Nepali Brothers lead Fair Trade Showpiece

from The Nepal Monitor

wo Nepali brothers in Washington D.C. are trying to restore ethics in global trade that is increasingly criticized for its corporate bias, reports KRISHNA SHARMA.

Two Nepali brothers in Washington D.C. are part of a unique business effort endorsed and supported by Grassroots Business Initiative (GBI) of International Finance Corporation (IFC), the private-sector arm of the World Bank Group. Deepak and Sunil Shrestha’s business is unlike any other in the world. They are playing a pioneering role in IFC’s first ever fair trade initiative for the poor.

As entrepreneurs, the Shrestha brothers have owned and operated other businesses in the United States, such as a dairy firm and a computer software company. They are also the owners of World Craft & Café Inc., a small company based in Springfield, Va. The brothers won the bid of the World Bank in May 2006 to run an outlet at the IFC complex under the management of the IFC itself. It has been eight months since Pangea Artisan Market and Café (PAMC), their newest business, opened at 21st Street and Pennsylvania Avenue NW, not far from the White House.

Pangea, which means “all lands” or a “single land mass of earth” in Greek, is an allusion to a more connected world. Some scientists have theorized that millions of years ago there existed a single land mass before continents split apart. The Shrestha brothers, who also believe in interconnectedness of different cultures and preservation of traditions, are part of the IFC’s fair trade showcase.

By providing a venue to products from poor around the world, the brothers help educate consumers about World Bank as a global development agency that provides financial and technical assistance to developing countries so they can reduce poverty and improve lives of their citizens. Headquartered in Washington, DC, WB is owned by 184 member countries.

In recent decades, its concept of economic globalization has faced harsh criticism from activists around the globe. It has become a preferred target of protestors who believe the Bank’s free market policies and the philosophy of globalization are actually hurting the poor around the world.

Critics of globalization have charged that WB is a US tool to promote big business interest at the expense of small businesses. They say IFC favors the interests of big corporations and industrialized nations over those of underdeveloped and the poor, and it is focused too much on free trade and rarely on fair trade. Free trade usually means uneven competition between poor and rich nations. Rich nations continue to maintain many trade barriers against poor nations; and they buy products mostly from the rich countries and not the poor ones. The public display of dissent against IFC’s policies was first evident in the 1999 demonstrations in Seattle. Following that, there have been many such public protests.

Pangea, then, is a novel IFC initiative mainly to bolster WB’s dwindling reputation as a champion of the poor. IFC launched the PAMC as a pilot project in its bid to host financial activities between the poor and the businesses. This is the first of its kind in the world. It’s WB’s effort to dispel the notion that everything in globalization is anti-poor.

Pangea for Ethical Business
With support from IFC in finding suppliers and developing educational materials such as brochures and computer-based catalogues, the Shrestha brothers lease space to others and run the store. Some 56 business partners, which are internationally expanded and are working in the areas of fighting poverty, are required to act ethically by providing their workers fair wages and delivering the products on time and within the budget limits. Suppliers also must sign a commitment to produce goods free of child labor, unsafe and unhealthy working conditions, among others.

Their 3,800-square-foot store looks more like a high-end boutique than an educational retail. It offers educational opportunities, with the products carrying tags that can be swiped at an interactive kiosk. Customers also can view short videos with brief account of the country where an item is made, who made it and how. IFC’s ultimate goal is to help countries develop infrastructure and businesses for the long term.

At the counter in the café, customers can pick up a latte brewed with fair trade coffee imported by Green Mountain Coffee Roasters Inc. or a smoothie whipped up from a ginger coconut mixture produced in Indonesia or Divine brand chocolate bars made out of fair traded cocoa grown in Ghana. Shoppers also can buy beaded necklaces from Ghana, or silver jewelry from Bali, silk ties from Khmer, recycled bag purses and coconut drink products from Indonesia, Peruvian Alpaca wool pillows, woven table runners from Swaziland. Products from Nepal, mostly handicrafts made by poor people and free of child labor, are also available. Customers can also collect IFC leaflets and brochures that provide updates on fair trade projects that are trying to change the face of business in the 21st century.

Along with the crafts, there in the Pangea store are stories of people who made them. For example, the silk purses from Cambodia are handmade by women who had been rescued by the Swiss nonprofit Hagar from sexual slavery and often drug addiction. These purses are favorite of Hollywood actress Angelina Jolie. The elephant grass placemats come through a group called Gone Rural that works in Swaziland with HIV-positive women who have little or no access to medical care. The Superchango chocolate bars are made with a Bolivian grain called canawa, grown by farmers in lieu of coca, a shrub used to make cocaine

“The artisans and producers get fair price for their products and they are paid in full before the products are brought to the store for sale,” said Deepak Shrestha. They pay 50 percent of the product price to the artisans at the time of order so that they could buy necessary materials to produce handicraft and the rest 50 percent is paid upon shipment of the products. “The artisan producers are required to comply with fair trade principles and sustainable and ethical business practices in order to supply products,” he added.

