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This research shows that plant products and niche economic sectors generated by natural products have an important role to play in development which is often underappreciated. As the momentum builds to lift the least developed regions out of poverty through environmentally and socially sustainable ways phy­tochemicals and their derivative products must be given greater attention.


Sustainable Sourcing of Phytochemicals as a Development Tool: The Case of Somaliland’s Frankincense Industry

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By Anjanette DeCarlo, Ph.D and Saleem H. Ali, Ph.D

Abstract

Finding paths for ecologically and socially sustainable development in post-conflict regions of Africa poses a tremendous challenge for researchers and practitioners alike. In this study we examine the role the phytochemical sector can play in creating a supply chain for a niche market. We study the frankincense extract sourcing from a remote region of Somaliland and how a diaspora-linked market mechanism for the tree resin can be sustained. Using structured qualitative research methods involving interviews with harvesters and dealers as well as policy-makers, we conclude that trade would not be hampered by environmental conservation. The harvesters would benefit from more vigilance of the trade mechanism with effective social and environmental policy as Somaliland’s economy develops. Furthermore, plant products have important renewable characteristics that deserve attention in development planning in such highly impoverished areas. Minimal infrastructure is needed for developing such an economic base and such a sector can very quickly help to bring in capital for other sectors of the economy to develop while creating incentives for environmental conservation.

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Introduction: Research need and case choice

Sustainably harvesting and sourcing natural products from plants (phytochemi­cals) for cosmetic use has been an important part of the fair trade movement going back to the establishment of The Body Shop by the late entrepreneur Anita Roddick almost 40 years ago (Dennis et al, 1998). Although there has been con­siderable scholarship on fair trade and also detailed management studies of com­panies such as The Body Shop, the particular salience of phytochemical supply chains as development tools has not been previously examined. Our research aims to show that the niche phytochemical sectors can provide an important op­portunity for states with minimal infrastructure to advance even in the absence of large foreign direct investment or aid programs.

Phytochemicals provide a particularly promising area for developing an environ­mentally and economically sustainable development path, since they are derived from naturally renewable materials while fetching high prices with appropriate branding. There is also the potential to vertically integrate the sector from ingre­dients to consumer end-product with relatively low infrastructure investment, par­ticularly with cosmetics that use phytochemicals. Thus, a phytochemical industry which starts from sourcing plants for extraction of the needed compounds can quickly advance to also manufacturing creams and lotions, with far greater speed and less external investment reliance than heavy manufacturing sectors.

For least developed countries (LDCs), this sector holds much promise but making such a sector work effectively requires a keen understanding of ecological con­straints, coupled with detailed process analysis of supply chains in an informal economy. To consider such a prospect, we focused on the case the frankincense resin derived from trees in the Horn of Africa. This resin has broad name recogni­tion globally with multiple uses in cosmetics and emerging uses in pharmaceuti­cals and thus provides an important species to analyze in terms of supply chain dynamics. Of particular interest to us as a source of this resign was the emerging de facto state of Somaliland that presented us with several key attributes that provide for clear analysis as follows:

  1. Frankincense resin in Somaliland has characteristics which make it particularly valuable and “brand-able” as compared to other species. Ecologically, it is hard to cultivate Somali frankincense in other locales and hence the establishing a robust supply chain is higher, thus also providing greater opportunity to study this sector longitudinally from its inception (current status) to its development as demand grows and the region develops and diversifies its economy.
  2. Since Somaliland is not officially recognized as a separate country by the United Nations, it does not receive major foreign aid. Thus our analysis could focus on the supply chain resilience in the absence of aid programs as a ‘worst case scenario’ of developing such a sector. However, it may also be argued that the noninterfer­ence of foreign donors provides advantages as well for governance development without dependence and can thus be instructive as well (Kaplan 2008).
  3. The Somali diaspora’s role in facilitating supply access from their land of origin is an example of how the “remittance economies” that have characterized foreign workers are being transformed. Not only is money being sent to sustain families in the homeland by migrants but business enterprises that provide win-win outcomes are emerging that can provide for more resilient “North-South” connections.

Background on Somaliland and Frankincense

Somaliland is a small “country” with an enormous impact on the political landscape of the Horn of Africa and beyond. Its history is full of transitions and alternations by colonization and the cold war with the greater boundaries of Somalia reshaped again and again. Today its status is a so-called “breakaway republic” from Somalia but that is not how the Somalilanders see it. However, Somaliland lacks recogni­tion as a country from the African Union or any other international body. Without first gaining this recognition, it lacks the ability to join the United Nations or partici­pate in the world political stage. This cascades into a list of international opportuni­ties it is ineligible for.

