Tata Chemicals Magadi: Confronting Poverty in Rural Africa
(9 pages of text)
In the summer of 2013, the managing director of Tata Chemicals Magadi, Africa’s largest soda ash manufacturer and one of the oldest and largest export earners in Kenya, was wondering how he was going to respond to a growing number of challenges. As a producer of a commodity product, the company was vulnerable to escalating energy costs, oversupply and economic cycles. Global growth had been sluggish since the 2008 economic recession and competition was intense, especially since the emergence of Chinese producers. Magadi Township, where the company’s production facility was located, was one of the poorest in the country, subject to droughts and without many of the basic public services typically provided by government such as roads, health care, electricity, water and education. To address these needs, the company migrated from a top-down, paternal, ad hoc and resource-intensive approach to a bottom-up, collaborative, holistic and resource-sharing style that focused on community capacity building and self-governance. However, the issue now is how to best balance the strong need to reduce costs while remaining committed to the sustainability of the surrounding community.
The case is intended for senior undergraduate or MBA courses in international business, extractive industries and corporate social responsibility. Its objectives are:
- To understand how companies in the mining and extractive industries, typically criticized for contributing to negative externalities in and around the communities in which they operate, can be a key player in contributing to poverty reduction and sustainable development.
- To understand the different approaches companies use to respond to extreme poverty surrounding their operations.
- To understand how and why companies transition between different approaches in response to extreme poverty.
- To understand the interconnectivity of social and business issues and how to go about incorporating social issues such as poverty into mainstream business decisions.
Mining, Quarrying, and Oil and Gas Extraction
Kenya, Large, 1990-2013
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