Tebabu Assefa, social entrepreneur
Tebabu Assefa is a US based social entrepreneur who came up with a new idea that combined profit making schemes with non-profit schemes. The new model is called Business Cooperation and various states in the US have passed legislations adopting the model. Tebabu, a film maker by profession, came to Ethiopia over a decade ago to make a documentary on Ethiopian coffee farmers. After seeing the state of poverty in which his fellow Ethiopians were living, Tebabu couldn’t ignore it or capitalize over their suffering. After the 2008 economic crisis that hit the world hard, he noticed the gripping force of greed and tried to come up with a model that made both economic and social gains. His efforts led to the creation of the Business Cooperation model. Tebabu claims to “want a life full of purpose. I want to take risks with high reward. Living for the greater good has better satisfaction in my book. So, my wife and I worked on a marketing strategy for 5 years.” Their efforts are currently paying off with their project bringing hope to millions of Ethiopian farmers and millions of consumers in the US. The Reporter’s Tewedaj Sintayehu spoke to Tebabu about the new model, the prototype business called Blessed Coffee and the prospects ahead. Excerpts:
The Reporter: What exactly is Benefit Cooperation for Africa’s (BCA’s) function?
Tibabu Assefa: Basically, BCA is a new innovative legislation that was enacted in the state of Maryland in 2010. It was inspired by the global economic crisis of 2008, because the greed in capitalism brought the American economy to its knees and the shock wave was global. The root cause of that crisis was greed in capitalism. They were extracting as much profit as possible, cheating and cutting corners.
We were one of the activists in Maryland that lobbied our state senators to pass a legislation that would protect aspiring social entrepreneurs to leverage the power of business, while keeping the greater good. We, thus, introduced a new model called Benefit Cooperation. Prior to that was C Cooperation; it is profit driven. And if you develop a business and you accept stakeholders, the shareholders can come and wipe out anything that doesn’t make sense in terms of profit making. So, the state of Maryland was the first one to enact such legislations that leverage the power of business while catering for the greater good.
My company prior to that was also trying to leverage the power of business to address the most pressing challenges we face here in Africa and Ethiopia as well. It was the most pressing and urgent social and economic need. And I was trying to provide (Ethiopian) small coffee farmers an investment opportunity on that side (in the US market). So, in a collective investment, Community Investment was very difficult prior to the benefit cooperation. You either have to be for profit or nonprofit, but ours is a combination of the two, they call that model here a social enterprise.
The Reporter: Does the legislation actually avoid domination by the profit side?
Yes. So Benefit Cooperation is a hybrid of nonprofit and for profit, which runs like a business and can make money, it’s accountable, but has a higher purpose. My company was the first one to be registered under that designation. Today, 38 states have adopted that model. And it’s a globally social conscious business model, which is really growing. Most of the crisis in the world is driven or created by greed. These companies want to extract profit to the maximum.
So today, Benefit Cooperation for Africa (BCA) is inspired by that. I took that model and adapted it to the economic challenges we face here in Africa. And the problem in Africa, for the most part, is created because of marginalization of African businesses in the global market. For instance, Ethiopia is best known for coffee and we do 90 percent of the work, and get 10 percent of the money it generates. And those who are the gatekeepers of the market will do only 10 percent of the work, keeping 90 percent of the profits.
So, my understanding was that the problems we face in Africa are because our market presence in the global market is marginalized, because we don’t have any investment capacity. So, to really mitigate that, I created a new international market, called a community-based value chain, like a commodity market. In the case of coffee, among the commodity market, the farmer and the consumer, there are about nine middlemen. The closer you get to the consumer, the more money you make.
So, we cut the middlemen and provided farmers and consumers to have direct trade ties. They (The consumers) started buying directly from the farmers who are organized. So now in Ethiopia, there are private producers, there are small farmers, and small farmers organized under cooperative unions. We have provided these cooperative unions with a chance to sell directly to American consumers.
The Reporter: So, how did you do that?
I started teaching the consumer about the way in which this international trade is creating poverty, how it was putting hardworking farmers in chains, because they work full time, husbands and wives with kids, and they can’t drink clean water living in a Garden of Eden. So, I started a public awareness campaign, through community events, sustainable oriented organizations, media, and challenged the policymakers, and leveraged benefit cooperation, which provides better chance for the most important player – the farmer and the consumer.
The Reporter: Is BCA a platform where farmers and consumers meet?
No, BCA was the initiative, but under that initiative, I created the first prototype called Blessed Coffee. So blessed coffee raised the money, introduced the brand, introduced the idea, tested the market small-scale, and we built the infrastructure with community-based infrastructure and market distribution.
