Eight agribusiness and food niches to explore East Africa

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Eight agribusiness and food niches to explore East Africa

Eight agribusiness and food niches to explore East Africa

Top entrepreneurs and investors have identified eight agribusiness and food niches in East Africa.

1. Supply of frozen baked goods to Kenya’s hotels.

Due to a lack of a consistent supply of high-quality products, many hotels, restaurants, and catering businesses must rely on costly imported goods. 

Kenya is estimated to have imported $2.5 billion in food products last year, many of which can be produced locally. 

Because large kitchens take up space that could be used more profitably for beds and conference facilities, hotels in Kenya are increasingly outsourcing activities such as baking. 

According to Steven Carlyon, president of SimpliFine Foods, Kenyan hotels import large quantities of frozen baked goods – such as bread and croissants – from Europe and the Middle East because there are few local companies producing frozen baked items of consistent quality on a large scale.

2. Crop storage

East Africa has a lot of potential when it comes to agricultural produce storage and preservation.

 David Owino, a founding partner at East African private equity firm Ascent Capital, is optimistic about crop storage opportunities: 

 “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.” 

3. Producing affordable fish

For decades, the wild catch from Africa’s Great Lakes has been declining; local markets are increasingly reliant on imported frozen fish, which is frequently of poor quality.

 This indicates the potential for domestic production of low-cost fish. Victory Farms, a Kenyan aquaculture company founded in 2015, has taken advantage of this opportunity to supply consumers with affordable protein 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.

4. Tailor-made finance solutions for agriculture in Tanzania

In Tanzania, the proportion of agricultural loans as a percentage of total commercial bank loans used to be around 40%. (in 1994). While the banking industry has been steadily growing since reforms began in the 1990s, the percentage of agricultural-based loans fell to 6% in 2018.

Hadija Jabiri, CEO of GBRI, a Tanzanian company that grows vegetables primarily for export to Europe, admits to being a 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.”

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 countries.

“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.”

6. Alternative packaging for Tanzania’s food industry

Tanzania’s government banned plastic carrier bags in 2019 and prohibited the sale of beverages or other commodities wrapped in plastic unless the nature of the product required it. Even in exempt industries (such as food processing, agriculture, and medical services), government regulations require suppliers and users to manage and dispose of waste in accordance 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 ban’s impact provides significant opportunities for alternative packaging producers.

 “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.”

7. Production of essential oils

Maxima Nsimenta, CEO of Livara, a Ugandan brand that produces natural and organic products for hair, skin, and body, believes that essential oil processing has potential 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.”

8. Exploiting camel milk’s potential

Africa is home to 86 percent of all camels in the world.

 The urban population is beginning to recognize the value of camel milk, which is good for lactose-intolerant people and has less cholesterol. Hassan Bashir, a Kenyan entrepreneur, is capitalizing on this opportunity through his company Nourishing Nomads, with the goal of producing 30,000 litres of camel milk per day within the next five years.

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Eight agribusiness and food niches to explore East Africa

Eight agribusiness and food niches to explore East Africa

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