Entrepreneurship Zone: 07 September 2021 :: Malawi: Entrepreneur capitalises on agro-processing opportunities

Tue Sep 7 08:01:15 CAT 2021

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Entrepreneurship Zone: 07 September  2021 ::  Malawi: Entrepreneur capitalises on agro-processing opportunities

Victoria Msowoya Mwafulirwa started a catering business when her position at a uranium mining company in Malawi was made redundant. Struggling to find certain quality, healthy ingredients while running the kitchen of a barracks, she spotted a gap in the market. In 2015, she established Homes Industries in the town of Karonga, a company that processes sunflower seeds, groundnuts and rice.

Identifying the opportunity

Mwafulirwa’s family had always grown their own produce and processed this into the finished products they required. In the three years she ran her catering business, Mwafulirwa continued doing this; processing raw materials into the ingredients she needed to ensure quality and cut costs.

“I realised if I was unable to find quality flour and oil, there would be other people also looking for it,” she says. The apparent gap in the market, along with the low level of value addition to the crops grown locally – which often resulted in post-harvest waste – made for a compelling business idea.

“There was no point for the local farmers to produce all this quality food but then not make anything from it. I wanted to add value to the food and to the farmers.”

The product lines

Homes Industries started in 2015 with the processing of sunflower seeds. It used the seed for oil production and sold the by-product – sunflower cake – as livestock feed. Six months later, the company began processing groundnuts. Led by demand from existing customers who made enquiries about the quality rice grown in the Karonga area, white and brown rice were added in 2017.

Groundnut flour produced by Homes Industries.

Early challenges

“Sunflower and groundnut processing is critical to the sustainability of the business but we needed a cash flow boost. As this is a premium rice-production area, it made sense to add the rice to strengthen our cash flow,” explains Mwafulirwa.

“The initial stage was a nightmare; it was painful,” she recalls.

Homes Industries has been self-funded from the outset. Using what finances she had, Mwafulirwa commissioned the sunflower seed harvest from farmers. However, when it was ready, she did not have the cash flow to pay the farmers who had been promised their entire harvest would be bought. “You can imagine the outrage in that community. It was a setback but I did not allow it to bring me down.”

The company set up a schedule for payment with the farmers, negotiating the terms to take the sunflowers seeds on credit for processing. As the oil was sold and revenue trickled in, those payments were made.

Setting up the processing facility

Mwafulirwa had some money saved up when she closed her catering business. This helped to fund the initial equipment, such as an oil expeller, oil filter and peanut grinder.

The processing facility is housed in a building belonging to her husband, whom she convinced to let her use for the business and make it fit-for-purpose.

“The renovation was a big job but the upside was that I did not have to pay rent, only the utility bills. Whatever money is made from sales is still reinvested into the business; we add to the equipment and hardware needed, in order of priority,” she says.

Building a customer base

The company’s first customers were vendors in the community, including some of the supplier farmers, but Mwafulirwa soon realised she would need to empower herself to build the business. She enrolled for a 12-month course with the Graça Machel Trust and was taught the basics of business development.

People in this network became her first batch of external clients, from Blantyre, Lilongwe and Mzuzu. “The networking was phenomenal and my client base outside of Karonga grew. I started receiving larger individual orders,” she remembers.

A Homes Industries employee seals rice bags.

Gradually the client base for Homes Industries’ sunflower oil and processed groundnuts grew, and local supermarkets began ordering. Later, the rice products were added, responding to market demand. “We are currently in negotiations with the larger supermarkets in Lilongwe and Blantyre, but we are already on the shelves in some smaller outlets in Lilongwe,” comments Mwafulirwa.

Getting the appropriate certifications from the Malawi Bureau of Standards has helped with these negotiations. The next step is to address the packaging of the products to ensure Homes Industries’ products are not only competitively positioned in terms of quality and price, but also look good on the shelf.

Securing supply

In the first year, Homes Industries joined forces with around 500 smallholder farmers. This has grown to over 2,000 currently.

Accessing the export market

Homes Industries had interest from other countries for its products and has just concluded its first rice export to the US.

“It is a very exciting time for us,” says Mwafulirwa. The company has also been able to export some groundnuts and groundnut flour to South Africa and hopes to increase revenue from these sales channels in the future.

Both the US and South African clients reached out to the company after spotting its Facebook page and website. However, these transactions did not materialise overnight. “It was a long process. The US talks kicked off in 2020, but the export itself happened only recently.”-Howwemadeitinafrica

Victoria Msowoya Mwafulirwa

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