Case Summary Honey Care Africa: A Different Business Model

1.

Background The for-profit business model of Honey Care Africa was initiated in 2000 in Nairobi, Kenya, by Farouk Jiwa. Previously he had joined the Aga Khan Development Network, which successfully sourced vegetables from smallholder farmers, then processed and exported the produce to Europe. It had been one of the solutions to the exploitation of Kenyan rural farmers due to the existing models that are characterized by corruptions and inefficiency, as well as the long sequence of intermediaries before the produce reaches its urban costumers. The Honey Care (HC) approach has a business model whose ultimate objective is to gain long-term efficiency. It builds a strong relationship and trust with the farmers in several different ways. For example, HC introduces an efficient and environmentally friendly Langstroth hives, for a better beekeeping technology. To solve the financing problem, HC provides the hives, to be paid back as a soft loan. The initial funding was obtained from Danish International Development Agency (Danida) for the first 100 hives, followed by other donors due to a publication by the Daily Nation. HC selectively recruit its personnel, mainly for the positions of: Trainers: providing initial training & technical support

Project Officers: ensuring that the farmer produces the honey, while knowing what is happening on the ground.

To gain the trust from farmers, HC maintains open communications to them without being patronizing. It also avoids any delays on payments. To obtain the trust from the end customers (the urban supermarkets), HC ensures the quality and delivery of the honey. Along with the business model, HC successfully partnered with Africa Now, an NGO that sponsors the efforts of entrepreneurship, directed by Rob Hale. By synergizing the efforts, e.g. in the honey marketing, HC has increased the loyalty of the farmers (despite its non-monopolistic approach) and improved the sustainability.

2.

Problem Definition The success of the business model of Honey Care Africa (in terms of produce, farmers loyalty, on-time payments, etc) has helped HC reach its economy of scale. However, it also introduced a new challenge: Growth and Scalability of its business. Financing the beehives is one of the challenges: with the growing number of requirements for beehives, additional working capital is needed. The geographically spread location has also made the honey collection more difficult. Similarly, prompt cash payments to farmers are becoming more challenging, while HC does not want to lose its trust from farmers. Ensuring quality is also

becoming a challenge, because it needs additional investment in microfiltration & pasteurization. Additionally, as an NGO, Africa Now only exists temporarily in Kenya. As well as other NGOs, it will stop operations & move on to other locations. HC will lose a key partner in rolling on its business model.

3.

Improvements Taken To cope with the growth, HC established regional Collection Centers. By having such centers, farmers have to take their honey to the nearest collection center. The center will receive the honey, pay the farmer in cash, process the honey, etc.

4.

Recommendations In order to further improve the business model, Group-5 recommends that HC take the following actions: Expand the partnerships with other NGOs. As NGOs are operating temporarily in Kenya, more of them are needed to be sustainable. Anytime a new NGO (with potential partnership) is emerging, HC should seek for partnership opportunities with it
-

Innovate in other related bee products, for example flavored-honey and medications from bees

Establish a formal approach to its key processes (e.g., production, marketing, HR) in order to be easily duplicated in different locations. It will ensure the scalability of the business model.