“More investment needed in Developing Countries”, Neil Kelsall, the director of RAISETRADE, asked the prestigious audience of the World Export Development Forum in Switzerland, hosted by the International Trade Centre. Asking for “more” is one thing, but “how” to raise investments is what we want to know.

Some background information here. Countries of Africa mainly exports farmed commodities to be processed, packaged and branded outside its country into developed countries economies. These commodities make up a very small percentage of “money” value of the finished product, say a chocolate bar, a cup of tea or coffee, bottle of beer paid by the consumer in the developed world. The commodity value is represented by the green bar in the illustration below, a tiny percentage of the value to establish the final consumer product.

Fairtrade schemes have been developed to maintain price levels of commodities at a level that can sustain rural and farming communities. The schemes have been necessary due to the disjoint between market demand and supply capacity causing wild fluctuations in prices. However much more value for the commodity and wealth in the community could be developed in the economy as well.

Our attention is targeted on creating “added value”, or wealth creation, by turning commodities into products, semi processed, private label and fully branded, bringing the market demands more closely linked to the supply base.

We recently pioneered fully packaged confectionery from Madagascar into supermarkets in the UK, Sweden, Germany and America. The media were asking is this “Fairtrade”Chocolate, no it is not, the cocoa was not exported to be processed in developed economies. The key difference is that the cocoa was crafted, processed and packaged totally in Madagascar for export markets, this is “Raisetrade”. Doing this was not easy, it required the vision, skills, partnerships across cultures and investments. The UK Guardian media called it the “Fairest Chocolate”.

So what is the advantage of this? Firstly if countries export value addition through companies, then many times more taxes are collected for health and education. Exporting value addition increases and widens the skillbase of the country. Similarly setting up manufacturing and processing in the country means there is less dependence on importing of expensive finished goods.

So what are the hurdles to adding value, to raising trade?

Raise Profile Firstly, investments are needed in capital, skill and expertise, and market linkages. But to attract investment, means that there has to be a good return on the investment. It can be a vicious cycle, because investments traditionally migrate to areas with the quickest payback and lowest risk, which is portrayed in the developed economies. To attract investment, means raising the profile of the country or organisation positively and utilising its competences and presenting its competitive strengths. Negative public relations does not cost money, that is why we see it more often in the media - whilst positive public relations does cost money, that is why the exciting potentials in many developing countries remain obscured, and so can add to the cycle of lack of investment and negative symptoms. It is important countries invest in raising their profile positively in sector specific areas that can impact their wider economy, such as Food / Drink/ Textiles and Tourism. Establishing cross cultural partnerships and joint ventures with developed nation companies can establish a win win solution, where each party can access new markets, capital, supply base and develop skills in an accountable way.

Raise Value Raising value, means turning commodities into products (eg. packaged and bottled products, cotton to textiles, health products etc) or developing a service ( tourism, finance services, information technologies, customer services etc). Ultimately a “brand” totally created in the developing country traded with developed economies and effectively competing with established “brands” will happen, contributing to bridging the income per capita gap.

Raise Wealth The resulting actions of raising investments that create value, will trickle into the country economy by increasing employment, skills, and tax revenues to improve social conditions of the population. You can see why necessary strategies are needed to bridge the massive gap in gross national product per capita between rich economies and less developed economies through targeted and careful investments. Raising wealth will reduce symptoms of poverty such as corruption, political instability, economic migration etc. These symptoms are used too often as reasons why not to invest.

Raise Profile, Raise Value, Raise Wealth…Responsibly. In a way that utilises the core competences of the country, that impacts the rural communities positively, that embraces and encourages the wildlife and local environment and utilises sustainable best practices in business and trading.

Attending the recent International Food Exhibition (IFE) in London, and it is very disappointing to see very little representation of countries from Africa at the show. Similarly at the SIAL World Food Exhibition in France, it was the same story with seven countries of Africa in a exhibition area smaller than one medium sized company in the UK. This is a symptom of the low gdp per capita, amongst other things. However Tanzania, had the vision and pulled its resources to show at IFE. It is encouraging to see Tanzania companies promoting their “value add” raisetrade packaged foods and bottled drinks, one step closer to accessing new markets and developing partnerships.

Country organisations and companies wanting further information in creating and developing “added value” business and trade markets and want to leverage their company’s products with “Raisetrade” logo are welcome to contact us for further information.

Kwabena Mensah Agyapong Strategy & Advisory Board, RAISETRADE how@raisetrade.com Tel +44 1995 642159