Green Business Development and Eco entrepreneurship in Agriculture

Financial Analyst  Bob Bosire takes the SME's through a financial planning session at workshop organized by KAAA

Financial Analyst Bob Bosire takes the SME’s through a financial planning session at workshop organized by KAAA

Rapid population increase brings with it growing demands for food, water and energy. This increase will bring with it growing demands, further testing the resilience of social and environmental systems in our increasingly resource constrained world.  The emerging challenge will be meeting the needs of this population and ensuring that they have clean and healthy environments.

Already, damages to the environment are reaching to scales that are threatening livelihoods and the quality of life due to unsustainable and inefficient growth patterns that have been in existence for many years that largely increase at the expense of the environment.

Kenya as a developing country has not been spared and the current environmental challenges being faced call for a cardinal shift in how we view growth and development. Growth is building up pace and cities are growing, new industries are mushrooming, energy demand is increasing dramatically and the need for agricultural produce is as high as ever.

Rather than taking the long, costly and environmentally harmful road that industrialized countries took to get where they are today, we have to leapfrog into a more sustainable future wherever possible. Embracing green growth is seen as the solution for securing a strong stable and sustainable future for developing economies

Speaking during a two day Switch Africa Green training workshop dubbed “Capacity Enhancement for Green Business Development and Eco Entrepreneurship in the Agriculture Sector” Andrew Omariba from Kenya Agribusiness and Agroindustry Alliance (KAAA) said Green growth presents a new approach to economic growth and puts human well‑being at the center of development, while ensuring that natural assets continue to provide the resources and environmental services to support sustainable development.

Green growth reconciliates environmental considerations and the value of natural capital into economic decision making and development planning. “Green Growth is a means to foster economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. It increases competitiveness, encourages eco-innovation, creates green jobs and reduces pollution improves resource utilization and transitions into a sustainable growth economy,” Omariba said.

Development that is not based on green growth may lead to prosperity, but only in the short term, and will soon be thwarted by insecurity and vulnerability. Of late interest in the green economy discourse has grown rapidly and governments are now keen on greening their economies.

The Kenya Agribusiness and Agroindustry Alliance (KAAA) together with the Kenya Private Sector Alliance (KEPSA) are mandated to ensure successful implementation of the Switch Africa Green project in the country. The project is supported by the European Union, United Nations Environment Program and the United Nations Office of Program Services.

Currently, KAAA has close to a thousand Small and Medium Entrepreneurs who have their enterprises under the Green Growth program. Like in any other enterprise, financial record keeping in green growth is key. “Financial records show financial responsibility regarding how much cash has been obtained by an organization, where the cash has come from, what the cash is meant for and how the cash has been spent,” Bob Bosire, a financial analyst said. Financial records that should be maintained in an enterprise include receipts and payments documents, cash Books, ledger Accounts, sales and Purchases Ledgers, profit & Loss Statement, balance Sheet and fixed Assets Register.

Records Retention Policies should be put in place for normal record retention. These policies should be guided by County and central government tax authorities, technology and aims and objectives of an organization. “In Green Growth, there should be a policy that as much as possible, financial records (Green records) should be electronically maintained to reduce the use of paper, ink and files, thereby cutting down their cost and most importantly “go green,” he said.

Sound solid waste management (SWM) is crucial to meet the 2030 Agenda for Sustainable Development. However, time and time again the public sector lacks the resources and infrastructure to tackle the increasing amount of waste that is being produced through population growth, urbanization and new consumption patterns as well as the skills and expertise to address its growing complexity.

While the private sector has been able to take on some of the burden, generally the high prices mean that only high level income households can afford the services. As a result collection and recycling rates remain low, at 25 percent according to the Green Economy Report (UNEP, 2011), and waste is illegally dumped, causing serious environmental damage, pollution and health problems, and in the long term high down-stream costs.

Sustainable Waste Management offers valuable pathways to a green economy and has the potential to be an engine for growth by creating new value chains, employment and innovative products while addressing social and environmental issues. The nine common types of wastes are waste of inventory, waste of talent or creativity, waste of defects, waste of waiting, waste of over-processing, waste of over-production, waste of transportation waste of movement and environmental waste.

Removal of the waste will help an entrepreneur to reduce all of the raw materials, prevent people from waiting for materials, information or instructions to eliminate the waste of waiting, become economic and reduce excessive motion to reduce the waste of motion make product when required by the customer in the quantities requested to eliminate the waste of overproduction.

