Feasibility Considerations

After a long and productive talk with Linda yesterday the team was busy at work today on two important tasks: a plan for the anticipated WOW Business Center and staffing considerations for the next 6 months. We were asked to steer our efforts to these areas after having encountered some difficulty performing a feasibility study for one WOW’s portfolio companies, Benn Loxo in the city of Joal.

Because we spent a fair amount of time preparing this feasibility study – and we believe these kind of studies should increasingly provide the foundation for WOW’s due diligence process – I thought I would touch on this a bit in this blog post. Benn Loxo is a women’s cooperative that processes a diversity of seafood products native to the Joal region. These include a variety of fish and shellfish that are dried, salted and smoked through artisanal methods. The waters around Joal are among the most fish-abundant in West Africa and this draws considerable attention from local and international traders. Women have traditionally processed and traded these products, but because they are rarely organized into cooperatives they tend to be exploited by outside buyers who at times force them to sell their products for as little as 100 CFA/kilo ($0.25/kilo). Benn Loxo – which means “one arm” in Wolof – was begun to strengthen the ability of Joal’s women to collectively bargain with buyers and generate better returns on their labor. At 157 members strong, the cooperative has the potential to do just that.

Recently the cooperative’s founder Fatoumata Ndiaye Lo provided WOW with an urgent funding request for 3 million CFA (approximately $7,500) to provide working capital to take advantage of the brief and lucrative octopus fishing season. While their concept was reasonable, WOW couldn’t act on it as quickly as Benn Loxo required because they were unable to provide any proof that this endeavor would be financially successful. Beyond this short-term project the cooperative has more ambitious plans to set up a central fish processing facility where the women could work as an organized unit (as opposed to their current loosely-organized structure), but have been unable to show that their objectives are attainable or feasible. This is in fact an obstacle to many of WOW’s portfolio companies, one that we are working hard to remedy. For this reason we took the initiative to prepare a feasibility study for Benn Loxo, but after speaking with Fatoumata it became clear that the cooperative was still in their preparatory stages and could not provide all of the necessary information to perform such a study.

Benn Loxo is not alone in its urgent requests for funding. One of WOW’s best organized and most promising portfolio companies – Marché.com – is seeking working capital to expand its operations and has good plan to carry this out. However, as our colleague Malick puts it, “these considerations are not simple,” and as WOW’s principle investment analyst he knows better than most. Malick explained that before WOW can disburse a new round of funding we need to put a new and better system in place to allow us to efficiently and responsibly respond to each requests. As I’ve mentioned in previous posts, this is one of the responsibilities that the Summer Interns have taken on and we hope to make a solid contribution to such systems before the summer is out! Until next time,

~Christian