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Unilever and SAP: Raising the Corporate Bar in Africa

| Thursday September 12th, 2013 | 5 Comments
gods must be crazy

Modern day corporate engagement in Africa differs greatly from this 1980s depiction.

The movie, The Gods Must be Crazy, depicts the story of a tribe of Bushmen from Southern Africa’s Kalahari Desert whose culture of sharing is shattered when they stumble upon an empty glass Coca-Cola bottle that magically appears in their village. The bottle becomes a coveted object, which in the end, is “thrown off the end of the earth” to restore balance to the tribe. Director Jamie Uys describes his production as “just a slapstick comedy, with no message,” yet its sustained international popularity is indicative of its perceived deeper meaning as a powerful representation of the destructive influence of Western presence across Africa.

Since the Berlin Congress in 1884 when European powers arbitrarily carved their claims across the continent, the history of Westerners in Africa has been characterized by words like “colonization,” “slavery,” “rape” and “pillage.” In recent years, well-meaning NGOs, nonprofits, missionaries and social entrepreneurs have (in some cases) chipped away at this scathing image, but by and large, multinational corporations remain Africa’s most malevolent enemy. The corporate reputation seems forever stained by gruesome stories of blood diamonds in Sierra Leon and the Eastern Congo, child-harvested cocoa plantations of the Ivory Coast and exploited communities of the oil-rich Niger Delta.

There is little doubt that corporations have earned this reputation. Yet ascribing this perception generally to today’s corporations ignores the starkly contrasting partnerships that are emerging between Africa and several of the West’s largest corporations. In fact, such blanket assumptions ignore some of the most powerful examples of both economic and social progress taking place in Africa today. To paint today’s corporations as the modern-day colonizers of Africa would actually slander the mission statements of companies like Unilever and SAP.

I first became curious about each of these companies in 2010 while working with a management consulting startup in East Africa. I collected data for a project with Rwanda’s capital city of Kigali to improve the city’s tax collection system, and our client would only consider working with one software provider for the project: SAP. For another engagement, I found myself frequenting small stores in the slums and across the countryside. I was struck by the overflowing inventories of small, cheaply priced packages of popular toothpaste, soap and packaged food products produced by Unilever. The pervasive loyalty locals felt for each brand made each company’s success in Africa obvious.

After digging deeper into these companies business practices in Africa, I’ve noticed a few common themes that distinguish both Unilever and SAP from most others who have attempted to enter the continent. To be clear, I’m not talking about philanthropy. Many companies donate in Africa. Instead, I wish to shed light on two large corporations that, while operating in vastly different industries, are applying similar, holistic approaches to doing business in Africa (and reaping the benefits in return). Here are a few unique commonalities that set them apart as corporate partners:

Listening to the customerStarShea

“Before you do a thing that affects a community of people, you must first talk with at least 100 people who live in the community,” development guru Paul Polak once advised.

Unilever and SAP are both notorious for deploying MBA students to Africa in droves on assignments designed to collect data that informs commercial concepts. Each company also partners with organizations with long track records for operating on the ground, from small local nonprofits to multinational NGOs. Take SAP’s multilateral partnership with Planet Finance, Grameen Creative Lab and the Stanford School of Business to improve Ghana’s shea butter supply chain. By providing SAP’s technology to on-the-ground data collection, the partnership succeeded in securing higher income for women producer groups and incubating a social enterprise called StarShea, while yielding valuable market knowledge to SAP.

But don’t think that these companies simply outsource this type of research. As Ling-Ling Phung of Unilever explained at last week’s SOCAP13 conference, Unilever has created a “new business unit for emerging markets that focuses on capturing local low-income consumers and understanding the constraints that they’re under.” For example, as a business that sells laundry detergent in markets lacking water access, Unilever’s new business unit is learning how to effectively address water issues before moving on to detergent.

By taking the time to build relationships with their customers, both SAP and Unilever avoid the likeliest of mistakes committed by westerners seeking to offer products or solutions to foreign markets: failure to LISTEN to what the customer actually wants or needs, otherwise known as market research.

Tailoring to customers’ needs on customers’ terms

As a direct result of such deep and thorough research, each company is equipped to develop innovative products that meet the needs of their target market on convenient terms at affordable prices.

Take a look at Kibera, Kenya’s largest slum. For decades, shopkeepers have repackaged larger containers of food and hygiene products into smaller batches to make them available at lower prices to customers living on less than $2 a day. In response, Unilever now sells a variety of products, from margarine and washing detergent to cooking fat and toothpaste, in small packages weighing as low as four grams and costing as little as half a cent. Such novel thinking informs Unilever’s approach to both packaging and products, from re-sealable sachets to low-cost climate-stable margarine that does not require refrigeration.

