Updates from IBD Madagascar – Team RioTinto

Spring 2014 IBD students Casey Lord, Najat Ould-Ali, Chad Reed and Pablo Uribe are working with the corporation RioTinto in Fort Dauphin, Madadascar. 

Christian smiled as we walked into the small room, his wide grin exposing two missing teeth. His overalls were stained with rust and grease, leftovers from a hard day’s work transforming waste metal into farming tools. In a soft voice, he muttered something in Malagasy. Our translator repeated, “Christian is happy that you’ve come to ask him about his business.”

Christian is just one of the entrepreneurs that Rio Tinto, a multi-national mining company, is seeking to support through its Local Content Program. To Rio Tinto, local content means procuring products and services from local entrepreneurs, rather than contracting foreign companies to set up a local base. For the next 40 years, Rio Tinto will be extracting ilmentine from a mining site in Fort Dauphin, Madagascar, and working with local companies is a core part of its strategy. In the long term, Rio Tinto hopes that this strategy will improve the entrepreneurial ecosystem in Fort Dauphin, increase the town’s exports, and strengthen its economy.

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But Fort Dauphin is not exactly overrun with ambitious entrepreneurs. It is one of the poorest parts of Madagascar, cut off from the rest of the island on account of the country’s infamously poor road infrastructure. Walking through the streets of this small town is a leisurely pursuit: occupying a small peninsula in the Indian Ocean, the town has a laid-back, island vibe. People take life slowly here. In the morning, you will see local fishermen out at sea in their narrow wooden boats. These fishermen use the most basic tools, unlike their more sophisticated counterparts on other parts of the island. A few hours later, women wearing brightly coloured sarongs can be seen walking towards the market balancing large baskets on the heads, full of fresh, silver fish. The market is the single source of fresh food in the town; beyond the small boutikas, there are no grocery stores here. This is a perfect illustration of the town’s enterprises: small, with little growth. Entrepreneurial spirit is one thing you will not smell in the air.

This is a problem for Rio Tinto: how to do business with local companies, if none of them are big enough to handle your contracts?

This is where we came in. We were tasked with producing recommendations and a training toolkit for CARA, the local business support centre. Rio Tinto, the local Chamber of Commerce, and the German development agency GIZ established CARA to be a one-stop-shop for entrepreneurs who need help with formalisation, training and accounting. Rio Tinto hopes that CARA will facilitate the transformation of microenterprises into medium-sized businesses that can provide maintenance and waste management services and other products necessary for its mining operations.

Fort Dauphin is no Silicon Valley, so it was important to kick things off by making sure we understood the lay of the land. We conducted almost 40 interviews (in 3 languages) with micro, small and large companies, and a range of funders and support intermediaries. These interviews gave us a set of insights that, together with the conceptual framework we developed previously in Berkeley, put us in good stead to start generating solutions. Four packets of post-its and two Sharpies later, we had generated a list of strategic recommendations aimed at strengthening CARA and improving its offerings to micro businesses.

Reflecting on what we’ve learned, one thing really stands out. Building businesses requires strong foundations. Foundations made of both tangible (e.g., supportive financial institutions) and intangible (e.g., entrepreneurial culture) forces. In the last three weeks, we have been struck by how often we take this for granted in the US. We’re some of the luckiest people in the world to live just a stone’s throw from Silicon Valley. As budding entrepreneurs, we have the world’s leading tools, knowledge and networks at our fingertips. IBD has made us realise and appreciate how priviledged we are – and given us a new-found determinism to make the most of these resources during our final year at Haas.

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No trip to Madagascar would be complete without exploring the country’s rich biodiversity. In addition to exploring the capital city and a couple of small villages, we escaped to two wonderful nature reserves to interact with Madagascar’s famously adorable lemurs and stand in awe of its towering and ancient baobab trees. The low volume of tourists here swung in our favour, allowing us to get up close and personal with this little fella.

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An afternoon at the beach turned out to be a great way to get to know the local children. Pablo, ever conscious of being a Student Always, decided to put his negotiation skills into practice.

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If the enthusiasm and drive of this next generation of young entrepreneurs and the natural beauty of the area are any indication, we are confident that the future of both Fort Dauphin and Madagascar as a whole is bright.

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