Recently Coca-Cola has been receiving some attention concerning their Manual Distribution Center’s (MDC’s) in Africa. Much of the attention has most likely come from the release of a joint report from the Harvard Kennedy School and the International Finance Corporation. You can download the report from the Harvard Kennedy School’s site here. There have been several articles generated around the web that tout the MDC’s as being a prime example of how big business can have a big impact on job creation and subsequently poverty around the world.
What is not really being talked about is corporate philanthropy. The term that is being used to a greater degree is called “inclusive business model”. This model seeks to encourage businesses to take their core business strengths and include the poor in the value chain. A main factor in the success of the model is that MDC’s are not a corporate hand out, it’s a viable distribution model that CCS, Coca-Cola’s bottling partner, relies upon. The MDC’s are accounting for over 80% of all product sales in over 5 countries throughout Africa.
MDC’s work well, and have also contributed to sales growth throughout areas of implementation in Africa. The centers allow for more efficient distribution in high density areas. Rather than wait for infrequent deliveries the supply chain brings small quantities of products to retailers a lot more frequently. In all, over 12,000 jobs have been created through the implementation of the MDC. Likewise total sales have risen to over $500 million per year. The total impact has a direct impact on almost 50,000 people when you consider the dependents of the distributors.
Between the purchased product by the MDC and the retail price distributors earn a profit between 3-5% of the total sales amount and some MDC’s are using bonuses as well. The MDC’s are profitable and are a key driver for sales in Africa. What was not discussed in the report is the impact on poverty. Generally speaking, jobs that increase individuals income is a good thing. Owners of the MDC are not considered to be the poorest of the poor, rather they typically are considered to be middle class.
One barrier to expanding the impact to a broader soci0-economic base is the cost of starting and MDC. On average it costs the owner around $6-10,000 dollars dependent on the area that the MDC is being created. More research is needed to determine how the model can make an even greater impact on poverty. As for now the manual distribution model is off to a good start.
