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May 26, 2009
Coca-Cola Distribution Model Contributes to Entrepreneurship in Africa
    by Robert Kropp

Report finds that the company's Manual Distribution Centers have led to the creation of 12,000 jobs while contributing to the Millennium Development Goals.


As part of its commitment to the Business Call to Action, Coca-Cola has developed a Manual Distribution Center (MDC) model in Ethiopia and Tanzania that has the potential to contribute to some of the Millennium Development Goals (MDGs).

Coca-Cola's efforts in Africa are described in a report entitled Developing Inclusive Business Models, issued by the Harvard Kennedy School and the International Finance Corporation (IFC).

The eight Millennium Development Goals provide a framework for the development activities in more than 190 countries, and aim to successfully address the world's main development challenges by 2015. These challenges include the eradication of extreme poverty and hunger, the promotion of gender equality, improvements in health, and environmental sustainability.

The Business Call to Action is an initiative designed to mobilize the world's largest companies to support growth in developing countries and contribute to the Millennium Development Goals by exploring new business opportunities that use their core business expertise. Its goals are to generate new employment and enterprise in developing countries, improve the quality of supply chains, and introduce innovations or technologies that help individuals earn a living.

The MDCs engaged by Coca-Cola in Ethiopia and Tanzania are independently owned, low-cost operations designed to service urban retail markets where traditional distribution models are not inefficient. To minimize costs, distribution of the company's products is accomplished by such manual means as pushcarts.

Some of the business benefits of the MDC model are access to such areas as crowded urban settings that are hard to reach by large trucks, the ability of MDCs to make frequent, small deliveries, and improved customer service.

The report found that the MDC model has created opportunities for entrepreneurship and employment. Coca-Cola has created over 2,500 MDCs in Africa, generating over 12,000 jobs and more than $500 million in annual revenues. The system has created new economic opportunities for women, who own 19% of the MDCs in Ethiopia and 32% in Tanzania. Training and technical assistance provided by the company has increased the skills and competencies of individual owners and staff, as well.

The report concludes with five recommendations for the development of inclusive business models in developing countries. The recommendations include investing in continual improvement, broadening socio-economic opportunities, promoting small business development, distributing social products or messages through the business models, and undertaking participatory evaluation.

 

 
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