Yet in the midst of tremendous political uncertainty this country has made no­ticeable gains in reducing terrorism and creating stability within an active combat zone. This accomplishment should not go unnoticed by the international devel­opment community and policy makers. Foreign Policy magazine designated it a Green Zone in 2010. One of only three places in the world able to accomplish a degree of stability in the midst of – severe poverty, drought, famine, food aid con­flicts, terrorism by Al Shabaab, the contagion effect, limited military – all with virtu­ally no government operating budget.

Frankincense has been a valued commodity for trade since ancient times by the Egyptians, the Assyrians, the Persians, the Macedonians, and the Kushites. These resins comprise what is believed to be the oldest global supply chain. The Nabataeans, an Arabian tribe, monopolized the trade nearly two thousand years ago and maintained their lucrative competitive advantage for more than 5 centu­ries (Hull 2008 p.275). The northern coast of Somaliland derived its importance from this ancient trade. In fact in Pliny’s book XII of Natural History he devotes much discussion to Frankincense. However, the African link in the production of the resin has been obscured since ancient times: “The chief products of Arabia are Frankincense and Myrrh; the latter it shares with the Cave–dwellers Country but no country besides Arabia produces frankincense.” (Pliny BC p37) Today we know this to be false but this misconception was in part due to the racists sentiments of the times about Africans and the secrecy around the location and the appearance of the trees.

Even in Pliny’s time the pressure on the trees to produce was of concern “it used to be the custom, when there were fewer opportunities of selling Frankincense to gather it only once a year but at present day trade introduces a second harvest.” Pliny goes on to state “I find it recorded that one of these lumps (of resin) used to be a whole handful, in the days when men’s eagerness to pluck them was less greedy and they were allowed to form more slowly.” (Pliny p45) The ancient uses of Frankincense (some continue today) included embalming, fumigating, making perfume, sacred religious uses and in traditional medicines including Chinese and Ayurveda.

In modern times potential uses have taken on a new importance in Western medicine. Anti-inflammatory and anti-carcinogenic properties of boswellic acid in frankincense have been noted in both animal and human trials (Efferth et al, 2011). Additional research at the University of Oklahoma concluded: “frankincense oil appears to distinguish cancerous from normal bladder cells and suppress cancer cell viability. Microarray and bioinformatics analysis proposed multiple pathways that can be activated by Frankincense oil to induce bladder cancer cell death. Frankincense oil might represent an alternative intravesical agent for bladder cancer treatment.” (Frank et al 2009)

These resins whether burned as incense, used as essential oil, or in medical trials to cure cancer certainly have a prominent place in the Somali culture and economy. After livestock, these resins are the second most important source of foreign exchange through exports for Somaliland. Before the collapse of the gov­ernment of Somalia officials estimated that 10,000 families were primarily depen­dent on gathering the resins (Farah 1994 p3).

There are two types of Boswellia that grow in Somaliland. Boswellia sacra (sny B. carterii) with the Somali name moxor, which yields a resin locally called beeyo. The second is Boswellia frereana with the Somali name, yagcar, which yields resin locally called meydi. B. frereana is an endemic species found only in the Somali Frankincense region. The Myrrh trees by contrast grow more widespread, mainly in dry inland areas. Apart from Somaliland (and Saudi Arabia where small quanti­ties are produced mainly for domestic use), Ethiopia, Sudan and India rank as im­portant resin producers. However these resins are comparatively of inferior quality frankincense (Frank 1994 p6).

The harvest of Frankincense is done by making a number of precise incisions into the bark and letting the resin ooze out and solidify over a number of weeks. Then the harvesters return to each tree to collect the resin. This procedure is repeated from two to three times over the 5 month harvesting season.

Today the trade of resins has been documented by photojournalists with images of camels carrying sacks to the red sea for shipment to the Middle East and beyond. These idyllic images stir sentiments of being connected to an ancient and sacred process, however this trade has stood still in time to the disadvantage of Somaliland harvesters, while the world it supplies has modernized. The implications for this include the harvesters of the raw resin are left at the bottom of the industry, discon­nected from the profits gained by more powerful Somali and Arab middlemen and end product producers outside of Somaliland. This scenario is not new to Africa and it is certainly a form of Neocolonialism.

Most importantly, this paradigm does not benefit the sustainable economic de­velopment of Somaliland. In fact it works to erode gains by not helping to secure basic quality of life for harvesting communities resisting terrorism and food inse­curity violence. These are the very people who are serving as “homeland security” and allowing for the latest democratically elected government in Hargeisa to move forward. Moreover it erodes the human, social and natural capital the region has built through thousands of years of experience in the resin trade and is loosing its competitive advantage from a lack of ability to raise itself up to the international playing field and protect its industry internally and externally.

This case study seeks to find from the source, the harvesting communities, what they need to improve their livelihoods and if socially responsible business can increase economic development at the community level, and in turn support peace efforts. This information is vital to decision makers, practitioners and stakeholders to gain insight into the Somaliland resin trade.

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