Entrepreneurship Zone: 24 November 2021 :: A macadamia nut business in Rwanda: How this CEO built his company

Wed Nov 24 07:22:58 CAT 2021

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Entrepreneurship Zone: 24 November 2021 :: A macadamia nut business in Rwanda: How this CEO built his company

 <http://www.zitf.co.zw/> 

Norce Elysee Gatarayiha was working for a food research project under the Rwandan Ministry of Agriculture and Animal Resources in the late-1990s. At the time, the government wanted to strengthen exports and diversify agriculture and had a list of suggested new crops that could work for the country. Macadamia was included on that list and Gatarayiha seized the opportunity to open his own agribusiness venture. Jeanette Clark talks to him about how he developed Norelga Macadamia into a business selling to both local and international markets.

Establishing a new crop

Gatarayiha had seen macadamia trees when travelling in neighbouring Kenya and decided to establish an orchard of his own. He went from farm to farm, encouraging other farmers to follow suit and plant a tree they did not know, with only the promise they would reap the rewards in five to seven years when the first harvest was ready. He established the Twihangire Cooperative, adding the farmers as they joined.

“I was working with smallholder farmers, advocating using the trees to intercrop with maize,” he says. Gatarayiha would educate farmers on both the lucrative price that the nuts fetched on the open market, as well as the longevity of production, as a tree could deliver substantial harvests for up to 100 years.

Between 2000 and 2003, the first trees were planted and the long wait began (it takes up to seven years for a tree to get to full production). Gatarayiha also established trees on his own farm, using personal savings.

But when the first harvests were available, there was no ready market in which to sell the macadamia nuts. As a result, some farmers became despondent and even started cutting down the trees they had nursed to production.

Gatarayiha decided to intervene and processed the nuts himself to add value before finding customers. He tapped into the knowledge of the same Kenyan and Zimbabwean friends who first introduced him to the crop, to guide the initial processing operations.

“I was plucking the nuts, manually de-husking them with a hammer,” Gatarayiha remembers. In 2010, he registered Norelga Macadamia and in 2011, the company was registered with the Rwanda Development Board and received its quality certification from the Rwanda Standards Board.

Scaling up the processing

Initially, everything was manual and over time, Gatarayiha sourced some second-hand equipment from Kenya and gradually ramped up production, de-husking the nuts and selling them raw or roasted to local supermarkets.

“Slowly, as I was getting some profits in, I would use the funds to buy more nuts from the farmers to process.”

As the Rwanda Standards Board developed a manufacturing standard for the nuts, Gatarayiha moved his operations from his home, where he started, into a new facility. The company also landed its first big customer, RwandAir.

Norce Elysee Gatarayiha

Then in 2015, the company got a capital injection from Dutch organisation SPARK. It was an equity investment of $100,000, which was used to purchase various machines to crack, roast and package the nuts.

By 2020, Gatarayiha bought the final share back from SPARK. “Now we are back as a family company with 50% of the shares owned by myself and 50% by my wife and we are happy to continue in this way.”

Sales and diversification

In the beginning, to find buyers for its product, Norelga targeted local supermarkets. When it landed the contract with RwandAir, the company reached out to players in the hospitality industry and added a few hotels, like the Radisson and the Marriott.

People, however, weren’t familiar with macadamia and in the process of selling, Gatarayiha would educate customers about the difference between macadamia nuts and what the market was used to, peanuts.

Gatarayiha’s wife, an equity partner in the business, suggested the company add peanuts to its product inventory, boosting sales and revenue for the company.

Today, Norelga produces and sells roasted and dried macadamia nuts, macadamia oil and lotion, roasted peanuts and non-roasted peanut flour, peanut butter, sunflower oil and raw sugarcane juice.

It exports to Kenya, Tanzania, the Democratic Republic of Congo, Burundi, Europe, South Africa, the Netherlands, Poland, Vietnam and China.

“We do export but not in big quantities. For example, in the Netherlands, the companies take between 200 kg and 500 kg. In the US, we had a company last year that took 300 kg.” Gatarayiha believes the export growth will pick up steadily and has had enquiries from Germany, the UK and US, asking for around five tonnes per month.

Cultivating outgrower relationships

>From the early days of Twihangire Cooperative to where Norelga finds itself today, the company remains focused on building good relationships with the farmers from whom it gets its supply. Norelga has its own 50 ha farm but supports the outgrowers with well-priced saplings when they establish a plantation, and collection hubs in four provinces to bring the harvested nuts to the factory in Kigali.

“We continue to work closely with the farmers. You can always find me in different areas of Rwanda organising the collection of the harvest and showing the farmers how they can better grow the macadamia,” says Gatarayiha.

Competition from the East

Norelga might have been one of the first commercial processors of macadamia in Rwanda but it is facing increasing competition from new entrants. For example, Japanese and Chinese companies have set up operations in the country. Norelga remains one of the few producers that is adding value before selling to the end customer.

“I was the promotor of macadamia in the country and a pioneer. But it isn’t called the gold nut for nothing; if someone realises he can get gold, he will come running,” says Gatarayiha.-Howwemadeitinafrica

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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