JOHANNESBURG Feb 22 Africa's
commodity-producing countries have historically exported raw
materials to the rest of the world, but products manufactured on
the continent are still a rare sight on Western supermarket
One man attempting to correct that imbalance is Andrew
Rugasira, a Ugandan businessman who aims to build his coffee
firm, Good African Coffee (GAC), into a multinational that can
compete with giants such as Nestle and Kraft.
In a book published this month, Rugasira tells the story of
how GAC, founded in 2003, became the first African-owned coffee
brand to sell directly to British retailers such as J Sainsbury
and Waitrose, overcoming significant hurdles
along the way.
The brand is also available online in the United States, the
world's biggest coffee consumer whose $30 billion market is
bigger than Uganda's entire economy.
GAC works with around 14,000 farmers in Uganda, the
continent's top coffee exporter, and trains them to produce
quality arabica varieties. It also has a roasting and packaging
facility in the capital, Kampala.
Rugasira said he wanted to shed light on why so little value
addition takes place in commodity-producing nations such as
Uganda and why it so difficult for these countries to penetrate
Western markets with finished products.
Africa's share of global manufacturing value-added is around
1 percent, according to the United Nations.
Faced with barriers such as lack of access to capital, poor
infrastructure, competition with heavily subsidised European
producers and manufacturers, and tariff and non-tariff barriers
in developed countries, most African entrepreneurs opt to become
job seekers rather than job makers, Rugasira believes.
"I don't see too many African-owned coffee brands on the
shelves," he said in an interview. "It's just too difficult.
People probably have better things to do with their time and
In the book, "A Good African Story: How a Small Company
Built a Global Coffee Brand," Rugasira writes that accessing
affordable capital has been his biggest challenge since setting
In his view, this is why the majority of small and medium
enterprises in Africa fail to take off.
A 2010 survey by the Consultative Group to Assist the Poor
found that only 28 per 1,000 people in sub-Saharan Africa had
access to credit, compared with 245 in the developing world and
more than 800 in high-income countries.
Rugasira says African governments need to address this by
making long-term capital available and investing in areas where
the private sector is unable or unwilling to invest.
"The biggest issue here is one of market failure," he said.
"The markets are not entirely capable of allocating financial
capital into the areas that will generate a lot of growth."
Poor infrastructure and high transport costs also prevent
African exporters from competitively delivering their products
and services to overseas markets.
Tariff and non-tariff barriers in developed markets, such as
subsidies given to the agriculture sector, contribute to making
international trade unequal, the book says.
Ultimately, Africa's failure to process most of its raw
materials means "the developed countries that carry out the
processing keep the lion's share of the added value", Rugasira
writes, hindering job creation on the continent and growth in
the domestic tax base.
He sees a role for Western donor nations, saying they should
divert their funding to Africa's private sector rather than
"They need to recognize that the engine for growth is the
private sector," he said. "Their economies developed out of the
entrepreneurship, innovation and creativity of their private
sector, and when it comes to us, they pump most of the money
into the government treasuries."
Rugasira realises he has chosen a difficult sector, but
points out that agriculture provides a livelihood for 70 percent
of sub-Saharan Africa's population and has huge potential to
He has seen the impact on the communities he works with,
where farmers have become more financially secure and have been
able to escape the clutches of rural loan sharks.
Rugasira has big ambitions for his company, including
diversifying into tea and chocolate, expanding into the rest of
Africa and expanding its presence in Britain and United States.
"We're looking to address the issue of how we can scale up,
how can Good African become a global brand," he said. "That's
the question that keeps me up every night. I want to become a
multinational like Nestle."
(editing by Jane Baird)