BY ZEKARIAS WOLDEMARIAM
After the hard won independence from colonization, African countries have to contend another challenge which is cultural colonization, as they only achieved political freedom through the liberation struggle.
Cultural colonization has done a lot of harm to the people of Africa as they were enticed to consider their culture poor and backward. As a result, many of them preferred to ignore their own valuable culture, heritage and enrich that of the west or their colonizers.
As they consider the products of the west superior or high quality, they pay more to it. They even migrate to the west instead of working to change their land.
As a result, Africa was left poor and war ravaged. While having its own rich resources, it depends on aid from the west. But the reality is the west buys Africa’s resources on small prices and sells it back to Africa on extortionate prices, and then channel small portion of it in the form of aid.
How long shall Africa continue in this vicious cycle? What is holding people of the continent from selling their resources on fair prices and stop receiving aid?
Tebabu Assefa is an Ethiopian American who lives in Silver Spring, State of Maryland (USA). He left Ethiopia at a young age. He finished high school in Kenya and then lived in Europe for quite some time. But he lived most of his life in the US. In profession, Tebabu is engaged in communication, studio arts, broadcast and film. But currently, he turned to be a social entrepreneur and an activist.
He says Africans need to boost cultural awareness so that they can add value to their culture, cultural assets and local resources. By doing so, they can promote their own brands, produce their own products, utilize their resources and compete in the global market. Eventually they can transform their ties with the west from aid to trade.
To this end, as an entrepreneur and activist, he is striving to introduce an initiative called Benefit Corporation to Africa (BCA). Through the initiatives he envisages to put in place a business model and market value chain that can enable African businesses to sell their produces on a fair price as well as African diaspora to invest in Africa’s economy. During his stay with The Ethiopian Herald, he has explained how he turned out to be a social entrepreneur, activist and how he and his colleagues came up with the idea of launching Benefit Corporation, as well as how he plans to implement the initiative in Africa. Enjoy reading!
Could you tell us why and how you turned to be a social entrepreneur?
I have come to be an activist and social entrepreneur because as a filmmaker I was offended by the international economic order that fails the west and the challenge we face in Ethiopia and Africa is directly related to the marginalized presence we have in the global economy. The way the international economic order is geared or developed is in favor of the west. We supply the resource; they add value, they invest and then they sell it back to us. And this was initially crafted during the colonial period. Europeans came to Africa because of resources.
In the Berlin conference, the scramble of Africa, they shared, mapped out and conquered Africa and they built what is known as resource extraction economy. Wherever the resource is, they extract the resource, they put an infrastructure to take it to the city and took it to their country to process and value adds to use it for them, sell to the world and sell it back to us.
And supposedly, when African countries gained independence they only gave political freedom. They left the economy as it is. They put their puppets, western-educated. So they sustained it. Until this day the intra- Africa trade is only 15 percent relative to the Europeans 70 to 80 percent, Latin America in the 50s. So, African countries don’t do trade.
There are lots of barriers; language, custom, currency and road disconnection. After a long struggle, the heads of state and government of Africa for the very first time signed the African Continental Free Trade Area (AfCFTA) agreement in 2018. At that time I was in Niger. They created a commission to build the infrastructure, they created a bank to finance African businesses, the African Import and Export Bank based in Cairo, they have 8 billion USD; they created a secretariat, the AfCFTA Secretariat in Ghana and they are aggressively trying to give an incentive to African business.
In 2019 I was invited by Coalition for African Development, an organization created by ADB, AU, and ECA. It is created to entertain ideas about the development of Africa. So they organized a forum, I was invited to present my initiative. They invited all African Chambers of Commerce to come for the convention, a three-day forum to incentivize them to invest in Africa trade. So the problem is for a significant part our limited capacity.
In the case of coffee for instance, we do 90 percent of the work and get only 10 percent of the money the end-user sells. The one that sells the coffee to the end user does 10 per cent of the work and keeps 90 per cent of the income. One company called Starbucks gross revenue is about 20 billion USD. The owner of Starbucks also makes a billion. If you Google coffee-growing countries you will probably find 50 poor countries mostly in Africa. But if you Google coffee, it is a 100 billion USD market. It was making money on the coffee market. America alone makes money by tax alone. And then the Italian and the Swiss, the German, make money from the billion-dollar coffee industry. Coffee happens to be a very good example but that is an example, but there are cocoa, gold …etc.
