A businessman’s account of establishing a spice company in Uganda
Based in Uganda’s bustling capital, Kampala, Africa Spices is an agro-processor specialising in dried spices. The company’s portfolio spans about 30 products, from ginger and tea masala to dried rosemary and garlic powder. Jeanette Clark spoke with founder and managing director, John Paul Ssengendo, about the origins of his business idea and the obstacles he navigated to scale the company.
In 2015, John Paul Ssengendo visited Zanzibar as part of an incentive trip offered by the Ugandan insurance company he worked for. Ironically, this trip, intended to motivate, catalysed his departure from the firm. Finding inspiration amongst the island’s spice sellers, Ssengendo decided to establish his own business in the production of dried spices.
Ssengendo, who owned a 10-acre plot of land, turned to three of his neighbours to supply the vegetables and herbs for his new venture. They became the first suppliers of ginger and cinnamon to Africa Spices. Ssengendo dried and ground the spices by hand, then packed them in polythene bags, sealing the edges using a candle’s heat. Thinking back to the candle-sealing process, he states, “I wish I had taken photographs.”
For Ssengendo there was a clear opportunity. Many farmers in Uganda were able to grow coriander, ginger, turmeric and rosemary, yet lacked a market for their produce. This often led them to sell their surplus at exceptionally low prices.
Africa Spices started expanding its supplier base from the original three neighbouring farms. It offered potential partner farmers agricultural inputs and advice on growing the crops required, committing to buying the harvest. Soon the company was able to add four new products.
The next step was to appoint an “aggressive” sales team who could take the products to markets, schools, hotels, restaurants and shops. Ssengendo ascribes the fact that the company went from zero to 103 clients in a year to the efforts of this team.
Ten months after the first packet of spice was produced, Africa Spices’ demand outstripped supply to the extent that the company had no other option but to find machines to automate some of the processes, like mixing and grinding.
Finance and payment woes
The company’s growth trajectory was looking promising, but it was not all plain sailing. Finding finance for expansion and working capital proved difficult. “I could not afford the security the banks were asking for, which made expansion in those early days very difficult,” says Ssengendo.
The company had to plough back every bit of profit it was making in order to grow, something that it has kept doing over the years.
Another hurdle for Ssengendo was receiving payment from some of the supermarkets and shops to which Africa Spices supplied products. With the aim to gain customers rapidly, the company offered products on consignment to some stores, many of which defaulted on payment without returning the stock.
“It really is a problem a lot of new producers are facing in Uganda,” he says. “Some of the supermarkets are not honest. We decided to only deal with those who would sign a contract that included fixed payment terms.”
Overcoming the challenges one by one
As the company started to grow, Ssengendo and his team had to clear various other hurdles. For instance, getting certification for its products from the Uganda National Board of Standards (UNBS) is an ongoing challenge, with some of its products still awaiting the seal of approval.
A growing customer base spread out across the country, also meant that the company needed to look at its distribution strategy. Up to this day, it has kept the logistics of delivery in-house and handles all distribution with a five-truck-strong fleet.
As sales continued to increase, the company recognised the need for a more secure and reliable supply of raw materials. To address this, Ssengendo sought partnerships with organisations that could provide access to a larger network of farmers, rather than establishing individual relationships. Through a collaboration with the international NGO Fauna & Flora, Africa Spices now has over 300 farmers who supply the crops needed for its dried spice products. It also grows coffee, coriander, rosemary and turmeric on its own farm.
Expanding the product range
The company has expanded from offering six products in its first year to a current total of 30. Ssengendo notes that four of these items contribute significantly to the overall revenue: pilau masala, masala tea, spiced tea leaves, and ginger.
Other products include dried and ground rosemary, cloves, cardamom, cinnamon, garlic powder and turmeric. These are mostly sold in 50g containers, but after the company saw its sales decline due to the economic impact of Covid-19 on customers, it introduced smaller sachets for lower-income households at the end of last year.
At the moment, Africa Spices packs close to 70,000 containers and 200,000 sachets a month at its manufacturing facility in Kampala. The brand has 5,000 business customers on its books and 27 permanent employees. While schools, restaurants, and hotels comprise part of their clientele, Ssengendo believes retail presents the most significant growth potential.
Currently, the company’s domestic presence spans 90% of Uganda. However, Ssengendo is not content with merely local success; he has his sights set on the international market. Africa Spices already has some customers who travel from South Sudan and the Democratic Republic of Congo, buying in bulk to take over the border.
In time, he sees a possible market not only in these neighbouring countries but also in the UK and the US.
“We first have to get all our certifications in place, which we hope to achieve by the end of 2023 or early next year. Then export will be on the cards.”
Africa Spices managing director John Paul Ssengendo’s contact information
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