Here are eight agribusiness and food opportunities in East Africa, as highlighted by top entrepreneurs and investors.
1. Supply of frozen baked goods to Kenya’s hotels. The lack of a consistent supply of quality products has meant many hotels, restaurants and catering companies rely on expensive imported goods. It is estimated that last year, Kenya imported $2.5 billion in food products, many of which can be produced locally. Hotels in Kenya are increasingly outsourcing activities such as baking because large kitchens take up space that could be used more profitably for beds and conference facilities. Steven Carlyon, president of SimpliFine Foods, says Kenyan hotels import large volumes of frozen baked goods – such as bread and croissants – from Europe and the Middle East because there are very few local companies producing frozen baked items of consistent quality on a large scale. Read more: French fries, croissants and frozen vegetables: Gaps in Kenya’s food industry
2. Crop storage. The storage and preservation of agricultural produce in East Africa is an area with compelling opportunities. David Owino, founding partner at East African private equity firm Ascent Capital, is bullish about the opportunities in crop storage: “We’ve been looking at a business that builds silos; this is interesting to us because you can add value to farmers by enabling them to choose when to sell their crops. If farmers have a bumper harvest, they could store their cereals and sell them when the market is right. In Africa, farmers lose about 40% of their harvest due to inadequate storage space.” Read more: Investor reveals East Africa’s most attractive opportunities
3. Producing affordable fish in East Africa. For decades, the wild catch from Africa’s Great Lakes has been declining; local markets are increasingly relying on imported frozen fish, often of low quality. This points to the potential for the domestic production of affordable fish. Victory Farms, an aquaculture company in Kenya founded in 2015 has tapped into this opportunity to supply affordable protein to consumers by growing tilapia, a native species. “We see huge potential for East Africa’s nascent aquaculture industry to grow and develop in a sustainable way, which should help relieve pressure on wild fish stocks,” maintains Chris Isaac, chief investment officer of AgDevCo, which recently invested in Victory Farms. Read more: Profit-making idea – aquaculture in East Africa
4. Tailor-made finance solutions for agriculture in Tanzania. In Tanzania, the share of loans to the agriculture sector as a percentage of total loans extended by commercial banks used to be around 40% (in 1994). While the banking industry continues to grow steadily since reforms began in the 1990s, the percentage of agriculture-based loans dropped to 6% in 2018.
Hadija Jabiri, CEO of GBRI, a Tanzanian company that grows vegetables mostly for export to Europe, says she is part of this statistic. “I’ve been in the agriculture industry for around six years and even though I wanted to obtain financing from the normal financial institutions when I started, I couldn’t … There are huge untapped opportunities in the agriculture value chain and customised agro-financing is one of these, particularly for smallholder farmers.” Read more: Potential for custom financing for Tanzanian farmers
5. Export of high-value, niche vegetables from Rwanda. According to Laurent Demuynck, founder and CEO of Kigali Farms, Rwanda is ideal for the cultivation and exportation of certain high-value vegetables and fruits to other East African nations. “I believe there is a future for good quality, organic and intensive horticulture in Rwanda. Owing to its proximity to Kenya – where there is a lot of purchasing power – I think it is a great business idea to set up the production of high-value crops. In terms of the product, it would likely be something like speciality or niche vegetables that you cannot find on the shelves – not even Nairobi – produce you can sell for a decent price because it is not yet a commodity product.” Read more: Learn about the horticultural options in Rwanda
6. Alternative packaging for Tanzania’s food industry. In 2019, Tanzania’s government banned plastic carrier bags and prohibited people from selling beverages or other commodities wrapped in plastics unless the nature of the product required it. Even for the exempted industries (such as food processing, agriculture and medical services), the government regulations require suppliers and users to ensure the waste is managed and disposed of in line with good environmental management.
According to Tahira Nizari, co-founder of Tanzanian agribusiness Kazi Yetu, which produces organic and fair-trade tea for export, the impact of the ban provides major opportunities for producers of alternative packaging. “A lot of the locally available options in the country, or region, are still plastic or boxes that are not food friendly. If you are packaging food, it needs to be sealable and meet the relevant health and hygiene standards,” she says. “It can’t go directly into the box without being sealed first.” Read more: Profit-making idea: Alternative packaging and carrier bags in Tanzania
7. Production of essential oils. Maxima Nsimenta, CEO of Livara – a Ugandan brand that manufactures natural and organic products for hair, skin and body – believes there is potential for essential oil processing in East Africa. “We import quite a lot of essential oils, yet it is possible to produce locally. We grow flowers in Uganda and Kenya but mainly for export to Amsterdam and Europe. We do not go the extra mile of using parts of these plants to extract essential oils. For example, lavender is a beautiful flower, very rich in oils; we could extract the lavender essential oil. A small bunch of lavender sells for around 15,000 shillings (about $4) in Uganda; however, 20ml of lavender oil will go for around $40. There are many local industries that require essential oils. They are used in pastries and drinks, as well as everyday cosmetics such as lotions, creams, hair products and perfumes. Some small-scale industries – like those that manufacture scented candles – also use essential oils.” Read more: Production of essential oils could be a lucrative opportunity
8. Exploiting camel milk’s potential. Africa is home to 86% of the world’s camels. The urbanised public is starting to recognise the value of camel milk, which is beneficial for lactose-intolerant consumers and has less cholesterol. Kenyan entrepreneur Hassan Bashir is tapping into this opportunity through his company Nourishing Nomads and aims to produce 30,000 litres of camel milk a day within the next five years. Read more: How Bashir aims to establish an entire value chain around camel milk in Kenya’s Wajir County