Care Kenya Case Study

Topics: Poverty, Agriculture, Sustainable business Pages: 8 (838 words) Published: September 30, 2011
Background Information
Kenya & Poverty
• 55.4% (17.1 mil people) lived below extreme poverty line (US$1 /day) 55 4% (17 1 in 2001 • Large Income Disparities: b/w richest & poorest, b/w urban & rural

(Year of 2001) Life expectancy at birth Adult literacy rate GDP / head UN Human Develop. Index (‘02)

KENYA 45 years 84% US$1,020 148th


% of Kenya’s Total Inco s ome

100% 80% 60% 40% 20% 0%

More than 79 years 99% US$29,480 4th



Poorest 20%

Middle 60%

Richest 20%

Background Information
Kenya & Agriculture
Formal Economy F lE
< Kenyan GDP (‘03) > 25% 50% 25% 83%
Agriculture Others

Real K R l Kenyan L b F Labor Force
< Labor Force > 17% 25% 75%
Totally based on Agriculture

Agriculture sector

Informal Economy Formal Economy

Smallholder Farmers

• Most of rural poor were smallholder farmers - Depended on subsistence agriculture - Had a poor resource base / Isolated due to poor infrastructure - Had poor access to markets, tech, information, capital, etc. ☞ As a result, rural poor rarely participated in Formal Economy

Background Information
CARE International
Outline • Global network of Humanitarian Organizations for Fighting Poverty g g g y • 12 lead members & more than 60 Offices for developing countries (‘05) • Serve the poor in the poorest communities by p p y - Promoting innovative solutions, - Strengthening capacity for self-help, g pp y gp y - Providing economic opportunity, Influencing policy decisions, etc.


CARE Kenya
Outline Staffs • 300 staffs, budget of 14 mil US$ (’04) • Excellent in community engagement & mobilization • Paid on a nonprofit compensation model p p - Reward process rather than profit - paid for the mandate for aid, not trade

Background Information
REAP project

REAP project (Rural Entrepreneurship & Agribusiness Promotion) • Financed with grants from Western governments


• Through education & infrastructure development, REAP helped smallholders improve crop yield & efficiency, etc. • Farmers with REAP - had better quality produce, - were more reliable

Problems at Hand
External Problems

Withdrawal of Donation & Funding

Increasing Competition

Problems are manageable?

Supermarkets demand prePackaging & Labeling

New EurepGAP Agricultural Standards

Problems at Hand
Internal Problems

Loose Lending Criteria Increasing Bad Debt

Lowered Productivity y Laziness & Infighting

Is REAP a sustainable Business Model ??

PUs s PUs’s unreliable Relationships with Exporters

PUs PU are profitable, but CMU is not

CMU : Central Management Unit PU : Pr du ti n Unit Production Units

Problems at hand
Internal Problems

The Problem • CMU provides advise and financing to PU’s • CMU establishes contacts with exporters • PUs deal directly with exporters t • Profits remain at PU level • CMU suffers losses and depends on donations





UK Supermarket

Ethical Perspective
Care Point of View


Fighting Poverty

Ethical Perspective

Rawl’s Theory of Justice • Just principles chosen beyond veil of ignorance Equal rights to most extensive basic liberty Minimization of social and economic inequalities • Position of fair equality of opportunity

Ethical Perspective
Before REAP
• • • • • • The farmers planted crops individually Mainly for self-use Selling of excess harvest in good times Dependent on financial assistance in bad times Dependent on brokers to sell harvest Lack of market data access resulted in disadvantageous g treatment by brokers


Ethical Perspective

Immoral Practice of Brokers • Brokers actions oppose to ethical standards • Focus on own advantage only

Ethical Perspective
Social S i l Enterprise

Care Kenya’s REAP project is a Social Enterprise. Social Enterprises are defined as having… • a clear social objective, • a sustainable business model and • a policy to...
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