The PAMC store carries merchandise from about 50 different countries through IFC’s Grassroots Business Initiative as well as another of IFC’s project called Craftnetwork, several artisan groups, and partners such as NOVICA, a seller of handmade global crafts that is affiliated with National Geographic and the nonprofit group called Aid to Artisans.

Killing Two Birds with One Stone?
The other day, when I visited Pangea Market (increasingly known as World Bank Café), I ran into some customers. Kristian Laggaro, a student from Massachusetts holidaying in the District of Columbia, was sitting at one of the eight interactive kiosks spread around the shop and browsing through various handicraft products. Undecided, he began to chat online with his girlfriend to seek her choice for a New Year’s gift. For her convenience, he sent her Pangea’s URL.

After getting her response, he stood up from the chair, picked up a silk tote bag made by Cambodian women (who were sexually abused), and paid the bill. “What a superb idea to help the poor through fair trade business in the biggest city of the world! For me, it was like killing of two birds with one stone. I not only bought a gift for my girl but also began the year by helping the women who made this bag,” his response was spontaneous.

Then he left the educational retail shop with a big smile.

Laggaro seemed so impressed by the concept that he wished for a fair-trade store like Pangea in his home town of Boston too.

“It seems, with this as a pilot project, the World Bank plans to come up with similar other projects that are pro-poor and are targeted to uplift the economic activities of the marginalized people living in developing countries,” said Sridhar Vaidhyanathaswamy, a development expert associated with the United Nations. He thinks that it is good for the World Bank to promote a trend in socially responsible trade through PANGEA at a time when the practice of big fishes gobbling small fishes is in its ebb and global businesses keep taking toll of entrepreneurship of poor people.

“Although it is not a charity and it looks like a high-end boutique at the heart of the Washington, PAMC is a perfect example that business can work for poor people,” said Binod Gautam, an ardent lover of handicraft products. He frequents the PAMC to see if new items are added. He further noted that PAMC was a blend of business with informative education. “It should be expanded not just in other cities of the USA but also across the world.”

In fact, in eight months, the PAMC not only arrested the attention of the handicraft lovers, the business has also earned some big media attention. For instance, the Los Angeles Times ran a long feature story on August 5 last year, and bloggers continue to write about it.

Some Concerns
Behind the rosy scene of PAMC, there is the ideological issue concerning the idea of fair trade that bothers critics. In the Lo Angeles Times article by reporter Evelyn Iritani, William Easterly, a former World Bank economist who teaches at New York University, said the fair-trade movement was merely a PR ploy. Unless trade barriers against developing countries are removed significant progress is not possible, he maintains.

There are other certain shortcomings that sometimes trouble the Shrestha brothers, too. It has proven a challenge to launch the poor artisans into the global marketplace. Majority of producers are women who live in remote areas and often work at home. It can be difficult to even decide what constitutes fair price to their products. It is also often hard to verify what child-labor free means, and how much really a product is worth and what constitutes environment-friendly work.

Quality of products is also a concern. Earlier the PAMC faced the crunch of quality products from the artisans. “[Some] artisans were not fully aware about the quality control of the US markets in the beginning and thus we had to dump a lot of such products as they had failed to meet the quality standard. But now the situation is gradually improving,” Shrestha said.

Coming from a poor country, the Shrestha bothers at least understand the desperate conditions facing their suppliers. And judging from the brothers' crowded e-mail boxes and the samples piling up in their small office, there are many more vying for Pangea's shelf space.

“We love to interact with the makers of the products. But because many of them live in the rural areas of the underdeveloped world, we find it very difficult to come in touch when need be,” Shrestha said.

Nonetheless, they look confident. They have spent 1.5 million dollars and aim to come to breakeven by May 2007. To cater to the growing demands they launched their website in September last year. They hope to expand their fair-trade business across the United States, starting perhaps from the San Francisco or Los Angeles in the West Coast.

They are not alone in this. They also get, via PAMC, a lot of support from partner NGOs that work as pool between them and the artisans. They not only help take orders and do the shipment of the products but also help give the fair share of the business to the artisans.

Krishna Sharma is staff writer of Nepal Monitor. He can be reached at kpsharma1971@yahoo.com.