A Crisis and a Certificate? This Is How They’re Related and Help the Resilience of Sectors

The COVID-19 pandemic has brought about unprecedented impacts on many aspects of our life and work. Yet, not everything is doom and gloom, and the pandemic also offers some opportunities. At RisiAlbania, a project of the Swiss Agency for Development and Cooperation (SDC)[1], we are using the crisis to strengthen collaboration and resilience across different sectors. One emerging lesson is certification. Wonder why? First, it allows companies to level the negotiation field with their buyers. Second, this also brings an opportunity to diversify their client-base and to enter new markets. And, of course, with more options and better income, businesses become resilient to shocks such as the current COVId-19 pandemic.

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While there are many ways of fostering synergies between the economic sectors that the RisiAlbania project supports, we don’t often face shocks such as the current COVID-19 pandemic that allow us to draw comparisons.

Last week, we shared some thoughts on tourism and the COVID-19 pandemic in a blog. RisiAlbania also works in agribusiness and ICT – in theory, two sectors that face very different challenges in delivering their products and services to the market. 

And yet as the team in RisiAlbania monitors the situation and identifies ways of providing support to its partners, patterns are emerging that have the potential to be game-changers in a post-COVID-19 world. It’s understanding and acting on such patterns that determine our ability to anticipate and/or influence the future.  

Agribusiness and ICT: global industries affected by COVID-19

The two sectors we’re dealing with are quite different. However, we can agree that we all have to eat and that ICT solutions are offering ways of limiting the damage of current global restrictions, as more and more businesses switch to remote working modalities or use technological solutions to deliver their services.

The demand is there. It’s also clear that some aspects such as logistics and transport for agricultural produce, and hardware for ICT, will be more disrupted than others. The pandemic is impacting global food systems, disrupting regional agricultural value chains, and posing risks to household food security.

At the time of writing, Albanian farmers are going through very tough times. Thousands of tons of cucumbers and strawberries are being thrown away as regional demand has dwindled to a stop. The livelihoods of hundreds of families are at stake, as is their capacity to recover. This is of grave concern to the project.

On the other hand, companies that have invested in certification and standards confront less grim an outlook: Tomato AL partnered with RisiAlbania to obtain group GlobalG.A.P. certification for a group of farmers, and as Laurat Muliqi, one of the managers, explains:

“Investing in Global.A.P certification was worth it: it has helped our company to be more stable during the COVID situation, as we started to diversify our markets since 2018 when we established a contractual relationship with Strobel, a supermarket supplier in Austria. Even before the pandemic started, we increased the number of farmers and products under the group certification scheme, and we now have sales contracts with supermarkets in EU countries who are committed to getting our produce”.

Similarly, some companies in the ICT sector are likely to take so strong a hit from the current demand dry-up that they may not make it through.

But companies that have invested in information security standards (covering cybersecurity and GDPR) are also faring better than companies that did not. And this is the key value-added of standards: they allow companies to diversify clients and expand their services. As Eldisa Cirogu, the sales manager of Fiber, a BPO company, and partner of RisiAlbania, says:

“We invested in standards and certification early on, which allowed us to confidently invest in technology knowing we would be able to sell our services. Now, we provide services to higher-end markets such as e-commerce. As a result, we have managed in this situation not only to retain our customers but to increase our orders, and to add 48 new employees, all of which are home smart working”. 

Long-term strategies pay off

Looking back, Risi’s support to support partners with certification was ahead of the curve. It’s paying off now. Risi supports software and Business Process Outsourcing (BPO) under its ICT portfolio, and covers the fruits, vegetables and medicinal plants value chains through its agribusiness interventions.

ICT is a globally integrated, demand-driven industry. While part of Risi’s ambition is to promote product development, realistically, most jobs will come from enabling ICT companies to sell their services to global markets (we have an interesting case study about this). This means that if international demand falters, there are fewer opportunities for Albanian ICT companies to sell their services – notwithstanding the situation is different for software solutions developers and BPO providers.

Before Risi’s support, agribusiness in Albania faced a different challenge: it is not demand-driven enough. As in other developing contexts, the sector suffered from a lack of coordination between players that means that farmers grow vegetables without having assured buyers, and exporters collect this product and sell it to a few buyers in neighboring countries without formal contracts. This, in addition to the uncertainty with the COVID-19 pandemic, makes everyone, particularly producers, along the value chain more vulnerable to price volatility. And yet, demand for food is notoriously inelastic: what a project like Risi can do is trying to incentivize players to adopt more market-driven behaviors, such as growing market-preferred varieties.

This is where it all began

Risi, together with its partners, has been working around certification as a route to high-value markets.  When Risi started working in Albania in 2013, we realized that both in the ICT and agribusiness industries, many Albanian companies were exporting sub-optimally. They had loose or no contracts with international buyers. They had weak negotiating positions and could not fight for fair prices. They had little knowledge of export markets beyond neighboring markets, which created an overreliance on a few clients.

Most importantly: in the cases when they were aware of certifications that would allow them to access higher-value markets, they had no information on how to obtain them and often thought they were unaffordable or too complicated. Anyone who works using the market systems development framework will react as we did: this was a classic information asymmetry that a project like ours could easily remedy.

Therefore, the project works on stimulating the standards and certification market. This involves bringing together a lot of people and working to support public agencies to align national requirements and incentive packages with international certification guidelines; nudging consultants to develop commercial certification products; supporting certification bodies to develop affordable packages, and incentivizing companies to obtain certification often by de-risking the initial investment and letting the market work its magic.

So, what does all this mean?

While it is encouraging to see the pilots by the project are doing well, we are fully aware of the danger of creating ‘islands of success’ that do not result in wider systemic changes.

For example, knowledge-based agribusiness (as opposed to a resource-based model) is increasingly becoming one of the key success factors for the sector’s resilience. Knowledge and innovation have a key role to play in helping farmers and rural communities meet the challenges of today and tomorrow.

So, we believe this is a call for action for our project to start building a consensus around the importance of investing in standards that cut-across digital society, start-up ecosystem, and agile business and government partnerships.

While having an eye for the opportunity for innovation from the COVID-19 crisis, Risi is considering several long-term strategies and actions:  

• Get others to copy: making business cases out of the benefits that project partners draw from investing in innovative practices is always part of our scale-up strategies. But now more than ever, we need to think of ways of getting enough data that can convince business owners of the benefits of investing in standards. This is where enhancing knowledge flows and strengthening links between research and practice becomes critical.  
• Work on safety measures: the situation with COVID-19 is a true resilience and continuity test for many industries. Businesses will likely not be back to normal after the COVID-19 restrictions are lifted – not only because international responses will differ and affect consumer patterns, but also because labor safety measures will need to be in place until a permanent solution is found. The project is now working to better understand what the post-COVID-19 requirements can be and what support companies in the agribusiness and ICT sectors will require to comply.
• Further exploring public-private partnerships for export promotion: building coalitions of Government and private sector around areas that can foster exports—such as in the identification and testing of best practice – has been successful in Risi. And now more than ever, we will continue to do so in supporting partnerships that are clearly defined, investment contributions and risks are shared, and active roles exist for all partners.

We think it’s not too late to turn this into an opportunity for lasting change.

Related readings

• Tourism in Times of the COVID-19 Pandemic: What Can We Learn as the Situation Unfolds?
• Turning the Coronavirus Challenges into Opportunities
• Navigating Locally the Economic Impact of the Coronavirus Pandemic
• Three Key Lessons from the Coronavirus Infection for Development Cooperation