Sales from small shops are up, but the potential for improving access seems limitless. Having thrived in India, Unilever’s direct to consumer distribution scheme – known as shakti – is now being unveiled in Nigeria and Kenya. Unilever intends to employ tens of thousands of vendors that will sell directly to low-income consumers across Africa. To accomplish this feat, Unilever provides microfinance for its vendors and livelihoods for people who might otherwise struggle to find work. As explained by Frank Braeken, Unilever Executive Vice President for Africa, ”Informal sellers form the bulk of Africa’s retail landscape and it therefore makes sense to sell our products through them…. to the BOP consumer.”

According to Frederik Malherbe, General Manager for Industry Solutions at SAP Africa, “Much of the continent, outside of South Africa, is rather immature from an enterprise business application perspective.” So to build the continent’s technology capacity, SAP is planting its SAP Education delivery arms across West Africa that educate IT professionals using SAP software. In addition to existing branches in Nairobi, Lagos and Abuja, another is scheduled to open in Angola later this year.

SAP is also partnering with several of Africa’s largest corporations in an effort to leverage its technology to affect high-growth industries and influence large markets. One example is SAP’s work with South Africa’s Standard Bank Group to bring mobile “AccessBanking” services to people who don’t have a bank account. SAP has also recently partnered with Nigeria’s largest corporation, the Dangote Group, to apply its software to industries ranging from steel, cement and milling to sugar, real estate and telecommunications.

Empowering local communitiessamwel1

Earlier this year, TriplePundit’s own Leon Kaye reported on SAP’s Skills for Africa program as part of his CSR in Emerging Markets series. Over the next five years, SAP plans to train 2,500 students in developing IT skills to boost access to education and support for entrepreneurs. This epitomizes SAP’s long-term commitment to markets in Africa. By investing in Africa’s future entrepreneurs and business leaders, SAP is building a future market for their products and paving the road for a thriving economy.

Not only does Unilever contribute to Africa’s overall standard of living by offering health and hygiene products at affordable prices, it directly improves livelihoods for over 40,000 employees across more than 40 regions in Africa, earning recognition as a top employer in countries including Kenya, Ghana, Nigeria and South Africa. The story of tea leaf picker Samwel Nyagucha illustrates the company’s commitment to empowering its African employees. In 2007, Nyagucha was challenging labor conditions in Lipton’s Kenyan estates when he suggested replacing the heavy wooden baskets strapped to the backs of his fellow tea pickers. In their place, Nyagucha designed a lighter plastic basket that holds more leaves and reduces contamination by allowing for greater exposure to fresh air. Impressed by Nyagucha’s innovation, Unilever has rolled out more than 6,500 of these baskets in Kenya and is now introducing them to estates in Vietnam as well.

While Unilever and SAP have both made tremendous strides in repairing the reputation of corporations in Africa, their primary objective, believe it or not, is likely not to save corporate face. Rather, as companies, by nature, they must seek profit through enterprise to survive. To this point, they are simply doing good business by heeding Polak’s words: “The future corporation will remain competitive in the global marketplace by creating vibrant new markets serving the 2.6 billion $2-a-day customers at scale.” Who would’ve guessed that Africa’s greatest wealth would one day go to the companies that do sound business rather than exploit?

[Image Credit: Film – The Gods Must be Crazy]

[Image Credit: Star Shea Website]

[Image Credit: unilever.com – Winning with People]


▼▼▼      5 Comments     ▼▼▼

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  • John Recruit

    Good Article – Both Companies have been awarded top employer status in Africa, not only Unilever. http://www.itweb.co.za/index.php?option=com_content&view=article&id=67044:SAP-Africa-recognised-as-best-place-to-work-in-Africa&catid=69

    • Travis Noland

      Wow, thanks for the great information John! Not only top employer status – SAP just ranked first place in the category ‘Overall Top Employer Africa’ by Top Employers Institute!

  • Sid Abma

    Improving IT technology is good, but we want to help these companies increase their operational fuel Energy Efficiency. This is where these companies can Increase Profits and reduce Greenhouse Gas Emissions and Global Warming and even realize Water Conservation, which in a lot of these countries is very important.
    http://www.SidelSystems.com
    Our companies goal is to make a big difference in these countries and the world.

  • Joseann Freyer-Lindner

    Hm. I would have liked to hear how they have solved the water problem, I understood their detergent is phosphate based i.e. not bio-degradable. And what happens to the packaging of all those nice little packages? I can see that they develop their own future markets, but how are they doing on the externality side? Creating the same old environmental problems?

  • Delilah Kinsey

    Great question Joseann Freyer-Linder…I would like to know what they give back to the communities and why they refuse to work with District and community leaders to meet the needs of the people and communities that would have a true impact on economic development and sustainability?. According to PIA, Uniliver and the group of companies that make up PIA: “The PIA is a business coalition that brings together ethically like-minded companies with the objective of tapping into their business experience in Africa…All our projects in Africa are developed and executed by our members in collaboration with international organisations. Unfortunately, the PIA does not fund any external projects.”…Does Unilever support this racist policy?