In 2019 I was invited to attend a forum in Djibouti, 45 minutes away from the birthplace of coffee, in a five star hotel. The next morning, my coffee selection was a coffee that was sent to Switzerland, roasted and packed in a fancy package. 45 minutes from the birthplace of coffee, I drank coffee which is a Diaspora coffee; and I drank tea, it is a Kenyan tea, which
was taken to England and came as a British breakfast tea. Cocoa, Swiss 75 percent of the cocoa comes from West Africa. A West African cocoa farmer cannot afford to buy chocolate candy for his/her son. So from my observation first and foremost our challenge is related to our marginalized presence. And in the meantime our consumption culture, anything they do is of higher quality than ours. So they have also colonized our mentality. I get sick to see people celebrating black label, double label. What about Areke? So, anything European is modern and anything African is backward, really ridiculous. Even though for a significant part it is because of the economic order, for a significant part it is also because our cultural consumption or our investment vision was colonized. So these are the two elements.
The third piece is the international economic order is driven by profit maximization. So in the value chain, everybody that is closer to the end-user extracts more money from the transaction. People in the lower end of the chain are exploited. So it is greed-driven. At the expense of social crisis, economic crisis, environmental crisis, capitalism, the greedy capitalism, profit maximization so-called free market, and evils of the problem trickle-down economies are so weird.
Another element is that Africans as a community are new to the global market. Ethiopians have never built-up roads. For the most part, they went there, got their degree and came back and lived in the country. So we did not have as such the Diaspora. Now we have a million Ethiopians in America. There are five million Africans this is a new phenomenon. So, now we have a direct market presence on that side. Back then many other communities like the Italians; they have the Italian community in large numbers, so they were able to have a representation.
Another thing is in the global cultural market our history is highly compromised or marginalized. We are defined by the media that has a different agenda which has crisis as a news-gathering motive; they assume crisis attracts an audience so, only our crisis in Africa is broadcasted while we are known as a basket case. But we are known for famine, war, and we are defined by the negative aspect. That has also marginalized our competitive edge on that side.
What was the solution you and your colleagues sought to address the crisis?
Naturally, I looked at the consumer and the system. The consumers are good-natured. As an activist, I have identified that we have to fight the global cultural market by authentically and honestly retelling our story; an African driven storytelling. Problems are there but we are much more than wrong. Africa is a magical place, the cradle of civilization, ancient resources, beautiful culture; so magical continent. And the world needs spiritual, cultural well-being as well as material. If you define human progress through the lens of spiritual and cultural development we will come up on top, we are only pure materially. I said first and foremost we have to retell our story. Retelling our story create the willingness of the world community to share our story as we shared theirs.
So, they are willing to partake in our culture and then we have to produce and add value to our products to them. And then we have to control the value chain. To promote, create the desire then produce and then we have hope we can do this. And that was the fact that currently there are about 5 million Africans, 1 million Ethiopians that is a perfect sage. So I sort out the change as an activist.
And then in 2008, there was a global economic crisis that was greed-driven. The profit maximization brought the world to its knees literally, because of the global economic crisis many people lost their savings, wealth, their houses. So, a socially-oriented conscious community started demanding correction. We have to stop this greed-driven madness. It has been proven by political economies that the current economic order driven by profit maximization will take us to the cliff because there is a limited resource. We cannot exploit environmental destruction, human destruction, unemployment, poverty and it’s been proved theoretically that you are on the wrong course.
The question was what is that we can do today to correct that? A famous political economist wrote a book called “What then must we do?” There is no question about the fact that we are on the wrong track. The question is what are we going to do to correct it before it is too late?
So in 2008, the movement picked in the state of Maryland. I was one of the social activists. We mobilized our state senator and asked him to write legislation that allows businesses who aspire to worthwhile doing good to be protected. Before that CCORP was created to maximize profit. If we do anything that compromise profit the shareholders will fire you. Like the CEO of a publicly owned company and you welcome a USD 10 million project, You are supposed to sign if your son gets sick and you are supposed to take to the hospital and then you miss the deal you will be fired.
