IXL Social Enterprise Case Studies Food Security January 2013 | Page 14

Food Security in Urban Slums by 2018

Partners across the food value chain are difficult to work with dependably
Food producers, food processors and food distributors must ensure safe, nutritious, and tasty food.
However, most players in this food value chain are also poor, which makes the whole value chain
fragile. Social enterprises will face significant challenges in building a consistent and predictable
supply chain.
Food producers may not provide sufficient and nutritious food
Food produced by many local farmers is aggregated for local consumption in slums. Increasing
production of the right mix of foods to provide a balanced diet requires knowledge, tools and
techniques that many of these food producers do not have.57 Additionally, food producers often do
not have access to the other players in the value chain and lose time and money trying to enter the
supply chain.58
Food processors may not provide safe and easy to eat food
Consumers in slums sometimes lack access to tools used in cooking (like utensils, stoves, even
serving dishes). Processing can help minimize the number of tools that a consumer needs to
prepare meals. These small food processors cook, prepare and package food. This is why street
food and street food vendors in slums and urban areas play such an important role in providing food
security.59 However, food processors may still use inferior food or ingredients or lack the necessary
resources such as clean water or sanitary environments to prepare safe, nutritious and tasty food.
Food distributors may not move food efficiently
There is insufficient infrastructure in slums, which makes following the developed-world model of
production and distribution nearly impossible. Distribution without adequate infrastructure is more
complex and less efficient, particularly in rural or slum areas.60 Across the value chain (Figure 10)
in the developing world, food is lost in inefficiency. In slums, food is moved by hand, bicycles or
carts. Storage is insecure from the environment and theft. Grain can be spoiled by insects, mold,
or rain.61 The packaging that does exist is wasteful and damaging to the environment, if it holds up
at all. More often than not, though, packaging is hard to find and preserving foods is difficult and
expensive.
Social enterprise operations are difficult to manage
Finances must be efficient
Social enterprises need to operate with razor-thin margins in an environment of fluctuating demand
and supply. In informal business (which dominate the economic landscape in urban slums),
relationships with suppliers and customers are informal – the hierarchy of roles and work is flexible.62
There are few, if any, contracts. Contacts are irregular and hours of operation vary. Managing cash
collection, inventory and supplier payments is key to ensuring a healthy cash position. To improve
cost positions, social enterprises will need to grow significantly to enjoy economies of scale. Both
working capital and scaling up could be managed through financing. Unfortunately, financing for
companies working in the slums or targeting poor slum dwellers is limited to a few microfinancing
institutions.
Assets must be able to bear risk
Social enterprises working in slums have higher risk due to product perishability, fire hazards,
natural disasters, corruption and high crime rates.63 Most insurance organizations cannot asses the
risk, claims and premiums accurately enough to build a viable business. Social enterprises have
to manage their environment and assets to ensure business continuity in the face of risk that most
enterprises in wealthy regions have insurance for.
Employee training must be flexible
Social enterprises should hire from slums to increase social impact;64 however, these potential
employees may not have the appropriate skills and training for the job.65 Training and on-the-job
skill development will put additional stress on management and operations. Social enterprises
will have to be