Help Self Help Centre (HSHC)

Viable business plan leads to the arising of Horizon biofuel

 

About Help Self Help Centre

The Kenyan NGO Help Self Help Centre (HSHC) started the Enterprise Development Centre (EDC) in Naro Maru, Mount Kenya Region, in the rural area of Kenya. The EDC is a business entity with a social dimension. With help of the centre, farmers commercialise their products. EDC helps to organise the farmers, trains them and supports them in finding access to local markets. The EDC attends 15 community groups at Kieni East division (4650 beneficiaries) and 5 community groups at Timau division (1550 beneficiaries).

 

Business case

The Enterprise Development Centre wishes to operate in a sustainable manner and as a business entity. Therefore HSHC asked the team of SharePeople to support them in the development of a viable business plan. In order to be fully sustainable within 5 years, the business plan will guide the HSHC in its search for a fair and responsible profit. Sustainability in this sense means that the EDC will be profitable within 5 years and at the same time fully able to compensate the farmers and stakeholders. The EDC wishes to even make enough profit to subsidize certain non economic activities.

 

Results

 

Analysis

• Together with the whole team of the EDC, the Dutch professionals analysed the activities of the EDC. They came to the conclusion that the HSHC (through EDC) does a great job in organising and assisting rural communities.
• During the years the EDC has been supporting farmers in the development of several production chains, including biodiesel, edible oil, honey, soap, mushroom, silk, poultry and tree growing. At the same time they deal with very limited staff and limited resources for business development. The team analysed that this model does not lead to sustainability.
• As the production of oil (principally sun flower and chestnut oil) was estimated to be the most viable production chain, the EDC and the Dutch professionals decided to make a thorough analysis of that specific chain. With input from the EDC-team they made a calculation model, showing the exact costs and earnings from the oil production.
• A systematic analysis shows that EDC did not have a good overview yet of the profit out of the oil production, It turns out that the profit is lower as they thought, due to the fact that several costs were not calculated.

Advice

The team advised EDC to:

• Adjust expectations
• Build up the business step by step
• Start with the most profitable business
• Attract employees with a more commercial background

The EDC decided to concentrate first on the oil and soap production. This will give them time and efforts to acquire the right business skills, find and analyse markets, develop financial systems and invest in product development. Together with the Dutch professionals they defined a very concrete action plan for the future, for the short term as well as for the longer term.

 

 

Impact on the overseas partner 

• As Paul Maina, the EDC manager, formulated it: "I feel revitalized!". The advice of the team was quite harsh, because it would mean that the EDC would have to concentrate first on the chain of oil production and cut large part of their other economic activities and therewith disappoint many of the farmers involved. But instead of feeling down, the EDC states to feel revitalized although they have a lot of hard work ahead of them.
• Analysing their business model in detail has given them new insights in their way of doing business and clarified what they would have to improve in order to become a sustainable business.
• Now they know which direction to go in the future and they have a concrete action plan to work on, step by step.
• They have chosen to concentrate, which has made the business more viable. They found a market for the oil and soap and developed the brand 'Horizon Soap‘ and 'Horizon oil". This clarity in their future strategy has given them access to funds (donations from development organisations as well as commercial loans)

"It helped the organisation to identify the best business opportunity and it brought us the focuss we needed to survive." - Paul Maina, EDC manager.

 

All signs show that it has been a wise strategic choice of the EDC to invest in oil production first. SharePeople supported in making this analysis and strategic decision. By the end of 2008, HSHC says they are satisfied with the choice they made to concentrate on the oil business. Since this year they even started the production of biodiesel, mainly from non-edible oil.

 

"Ever since we started, it got quite busy on our otherwise quiet compound. Matatus (mini-vans) quickly discovered our fuel that is cheaper than regular diesel and the vehicles can drive longer on 1 litre. At some point Matatus would be filled up while the passengers would come to our office to buy our sunflower and canola oil (cooking oils). Pretty soon, the media jumped on it. We appeared in all major Kenyan newspapers and 2 national TV channels So the market is there. Getting sufficient raw materials is now high on our agenda, Maina is going around half of Kenya on his piki-piki (motor bike) to talk to farmers. Fortunately all the publicity helped enormously: many farmers want to plant for us, and people collect seeds for us from the forest. Of course that is what it's all about: introducing a reliable market to farmers and introducing alternative livelihoods." - Janneke Beemster (VSO), Organisational Capacity Builder HSHC.  

 

Impact on the European professionals

• The Dutch professionals learned a lot about solidarity on the Kenyan countryside.
• They are impressed by the work of the NGO HSHC,the trust they gained from the rural communities and the work they have been able to establish with these very poor communities under difficult circumstances.
• The team had the opportunity to visit some of Kenya's poorest areas and learned how people are able to survive under extreme circumstances without giving up hope.
• They got insight in the difficulties of doing business in the context of rural Kenya with small farmers, which is a completely different reality.
• Another challenge for the Dutch participants, was how to advice the NGO. They had to overcome themselves in order to bring the "bad news message" and be straightforward instead of being too protective.

 

Related business cases

• Elreco, 2007, SharePeople Group Program, Kenya
• The Church of England in West Kenya (WRCCS), 2007, SharePeople Group Program, Kenya