They don’t care about you. So, social entrepreneurs who want to enter to business did not have any guarantee if they go public, and raise shares they will be vulnerable. So, social entrepreneurs need to be protected and unless you go IPO you cannot have access to a loan. In the USA you come up with a model, you show the model, you show the model works and then raise money. That is how you grow; you raise the capital from the capital market or stock market.
In 2009 my senator wrote legislation called Benefit Corporation. As a boss to CCORP, benefit for the greater good. That is the first one. In 2009 the state of Maryland passed the legislation and my company was in cooperated that day.
And there was a coffee company that I created and what I wanted to do is I took coffee as a model. As I said earlier we do 90 percent of the work. When I came to Ethiopia, I was inspired by small farmers in the rural area who are organized under a coop. The coop is organized under the international cooperative alliance democratic structure. They are self-governing, they run their coop and they have collective power. They have collective assets and then the coops have a union and the union has hired professionals.
The Oromia coffee farmers union is the largest one; they have 500,000 members. They started in 1999 with 29,000 coffee, 90,0000 capital. Today they have over 15 million USD capitals. They own the largest coffee processing plant in Gelan. I was impressed by that. From the commodity market, they have done well. Before that they used to give the commodity market that has a shopkeeper who collects from a farmer, there is someone who collects from a storekeeper and sells it to the exporters.
They broke down that chain and they collectively controlled the production and produced high-quality coffee and sold it in the fair trade market. The fair trade market came because the greed-driven commodity market created so much havoc in their lives. So conscious buyers said “what will pay a little more?” another indication of the crisis in the commodity market. Satisfied by that, they brought to the international market.
How did you use cultural awareness as an approach to boost a new business model and value chain?
I wanted to take them from the global market to the consumer to have our value chain. And I did a campaign on the consumer. I did cultural festivals, ceremonies, telling an African story, I captured their imagination and then told them the viciousness of the international market they support. And then, nobody wants that, it is against their core value. I got traction in that. And then I raised a little seed money. I roasted my coffee sold my coffee at a small scale to grow the market as I was negotiating with farmers. The farmers were 500,000 at that time.
I asked them to invest at a time, the 500,000 to invest, 2 unions 6 USD per farmer that was 3 million USD. They were willing to do that and said they have the capacity. In the shorter version, my model failed three times. But in the end their willingness to invest, So, if they invest 3 million USD, I wanted to invest another 3 million USD, create a roasting facility and give them 50 percent of the ownership. That will sell directly to the consumer so they can have a higher percentage of the share. And this took a long time because of the bureaucracy, international trade, and lot of policy issues.
Right now Ethiopia does not allow outward investment. If you want to buy a house you have to have foreign currency. The government does not have any foreign currency. So that was a challenge. And to make a long story short I created a model at the end it has three components. I wanted to do the first part in DT Virginian
market. I developed three components to the business of roasting, café (Mother Café) and then satellite cafes. The first one in the DNV area to be eventually scaled up in the four corners of America. I gave the roasting to the farmers, the café to 25 nonprofit organizations in each market. I went to them, I said to them ‘buy my coffee on small scale; I will give you 30 percent if you tell your community.’ Each organization has 5 to 10 thousand members or supporters. I showed them all the presentations, coffee ceremony and then some churches people shelter the homeless, who feed the hungry and give medical services across America.
I told them if you mobilize your community to buy 30 percent will be yours. And then I opened the café. Once I got the farmers to open the roasting facility, I told them I will allocate 50 percent of the investment of the café so that they can mobilize the community and buy 50 percent of the share of the profit will go back to the community, organization.
So now, I am making relevance in my business. And the third piece is once I have the roasting and the café, I can do 20 satellite cafés in DC, Virginia and each satellite café can give employment to 10/15 people. So I am going to train 10 people, unemployed women and youth, starting from our community, have them develop the business plan and have them get a microloan to buy. If you give it to 10 people and they borrow 20,000 USD that will be 200,000 USD, I can sell the franchise to them so that they can run it as a business. So this model became very powerful.
