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SAP, PlaNet Finance to invest in shea nut industry in Ghana

Page last updated at Monday, June 22, 2009 14:14 PM // 1 Comment
Shea nuts - Cocoa of the north

Shea nuts - Cocoa of the north

The shea nut industry in Ghana will soon get a boost to make it more viable and profitable. The industry, even though very significant in the economic life of particularly the northern part of Ghana, hasn’t received the necessary injection of funds to make it stronger and more beneficial to the country’s overall economy.

However, news out last week say two international organizations, SAP and PlaNet Finance are looking at investing in the shea nut industry in Ghana.

In a press release last week June 17, 2009, the two organizations have committed to provide financial, software and expert assistance to the shea nut industry in Ghana.

According to the release, SAP and PlaNet Finance aim to improve the microfinance sector through a combination of microfinancing, the use of new technology and the creation of value-chain extensions that help entrepreneurs at the base of the economic pyramid to create sustainable businesses.

Three main areas will be targeted it said: technology development for field initiatives, development of software solutions for MFIs and deployment of SAP technology for PlaNet Finance’s corporate initiatives.

In the press release, the two organizations indicated that SAP and PlaNet Finance have carefully studied the shea nut value chain in northern Ghana to identify how microfinance, education and technology can help improve the incomes and living conditions of women who pick and process the nuts into shea butter.

Although the production of shea butter, used in food and cosmetics, is one of the most accessible income-generating activities for rural women in Ghana, their incomes are unstable due to a lack of market information, inadequate business knowledge and low negotiating power, it said.

The joint initiative aims to develop groups of shea nut harvesters and provide them training on how to effectively work together to help drive maximum success. Women will also be trained in after-harvest nut treatments and improved techniques for shea butter production. Each group will be equipped with a mobile phone to manage orders and facilitate the microfinance institution’s follow-up on loans. Along with the technology solutions from SAP and PlaNet Finance, this regrouping will help increase yield, improve bargaining power, enhance product quality and offer better management of contractual relations with buyers.

An official of SAP, Heino Kantimm has told ghanabusinessnews.com by email that they chose Ghana and the shea nut industry for the following reasons:

“We believe that a focus on one country can have a higher impact than many small projects in different locations.”

He said in 2008, SAP partnered with GTZ (Deutsche Gesellschaft für Technische Zusammenarbeit) to deliver technical support to the Extractive Industries Transparency Initiative (EITI) in Ghana.

He explained that EITI aims to improve governance by bringing greater transparency to the receipt and use of royalties from extraction of natural resources.

“We have completed the first phase of the EITI project and are optimistic about prospects for a successful completion. We have learned a lot about using technology to speed the progress of multi-stakeholder initiatives such as EITI in Ghana. Because of this experience, we wanted to stay in Ghana for the microfinance field initiative with PlaNet Finance,” Kantimm said.

He also told ghanabusinessnews.com that to lay a strong foundation for the SAP-PlaNet Finance project, studies were conducted to help identify where SAP’s donations could have the largest impact.

According to Kantimm, the shea-nut sector in Ghana has many factors that contributed to it being a good first project.

The shea tree grows wild in arid regions of Africa and is found in the northern savannah region of Ghana, a major shea exporting country. Interviews and observations revealed that there are opportunities to increase the quantity, quality, and value of nuts and butter exported by working with the women harvesting and producing shea, the MFIs, and local and international companies, he added.

He believes that the shea-producing women’s groups can build their output capacity and move up the value chain by using information technology tools such as videos and mobile phones.

And the MFIs can improve their capacity to provide financial and non-financial services by creating an IT platform between the women’s groups and the buyers at the MFI level. In addition, implementing SAP-designed software in the MFIs can enhance the effectiveness of their non-financial operations. The local companies that provide logistics and export markets for shea nuts and butter will benefit from improved coordination with suppliers of butter and nuts thanks to mobile phones equipped with a software solution (such as that offered by SAP). This will improve their operating efficiency with an anticipated increase in output.

Combined, the experience with EITI, the growth potential of the shea market, the need for new technologies and the existing relationships with other participants in the shea value chain makes Ghana a good target for a first joint SAP-PlaNet Finance initiatives.

“We keep our eyes open and explore opportunities in other value chains such as cocoa and cashew as well,” he told ghanabusinessnews.com.

The project is expected to last three years, but he declined to mention how much money is involved when ghanabusinessnews.com asked to know the cost of the project.

In our effort to confirm the project, we spoke to an official at Technoserve in Ghana, who confirmed having worked with the two organizations in their project areas in the north. However, efforts to speak to an official of GTZ Ghana, was unsuccessful as no official was available to speak to us at the time we called.

Meanwhile, Trev Gregory, the CEO of Trade Right International, a social business that works with local women groups in the shea nut industry in the northern parts of Ghana, thinks the move is laudable.

He told ghanabusinessnews.com, “my observation is that the shea nut industry needs investment at every level and I am pleased to hear of what these groups are going to be doing.  There seems to be a ground swell and growing momentum of investment and help into local communities involved in the shea industry.”

“What we need to ensure is that this is sustainable not only financially, but also in the sense that shea products are brought to market either at home or abroad.  For this to happen there needs to be a greater linking, networking and co-ordinating from within the shea nut industry which is focussed on both the business and the eradication of poverty,” he added.

It is good that the shea nut industry is getting some attention, even though, it is long overdue, it is better late than never.

The government of Ghana under the Savannah Development Fund is focusing on developing the shea nut industry in the north. It intends to establish a board for the industry just as the COCOBOD.

The Presidential Spokesperson, Mahama Ayariga, said last week that Ghana would be exporting $30 million worth of shea butter to Brazil.  These are good signs that the she nut industry is receiving the necessary attention to exploit its economic potential to reduce poverty in the north of Ghana and to make it contribute to Ghana’s economy.

By Emmanuel K. Dogbevi

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Comments

1 Comment

  1. Marieme Jamme says:
    June 22, 2009 at 5:47 pm

    Excellent Article!

    Best Wishes.

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