On Wednesday morning, BIF Malawi, in collaboration with Business Consult Africa (BCA) and CONGOMA (the Malawian Association of NGOs), held a joint workshop to discuss inclusive business and the opportunities and challenges for NGOs to work with the private sector. The event was well attended, with a total of 27 participants, mainly from Malawian and International NGOs, but also with representation from the donor community. The high attendance meant the room was a little cramped – but at least that made networking easier!

Tiona Kaonga of BCA started the session by explaining the journey that Scottish Government funded Capacity Building for Enterprise project has taken over the last ten years to provide support to develop the skills and opportunities for Malawian management consultants. Now transforming into Umodzi Consulting, the group offers a wide range of consultancy and training services as outlined in these slides.

I then gave a presentation on inclusive business with a focus on the Business Innovation Facility and its work in Malawi. My colleagues, Georgina Turner and Jonathan Said, explained the methodology used by Imani Development to design a private sector engagement strategy for Christian Aid / ICCO and presented information on the development of the first National Export Strategy (NES) for Malawi, which is sponsored by UNDP and being facilitated by Imani. The results of the research being conducted for the NES will determine which clusters of crops should be prioritised in order to have the biggest impact on economic growth.

There followed a break out session and two groups discussed the challenges and opportunities for NGOs in working with the private sector. Inevitably the discussion centred around smallholder farmers, the common NGO role of supplementing limited government extension work and facilitating smallholder access to finance, information and ultimately markets.

The following were the key themes that emerged from the discussion:

• Many NGOs are on a learning curve in developing a private sector approach and feel that they don’t speak the right language to communicate with businesses. This lack of confidence is probably one reason why there is a little proactivity among NGOs in approaching the private sector.
• There is a gap in understanding between the parties involved in contract farming – UNDP saw the benefits of showing smallholder tomato growers around Mulanje Peak Foods to explain that the production costs which were otherwise hard for them to understand. NGOs feel that they need to support smallholder associations from being taken advantage of by commercial negotiators and by companies with monopolies on certain commodities.
• The quality, yields and guarantees of supply remain major constraints in companies sourcing from smallholders, and these are exacerbated by poor education and a lack of access to finance and financial services. A lack of investment in infrastructure (e.g. warehousing) also restricts opportunity and is an area where the private sector can be engaged – Oxfam gave an example of a company in Ethiopia which invested down the supply chain to improve sorting and grading of beans.
• Access to information is critical; current developments in technology such as Esoko are promising, providing up to date pricing information and potentially advice on inputs and weather forecasts, and these need to be leveraged. However, there is also a requirement for market level co-ordination and information sharing to better match to supply to demand. As an example, Carlsberg wish to source sorghum for its beer production locally instead of having to import this and other inputs, but to date no-one has been able to supply in sufficient volumes.

Following this session, Richard Kettlewell spoke to the group about the history of the Malawian groundnut industry and the concept behind Afri-Nut, a company which has been set up as a “blend investment” with both private sector and donor investors as well as NASFAM, Malawi’s leading farmer association. At peak levels of production, Malawi exported 40,000tonnes of groundnuts per year, but the advent of quality controls to manage aflatoxin poisons decimated the industry and there is a long way before such export volumes can be regained. Afri-Nut's modern processing plant meets western export standards and plans to produce 4,000tonnes in 2012, but 30% of the nuts supplied to the factory are rejected on quality grounds. There are currently a number of institutions and projects underway which aim to tackle these fundemental aflatoxin management issues.

Richard fielded a good number of questions, including on formulae for nut purchasing, which is a tricky area given the seasonal fluctuations in price. Malawian nut farmers receive some of the best prices per kg in the world for their produce, but are constrained on total income by poor yields. More information on Afri-Nut can be found on Twin Trading’s website, a summary of BIF’s input to Afri-Nut can be found at the Afri-Nut BIF project summary and a blog from November describes production starting up. In the next month BIF will conclude its support to Afri-Nut with a case study and this will be also be shared on the Hub.

Following the talk on Afri-Nut, the two workshop groups reconvened to answer the question “what help do NGOs need to be able to pursue private sector development / inclusive business?” The following ideas were put forward:

• The overwhelmingly request was to improve collaboration and communication, primarily for more face to face meetings but also making use of online resources such as the BIF Hub. Potential facilitators of improved information sharing include BIF, CONGOMA and CISANET. Suggestions included themed workshops, networking events, speaking tours to increase awareness of inclusive business and cross-sector partnerships. A priority is to bring together NGOs and private sector players to facilitate a dialogue about working together.
• A need was identified to build the capacity of NGOs to be able to effectively engage and partner with the private sector.
• Inclusive business initiatives require support and funding, so UNDP’s upcoming Malawi Innovation Challenge Fund may be a valuable resource.

The conclusion that I took away from the morning was that there is a healthy appetite among NGOs for pursuing collaboration with the private sector in Malawi. The feedback forms reiterated this point and many participants expressed a strong interest in taking part in further networking events / workshops, particularly if these could include introductions to relevant private sector representatives. The Business Innovation Facility held a successful event focussing on the role of NGOs in inclusive business in Bangladesh and similar events have also been held in Nigeria and Zambia. BIF Malawi will be considering how best to support information sharing and partnerships between the private sector and NGOs to achieve inclusive business results – watch this space!