What a coffee trader and his donkey tell us about tailoring business models to Africa

“It’s critical to find the African solution to the businesses that we build,” says Eleni Gabre-Madhin, founder and former CEO of the Ethiopia Commodity Exchange (ECX).

Eleni Gabre-Madhin

Ethiopia Commodity Exchange founder Eleni Gabre-Madhin

Gabre-Madhin founded ECX in 2008 and the exchange’s success has led to her being considered one of Africa’s most respected business leaders, as well as the recipient of a number of prestigious awards.

Speaking at the Investing in African Mining Indaba held in Cape Town earlier this month, Gabre-Madhin said that while business models may have been developed elsewhere, it’s important to adapt them to the context of the African market.

Gabre-Madhin’s team noted the importance of this for business success when developing the software for the ECX’s electronic system a few years ago. While collecting agricultural commodities in a warehouse outside Addis Ababa, one supplier delivering coffee was told by the clerk that a number of details were required for the ECX’s system to accept the commodity.

One of these requirements was the licence of the vehicle that transferred the commodity to the warehouse. However, the supplier said he did not have a vehicle licence number and since the clerk could not override the system without it, the two entered into an argument. As it turned out, the supplier had brought his coffee to the warehouse using donkeys.

“So we have built an electronic system but the reality is that people are still using donkeys to transfer a commodity to our market. So again we [had to] go back to the drawing board and there are many, many examples like this that I could share with you about this constant tension between global standards of systems and processes – and all the thinking behind that – but always [being] confronted with the reality of the people that we are working for and with,” she highlighted.

For business success in Africa, Gabre-Madhin advises companies to get the buy-in from the relevant political players and market actors, in addition to doing their homework on the market in which they plan to operate.

“And I think all of this actually leads to not only understanding the context, but innovating the right solution and tailoring that solution with all the global knowledge that foreign investors may bring,” she explained.

“At the end of the day it’s an African company, it’s an African business that’s been built, and it’s going to be employing African people so it has to be a solution tailored to the context, in recognition of all those challenges and constraints… and equally the size and dimensions of the opportunities that are available.”

Gabre-Madhin is also the co-founder and CEO of eleni LLC, a newly formed company that will incubate and support the formation of commodity exchanges across Africa.