Unlocking Inclusive Growth: The Power of Alternative Ownership in the Global South

Rebalancing Power: A New Economic Paradigm

The current global economic system, with its focus on external investors, has created vast wealth disparities and environmental damage. Even when economies grow, the benefits often bypass working people and marginalized communities. A new model is needed, one that prioritizes a more equitable distribution of wealth.

Alternative Ownership Enterprises (AOEs) offer a powerful solution. By shifting economic and governance rights away from outside investors and towards stakeholders like workers and producers, AOEs aim to foster inclusive economic growth and empower those who drive value creation.

Success Stories from the Global South

The potential of AOEs is not limited to developed economies. In fact, the Global South boasts some of the most inspiring AOE success stories, particularly in the agri-food sector.

In Kenya, the Kenya Tea Development Agency (KTDA), owned by over 600,000 tea growers, transformed a sector once dominated by colonial interests. This shift empowered smallholder farmers, boosting rural economic and social development.

India's Amul, owned by 3.6 million dairy farmers, has become a leading consumer food brand. Unlike conventional agricultural value chains, Amul ensures higher and more stable prices and profit distributions for its farmer-owners.

Colombia's Procafecol, the company behind the Juan Valdez brand, demonstrates how AOEs can drive value-added production and international market success while benefiting smallholder coffee farmers.

More recent examples like Nigeria's Babban Gona and a Rwandan tea factory demonstrate the ongoing momentum of the AOE model, showing tangible improvements in farmer earnings and community ownership.

Lessons Learned: Navigating the Path to Inclusive Growth

While the potential of AOEs is clear, their success requires careful consideration of key factors.

The Importance of Strong Management

AOE success hinges on strong business acumen and professional management. KTDA, GCMMF, and other successful AOEs demonstrate the importance of innovation and effective leadership in navigating the marketplace.

As Verghese Kurien, the "milkman of India," demonstrated at GCMMF, visionary leadership can drive decades of growth and innovation.

Aligning Ownership Structure with Business Drivers

Effective AOEs align their ownership structures with their core business drivers. KTDA's structure, for example, creates a powerful feedback loop between tea quality and grower rewards.

Accessing Flexible Capital

Access to flexible capital is essential for AOE growth. Concessional debt, grants, and strategic investments have been crucial in enabling AOEs like Babban Gona, KTDA, and Procafecol to scale their impact.

The Role of Societal Shifts and State Intervention

Large-scale AOE successes often coincide with broader societal shifts and supportive government policies. However, direct state control and interference in business operations can hinder progress.

Recommendations: A Roadmap for Future Action

Philanthropy, impact investors, development actors, and governments all have a role to play in fostering the next generation of AOEs. By tailoring investment instruments, supporting effective management, and collaborating with governments, we can unlock the transformative potential of AOEs across the Global South.

These stories demonstrate that business success and inclusive growth are not mutually exclusive. By embracing the AOE model, we can build a more equitable and prosperous future for all.