Q+A - Divine Chocolate's Sophi Tranchell on good business, empowering women and social enterprise funding trends

by Astrid Zweynert | azweynert | Thomson Reuters Foundation
Thursday, 5 April 2012 17:16 GMT

* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Cocoa farmers in Ghana are benefitting from ownership of a Fairtrade company thanks to a partnership with Divine Chocolate

GLASGOW (TrustLaw) - Cocoa farmers in Ghana are benefitting from ownership of a Fairtrade company thanks to a partnership with Divine Chocolate, a social enterprise that makes Fairtrade chocolate products.

Divine was founded in 1998 with cocoa farmers of the Kuapa Kokoo co-operative in Ghana, who own 45 per cent of the company.

While Fairtrade ensures the farmers get a better deal for their cocoa and additional income to invest in their community, company ownership also gives them a share of Divine’s profits and the potential for a stronger voice in the cocoa industry.

Sophi Tranchell, managing director of Divine Chocolate, spoke to TrustLaw at the Social Enterprise Exchange in Glasgow last week.

Q: What is your advice for someone thinking of becoming a social entrepreneur?

A: I think there’s a piece of advice that I would give to anyone who’s thinking of setting up a business -- have excellent goods or services…You’ll also need to set up a structure, which you feel will support you but that you’ll also be accountable to -- that’s the difference in social enterprise -- that we’re running accountable, democratic businesses. And then, I think you need to look at all the people you can work with so that your idea can survive and flourish. Who could help you get more reach, who could help you…talk to more people. But I do think you’ve got to get the product right, so that (you don’t end up) doing the right thing in terms of how you’re running the business in an accountable way, really promoting it in a good way and then the product doesn’t work and you have ruined the opportunity... I think the reason Divine is here today is because we have fantastic chocolate. We could tell wonderful stories and it could be beautifully packaged, but if it doesn’t taste good nobody is going to buy it.

Q: Should capitalism be replaced with an economic model focused on doing social good?

A: Business has an enormous potential to deliver social change. If you look at some businesses in Victorian times, if you look at Cadbury – they were founded on philanthropic aims. They didn’t want people to sit in gin houses, they wanted them to drink cocoa because they thought that was better, they invested in their workers, they built them houses and schools, they invested in their suppliers, so they got good cocoa. That’s what we want.

Q: What is your vision of a good business?

A: We want business to deliver good services or products, and that it should invest in its communities and it shouldn’t be paid indecently. So, I think business has that huge potential to drive social change but I don’t think it will do it if all the things we see about business are about making you personally rich. If young people watch “The Apprentice” or “Dragon’s Den”, they just think business is about making you rich, and actually, there’s so much more to life than being rich... The experience of running a social enterprise and being part of a social enterprise, and even buying goods from a social enterprise, is so much more rewarding than being rich.

Q: How did you ensure women farmers in Ghana were empowered to participate in the cooperative?

A: Kuapa Kokoo in Ghana started in 1993, well before I had anything to do with it. Gender empowerment was part of their founding principles.  They recognised that if they didn’t do that, women would be excluded and that you needed to do that as a positive affirmation. They constituted the organisation at a village level, where you elected your local executive.  You had to vote for three women out of an executive of seven, so there had to be at least three women on it. And when you send delegates to the annual general meeting, they send two from each village, so one has to be a woman. It’s quite interesting that these are not things that cost them money.

Q: What else did they do to empower women?

A: They supported microfinance schemes that supported women’s groups collectively in alternative income-generating strategies, things like making batik, making soaps, cultivating snails, cultivating mushrooms and selling them on the local market as a way of complementing their income outside of the cocoa season. So, that’s meant in the nearly 20 years that they’ve been operating, women have got themselves all the way through the organisation. They’re confident and feel they have a right to call people to account and stand for elections. It’s interesting that one of the things that made this possible in Ghana is that women have land rights, so they own the farms they work on. This is something where national legislation can make an enormous difference to the role women can play in society.

Q: Is it harder now to get funding for a social enterprise in the UK?

A:  I don’t think it is. I think there is probably more money being mobilised. What is being difficult is that the money that has disappeared since the new (Conservative) government (came into power in 2010) is the business support money. There were a lot of people who were intermediaries -- who were supporting social enterprises setting up -- who were being funded by regional development agencies -- that money has disappeared, that’s become much more difficult. Out of these programmes came things like apprenticeship programmes and it’s more challenging to get money for that now.  But in terms of start-up money for young people, there are a number of different funds, like The Prince’s Trust for example, which target under-25s who only want 5,000 to 10,000 pounds… to set up their own enterprise, which I think is very interesting seed funding.

Q: How is more money being mobilised?

A: What we’re seeing now is growing amounts of money from private institutions that want to set up social impact finance, they want to see how they can invest in this field. They don’t really know what they’re talking about yet, but they think there is an opportunity there. They’re helping rich people manage their wealth and what they’re realising is … that delivering a social or environmental outcome might be more exciting to those (investors), or as exciting, as making money for their portfolio. So, if they put some of their portfolio into making more money and some of it into making the world a better place … that makes it quite an interesting market place.

Q: There still seems to be a lack of knowledge about investment opportunities in social enterprise?

A: Yes, and also social enterprises are not necessarily legally structured to take on that sort of money if it’s investment capital. But I think one of the things you probably need to challenge over time is debt/equity ratios, so that what people count as a conventionally good balance maybe isn’t the right balance for a social enterprise. It might be that we ought to be allowed to have more debt because of what it is we’re doing and that might better fulfill our mission.

Q: Why is being able to borrow more good for a social enterprise?

A: Clearly, Divine doesn’t want to take extra capital of just anyone because it would compromise the fact that the farmers own the company, and it potentially would take us to make decision we didn’t want to make. So, in that sense, borrowing money is really good. But what is an acceptable level (of debt) and why was that level set? It’s time to open up those discussions. Particularly at the beginning you need to have more flexibility. We had a 400,000 pound loan guarantee from the (Labour) government, which enabled us to access conventional banking loans at very competitive rates. That enabled us to get our own track record with a commercial financial institution, which then enabled us to access other tools that they had and that made us a more competitive business. That was a lot of money as a start-up.

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