At the age of 21, in 1993, a young Berhane Abraha’s girlfriend broke her glasses in Pune, India. They were both in the city for their studies, Berhane in his final year of obtaining his business management qualification. He contacted a class friend who had a side-business in optics and found a replacement for only US$10. Back home in Ethiopia, the same product would have cost close to $200. “It was a huge margin. It just clicked in my mind that this could be a great business,” he remembers.
During his last semester, he used the little capital he had – around $200 – to purchase some stock. Back home, he sold it for more than $1,000.
“The rest is history,” Berhane says. Today, Sun Optics has more than 20 franchised outlets across the country which do eye tests and sell frames and lenses to the public. It also has three production labs where imported lenses can be converted into the exact prescriptions needed for these outlets as well as for hospitals, eye clinics, NGOs and other private optics shops. In 1997, he brought on strategic partner Essilor International by selling 51% of his shares to the French-based international company that designs, manufactures and markets lenses to correct or protect eyesight.
Getting the timing right
“Sometimes, time favours you,” says Berhane of the business environment that allowed his company to grow.
When he returned from his studies, Ethiopia was transitioning out of communism.
“It was the easiest thing at the time to arrange imports as there were no bureaucracy issues,” he recalls. As with most countries that were dismantling communist regimes, there was a severe shortage of goods as the economy was not functioning as an open market.
“The market was very ‘thirsty’, so on top of not having constraints around importation, selling also didn’t pose a problem,” he adds.
Within a year he launched his first customer-facing store, which Berhane admits was quite “shabby and basic” due to his capital constraints. The shop was situated in Addis Ababa, across from a government medical facility specialising in eye care.
The very next year, in 1995, he opened his second outlet, this time matching the layout and set-up of the store to the more modern optical shops he saw in India. Berhane imported the products he needed from there, first from his friend in Pune, then from wholesalers in Mumbai with whom he steadily built solid relationships and who eventually extended him credit facilities. This enabled expansion back home.
In 1996, Berhane closed the first shop to open another modern outlet; this time focusing on strongly establishing the Sun Optics brand and paving the way for the franchises to come.
His first lab followed in 1997.
The lab was definitely a growth lever. “When you import lenses, the limitation is that due to the wide range, it is difficult to stock all the options. With the lab, we could import a limited range and convert them to the exact requirements of the client.”
Berhane believes Sun Optics built trust in the market because it could offer prescription precision which previously was not available in the country, with customers often being forced to settle for prescriptions with a margin of variance to what they needed.
A substantial potential market
Ethiopia has more than 110 million people and, explains Berhane, only 250 optical eyewear shops. That equates to 440,000 people for every store. “When I started, there were just 13 outlets and only one optical workshop; the latter being a gift from the East German communist government to ours.”
The market potential was incredible but it was hampered by a shortage of trained and qualified optometrists and ophthalmologists. According to Berhane, there were only three trained optometrists back then.
“That was one of the biggest challenges early on, the human resources in the industry. You can have the biggest market, but if there are not enough optometrists to write prescriptions and serve the market, we couldn’t sell.”
Sun Optics then became part of an initiative alongside non-profit organisations such as ORBIS International and Vision Aid Overseas to assist in establishing training facilities and addressing the shortage. Today, there are two schools, one at the University of Gondar and the second at Hawassa University. Sun Optics supports some of the students financially and provides on-the-job training after graduation. The company also offers outreach eye camps in partnership with the trainees.
“We now have more than 500 optometrists in the country, supporting government hospitals, private clinics and, of course, Sun Optics stores,” Berhane says.
The size of the potential market is also what sealed the deal with Essilor and being part of the Essilor network, in turn, brings considerable benefits to Sun Optics. Before the transaction in 1997, Berhane was importing stock only from India, occasionally bringing in machinery from China. Now Sun Optics has access to the preferential pricing that Essilor gets globally through its central procurement department and distribution network.
What could have been
Berhane comes from a family of entrepreneurs who run various businesses. Apart from Sun Optics, he also started manufacturing furniture under the brand Majestic Furniture three years ago. He still wonders how much else he could have achieved had he taken advantage of more of those early opportunities when the government transitioned.
“I sometimes regret not doing more, right at the start,” he admits. “When I started in my business, there were so many opportunities. Banks were begging us to take money. But now the opportunities are narrowing.” Land is expensive, with prices at “New York levels”. Finance is difficult to acquire, bureaucracy makes export difficult, and working capital is scarce.
“If I could do it all again, I would have taken more loans and acquired more land. I concentrated on optics and it is a great success, but I could have had more businesses today had I been more innovative,” says Berhane.
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