The AAK Kolo Nafaso programme – Securing an alternative shea supply chain
AAK, a Swedish company providing vegetable oils and fats for various industries for more than 140 years, has been a dominant player processing shea since the 1950s. In 2009 in Burkina Faso, AAK started a project to work directly with West African women with small farm holdings, to improve their productivity as well as pay them fair prices. This project evolved into an alternative supply chain. The shea nuts through this programme – called Kolo Nafaso – were traceable to the women’s group level in West Africa. Kept segregated, the shea was not blended with AAK’s conventional shea supply, such that clients could lay claim to having sustainable and traceable sourced shea, when using Kolo Nafaso shea in their products. This was becoming increasingly important, as focus on sustainability grew among end-consumers, employees, as well as investors. The Kolo Nafaso programme expanded to Ghana, as AAK realized the potential of this alternative supply source, especially in 2018 when there had been a global shortage of shea. The issue was how to significantly grow this alternative sourcing programme, and how to realize its value
Transforming a Supply Chain Into a Social Enterprise
For conventional, profit-seeking companies, moving into social impact carries huge contradictions. An ad hoc, small-scale initiative is an inexpensive way to do a bit of good and receive a nice warm glow in the process. But any attempt to achieve more serious impact through scaling the initiative will likely trigger awkward discussions about how much that warm glow is worth to the firm. Thus, the ceiling remains low on social impact unless it can be justified in “win-win” terms. Needless to say, this is no easy feat.
My recently published case study about Swedish oils and fats producer AAK’s “Kolo Nafaso” programme in West Africa describes how one company redefined “win-win” by creating a sustainable and scalable shea butter supply chain. In so doing, , creating ripple effects with strongly positive implications for the firm’s most important stakeholder relationships and future activities in the region.
Building Sustainable and Socially Impactful Businesses at the Base of the Pyramid
Estimates suggest that four to five billion people live in poverty. Businesses engage with the base of the pyramid (BOP), typically through corporate social responsibility (CSR) efforts. Such efforts are laudable but are limited by their budgets. An alternative model would be to engage with the BOP as a sustainable business opportunity. The BOP can be customers as has been shown through the work of Unilever. The BOP also often own assets, such as small parcels of land or a few head of livestock. Likewise, the BOP has skills and labour. These can be sustainably leveraged to the betterment of the BOP. In this paper, I describe three initiatives that are profitably engaging with the poor as customers, providers of labour and providers of raw materials, while at the same time helping the target group lead better lives. Abstracting from these initiatives, I offer a framework for building profitable businesses at the BOP.