A leading United States company, Coca Cola, is receiving international praise for an initiative it’s launched to improve sales in Africa, while at the same time supporting thousands of first-time entrepreneurs. The firm’s unique Manual Distribution Centers are managed by local small business people who make profit by distributing products to retail outlets in hard-to-reach parts of the continent. The entrepreneurs use manual means - such as trolleys and baskets - to transport the products. Former US president Bill Clinton’s Global Initiative Against Poverty, as well as the Africa-America Institute, recently recognized Coke’s contribution towards business creation and poverty reduction in Africa.
The company says its network of centers has “fueled the growth of entrepreneurs, jobs, prosperity and, ultimately, economically sustainable communities.”
At the moment, 1,800 distribution centers in East Africa alone employ more than 7,500 people and provide over US$500 million in revenue for local economies.
According to Bill Egbe, president of Coke Africa, one of the company’s jobs on the continent results in up to 16 local jobs “further up the supply chain.” He says so far the firm’s Manual Distribution Center project has been an “immense success.”
“It’s essentially a set-up where we have a depot for our products that serves a certain number of retail outlets within close proximity of that depot, using very simple delivery systems like pushcarts or trolleys. It is a low-cost approach to doing distribution; you’re not using any mechanized or motorized means,” Egbe explains. “That limits how far you can take the product, but it also gives you more frequent access to a set of outlets.”
Egbe acknowledges that the centers were initially created “out of a business necessity. We were trying to find a way to expand our distribution footprint, and to include some of the local entrepreneurs in how we expanded our distribution. And by doing so we were able to increase the availability of our products in the retail outlets.”
He says that as Coke implemented the project on a larger scale, it began to realize that it held the potential of “benefits that fit well with the economic development and poverty reduction agenda of the United Nations Millennium Development Goals (MDGs). And that’s how we figured out that this is a tested model that works and meets our business needs but in that process helps other people get going in terms of entrepreneurship and creating income for themselves.”
In September 2000, 189 nations adopted and signed the Millennium Declaration, setting the primary goal of making the world a better place, including the target of eradicating extreme poverty and hunger by 2015.
In identifying potential sites for the Manual Distribution Centers, says Egbe, the company investigates areas that have “enough of a concentration of retail outlets” that would enable individually operated centers to function at a profit.
“Once that is done, then the company goes out to identify potential entrepreneurs who are willing and able to run this new business that’s going to be established to service these outlets.”
Coke interviews candidates, assessing their levels of business experience and their access to capital. Successful candidates are then assisted with more capital and securing lease agreements for business premises.
“From there on we have a well-tested model that helps these entrepreneurs figure out stock they need to have, how much cash flow they need to have to maintain the business, what are the working capital requirements, and how they can recruit some laborers to help in the delivery of products,” Egbe says.
He says there’s also a lot of work involved in “getting the business established and then ongoing monitoring and support of the business once it’s established” but that the eventual result is thousands of people pushing carts, trolleys and other manual means of transport laden with soft drinks all over rural and urban Africa.
“(The Manual Distribution Centers are) spreading all over. In West Africa, you see them in Ivory Coast, Ghana and Senegal.”
Egbe says the centers are ubiquitous in East Africa, with the greatest concentration in Ethiopia, but that the model is being adopted across the continent “to service the needs of the local markets in having a low-cost distribution model…. You also have large numbers in Uganda, Tanzania and Kenya. You start seeing them now in Nigeria, in (the capital), Lagos. You see varieties of these Manual Distribution Centers in South Africa, parts of the southern tip of the continent like Mozambique, Zambia; you see some of them in Angola.”
Egbe reveals that “surprisingly enough,” the people managing the centers are mostly first-time entrepreneurs. And many are women.
“A good example is Tanzania, where you would have about a third of these entrepreneurs that are female, they’re women who are getting into business for the first time. You have another third where it’s husband and wife that go into this business, usually run by the wife. So in Tanzania, two thirds of these Manual Distribution Centers will be run by women.”
But Egbe says his company usually insists that its center managers possess at least “basic levels of education” to enable them to “keep the accounts, manage the inventory, and be able to reconcile their books at the end of the month…. The rest of the training will be delivered by the Coke system.”
The firm is also usually “quite strict” in choosing people who don’t have “other big business interests.” Egbe says for the centers to be effective, the entrepreneurs have to be dedicated. They have to “focus on these businesses, to be involved on a day-to-day basis. They cannot start this and then hand it over to a friend or cousin to run; they have to be really involved in the business to make it successful.”
He maintains that if Coke is able to replicate the Manual Distribution Center concept in more places in Africa, it’s going to make a big difference in hundreds of thousands - and perhaps millions - of lives, and “make a real dent” in poverty on the continent.
“We are committed to scaling up this initiative,” he says. “As part of our contribution to meeting the MDGs, by 2010 we want to create between 1,300 and 2,000 new centers, create between 5,300 and 8,400 new jobs and generate new revenue of between $320 million and $520 million in local economies.”