In 2005, chartered accountant Erick Rajaonary decided to start his own company, one that produces and supplies natural fertiliser and organic manures created from bat guano found in Madagascar’s caves.
After visiting bat caves, obtaining excavation rights from local tribes and sampling the product, Guanomad was born and today employs almost 100 full-time employees. In 2011, the company began international operations, exporting its products to European, Asian and African markets.
This month, the African Leadership Network awarded Guanomad with the Outstanding Small and Growing Business Award at the 2013 Africa Awards for Entrepreneurship. How we made it in Africa spoke to Rajaonary to find out more about Guanomad’s business, agriculture in Madagascar and some of the opportunities the French speaking African island holds for investors.
Are your customers mostly local or do you export the majority of your fertiliser?
Since inception, the main part of our production has been sold locally. But in December the ban on imports of Malagasy guano to the European Union was lifted, and Guanomad could start its export activity to that region. Guano is exported first to La Réunion and then to Europe.
This year, our strategy is directed towards Africa due to its proximity and the opportunity in terms of organic agriculture.
Thanks to the 2013 Africa Awards for Entrepreneurship and the African Leadership Network, our new direction has been verified. Indeed, Africa presents a big opportunity for us.
What were some of the challenges you faced in the beginning?
The biggest challenge, due to the newness of the product and its origin (bat droppings), was the penetration into the domestic market. Even for us, from the beginning we could not choose the right word that explains [guano].
Secondly, we had to penetrate a market which is dominated by chemical fertilisers. The idea of sustainability was not yet well known by farmers.
Agriculture is a huge industry in Madagascar. Describe the demand for your fertiliser and what competition you face?
Agriculture is huge, but it is subject to contradiction. It employs 85% of the active population but generates only 26% of the GDP. In our domestic market, we face the poverty and the lack of purchasing power. Nevertheless, we found a way to distribute our products, thanks to the network we have implemented.
Our main competitors now are the chemical fertilisers. They have been in the market for quite a long time. But now, farmers are conscientious about the harmful effects of the chemical fertilisers, and they are tending to use more organic manure.
What have been some of your failures, and what important business lessons did you learn from them?
Our main failure was that our strategy depended on the grants and the state aid. In the beginning of the political crisis (early 2009), we had to face the sudden halt of the subsidies.
Since then, we have adjusted our strategies by segmenting our market and defining our actions for each segment.
Describe some of the challenges entrepreneurs and businesses in Madagascar face.
First and foremost, it is to override the lack of purchasing power and it is not impossible to do. You need to adapt all your strategies [around that].
What would you say are business and investment opportunities in Madagascar?
I would give priority to products or services that have a direct impact on the lives and the wellbeing of the population. Within the predictable increase of the global food demand, Madagascar, with its arable land, can position itself on the world stage. Obviously, I think that investing in agriculture and agribusiness is advisable.
If you could provide just one piece of advice to young, aspiring entrepreneurs in Madagascar, what would it be?
Think big and be a visionary, not an opportunist.