaigns, advice on quality nutrition and training of the community members on healthy lifestyle skills.

The Sahteens are paid thanks to the profits generated through the Omda’s work, closing the loop.

With these two projects, the Danone Ecosystem Fund is exploring new ways to supply its dairy production chain and to distribute its products, while contributing to better nutritional information, and to improved quality of life for the small producers and retailers who work with and around the company. Both initiatives are bound to be replicated in other areas; hopefully they will pave the way to working a bit differently in emerging markets, with the complete chain and its impacts on the local populations constantly in mind – quality, efficiency and sustainability come at that price.

Photo © Shutterstock /tamarasovilj

  • Ahmed I. Moustafa

    If Danone that giant in NAF region and targeting 1.0 Billion USD$ soon from the people pockets, market leader and is claiming to have keen understanding of Egypt deep problems regarding education and nutrition; They should think in more strategic projects in Egypt. What about opening schools in rural areas, providing free well-balanced meals for prep schools. This positive contribution gonna lead Danone to its 1 billion $!
    If Danone won’t do such initiatives; who should do so in order to provide true contribution for improving people lives? !

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