A Review of Coca-Cola's Manual Distribution Centers in Ethiopia and Tanzania
Jane Nelson, Eriko Ishikawa and Alexis Geaneotes Executive Summary
Written by Jane Nelson, Eriko Ishikawa and Alexis Geaneotes © 2009 Harvard Kennedy School and International Finance Corporation This report is a summary version of a longer research study undertaken by the IFC and the CSR Initiative at the Harvard Kennedy School. The full report will be available on the CSRI website at: www.hks.harvard.edu/m-rcbg/CSRI
Acknowledgements: The authors would like to thank Adrian Ristow, Marika McCauley Sine and Euan Wilmshurst from The Coca-Cola Company for their inputs in project design and process management, Beth Jenkins from the Harvard Kennedy School for her substantive and editorial review, and Harvard’s Shannon Murphy, Scott Leland and Minoo Ghoreishi, and IFC’s Sujata Lamba for their overall support and input. The project would not have been possible without the full cooperation of the owners and staff of the 48 Manual Distribution Centers and the Coca-Cola Sabco staff in Tanzania and Ethiopia, especially Hebert Nuwamanya, Victor Getenya and Solomon Shiferaw. The project team would also like to acknowledge the valuable insights and feedback received from a group of development practitioners in the NGO community, government representatives and international development agencies who participated in a stakeholder dialogue in Tanzania in November 2008. We would like to especially thank Zahid Torres-Rahman of Business Action for Africa and Graham Baxter from the International Business Leaders Forum for assisting with the facilitation of the convening.
Cover Photographs: Supplied by Coca-Cola Sabco and The Coca-Cola Company
The findings, interpretations and conclusions of the study are those of the authors and do not necessarily reflect the views of the IFC or the Harvard Kennedy School. The MDC statistics cited are accurate as of November 2008.
Table of Contents
1. Preface 2. The Contribution of the Private Sector to Development 3. Study Objectives and Methodology 4. The Coca-Cola System 5. The Manual Distribution Center (MDC) Model 6. Assessing the MDC Model’s Contribution to the Business and to Development 6.1 Business benefits 6.2 Development contributions Creating Opportunities for Entrepreneurship and Employment Promoting Women’s Economic Empowerment Catalyzing Human Capital Development
3 5 8 10 12
15 16 16 17 18
7.1 7.2 7.3 7.4 7.5 Invest in continuous improvement of the core business model Broaden socio-economic opportunity for MDC owners and employees Promote small business development and entrepreneurship more widely Explore how the business model could distribute social products or messages Undertake participatory evaluation and action-based learning
20 22 23 24 25
DEVELOPING INCLUSIVE BUSINESS MODELS
“More than ever, companies realize that it is good business to share benefits with the communities in the developing countries in which they operate. Enabling small, local firms to supply or distribute goods and services to larger enterprises creates more efficient supply chains. At the same time it maximizes development benefits by helping local companies to grow and create jobs.” Lars H. Thunell, Executive Vice President and CEO International Finance Corporation (IFC)
“Doing business with poor people brings them into the marketplace – a critical step in the path out of poverty – and for entrepreneurs and firms it drives innovation, builds markets and creates new spaces for growth. Inclusive business models both produce and reap the benefits of human development.” United Nations Development Programme (UNDP) Creating Value for All: Strategies for Doing Business with the Poor, 2008
DEVELOPING INCLUSIVE BUSINESS MODELS
Expanding economic opportunity, raising productivity and...