By: Nick Davis
June 15, 2011: Accra, Ghana
You hear a lot of talk these days in both business and nonprofit circles about tracking “multiple bottom-lines”. This trend comes from a growing recognition that net profit – the proverbial “bottom line” – is by itself an insufficient measure of the true value an enterprise has to all its stakeholders, and that a business’s stakeholder group includes more than just its shareholders and employees. Therefore, “good” business – as opposed to both “bad” business and “evil” business – needs to be conscious of the impact that it has on the lives and the livelihoods of all the people its activities touch upon so as to maximize both its economic and social bottom-lines.
The potential business whose feasibility we have come to evaluate is envisioned by our clients to become a social enterprise – i.e., a business that is aware of its economic and social impact on the broader community in which it operates. This requires careful, circumspect business planning and an awareness of the issues facing the businesses potential stakeholders. One of these issues – which has recently surfaced as a common buzzword in international development circles – is that of food security.
The link between biofuels – like this gel ethanol we’re working with – and food security in developing countries – like this place we’re working in – is one that has been widely studied and commented on. With so much of the world living in poverty and so many people going to bed hungry every night, does it really make sense to take what could be turned into a nice meal and use it to fuel your car? The sharp rise in food prices in recent years has been widely blamed on the biofuel boom: food prices suddenly had to compete with fuel prices in order to attract the attention of farmers. In poor households, where food constitutes a much larger percentage of the weekly budget, the price spike was an especially painful one. In terms of our project, then, what’s the point of lighting up a stove if it’s fueled by the very food you otherwise would have cooked on it?
In order to ensure the maximum social value of this potential ethanol business, we of course need to be asking ourselves how this project, if implemented, might impact food security in Ghana. A definitive answer to this question is beyond the scope of our assignment, but it is an important one to keep in mind as we formulate the final recommendations to our client. Our client has of course already considered this question at least to some extent. For example, cassava, a starchy tuber, is a staple crop throughout West Africa and is apparently a very viable feedstock for ethanol production. It is, however, also a key ingredient in Ghanaian cuisine, used to make banku, fufu and gari, and is therefore not a source of feedstock that our client is particularly keen to consider.
So what feedstock would provide the greatest social benefit? Even other crops, such as sugarcane, which are not staple foods, may still use up farmland that would otherwise be put to use producing more essential food crops, like rice. The pros of creating a market for farmers who might supply an ethanol plant with its feedstock must be weighed against the cons of repurposing land and labor that might have gone to other, perhaps more productive or essential uses. Alternatively, instead of producing new crops for the sole purpose of generating ethanol feedstock, we could look to piggy-back off of industries that create useful byproducts: Ghana’s thriving cocoa, cashew and fruit juice industries all produce waste that could theoretically be fermented and distilled to create ethanol. But each of these options comes with a number of other drawbacks: low yield, seasonality, or the risk of depending upon other businesses’ performance. Perhaps, in the end, some mixture of all of the above will prove the most viable.
Now keep in mind that food security is only one of the ways this kind of enterprise might affect its stakeholders. When you start looking at things like deforestation, climate change, education, health, i.e., all of the other potential social impacts a business can have, it becomes clear that while setting up a basic, profit-driven business can be pretty complicated, setting up a social enterprise is exponentially more so.