How did you manage to obtain legal status for the benefit corporation?
I was able to go to the US Congress and said if you allow me to help my African farmers not only they can take care of themselves, they can create economic development which means this has a potential that can be expanded beyond coffee. I used coffee as a model. My entity is a benefit corporation. It is a hybrid of nonprofit and for-profit. It is not like here for instance there is a Private Limited Company (PLC) and there is a Civic Society Organization (CSO).
What they tell you is you get a business you pay tax. If you are a social enterprise, if you use all the money to go toward the cause you will be fine. So, both are to the extreme. I am saying it is possible to do the hybrid because it is all created by business so if you correct the business model. Capitalism is good; adding value and selling, but greed is the problem. So the greed is contained if the public good is considered, a business can be corrected by a business.
In Ethiopia, they call it a social enterprise, they don’t have that designation but they are trying to survive in that space. In America, we have created legislation. Now the benefit corporation that was enacted in the state of Maryland is duplicated in 38 states. And thousands of businesses have adopted it. It runs like a business, makes money but the ultimate goal is the greater good.
The market is demanding. For instance, clothing; they design the cloth, manufacture it somewhere in the third world and subcontract the manufacturing and the people in the 3rd world they will be paid dirty little and they exploit the people.
What are you doing to replicate the initiative in Ethiopia and Africa in General?
I created the Benefit Corporation for Africa (BCA) here that is what I am trying to establish. It is my initiative. The initiative is a business that leverages the power of business challenges for Africans by growing an African market presence. So, coffee became the prototype. I have an initiative, I have a prototype and I will prove that in the marketplace so that I can inspire other African enterprises to duplicate my model.
So I created another initiative called US-Africa Diaspora Business Council. I have an initiative –Benefit Corporation, a model prototype – Blessed Coffee, and an organization that aspires to inspire the market to be socially conscious, provide opportunities to African Diaspora as well as American socially oriented businesses to duplicate a model. The model can be duplicated to other products like cocoa. By now I am trying to duplicate it with the women potters, weavers.
Finally, I had a forum at ECA; farmers came and signed that investment agreement and I am going to do another agreement this year in May, to show my supporters I have a minimum of 50 to 100,000 supporters. They watch this thing from inception to development they invest in others and they will see their dream come true.
Last September, I also signed a Memorandum of Understanding (MoU) with Ethiopian Federal Cooperatives Commission. Under it, 19,000 cooperatives are representing 28 million people, a fourth of the population of Ethiopia. I am going to source that in the Habesha US market. We have groceries where Ethiopians buy berbere, Shiro, injera, misir and Kik.
They buy it from India and Turkey. When you ask them “why don’t you buy from Ethiopia?” they tell you the one that comes from Ethiopia is not clean. Nobody works on the business of cleaning and selling that. So we sell it cheaply in the market. Sometimes other poor countries buy it from us, value add and sell it. So I signed a MoU with the FCA to show the Diaspora the potential investors so that they can duplicate in the market.
By now I have a market, the community; I have built a supply chain with coffee. I have built a supply chain with coffee. It can be used to sell others. It is called a community-based value chain. There is enough money for everybody. So everybody has to invest their skill in the game.
Now we are trying to use that as a model, BCA came to Ethiopia to showcase it. So that it can be a new business model for Africa to engage with the US. So, ultimately this new international business gear towards development can change the US-Africa trade or the US-Africa relations from aid to trade for mutual benefit.
Africans don’t need aid, Africans want investment. And the Diaspora has to wake up and use its purchasing power and be rich in America by providing everybody in the value chain access, profit sharing investment partnership between the producers and consumers.
The first 12 years, I have come here every year, nobody gave a dime, they thought I was fool and the government was not willing to open. The system was not conducive to going to Kenya to sell it to Kenyans.
When I heard this reform agenda, I came back, now the government is very interested, out of the box there are still issues, at least in principle. So, now because of the current crisis, conflict everybody wants new ideas.
Are there Social enterprises in Ethiopia? Do you think they will sprout here?
