Developing Inclusive Business Models in Ethiopia and Tanzania

By Euan Wilmshurst, Manager, International Government Relations, The Coca-Cola Company

Coca-Cola’s Manual Distribution Centers – or MDCs – are a major factor in our success in East Africa. Since they were first set up a decade ago, these small independently owned businesses now deliver over 80% of our drinks in the region, largely by push carts, to small-scale retailers who need regular but limited supplies.

But it is not just Coca-Cola the MDCs are helping. They have created thousands of businesses, providing new entrepreneurial opportunities and jobs – the single best route out of poverty. Across Africa, there are now 2,500 MDCs employing 12,000 people and generating $500 million dollars in revenue each year.

The MDCs help highlight how the private sector can both grow their businesses and drive development goals. In fact, it is becoming clearer that concentrating on core operations in a profitable but inclusive and responsible way is absolutely crucial to tackling global poverty.

It is why, when Coca-Cola joined the Business Call for Action, we committed ourselves to expand our MDC network. We are already well on the way to deliver our target of over 1,300 new independent distribution businesses and 5,300 new jobs by 2010.

But we are also keen to do this in a way which best helps the health and wealth of the societies in which we operate. This is not, of course, simple altruism. The more widely prosperity is spread, the better for our business.

So we asked the Kennedy School of Government at Harvard and the IFC to examine our MDC network in Ethiopia and Tanzania – two of the countries where it is already strongest. Their report, published last week, underlined their potential within the 25 countries where we already have MDCs and in new markets in Africa and elsewhere.

It also identified areas where more thought needs to be given to overcoming obstacles and increasing benefits. These include improved training, education and development to help people grow their business; innovative ways of increasing access to credit; and exploring how the MDC model might be used to distribute social products and messages.

The report called as well for increased efforts to help women set up MDCs. With one in five existing MDCs in Ethiopia and one in three in Tanzania already female-run, it is clear that they are an effective way to tap into the vast entrepreneurial talents of women.

MDCs are, of course, not the only way businesses can meet the needs of their shareholders, consumers and wider societies. But as the report makes clear, there is real potential for this model to be expanded and replicated. We are keen to share ideas and work in partnership with others to achieve this.

To download the report, click here.

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