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    Spinners and Spinners Blankets the Humanitarian Aid Market

     

     
     
    © International Trade Centre, International Trade Forum - Issue 4/2001

    The story of Spinners and Spinners, an enterprise based in Nairobi, Kenya, illustrates the opportunities and challenges of one developing country supplier doing business with international aid agencies.

    For the past nine years Spinners and Spinners, a blanket manufacturer based in Nairobi, Kenya, has been supplying blankets to various international aid agencies. The company currently has long-term agreements with the Office of the United Nations High Commissioner for Refugees (UNHCR), the International Federation of Red Cross and Red Crescent Societies (IFRC) and the International Committee of the Red Cross (ICRC) to supply blankets. In 1999, it was one of the largest suppliers of blankets to relief agencies during the crisis in Kosovo.

    Spinners and Spinners have exported blankets throughout Africa including Sudan, Namibia, Burundi, Ethiopia, Somalia, Uganda, Liberia and the United Republic of Tanzania. The market for blankets is very competitive; there are six other manufacturers in Kenya and demand is limited. Spinners and Spinners are able to succeed in this market for two reasons: they produce quality blankets at competitive prices.

    Before 1995, business with international aid agencies was very different in the region. Though standards were mentioned, they were not strictly enforced. This situation caused a major influx of non-standard blankets which were offered on the market. Following the genocide in Rwanda in 1994, the business of aid procurement became much more formal and regulated. Most international aid agencies, including UNHCR and the Red Cross and Red Crescent Movement introduced stringent standards and specifications. Spinners and Spinners saw these new developments as opportu-nities to pitch their products with aid agencies. Some tenders were also published locally, enabling the company to participate directly in the bidding process.

    Today, Spinners and Spinners has frame agreements with three agencies - UNHCR, ICRC and IFRC. The pressure to maintain adequate stocks of finished products and raw materials puts considerable strain on finances. Profits are depleted as inventories remain in warehouses. To counteract these problems, the company borrows capital from different sources at high interest rates. This is a problem for enterprises in Africa because if they borrow in United States dollars, as the local currency depreciates, they are adversely affected and profits may even be wiped out at the time of repayment. To help developing country enterprises survive, Spinners and Spinners proposes that donor countries offer soft loans, preferably in the local currency at low interest rates. These soft loans can also help maintain the large stocks of raw materials required.

    Another concern is the short duration of agreements. Normally agencies have two-year contracts with suppliers. Spinners and Spinners supports having longer-term agreements, with a clause to review the price every two years. Longer contracts can benefit everyone: international aid agencies gain a continuous supply of quality products with an agreed delivery time and price; the manufacturer is assured of business and, most importantly, the beneficiary gets the best quality product when he or she needs it most.

    Chandu Dodhia is managing director of Spinners and Spinners Ltd and can be contacted at spinners@form-net.com


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