22 February 2013

Good African Coffee and the False Choice of “Trade Not Aid”

The clarion call of “Trade Not Aid!” is a catchy slogan but a false choice, one that provides more heat than light and undesirably narrows the set of options available to development. It attacks a straw man from the past and doesn't contend with the latest in development theory and practice, which is, often, “Trade And Aid.”

Andrew Rugasira, founder of Good African Coffee*, is out with a new book, A Good African Story, and was recently profiled in The Guardian. In the article – and on the company’s website – his philosophy is clear: “We passionately believe that Trade is the only viable strategy for Africa’s economic and social development.”

His is a compelling story to tell. An obviously charismatic and intelligent Ugandan creates a multinational coffee company from nothing, all the while preaching the gospel of self-reliance and home-grown solutions to home-grown problems. In the process, he helps pull a community out of subsistence poverty and through sheer perseverance and will manages to have his coffee distributed to Waitrose, Sainsbury’s, and Tesco. An inspirational entrepreneur in every sense of the phrase.

And he is certainly correct that one way for a country to develop is to engage in industries that allow full-scale, value-additive production; there’s much more value in growing, roasting, marketing, exporting, and selling coffee than in merely growing and selling unfinished beans to Starbucks. The value-added industries mean more money for the country and more jobs for the community.

But Rugasira seems to believe that his company hasn't been helped by aid, which, in Uganda, seems unlikely. Health and education projects in Kasese district likely have improved the health and skills of the 14,000 workers that till the land; aid-funded boreholes that he inveighs for being a small step are boreholes that his workers may use to stay hydrated while tilling the land; the highway that his coffee beans travel on, A109 from Kasese to Kampala, is likely maintained with funds from multilateral donors. Aid helps pave the wave – sometimes literally – for entrepreneurs like Rugasira to use their significant talents to better themselves, their communities, and their countries.

Rugasira and other entrepreneurs don’t have to choose between aid and trade; likewise, Uganda and other developing countries can embrace both. There’s more synergy than discord between aid and trade; appropriately executed, they can build on each other and create myriad positive feedback loops in health, education, and economic development.

As a successful entrepreneur, Rugasira has pledged 50% of Good African Coffee’s profits to the communities that grow its coffee, for use in community-developed and approved programs, especially microfinance; it would seem prudent of the community to partner with a NGO or multilateral organization with expertise in microfinance to help the programs be as successful as possible. If that 50% wasn't enough to help the community make its ideas tangible, there could be a role for a donor to step in and fill the gap.

The particular conception of aid outlined in “Trade Not Aid,” and espoused by Rugasira, is myopic and focuses only on what many would consider “Bad Aid” – outsiders or multilaterals with bags of money, wantonly starting programs without bothering to ask the receivers what they want or need. But attacking outdated models with pithy phrases doesn't add to the discussion; overly-simplistic assumptions of what aid can and can’t be detract from the larger goal rather than promote it.

For an example of how aid may work in tandem with trade, we need look no further than Good African Coffee itself. The profile notes how the company couldn't keep up with sales from Waitrose, which led to its being delisted by the store; Good African Coffee simply couldn't secure funds from an Ugandan bank for historical and cultural reasons.

Could an aid fund, jointly operated by the donor and the government, play a role in assisting successful companies scale to meet demand for their products? Would a social venture capital fund, buffeted with funds from USAID, be an avenue towards expansion, marketing, and promotion for Good African Coffee? The point isn't that these are good ideas – they may very well not be. It’s merely that they are ideas of what aid could be.

The chorus of “Trade Not Aid” is unlikely to go away soon; it’s sticky for a reason. But one can hope that, in the near future, it will be drowned out by the sound of “Trade And Aid.” While there is no silver bullet in development, the coupling of the two may produce the best outcomes we can hope for.

*Incidentally, the only Good African Coffee in Mbale that I've found is the freeze-dried version, which is, well, not so Good (at least to this American).