- January 20, 2021
- Srujith Lingala, Manager Technology and Entrepreneurship at Sight and Life
- Most Recent, Food Systems
According to our estimates, 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world[i].
(The World Bank)
Small and Medium Enterprises, commonly referred to as SMEs, constitute approximately 90% of all businesses worldwide, accounting for nearly 50% of total employment[i]. They are also the most significant actors in many developing countries’ food systems, and yet SMEs often struggle to attract interest and investment. Most high productivity technologies rest with conglomerates in the global north who benefit from large consumer markets and, more importantly, pools of venture capital to develop disruptive innovations. These innovations are vital to boosting nature-positive production of agricultural goods while preserving and advancing equitable livelihoods. The disparity of investment between conglomerates and the SMEs of low and-middle-income countries (LMICs) limits the latter’s ability to stay ahead of the innovation curve[ii]. This in turn caps a community’s economic development and stifles its citizenry’s upward mobility, making access to affordable and good nutrition more challenging.
If we want to help improve the nutrition levels and health of a population, we should therefore look to bolster its SMEs.
Room for improvement
Sight and Life has long been interested in finding ways to boost the productivity and income of SMEs in LMICs and has researched different business models which can be most effective. Recently, we investigated constraints in egg production in four countries – Kenya, Ethiopia, Malawi, and India – and identified five business models that are viable and sustainable (read more on why we love eggs here). Of those five, the Egg Hub model has proven to be the most successful. An ‘Egg Hub’ is a centralized unit providing high quality affordable inputs, extension services, training, and market access to small and medium farm enterprises (out-growers) involved in layer farming. This approach showed rapid increase in egg yields, achieved self‐sufficiency, reduced the price of eggs, and provided a high income for the farmers, a majority of whom are women. We found that this model was successful in improving hen productivity from an average of 40 eggs per bird to 270-300 eggs – an outstanding result.
It should be noted that private companies were the ones to develop the Egg Hub model, and although the commercial players did not see any immediate profit, they will have long‐term sustainable gains through increased market share, justifying their initial capital investment.[iii]
This study demonstrates how impactful the right kind of efforts can be on SMEs, the livelihoods they support, and food systems. To enable more of this sort of targeted investment all along the value chain, Sight and Life is initiating Food Systems Innovation Hubs in rapidly emerging markets such as Nigeria, Bangladesh, and Rwanda. These hubs will work to alleviate malnutrition through corporate partnerships, impact investors, and government collaboration in the context of a robust entrepreneurial culture in these geographies.
Food Systems Innovation Hubs can help unlock the full potential of SMEs by using proven strategies and increasing capital flow to LMICs. We encourage you to join us in this effort by joining the upcoming webinar on February 2 to learn more about this initiative and how you can contribute.
Read further about our ideas for the Food Systems Innovation Hub HERE.
[i] The World Bank
[ii] https://www.worldbank.org/en/topic/smefinance. Accessed online on January 17, 2021
[iii] Beesabathuni K, Lingala S, Kraemer K. Increasing egg availability through smallholder business models in East Africa and India. Matern Child Nutr. 2018;14(S3):e12667. https://doi.org/10.1111/mcn.12667