Projects to Enterprises

The co-operative was “changing projects into business enterprises, make more profits so people can get more money and change there living”.

This was, this morning as I was watching Ulimo, a magazine for emerging farmers in South Africa. The statement was by Sandile Adam the Project Leader of the Uitenhage & Dispatch Development Initiative.

This is what I was alluding to in my blog of 06/12/2007, where I referred to West African Projects which were unable to make a real difference.

I had personal experience of a similar thing when I started out looking at small business in South Africa in the early 1990s.

An obvious opportunity for small business was small scale (100s of loaves a day) bakeries. At the time most standard white and brown bread was baked in large regional bakeries, which delivered into the rural areas, sometimes as infrequently as every second day. These deliveries were to a very large number of local shops selling tens of loaves a day over very poor roads. Demand in these areas for bread and rice was low because of its high cost compared to the staple which is mealie meal.

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We worked with a supplier of flour to develop a breadmix that took the technology out of the baking – ie the mix was adjusted to account for the particular bread flour characteristics, meaning that baking was a “bag of ingredients plus a bucked of water” process. Appropriate ovens were bought or built and some 20 projects established. The supplier of the mix implemented and managed the projects using one of the company’s master bakers.

I was involved in the set up of some of the early bakeries and facilitated an approach where an appropriate entrepreneur was established in business through the “offices” of the community’s development activities. At one particular bakery we were confronted by a different approach – the group preferred to share, the “salary” that was affordable by the business, between 24 bakers, rather than the 3 that the business model proposed. This was so that at least “everyone would get something”.

What was interesting, was that over the months I was able to compare these two models of running a bakery. The entrepreneurial one succeeded as the entrepreneur was able to put real effort into the activity. He did this because his “income” was directly related to what he did. It was also true that he had a sales point through his rural shop. In the group approach the “bakers” enjoyed the few dollars they earned and the comradeship of the bakery. They were not prepared to put an effort in to growing sales at they neither saw a real reward for effort nor a threat of loss of income for inactivity. This was because changes in the very small income were effectively insignificant. The small income was also not able to make a any real difference to their lives.

The project did not succeed in setting up large numbers of bakeries because of a change in the industry with the deregulation of baking leading to a boom in small urban bakeries. Also, as has been revealed lately, prices were controlled and manipulated by the large bakers giving the small baker of standard bread little opportunity.

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