Banana Wine Becomes a Tasty Conduit for Entrepreneurial Expansion

Published: April 28, 2010

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In 2004, Christine Murebwayire, a widow raising five children, joined with five men and women in Eastern Rwanda to promote the production of bananas by processing banana wine and banana fiber. The wine tasted so good that the association doubled production in the first year, added five more members and became a cooperative, managed by Murebwayire. "The objective is to improve the life of these members while fighting against poverty and creating jobs," she says. Today the cooperative's annual sales have grown from 6,000,000 Rwandan francs (US$10,516) in 2004 to 106,975,000 Rwandan francs (US$187,506) in 2009 as it continues to reach out to more customers.

Most women who start a business in Africa stay close to home. They open small shops or produce food, textiles and other goods and services aimed at the needs of their own village or the immediate surrounding area. Many are successful, but fail to reach their full potential, including the possibility of becoming national or global corporations, because they never break out of the informal economy in their original markets.

The obstacles are many. Financing to grow and expand into new territories is limited. Poor roads and other infrastructure problems make it difficult to physically transport products to faraway markets. Local and national government rules overseeing commerce are complicated and add to the cost of a product.

Overseas Expansion

Murebwayire, a Goldman Sachs 10,000 Women scholar, is working with educators to break through some of these limitations. In Rwanda, the William Davidson Institute (WDI) -- a nonprofit education center within the University of Michigan's Ross School of Business that focused on emerging economies -- is working with the School of Finance and Banking (SFB) in Kigali and the Chamber of Women Entrepreneurs in Rwanda to teach women how to restructure operations and market beyond their local regions to larger cities in Africa and beyond.

"I encourage them to be thinking about international marketing but to go first to East Africa, where the people share a similar character, and take advantage of that larger market," says Etienne Musonera of the Stetson School of Business and Economics at Mercer University in Atlanta, who is WDI's marketing faculty representative for the 10,000 Women initiative in Rwanda.

For many entrepreneurs, banding together into a cooperative is one way to build scale and lower the unit cost of production, and also gain access to financing. Murebwayire's cooperative, called COPROVIBA, or co-operative of production of banana wine, has already reworked the way employees perform tasks to make operations more efficient, and is considering new ways to package its product as well as expand overseas.

Murebwayire's marketing plans suggest the co-op is meeting only about a third of potential demand for its products due to limits on product and distribution. The company uses representatives in each province of Rwanda and in shopping malls to sell its products. She would like to export into Kenya and Tanzania but, as a foreigner, is having difficulty finding the right markets.

Valence Mushimwe, a marketing professor at SFB, says it is difficult for entrepreneurs to find reasonably priced locations with good access to consumers. It is easy to find the best locations, but they are usually very expensive. "So one way to help them market their products elsewhere in a good location at a lower cost is to come together at one location," he suggests.

Another way to gain more power in a new market is by co-branding with others, adds Musonera. For example, an entrepreneur making a product in her own village could team up with a shop owner in a large city. In some cases, using distributors is another way for entrepreneurs to increase their outreach, according to Bideri Ishuheri, another marketing professor at SFB.

Before committing to expand, small entrepreneurial businesses need to take a hard look at expenses and the impact that expansion may have on the original business, advises Mushimwe. Entrepreneurs face a whole different set of costs -- transportation, rent, communications, hiring staff in the other areas -- that can be hard to estimate.

However, an entrepreneur with a solid marketing plan can often convince local banking officials to provide financing because many of those lending officers have rarely seen adequate financial plans submitted for loans, states Musonera.

Caution Advised

Before Murebwayire joined the 10,000 Women program, the cooperative was planning on expanding with a bank loan. After she learned more about how to develop a marketing and business plan, Murebwayire realized the banana wine company could reach even more customers than originally expected. She decided to double the amount of the loan the cooperative was requesting and applied for a loan of 40 million Rwandan Francs (US$74,667).

Ishuheri says Africa's poor roads and public transport system add not only to the cost of expanding to larger markets, but become a consideration in packaging. Murebwayire's banana wine is breaking new ground in East Africa, he says, by introducing modern packaging for a product that is traditionally homemade and consumed out of local containers that are reused. This woman "wants to package in the modern way," says Ishuheri. "They want to bottle this wine and sell it so that it meets the ideal government standards, then transport it to Kigali and various bars and other outlets. They have achieved a lot in this area."

Women running service businesses -- or producing products, such as food, regulated by health and other authorities -- must pay close attention to government policies that impact their businesses, Ishuheri warns. This includes meeting with local officials and asking for advice on how to move into the new markets. Many entrepreneurs begin their businesses in the informal economy and are surprised by the level of government scrutiny as their businesses grow to the point where they are increasingly visible. COPROVIBA's wine is tested and approved by the Rwandan Office of Standardization and has a registered trademark.

Musonera points out that many women running their own businesses in Africa are also raising children or caring for older parents. "That's a big challenge," he says. "Taking care of the business and taking care of the household are not easy things."

Confidence is also essential. Women in Africa tend to lack a strong belief in their products or ability to extend beyond their hometown where they are well known. "Most of them, even those with good products, are lacking confidence that what they do is of [high] enough quality to go to other markets," says Mushimwe.

According to Musonera, no matter how small, women entrepreneurs in Africa should at least consider how they might sell their products internationally to take advantage of vast markets overseas. He says artistic or cultural products -- perhaps even banana wine -- are best suited for export to other nations because there are not similar products entrenched in consumers' minds.

Murebwayire has already traveled from Rwanda to represent her cooperative at international events in Kenya and Uganda. She plans to spend the next few years building new markets in East and South Africa. Someday she hopes to ship to the United States. "Our product is liked by Americans because of its quality, its taste and its color," she says.

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