It took seven, eight years to develop, because it was a campaign to enlighten the community on that side (the US). Because the community has a power, the consumer has a power. So now, Blessed coffee has three components. And the first one is a roasting facility, where Green Coffee beans are imported and roasted. And we give 50% of the roasting investment on the roasting cafe to farmers. So, we selected 500 to launch the first phase, in the DC Virginia market, Maryland market.
The first time I gave the offer to a union was in 2014. After six years of lobbying the Ethiopian government, the opportunity opened up with the new government’s reform agenda as they wanted to test alternative ideas. So, at the ECA, we signed what we call profit sharing investment partnership. So, on the roasting facility, thousands of Ethiopian coffee farmers organized under cooperative unions have profit sharing investment partnership with my investors. So that will increase their take from what they get today which is 10 percent. Mind you the cooperative unions have 500,000 small scale farmers within them; behind every farmer, there are five people. So that’s 2.5 million people who will be impacted. So, after we did the first model in the DC market, we decided to take it to the four corners of America.
We’re going to let the Ethiopian government agencies determine who is going to participate on the first phase because we want to be fair to all. So, we’re working with three agencies, the Ethiopian Coffee and Tea Authority, Ethiopian Federal Cooperative Agency, which has over 90,000 Cooperatives under it with different commodities, and the ATA.
On the second part, remember the community on that side is also hurting. So, they will have a coffee shop in Maryland and Virginia where the coffee will be good. Food will be sold along with the wonder coffee in a cottage café. Imagine kuriftu, we’ll have something like that in the middle of America where Ethiopian culture will be presented and promoted. We give that investment on the cafe to 25 nonprofit organizations. These are nonprofit organizations who feed the homeless and work on so many other social issues. Each organization has about 10,000 supporters who support them financially. So, we went to these organizations, built a relationship with them; we did coffee ceremony to celebrate what they do. We did fundraise for them to promote our coffee to their supporters. And so now, these organizations are going to mobilize their supporters to buy shares for them in the cafés. We have reserved 50% of the share from the cafe to these organizations.
On the third level, we can create 20 other satellite cafes like kaldi’s has all over the place. So, that small satellite cafe can give jobs for 15 people running two shifts. So, what we want to do on that level is organize, train, educate and support unemployed women and youth to work as a cooperative and then give them support to borrow money so they can buy shares themselves. So that we will be community owned.
The Reporter: Are Ethiopians farmers going to have shares in the cafes?
No, the farmers are only involved in the roasting. The cafe is for those community organizations, and the satellite cafe is to unemployed women and youth who will be trained. And they will be supported to borrow money, depending on the cost. We haven’t gotten there yet. So collectively, they will own it and it becomes worker owned.
The Reporter: In addition to the roasted coffee, are there any plans to process the coffee and sell the powder or even cups of coffee?
Coffee is a USD 100 billion market. Arabica is sold as a high-end coffee. That’s what people want to drink. And we are trying to position the Ethiopian coffee in that market. We want to win that market because we have the finest coffee. So, there is no reason to dilute its value. You don’t have to make it powdered because you would be diluting. We have 1000 varieties to put on a test. And its demand is on the rise. So, we want to specialize. We don’t have a lot of quantity; so, the strategy is to sell at a maximum value.
So why did it take 10 to 15 years for the model to come to fruition?
It took time since it was a new market and a new idea. We did a reverse model. We said, first we have to create the market, get the consumer, and then product marketing. This is called Lean Startup model. And then we promoted it at one church at a time, one event at a time, one investment at a time. We wanted to take a grassroots approach. This was a relationship with the consumer in the very center. So, we started the movement to create the market and reversed it by creating the value chain. Once you get the market, it’s easy, right? So, this took a long-term oriented plan.
The second reason it took almost 10 years was to convince people on this side (Ethiopia). After four years of development, we did a research and survey in America and 95 percent of the people we interviewed thought coffee came from Colombia. Colombians have done massive marketing in this regard since 1960. So, we had to really change that mentality to tell the beautiful story of Ethiopian coffee tradition, how coffee was discovered, the variety and the taste and the culture, to get the attention of the international market.
So, through storytelling, we wanted to position Ethiopia as a birthplace of coffee and tell the world about the 1000 varieties. And so, at a very cheap budget, 300 million people in America can get the information. We came up with a USD 1.5 million budget for the movie and USD 1.5 million for the campaign. And as soon as you create awareness, we have to have a place where that awareness can be harvested. So, we wanted to create six cottage coffee shops to capture Ethiopia, which needed another USD 3 million, amounting to USD 6 million.
So, we have gathered stakeholders, the farmers, the bank and anybody who would benefit from the growth of Ethiopian coffee. That was a marketing strategy that took about four years to do.
