Case Summary

Honey Care Africa: A Different Business Model

1. Background

The for-profit business model of Honey Care Africa was initiated in 2000 in

Nairobi, Kenya, by Farouk Jiwa. Previously he had joined the Aga Khan

Development Network, which successfully sourced vegetables from smallholder

farmers, then processed and exported the produce to Europe. It had been one of

the solutions to the exploitation of Kenyan rural farmers due to the existing

models that are characterized by corruptions and inefficiency, as well as the long

sequence of intermediaries before the produce reaches its urban costumers.

The Honey Care (HC) approach has a business model whose ultimate

objective is to gain long-term efficiency. It builds a strong relationship and trust

with the farmers in several different ways. For example, HC introduces an

efficient and environmentally friendly Langstroth hives, for a better beekeeping

technology. To solve the financing problem, HC provides the hives, to be paid

back as a soft loan.

The initial funding was obtained from Danish International Development

Agency (Danida) for the first 100 hives, followed by other donors due to a

publication by the Daily Nation. HC selectively recruit its personnel, mainly for the

positions of:

Trainers: providing initial training & technical support

Project Officers: ensuring that the farmer produces the honey, while

knowing what is happening on the ground.

To gain the trust from farmers, HC maintains open communications to them

without being patronizing. It also avoids any delays on payments. To obtain the

trust from the end customers (the urban supermarkets), HC ensures the quality

and delivery of the honey.

Along with the business model, HC successfully partnered with Africa

Now, an NGO that sponsors the efforts of entrepreneurship, directed by Rob

Hale. By synergizing the efforts, e.g. in the honey marketing, HC has increased

the loyalty of the farmers (despite its non-monopolistic approach) and improved

the sustainability.

2. Problem Definition

The success of the business model of Honey Care Africa (in terms of

produce, farmers’ loyalty, on-time payments, etc) has helped HC reach its

economy of scale. However, it also introduced a new challenge: Growth and

Scalability of its business.

Financing the beehives is one of the challenges: with the growing number

of requirements for beehives, additional working capital is needed. The

geographically spread location has also made the honey collection more difficult.

Similarly, prompt cash payments to farmers are becoming more challenging,

while HC does not want to lose its trust from farmers. Ensuring quality is also

becoming a challenge, because it needs additional investment in microfiltration &

pasteurization.

Additionally, as an NGO, Africa Now only exists temporarily in Kenya. As

well as other NGO’s, it will stop operations & move on to other locations. HC will

lose a key partner in rolling on its business model.

3. Improvements Taken

To cope with the growth, HC established regional Collection Centers. By

having such centers, farmers have to take their honey to the nearest collection

center. The center will receive the honey, pay the farmer in cash, process the

honey, etc.

4. Recommendations

In order to further improve the business model, Group-5 recommends that

HC take the following actions:

- Expand the partnerships with other NGO’s. As NGO’s are operating

temporarily in Kenya, more of them are needed to be sustainable. Anytime

a new NGO (with potential partnership) is emerging, HC should seek for

partnership opportunities with it

- Innovate in other related bee products, for example flavored-honey and

medications from bees

- Establish a formal approach to its key processes (e.g., production,

marketing, HR) in order to be easily duplicated in different locations. It will

ensure the scalability of the business model.