Entrepreneurship Zone: 03 March 2025 : Selling chicken in Uganda: Investor sees gap to formalise the low-income market

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Entrepreneurship Zone: 03 March 2025 :  Selling chicken in Uganda: Investor
sees gap to formalise the low-income market

 


 

 


 <https://www.firstcapitalbank.co.zw/> 

 


 

 


 

 



David Wangolo, investment manager at Pearl Capital Partners

 

The Yield Uganda Investment Fund recently announced an investment of $1.8
million in Sekajja Agro Farms (SAF), a Ugandan poultry business that
operates a commercial chicken farm and abattoir as well as a chicken feed
manufacturing unit. Jeanette Clark spoke to David Wangolo, investment
manager at Pearl Capital Partners – which manages the Yield Uganda
Investment Fund – about opportunities in East Africa’s poultry industry.


Why are you enthusiastic about the poultry industry in Uganda?


There is a definite market for cheaper protein in Uganda and the region.
Poultry is the cheapest to produce, for two reasons. Firstly, the time to
raise poultry at a broiler farm for meat processing is short, only five to
six weeks. Secondly, the manufacture of quality poultry feed in Uganda is
not expensive because of easy access to affordably priced maize.

For the Yield Uganda Investment Fund, the key consideration for this
investment was to improve access to affordable, quality protein for the
Ugandan population.


What will the funding be used for?


With this investment, SAF will be able to execute on its expansion plans to
become a fully vertically integrated company involved in the production of
feed and raising broiler chickens for processing, as well as engaging with
smallholder suppliers. It will also improve the company’s slaughter
facilities, cold storage facilities and distribution.

We will build a new feed mill to produce quality pelleted feeds and plan to
set up additional poultry shades to increase volumes. Expansion through more
sites helps with biosecurity issues as chicken-rearing should be managed
with safe distances to reduce farm-to-farm contamination risk.

We will also install a larger modern and automated abattoir and improve the
cold chain system, including additional trucks and blast freezers. With
proper cold chain equipment and facilities, SAF will be able to hold on to
its inventory a bit longer and this will be a game-changer. In the absence
of proper cold rooms, producers of poultry for meat often have to increase
the period that they feed the chickens before slaughter until the customers
are ready to purchase. With these cold-storage facilities in place, we can
manage the inventory to market and ensure better profits.

Ultimately, we are increasing SAF’s production and processing capabilities
four-fold.

We will also grow the footprint of SAF’s Abbas Chicken branded retail
outlets.


How soon will SAF be able to increase production?


The commissioning of all the buildings will take approximately six months
and we hope to start producing at the level the investment demands within a
year.



A selection of products produced by SAF under the Abbas Chicken brand.

 

With the short turnaround time required for rearing poultry for meat, it
will be important to have our market penetration sorted out and new
distribution networks in place. SAF has its own distribution network –
including the branded retail outlets, agents and direct supply – and we will
build on that in low-income areas to ensure we can sell poultry products
under the Abbas Chicken brand to this segment of the population.

On the B2B end, we will be supplying to catering companies, for example.

If we start moving into the higher income segment, we might consider
developing a specific brand for this market, but, at the moment, our primary
goal is to serve the lower-income segments.


Tell us more about the potential you see for the new feed mill.


The feed mill will supply enough for SAF’s production, as well as for
smallholder poultry producers. We are an impact fund, and the smallholders
are an important element of our journey. Having the feed mill to provide
them with quality pelleted feed for the chicks, will also ensure supply for
us.

Uganda is blessed with two harvest seasons for grain and there is very
little competition between animal and human consumption for the crop. We
will source raw materials such as maize, soya and silverfish locally, but
some of the premixes or supplements we will have to import.


Do you see opportunities for export into the wider East African region?


Yes. Uganda is perfectly situated to supply food to the region and
neighbouring countries that cannot support themselves in terms of poultry
from domestic production. We are looking at eastern DRC, South Sudan and
northern Tanzania specifically.

Many of the large corporates in the region, like mines, hotels and catering
service companies, source from as far as Brazil.


What are some of the challenges the poultry industry faces in Uganda?


For SAF, a challenge would be to convert an informal market into a formal
market for processed poultry. Almost 80% of poultry products are informally
consumed, where customers buy live birds to slaughter themselves. That is
our main competition.

For the industry as a whole, a challenge would be the supply of day-old
chicks. There is a lack of breeding facilities to increase this supply;
fertilised eggs are currently mostly imported and hatched locally. There are
a few local suppliers and they have been hard hit by Covid-19.

Another challenge that a vertically integrated business would be able to
address is sourcing consistent high-quality feed. However, we will have to
continue monitoring the quality of raw materials like maize to make certain
there is no contamination or infection that happens post-harvest before it
gets to our feed mill.


Would SAF ever consider going into the production of eggs as well?


There are other players in the production of eggs; it is a different
economic cycle with a longer turn-around time. There are certainly
opportunities and through SAF’s distribution network, we retail the eggs the
farmers bring us, but we will not focus on producing them directly.

 

—Howwemadeitinafrica

 

 


 


 


 

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