FrieslandCampina is one of the world’s largest dairy companies with products sold in more than 100 countries. In Nigeria, the company is known through the PEAK MILK brand. It began as a cooperative of farmers in the Netherlands, around 1871, and set out for a global domination. All dairy farmers produce milk from their cows, and those are paid for and collected at distribution centers, and then processed for global export, through the FrieslandCampina brand. Those farmers collectively own FrieslandCampina and the company publishes and enforces standards which all members adhere to. Using this business model, the company generates excess of US$12 billion in yearly revenue.
There is something we can learn from this company for textile, footwear, and other categories in Aba and other Abia cities. Let us assume that a group of business leaders come together and set up a company – and that company specifies product specifications, quality standards, etc across product lines.
For footwear, let’s say we have Aba Global Footwear producing under “Enyimba” brand logo; footwear makers within that ecosystem will become the majority shareholders.
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In operations, every footwear produced by members would be bought by Aba Global Footwear which has a core mission to market and distribute the footwear locally and globally. The artisans will just focus on making quality shoes for “Enyimba”, knowing that the brand owner (Aba Global Footwear) will buy whatever they produce.
This model has the core spirit of Igwebuike (strength in unity) baked with entrepreneurial capitalism. It supports the core thesis of the Igbo Apprenticeship System and “Onye aghana nwanne ya” [do not leave your brethren behind] since they mutually compete and cooperate while maintaining the core element of free enterprise.
The state government (via ministry of trade) will regulate “cooperatives” which are actually fully-structured enterprising entities owned by members mainly to ensure those artisans are well protected.
The government cannot transform Aba and our cities by itself. We need new business models engineered by companies and businesspeople to come and help us.
We’re looking at new business models which can make it easier for innovators to organize and drive growth in Abia State. For this, can you invest in this business model? Or simply, what do you think of it?
Prof Ndubuisi Ekekwe
Co-chair Abia State Economic Transformation Transition Council
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The ownership structure is the biggest sticking point, shoemakers cannot own 100%, because they lack the marketing and distribution capabilities, so it requires group of people or entity with marketing and distribution capability controlling a certain percentage. If it’s 60/40, or 40/60, it may work, but the funding mechanism will be clearly defined. The stakeholder/shareholders structure will be healthier, as against having an entity that simply purchases what shoemakers produce at a set price, this can easily lead to all manner of tussle or power play.
The idea is great, the intent is grand, the missing piece? Getting all stakeholders to row in the same direction, humans are not so easy to work with.
Once you resolve the issues around ownership structure and funding mechanism, other things will sort themselves out. If the hearts are willing, how to make everything work is within reach.
This is a great intresting model.
A discuss should be scheduled asap