Do not do more to a product than required by the customer to reduce the waste of over processing, do not waste your resources such as gas, electricity and water to reduce the waste of resources, involve and respect your employees to reduce the waste of people in your business and reduce the transportation of goods within your organization to reduce the waste of transport.

One crucial condition of the Green Growth sector is that it is accessible to all, even the poorest with few other employment opportunities, regardless of age, level of education or skills set, and it has low capital requirements. Even though the flipside is that the often informal and unregulated nature of those jobs results in unsafe working conditions, lack of physical protection, insecure income, child labor and the absence of any social protection.

In order to realize the largest green impact in green waste management, you need to eliminate processes you can and reduce what you cannot. You can enhance the impact by letting customers identify value, identifying the value stream, making the value stream flow, pulling from downstream and always pursuing perfection.

Adding value on a commodity is a business strategy for growth of any enterprise. “Value addition is the difference between the value of commodities used as inputs in the production process and the value of the outputs of that process,” Omariba said.

Added Value comes inform of quality Added Value, environmental added value, cause-related added value and cultural added value.  Value addition includes increases income and sustainability of the business, enables businesses to receive a bigger share of the consumer price, opens new markets and creates recognition and appreciation for the businesses and creates jobs.

In order to succeed in adding value, start small and grow naturally, follow demand-driven production, create quality products, make decisions based on good records, establish a loyal customer base and plan for the future. Decisions to make when adding value include what quality of output you expect, how to market the new products, how much capital you require in the process and what legal/quality issues you must address. “To get started identify the product for value adding, identify and understand the customer and his needs, develop marketing plan and business plan,” he said.

Being the change that creates or adds value, innovation is the only way to stay ahead of the competition and if exploited properly it will improve business survivability and lead to increased profits. Basic understanding of the subject is essential for all businesses regardless of product or service offering.

The choice of innovation approach depends on the business strategic purposes and direction, its capability, its market understanding and the size of the risk investment available. They are, in order of increasing investment incremental, new design, new business model increasing functionality, applying technology and breakthrough.

In product development, understanding customer needs leads to products that are desirable, feasible and saleable. These needs are either articulated or unarticulated. Articulated needs are those needs that a customer can readily verbalize if asked appropriately and unarticulated ones are those that a customer cannot easily verbalize.

New business models can make an important contribution the Green Growth transition. While some new business models involve large firms, others are small start-up firms that seek to exploit technological or commercial opportunities that have been neglected or not yet explored by more established firms.

New firms tend to engage in more radical innovation than existing firms, and scaling up new business models can therefore help reduce environmental pollution, optimize the use of natural resources, increase productivity and energy efficiency, and provide a new source of economic growth.

Although the market for green goods and services is growing, the development of new business models is affected by a range of barriers, many of which can be addressed by well-designed policies. According to Omariba, business models focus on profit maximization and economic sustainability. The focus is mainly on relations with customers and immediate business partners and wider social and environmental effects of value propositions are not the main concern of business models.

A business plan essential in any enterprise and acts as a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals.

They may target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture for instance, a 3 to 5 year business plan is required, since investors will look for their investment return in that timeframe.

“Any business plan has a dual function, internal and external,” KAAA’s Marketing Information Officer Thomas Mukhebi said. Internal function provides management and staff with a clear map, complete with signposts and milestones against which progress can be monitored and evaluated, outlines goals and details how you plan to achieve these goals, is a key ingredient for successful business and its often ignored, is an essential step for any prudent entrepreneur to take regardless of the size of the business

External function presents the investment case to an outsider. “Essentially, business plans are sales documents since what they are selling is your business idea, your product or service and, above all, you and your track record, “Mukhebi said.

Environmentally responsible marketing is business practice that takes into account consumers concerns about the promoting preservation and conservation of the natural environment. This is characterized by reduced waste in packaging and increased energy efficiency of the product in use.

In green marketing, the products are presumed to be environmentally preferable to others. “These products have been produced under reduced use of chemicals in farming or decreased release of toxic emissions and other pollutants in production,” says Sara Mbithi, KAAA’s Head of Market development. Green marketing communication highlights the superior environment protection characteristics of company products or services.

Product cost refers to the costs used to create a product and is used to determine the any product price. These costs include direct labor, direct materials, consumable production supplies, and factory overhead. Pricing is the most important element of the marketing mix, as it is the only element which generates a turnover for an enterprise. Price must support the other elements in the mix. Getting pricing correct can be tricky and must reflect supply and demand relationship. “Although many green consumers are willing to pay slightly more for a green product, the price needs to remain close to alternatives to attract customers,” She concludes.

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