Ghanian Shea Butter Non-Profit Collective Shifts to For-Profit Model

Four years ago, SAP and PlaNet Finance joined forces on a multilateral partnership to improve Ghana's shea butter supply chain. The result was the StarShea Network, a non-profit collective that provided a combination of mobile technology, education and microfinance to rural shea nut farmers and butter producers in Northern Ghana. Now the network has transitioned to an incorporated, stand-alone business, SAP announced yesterday.

Founded in 2009 to help 1,500 women manage and grow their shea nut business, the newly named StarShea Ltd. has grown to a network of more than 10,000 women, and emerged as one of the worldwide market leaders of organically produced and fairly traded shea butter.

Harvesting and processing shea nuts is arduous, but women shea nut farmers and butter producers in Ghana often get a low rate of return on their product. A lack of information on commodity markets, limited financing options and poor supply chain traceability means producers are subject to market instability and limited ability to negotiate on price.

"Shea is a great example of sustainability," said Heino Kantimm, SAP's chief expert on social sustainability and member of the StarShea Ltd. board of directors. "The trees grow naturally in the Savannah in West Africa…but there are huge inefficiencies in the supply chain."

The SAP solution helps to create a reliable supply chain, which generates the security – for both buyers and farmers - of being able to buy predictable amounts of produce at a stable quality and fair price. A mobile app developed and donated by SAP scans and traces each sack of shea nuts and each box of shea butter, which provides the product traceability demanded by global export markets. SAP software can also send price and market information straight to the buyers’ mobile phone.

Additionally, PlaNet Finance partners have provided microloans to the network to give the women financial support so they can sell shea nuts when the price is best, rather than when they need the money.

From non-profit collective to independent business

The new independent enterprise is modeled after the social business principles of Professor Muhammad Yunus, who won the 2006 Nobel Peace Prize for his work creating a social bank in Bangladesh. Although SAP continues to support the business with an interest-free loan, StarShea Ltd. is no longer dependent on donations and is targeting profitability within the next three years, Kantimm told Triple Pundit.

"If everything goes well, that's a realistic goal," Kantimm said. "We have an aggressive growth plan. We want to grow the number of women and at the same time also increase the impact that we have on those women."

With 62 metric tons of shea butter sold in its first year, StarShea Ltd. is already one of the top four exporters in Ghana. Revenues for women participating in StarShea transactions have improved by 59 to 82 percent, and a case study from the Stanford University School of Business found that women who sell hand-crafted shea butter to international buyers generate three to for times as much revenue compared to women who do not participate in social business activities like StarShea.

These results are surely promising, but SAP hopes the new social enterprise will have an even greater impact. After profitability is achieved, it's the company's ultimate goal to see shea farmers become co-owners of the business.

"The long-term vision is really to make the women also owners of that business," Kantimm told us. "That of course is something that most of [the farmers] take very, very seriously, and it's something that also helps us to establish trust - which is very important on the African continent."

SAP hopes to expand the network to 15,000 women by the end of 2014. Fair Trade certification was achieved earlier this year and organic certification is in process. In addition to other multi-national corporate clients, StarShea recently began a collaboration with one of the leading suppliers of fats and oils to the global food industry, IOI Loders Croklaan.

What happens next

SAP is already looking into how the mobile applications and supply chain management systems it developed in Ghana can be used to address similar challenges around the world. According to the UNEP, small holder farmers manage approximately 500 million farms worldwide, and SAP said these software solutions could be used to address value chain inefficiencies regardless of crop.

"Here we really see an opportunity at SAP," Kantimm said. "We have many other crops and many other pilot customers that we're working with to see how this solution, from a technical perspective, can scale to capture more farmers."

Farmers aren't the only beneficiaries of the Ghana partnership. SAP also profited through its work with the network, exploring innovation opportunities through cloud and mobile technologies for high-growth emerging markets in the hopes of eventually developing commercially available software products, the company said.

Image credit: Shea nut farmer in Ghana courtesy of SAP

Based in Philadelphia, Mary Mazzoni is a freelance journalist who frequently writes about sustainability, corporate social responsibility and clean tech. Mary also contributes to Earth911; her work has appeared on the Huffington Post, Sustainable Brands and The Daily Meal. You can follow her on Twitter @mary_mazzoni.