Ethiopia, the second-largest country in sub-Saharan Africa, with a population of over 100 million, has been an economic success story over the past decade. It has grown GDP between 8% and 11% annually during that period, faster than any other country in sub-Saharan Africa. In Ethiopia, agriculture accounts for 34% of GDP and 71% of employment, including 12 million smallholder farmers; it is the only country on the continent to consistently exceed 6% growth in agricultural output, the threshold established by the African Union as necessary for agriculture-led economic development. Central to this success is the government’s prioritization of the agricultural sector’s transformation, something that will be essential for Ethiopia to reach its ambitious goal of attaining middle-income country status by 2025.
beekeepers engaged through contract farming arrangements
Ethiopia’s second Growth Transformation Plan, begun in 2016, goes beyond improving smallholder farmer productivity and production to focus on the commercialization of agriculture. This requires, among other things, vibrant small and midsize enterprises (SMEs)—such as food processors, aggregators, packagers, logistics providers—to anchor high-quality and sustainable value chains that connect smallholder farmers to processors and export and local markets.
These SMEs exist, but they need support to grow, including access to reliable inputs, financing, talent, expertise and markets.
To create a stronger agribusiness entrepreneurial ecosystem, the Ethiopian Agricultural Transformation Agency (ATA) and the Bill & Melinda Gates Foundation decided to launch an industry accelerator, modeled on successful precedents in countries such as Chile. The ATA is an innovative government organization created in 2010 as a dedicated unit to help accelerate the transformation of Ethiopia’s agriculture sector. Bain was brought in to help with the design of the accelerator’s strategy and operating model.
At an Ethiopian hive manufacturing location, the Bain team examined the consistency of hive construction and design, critical factors for ensuring that colonies take quickly to hives.
Together, we developed an ambitious vision for the Ethiopia Agribusiness Accelerator Platform (EAAP). The platform is demand-driven and focused on catalyzing the growth of specific value chains in which Ethiopia can become globally or regionally competitive; it must also have meaningful impact on the livelihood of smallholder farmers. The platform has multiple “tracks”: one supporting the formalization of early-stage enterprises (incubator track), a second supporting growth-stage enterprises (accelerator track) and a third addressing systemic bottlenecks (ecosystem track).
After conducting detailed analyses of dozens of value chains, we decided to focus on honey as the pilot commodity.
Practiced for centuries in Ethiopia, beekeeping is well suited to the East African country’s different agroecologies and rich botanical diversity. Today most honey is sold domestically, but global demand for honey is growing, creating a strong export opportunity.
Bain worked closely with ATA on the design and operationalization of the platform, analyzing the honey value chain to identify challenges and opportunity, assessing the needs of entrepreneurs at different life stages, and defining the services EAAP would offer as well as the resources, capabilities and partnerships required.
The EAAP currently supports seven companies, including the largest exporter of honey in the country, Beza Mar. The platform has engaged 2,000 beekeepers through contract farming arrangements and set up a training partnership with the United Nations Development Program’s Entrepreneurship Development Center to facilitate professionalization of early-stage honey processors. Notably, the EAAP is supporting Beza Mar on its goal of doubling its export volume by establishing a direct sourcing arrangement with beekeepers and facilitating access to working capital financing. In partnership with the World Bank, EAAP is also working to internationally accredit Ethiopian laboratories to provide full honey-quality testing.
Bain’s partnership with ATA on the platform has continued. In addition to project team support, Bain has provided a steady stream of externs since the platform’s formal launch in mid-2017. EAAP has become a sought-after externship opportunity for consulting staff who love working on the ground in Ethiopia, nurturing agribusiness enterprises’ success and expanding economic opportunities for thousands of people.