Coffee Sector_web_2_2-20-15_v3In a February 2015 Report the African Fine Coffees Association featured as a case study in the World Bank Agriculture Global Practice Discussion Paper 02. The topic of the paper was Risk Finance in the Coffee Sector – A Compendium of Case Studies Related to improving Risk Management and Access to Finance in the Coffee Sector.

Special Appreciation to the World Bank Team and Consultants for this feature article. To download the full report from the World Bank please click here –  Risk and Finance in the Coffee Sector: How to Improve Risk Management and Access to Finance in the Coffee Sector

Below is an extract from the World Bank article;

 

Case Study 2: The Value of Regional Private/Public Sector Initiatives: The Example of the African Fine Coffees Association (AFCA)

Overview

This case study examines the ways in which the African Fine Coffees Association (AFCA, previously EAFCA) has evolved beyond its initial role as a regional coffee sector organization focused on marketing, policy, and sector advocacy to being able to add substantial value to the process of improving coffee sector environments in individual countries. Of specific interest with regards to improving the enabling environment for coffee – and managing enabling environment risk – is the policy dialogue conducted by AFCA on behalf of their sector membership.

While many of AFCA’s activities could have been undertaken directly by each member country, the Association has proven adept at undertaking these on behalf of all its members by aggregating resources and aligning them with emerging opportunities. It has also displayed an ability to attract donor funding for its activities, bolstered by the introduction of the now prominent annual AFCA coffee events.[1]  A growing realization by policymakers and industry bodies that AFCA represents a worthwhile and knowledgeable discussion partner has enabled the Association to assist with the development of appropriate sector policy and regulation in different African coffee-producing countries. This confirms that regional private/public initiatives can bring both positive results and greater exposure. Other coffee-producing regions would benefit from this example by embracing the view that the sharing of knowledge, and experience, augmented by active promotion, can bring benefits to all. AFCA’s case also highlights that only major coffee-producing countries can catalyze the large-scale attention and exposure that AFCA has achieved for its smaller coffee-producing member nations.

Background

The Eastern African Fine Coffees Association, the precursor to today’s AFCA, was established in 2000 as a result of an initiative by coffee professionals from different backgrounds who held to some common views, namely:

  • As the birthplace of both Arabica and Robusta coffee, Africa is home to a wide diversity of unique coffees. However, to benefit from this advantage, producers needed to understand their markets and buyers better.
  • The future belonged to the organized. This presumption was already well appreciated in East Africa, but numerous challenges remained that affected all African coffee-producing countries.
  • Addressing these challenges required a regional, apolitical sector body, not only to promote fine coffees from Africa but also to collaborate with government authorities in producing countries and to liaise with important interregional bodies elsewhere, such as the specialty coffee associations of America, Europe, and Japan.

Incorporated in Uganda in 2000 with both public and private members from Burundi, Ethiopia, Kenya, Rwanda, Tanzania, and Uganda, the initial objectives were to address the following challenges:

  • A lack of institutional arrangements in addressing issues affecting specialty coffees.
  • Inadequate quality/specialty coffee orientation among many producers.
  • Inadequate coordination with research institutions and limited technology transfer.
  • The need to better understand both the market and the product and to join the specialty and sustainability movements that were afoot at the time.
  • Generally weak linkages with both the international trade and roasters.

Resource constraints made these objectives difficult to achieve by individual countries,  demonstrating the need for a regional industry organization.

By 2003, another five country chapters had already been established in the Democratic Republic of the Congo, Malawi, South Africa, Zambia, and Zimbabwe. In 2012, AFCA transformed itself into a pan-African organization with members joining from Cameroon and African and Malagasy Robusta Coffee Agency (ACRAM), a body that brings together African Robusta producers.

By early 2014, AFCA had country chapters in 11 countries and 252 members, ranging from individuals to companies and public entities.[2]

How was this achieved?

In 2002, USAID began supporting AFCA due to concerns that the East African coffee sector was failing in the wake of a global glut of extremely low-priced mainstream or commodity-type coffee. This assistance (initially through the Regional Agricultural Trade Expansion Support Program, and subsequently through the Competitiveness and Trade Expansion Program) enabled AFCA to show the value of bringing together industry stakeholders from across the region to focus on both improving product quality and raising the profile of the region’s truly unique coffees. This was done by establishing and promoting a network in the Eastern Africa coffee-growing region to:

  • Exchange information and promote the production, processing, export, and consumption of the finest quality coffee through education and training for coffee professionals and other stakeholders.
  • Encourage the development, establishment, and implementation of a modern, regional marketing infrastructure in order to:
    • Increase the purchasing power of coffee growers
    • Improve buyers’ accessibility to fine coffees from the region
    • Promote the rewarding of coffee quality with premium prices
    • Improve industry accountability, transparency and professionalism
  • Liaise with any organizations on matters relating to the promotion of the fine coffee industry, inform all members of all such developments, and facilitate joint activities where considered appropriate.
  • Encourage sound business and professional practices.
  • Enhance consciousness of environmental and social as well as socioeconomic issues related to the industry.

[1] Today, 2014, AFCA is however entirely self-funded for all its administrative and operational costs, and it funds a large proportion of its program activities from internally-generated income.

[2] AFCA chapters: Burundi, DR Congo, Ethiopia, Kenya, Malawi, Rwanda, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe. A new chapter is being established in Cameroon.

For the Full Article please click here – Risk and Finance in the Coffee Sector: How to Improve Risk Management and Access to Finance in the Coffee Sector