Of course, we have to do two things. One thing is we have to create awareness; we have to start the cultural campaign. We take our wallet every five years for election. Every day we pull our wallets, we cast a vote, what we do with that matters most. We keep buying Johnny walker, not Areke. The country that is producing Johnny walker becomes rich. If we buy furniture that is made in China, if we buy cloth made outside, but if we don’t buy local we are killing our economy. So there has to be cultural awareness.
The second, policy has to be put in place to encourage this and then we have to give incentive to social enterprises to come into play. I think there is hope. A 100 million people sell 3 to 4 billion USD; they are sitting on 20 million dollar gold. The fate of 100 million people depends on 1 million who can invest a 20,000 USD a year to help the Ethiopian market grow in the global market.
So the government has to be more aware of this and put a foreign policy conducive to that and the finance sector has to recognize this as an opportunity and make finance available. Right now, Ethiopia is isolated; it moves in its orbit like a planet. But Ethiopia is part of the global economy. That is the only way out, we are social animals, we drink coffee together but we don’t do that in the economy. How can you drive a Mercedes and pass children who don’t have anything to eat?
So the relationship between the ‘I’ and ‘we’, ‘I am because we are’ is the African way. If that relationship is disrupted, whether culturally, politically or economically, if one is sick, we are all sick. We have to adhere to our traditional values and implement that in our economic engagement. So there has to be cultural awareness. Last time I was devastated to see a Chinese made jebena. You are killing millions of people who live in Entoto. The government needs to have the policy to stop that; people have to be aware. There is greed, which is the problem we have right now.
What do you think would be the role of the Diaspora? Is there any way they can contribute for transforming Africa’s economy?
The Diaspora is not one; the Diaspora is one-to-many. There are rich and poor. If you estimate, 40 percent of the Diaspora is people who have a degree and have gone to school. They live in America like Americans. They have bought their house and live the American dream and are too busy to pay for it. They only have two weeks a year vacation and if they don’t pay the notes the house would be taken; it is a credit. So they have to sustain that. They are busy. They are materially satisfied but not spiritually.
But, 60 percent of the Ethiopians live in a ghetto called Ethiopia in America. Some Ethiopian communities, who live without speaking in English because they work in a restaurant, serve Ethiopians; they created a little Ethiopia within America. If you go to Ethiopian clubs, it is only Ethiopians. When Ethiopians get together for football, it is only Ethiopians. We have created our little economy and those who are about 20 percent have a business and are making money. They have restaurants; they own shops and sell things like injera.
These are people who are not educated; they do not compete in America, they became innovative entrepreneurs. They got money not a lot of money, but at least if you ask them to show some money they can pool 100,000 dollars. The professionals do not have cash, they live on credit cards. The rest are car drivers who work in the service industry. Most of them have equb and iddir.
On the average they can all access 20,000 USD a year from their purchasing, investment and the money they send. We have to give them a business model that is conducive to their income. If you allow them to invest 20,000 USD per year for five years, it will matter. If you ask them to pool 10/ 20 that is 20,000 USD. That is a nice business that can grow. So we can’t just tell the Diaspora to come home. We should tell them to grow Ethiopia’s business where they are; to invest buying from the coops.
Today I had a meeting with the bank officials. I brought them a sample Diaspora who has a PhD in pharmacy. She makes 100-150 USD a year; living comfortable life. But life is meaningless. She came here and tried the pharmacy and did not give her satisfaction. She looked at a product that comes from the Middle East, child food and found out dangerous for children. ‘Wow! Here is an opportunity to create child food from natural products sourced from the farmers.’
That is a big market; the Ethiopians market, the inter-Africa market. She wanted to do that if the banks finance it, if the government gives her a conducive policy. The fate of Ethiopia is in the hands of the Diaspora; growing Ethiopians business in the globe. To do that they first have to redefine, promote Ethiopian culture, and create an appetite and then use that. Otherwise bringing them here is crazy.
At this junction the sentiments that Ethiopians have, “I want to do for my country” that is good, the subjective reality. That has to be coined much with a strategy and that solution is growing the Ethiopian market in the global world and building our value chain and sharing the profit across the chain. And only a socially driven business can do that. You can make money but you can do it while doing well. You don’t have to kill your brighter sister. Because that greed-driven market is not doing good for America. So, this is proven to be wrong.
