Entrepreneurship Zone: 26 June 2020: How this entrepreneur went where nobody goes to start dried fruit business in Mozambique

Fri Jun 26 05:39:10 CAT 2020

 <mailto:info at bulls.co.zw> 

“We go where nobody goes,” reads a line on Mozambique-based fruit-drying company AfriFruta’s website.

It adequately captures the journey of founder Jaco le Roux over the past eight years. In a remote area with little infrastructure and a dearth of educated workers, he created a dried fruit business from scratch. AfriFruta is a producer of organic dried mango and coconut oil, among several other related products. Its production facility is located about 90 minutes south of the coastal town of Inhambane.

South African-born Le Roux and his wife moved to Mozambique in 2012. Prior to this, he spent about two decades working in the agriculture industry, including an eight-year stint as a manager for Westfalia, South Africa’s largest subtropical fruit company. The couple’s primary reason for settling in Mozambique was to do missionary work. As their mission included providing employment and upskilling opportunities for the local community, he soon found himself knee-deep in the world of an entrepreneur in a frontier market.

Le Roux started out by trading in fresh coconuts. In colonial times, the Portuguese planted large coconut plantations in the Inhambane area. These plantations lay idle and were harvested largely by the surrounding communities. Le Roux spotted an opportunity to buy coconuts from the locals and export them to supermarket groups in South Africa. He got in touch with some of his old industry contacts and was soon supplying retailers such as Food Lovers’ Market and Checkers.

“One other guy and I had to go to all the communities and select their good coconuts – sometimes in the middle of the night – to fill the trucks that had to go out,” he notes.

Not all the coconuts were up to supermarket standards; they were either too small or had other defects. At the time, international demand for coconut oil – used in the food and beauty industries – was exploding. Le Roux realised he could tap into this trend by processing these substandard fruits into coconut oil and established small coconut presses in several nearby villages. But he soon found there wasn’t a market for his product. It didn’t meet required food safety certifications, as demanded by most retailers, due to the rudimentary nature of the production process. On top of that, Le Roux didn’t have the capacity to produce in the volumes required by the retailers.

He knew he needed a proper factory and more sophisticated equipment.

Taking it to the next level

While researching techniques and machinery to improve his coconut oil production, Le Roux discovered the same equipment used to dry coconuts (water first needs to be removed from coconuts to produce the oil), can also be used for fruit drying. This sparked the idea to diversify into the drying of mangoes, which were also growing in abundance in the region.

In 2016, to help take the business to the next level, Le Roux brought a new partner on board: businessman Koos van der Merwe who had extensive farming experience in both South Africa and Mozambique. They rebranded the company to AfriFruta.

Finding financing to build its new factory was a tough process. However, AfriFruta got lucky when two businesspeople from the Netherlands bought into the business (they are now responsible for running the company’s marketing office out of the Netherlands). AfriFruta also managed to secure funding from the Africa Enterprise Challenge Fund (AECF), a development finance institution.

As with the coconuts, AfriFruta doesn’t own any mango plantations; it buys from about 3,000 local small-scale farmers who typically cultivate five to 10 trees alongside their other crops. “The majority is sourced from individuals who come to the factory with a few mangoes in a bucket on their head, or in a donkey-cart or a pick-up truck,” Le Roux explains.

To peel and process the mangoes, AfriFruta had to employ factory workers but because of the remote location, there weren’t many skilled or educated employees. Ninety per cent of the workers in the factory had never before been formally employed and this presented challenges. “Things you would assume are common sense just weren’t. In the early days, everyone would peel mangoes until lunch but after that, only about 10 people would come back. It turned out they were tired and simply went to sleep.” The workers weren’t used to business hours and assumed the same rules applied as when they worked their own fields: when you are tired, you sleep.

AfriFruta has invested significantly in training and educating its staff. “We’ve got a good crew now who knows how to work the products,” Le Roux says.

Tapping into the health trend

AfriFruta currently produces a variety of dried fruit – including mango, pineapple, papaya and banana – as well as several coconut-related products. All the products are organic and the company benefits from growing consumer demand for health foods. The bulk of the dried fruit is exported to Europe – mostly the Netherlands and Germany – while the fresh coconuts and coconut oil are largely consumed in South Africa and Mozambique.

Le Roux says bringing AfriFruta’s Dutch-based partners onboard to run the company’s marketing has been one of his best decisions. “They took a weight off my shoulders by ensuring our products get to the final consumers and it also means we don’t have to work with middlemen.”

Although the dried fruit industry is relatively competitive, AfriFruta has an advantage in that it is the only organic-certified dried mango producer in the southern hemisphere. The significance is that thanks to the seasons, when AfriFruta’s mangoes are ready to go onto the shelves, the northern hemisphere producers have no stock. “There are quite a few organic producers in West Africa but there the season is about five to six months later,” he explains.

The coconut oil industry, on the other hand, is more cut-throat with several mega manufacturers in countries such as the Philippines, Sri Lanka and India. In addition, coconut oil competes with other healthy oils in the market.

Multiply everything by pi

Le Roux describes Mozambique as a challenging business environment where things typically take a long time to get done. He quips that he and his team multiply figures by pi – or 3.14 – to arrive at the actual cost or completion time for a project.

“It took ages to get permits in place and conclude the environmental studies. Everything took years, whereas you would expect it to take a month or less. It’s time-consuming and there are a lot of hidden costs; for instance, no one can tell you the exact cost to register a company, it differs for every kind of business.”

He says while the government wants to assist foreign investors, its implementation is often lacking. “We’ve had very good access to the governor and the directors of agriculture, commerce and industry. You are able to sit with them and discuss your problems and challenges. They bend over backwards to help you but despite political will at the top, sometimes balls are being dropped lower down the ranks.”

AfriFruta’s biggest obstacle by far was unrelated to ill-disciplined workers or bureaucratic bottlenecks. It came in the form of the 2017 tropical cyclone Dineo which made landfall near Inhambane just as the company had finished its factory. “It destroyed the entire mango and coconut crop. There were no leaves on the trees, no fruit, nothing. We had just opened up the factory and employed 100 people yet there was no fruit to process and no foreseeable income for the next year.” AfriFruta was able to source some fruits from other parts of the country but only small quantities.

In 2019, Mozambique was hit by another major cyclone. Although it moved north of AfriFruta’s operations, it did dump an extraordinary amount of rain on the Inhambane area. “We had 1,000mm of rain in the middle of our mango season that caused the entire mango crop – which normally matures over three months – to ripen in a week. This was another major disaster for us.”

Le Roux says even before moving to Mozambique, he knew what he was letting himself in for and never expected it to be easy. “When you do something like this, the word ‘quit’ cannot be in your vocabulary. It requires a certain character to tackle projects and see them through in a country like Mozambique. People need to go into it with the right mentality. You simply have to be a pioneer in everything you are doing.”-Howwemadeitinafrica

AfriFruta founder Jaco le Roux

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