SAP Helps Ghanaian Shea Nut Workers Earn More
Groups of women Shea nut harvesters in Ghana are using SAP smartphone software to improve efficiency
For many women living in the North of Ghana, the Shea nut industry is one of the few ways to earn money and provide for their families. But due to a lack of ready money, market information and business acumen, many of these women lose a large percentage of their profits to intermediaries and wholesalers, who add little to the value of the product but increase costs considerably.
Two years ago, software giant SAP and non-profit NGO PlaNet Finance teamed up to provide a combination of microfinance, education and information technology to try and improve the incomes and living conditions of Shea nut harvesters.
The two companies helped to set up the Star Shea Network (SSN) – a national organisation of more than 3,000 women, divided into small cooperatives, spread throughout north-east Ghana. The network provides training in improved production techniques and business management, as well as offering microfinance opportunities to the associated groups.
Processing orders transparently
The Shea nut is at the core of a fruit picked from trees growing in the bush. After drying and processing, the nut produces Shea butter, which is used in cosmetics and sometimes chocolate production. This gives it a role in international trade and development.
Families traditionally collect Shea nuts between June and September, when income from cultivated crops is low. The work is laborious, and the lack of traceability in the supply chain means that women harvesters tend to get a low return.
SAP has developed a mobile application called Rural Sourcing Management, which uses barcodes to match up each sack of Shea nuts with the woman who collected them. The barcode can be scanned using a smartphone at the point of purchase, ensuring that each individual’s contribution to the cooperative is logged.
Meanwhile, at the far end of the chain, SAP’s Market Connection software package collects and processes orders from buyers over the Internet. The system transmits the order details to computers at the offices of local microfinance agencies working with the SSN.
The cooperatives with available products coordinate with their members to meet the order requirements, organise collection and make other logistical arrangements. Details are sent back through the system and recorded by the software, allowing buyers to track the product’s progress through the supply chain. This transparency element is now a key requirement for many export markets.
Members of the SSN can also get updated market prices from Esoko market information service delivered directly to their mobile phones via SMS. This means that the Shea nut harvesters no longer have to accept any price offered, but can make informed decisions and get the best prices for their products.
Additionally, SAP has helped SSN set up a website to raise the profile of the organisation. Buyers and consumers can now read about the project, its achievements, view products and make direct contact with the cooperatives to place orders.
“We believe in technology as a main driving force to create opportunities and connect that global value chain at the bottom of the pyramid,” said SAP research and development worker Soo Shim.
Microfinance for money management
Meanwhile, PlaNet Finance enables microfinance institutions to manage loans while keeping transaction costs low, using SAP’s Microloan Management software. PlaNet Finance has partnered with two microcredit organisations in the region, Grameen Ghana and Maata-N-Tudu, to provide financial support to SSN members.
Many families were previously forced to sell their nuts at the beginning of the season in June, before they were fully dried for processing, due to household cash-flow problems; but microfinance loans provide women with ready money during the early part of the Shea season, so they can sell their produce when the price is higher.
Before they qualify for loans, however, these women have to prove their credit worthiness with an ‘in-kind’ loan. For example, some are given gloves and boots for protection when collecting the nuts; others will get processing equipment such as grinding mills and packaging, with which to make Shea butter. The cost of the items then has to be repaid in installments over a number of months.
“These things develop their credit mentality and prove to us that they’re committed to the project, and that they also see the benefit in it,” said Lauren Simkulak, business development advisor for PlaNet Finance. “The following year they will receive [monetary] loans.”
Microloan Management allows Grameen Ghana and Maata-N-Tudu to track who has loans, and get up-to-date information on repayments and available funding resources.
Meanwhile, these microfinance institutions offer group savings accounts, which enable the women to pay for one-off expenses such as weddings and funerals, and help to establish trust within cooperatives, which need to work together to achieve economies of scale. PlaNet Finance also offers business training courses to SSN members, to help them manage their income, organise budgets and coordinate group activities.
Ultimately, SAP and PlaNet Finance hope to transform the SSN into a ‘social business’ that does not rely on private investment but is self-sustaining.
A study last year by Stanford University showed that some SSN members had increased their income by between 59 and 82 percent, through improvements to efficiency and increased production. The shea nut programme has also been bolstered by the participation of Olam International, a global supply chain leader of agricultural products and food ingredients. Olam will become a major buyer of the shea nuts in Ghana to meet its mandate of sourcing high-quality and sustainably sourced foods.
“The main concept is it doesn’t just focus on profit maximisation, like the private sector, but it’s really focusing on solving social issues,” said Soo Shim. “You are covering your own costs to sustain your business, and if you make a profit you reinvest in your business again; and if there were investors, they will get their investment back too.”