So a business market that is driven by social value a greater good that is our culture. Benefit Corporation is built on that idea. And the social enterprise movement in Ethiopia is built on that idea. I am happy to join forces with SSE. In Ethiopia, it is a recent phenomenon, new idea they are no more than 5 years old.
Emotion is not enough. We have to be smart, strategic, control, be disciplined. For instance, the Diaspora should not change money at the black market. It is contradictory. We have to invest or buy local. For instance, once upon a time vodka was Areke, Tella is a beer. We are selling beer in America. Why don’t we sell tella in America? Why are we duplicating others when ours …, unless we sell netella like they sold jeans to us unless we sell Shiro like they sell a hamburger, so that is a culture consumption. It is an individual battle. We have to fight on an individual level collectively. Then we can win.
Due to the current political situation in Ethiopia, the US government has delisted Ethiopia from the list of beneficiaries of African Growth and Opportunity Act 9 AGOA. How can we use the new business model to compensate the loss incurred due to this? And what do you think should our relations with the US be in the future?
AGOA was enacted in 2000 by Clinton; the purpose was to encourage farmers in Africa to compete in the global market. It is quota-free, tax-free access. But if we don’t produce or if we don’t sell our commodity the difference is not much. Coffee is sold 1.5 USD, but they sell it to us for 18 USD. Ethiopians are paying 100 million USD a year for Starbucks. This means they are paying Starbucks to kill their farmers.
My benefit corporation was submitted as an amendment to AGOA. It is a better engine to AGOA so that both can benefit so in 2025, it will expand. The Chinese economy has grown. The Chinese economy is dominating the world. America is dependent on the Chinese economy. The Chinese have loaned money to America. Everything America consumes is produced in China. And now China is strong. China has taken Africa in the last 15 to 20 years. Americans are trying to aggressively reclaim Africa. Africa is a big market, growing market. The population is big, labor is cheap.
They will pool the supply chain from China to Africa, and they will aggressively invest in Africa. They wrote a new law in 2018. They restructure their international finance corporation and created a new financing corporation called Development Finance Corporation (DFC) put 40 billion USD for Americans to do business in Africa.
I am telling them it is difficult for America to be in Africa. First, Americans think Africa is a jungle. So no American business can come and take a risk. So the leadership has to be given to the African Diaspora; the 5 million. If the African Diaspora is given an opportunity, they have 100 billion USD in their hands, and in five years it would be 500 billion dollars. So if you want to make a difference that 40 billion has to be invested.
If I get a chance for AGOA to be amended with Benefit Corporation for Africa and AGOA is extended which means the minute the law is put in place, the government has to allocate money to implement the law which means the aid money that they waste. We can decide how much money can go. That is how America works. But we have to be very smart, we can’t fight with America.
We send 3 billion and buy 14 billion. We have to work with America. It is a big market. America is an ally. Ethiopians living in America pay tax. By the way, Ethiopians who live in America are educated by Ethiopia; the doctors in America, engineers who are living in America. So America owes money to Ethiopia. The Ethiopians who made America great are educated by the poor Ethiopians. Ethiopia can demand to her children. We have made America great. We have not even promoted that yet.
How much does the American government, society understand the role of Ethiopian or African Diasporas to the greatness of America?
At one time, I made a festival in Silver Spring downtown I had 20,000 people on the stage. I brought the senators and congress members. I said “You never said thank you to Ethiopians who have made America great. You’ve never welcomed them. So this is a chance for you to stand and say welcome Ethiopians, you have made our Silver Spring great”
During the 2008 economic crisis, Silver Spring downtown was boarded, businesses were closing. Ethiopians came and started opening. The rate was cheap. Ethiopian’s started café, shops, and restaurants. Now if you go to Silver Spring, it is a vibrant city. Ethiopians did that. We made America great. If you argue it is easy to argue. So I told the senators to say thank you. So helping the Ethiopian Diaspora is best for Africa-America’s interest. If America wants to take Africa, the only way she can do that is through this.
Thank you very much for the elaborated response. I wish you success for your initiative!
You are welcome!
The Ethiopian Herald February 5/2022