We were at Sheraton in a meeting called by the Foreign Minister of the time, the mayor, exporters, and we had about 30 people in the room, to listen to this idea. And our numbers showed at that time that I was only making USD 280 to 300 million a year from coffee and sales. If we take charge, within 10 years, that number was going to go to 3.5 billion. Everybody was fascinated. Exporters and farmers want to invest. And the farmers said they can invest in a six-year campaign.
The Reporter: How compatible is the project with the current Ethiopian policies?
This government is very, very open to new ideas. Now because of the current economic crisis, the reform agenda is looking at every possible venue to create wealth. So, they are very receptive.
The notable proponent of free market capitalism, Friedman, said, “crisis is an opportunity for good ideas that were neglected in the past. The status quo will open up when there is a crisis.” There’s socialism and capitalism. They both have issues. State control is not good. Private sector is also not good. So, I say, I’m taking the European heart out of capitalism, and put an African Heart in its place, which is socially oriented. I do that just to crack a joke. And the time is perfect now, because everybody’s aware of the fact that this is not sustainable.
Purchasing Power is important. Where you spend your money is important. I could drink “araqe” (a local spirit), helping the local economy or black label where my money would be lost. Their products have dominated ours; that is what hurts. So, instead of using that purchasing power to invest in a model that helps farmers, they help a multimillion-dollar company that doesn’t help farmers.
The Reporter: What changes did the Ethiopian government make to accommodate your new ideas?
I’ve been coming here for 15 years. Currently, our partner, one of our government agencies, is a federal cooperative agency that supervises 90,000 cooperatives representing 28 million farmers. Their motto is to help this community-based market. There’s a new sector now, a community-based sector.
I did a survey in America to see stores that sell Ethiopian products. I went to each store and checked where people buy their lentils? They buy the lentils, chickpeas and whatever, from Turkey and India, because they say that the lentils from Ethiopia are not processed.
So, we’re working to change that by working with the federal cooperative agency and by showcasing the success this model will bring investors. Thus, in the last three years, I’ve seen a lot of willingness. And I’ve never been excited as I’m excited now.
I made some connections in Kenya in 2018; they were willing to invest money and grow this quickly. When I saw this excitement, I said, maybe I should wait. And, in three years, I’ve gotten so much. I’ve come here several times; I get so much support and brainstorming much more than I had in the last 15 years.
So, does your company operate under AGOA terms?
AGOA was established in 2001. Basically, people lobbied the Clinton Government because Africans were facing problems and did not have a market presence. So, they thought if the farmers are given an opportunity to bring their products tax free, and quota free, the African businesses will grow. That’s what they thought. But the businesses here did not take advantage of that. They did not invest or add value. So, Ethiopia did not benefit from AGOA. Actually, most African countries don’t benefit. The ones that benefit are those who were in the garment and oil industry, because they had capital to produce and sell in the market.
But Ethiopia was still benefiting by selling coffee, shoes or garment. We have made little money, but not as much money as we should have made.
We have already started the work to have a benefit cooperation in Africa model as an amendment into that policy. So, my initiative can be an engine that would make AGOA work, because it gives incentive to the African Diaspora to invest on the business model by providing farmers access. When we get that enacted, amended and AGOA renewed, we can demand finance to back the legislation.
Currently, TPLF activists are actively lobbying the Biden administration not to extend or renew Ethiopia’s access to AGOA. This is a campaign they’re doing. Whether they win or not, is another issue.
The model that I have created will benefit American interests. I’m an activist pushing back against it. I’m trying to grow AGOA for the benefit of Africa. So, it’s a matter of lobbying. There’s a misconception here. People confuse lobbying government with American policy. Beyond the branches of government, there are lobbyists fighting to get a policy passed.
We have a USD 14 billion economy but the government went against our advice not to invest USD 10 million to protect its interests. Our Diaspora and foreign policy weaknesses are the problem.
The current US policy is a representation of a weak Ethiopian Diaspora presence. America’s policy should be scrutinized on the world stage because it is destabilizing Ethiopia and its regions. Biden’s administration is misled by “activists” who have access to his government. They won because we were weak.
The Reporter: What can we expect from Blessed Coffee in the near future?
The first is we’ve the willingness of the farmers; they have signed the agreements. We’re going to leverage that and raise the money by showing the farmers an opportunity to invest when we’re up and running. After we do the first roasting, which would take about 2 years, we will buy coffee from them at a higher rate. And then we promote Ethiopian culture and coffee. After we prove the first model, we will ask them to invest.
In 3 years, we will complete the roast and its process. In the last 2 of the three years, we will get the community to produce goods like “netela” (traditional cotton wear), spices and so much more. When we go beyond 500,000 people, we plan on scaling their income. We would like to use our model for people producing under the FCA.
In 10 years, we will have a dramatic impact on the market. Ethiopia will be a part of this new idea that is a hybrid of profit and non-profit.