DailySun
Ramesh Moochikal, CEO of Africa Improved Foods, has revealed the company’s ambition to raise hundreds of millions in investments aimed at facilitating its growth across the continent, with a focus on shifting towards commercial food production.
Africa Improved Foods was founded through a collaboration involving Royal DSM from the Netherlands, the Dutch development bank FMO, and the International Finance Corporation, which is the private sector arm of the World Bank. The company currently operates in Rwanda under its subsidiary AIF Rwanda, with the Rwandan government retaining 7% ownership.
Currently, AIF’s main customers are the Rwandan government and various international organizations such as the World Food Programme (WFP), Catholic Relief Services, and the Red Cross. These entities make use of AIF’s products in programs across several nations, including Ethiopia, South Sudan, Uganda, and DRC. Moochikal mentions that only about 5-7% of AIF’s production is currently directed towards commercial channels.
As the company aims for further expansion, it plans to transform its operational model.
“As we explore additional African markets – such as Ghana, Ethiopia, Nigeria, and Zambia, where the consumer markets are considerably more developed, a significant portion of our business will focus on consumer needs,”
states Moochikal. This adjustment will essentially flip the current model, with 70% of production aimed at commercial distribution and 30% reserved for humanitarian relief.
Concerns Regarding the Aid Sector
This change may stem in part from the loss of a vital client, the WFP, which stopped purchasing from AIF at the beginning of 2024. Moochikal openly shares his frustration, believing it adversely affects African manufacturing.
“Ironically, the poorest people in Africa were receiving food from a factory in Belgium, which relied on Belgian crops, subsidies, labor, and resources while contributing to carbon emissions to transport the food to Africa. Why not utilize an African facility capable of producing food using local resources and labor?”
Despite this challenge, Moochikal reassures that AIF has upheld its commitments to out-growers and has boosted sales through alternative channels. With new global funding for relief anticipated, the WFP may begin purchasing again in 2025.
As the company moves towards commercial expansion, AIF aims to reduce its reliance on specific buyers. Moochikal emphasizes that regardless of the distribution channel—commercial or humanitarian—their mission is to deliver improved nutrition at an accessible price to the most underprivileged communities.
“Our prices will consistently be 30-40% lower than leading products like Cerelac from Nestlé, for instance. Our goal is to cater to consumers who are unable to access existing offerings,”
he elaborates. In West Africa, where humanitarian aid activities are less frequent, the commercial route will be more effective in achieving this goal, he notes. AIF is also investigating partnerships, similar to its collaboration with Unilever in Ethiopia to fortify the local staple Shiro.
“Our product format will adapt to the specific country in which we operate.”
Plans for Expansion
Moochikal mentions that AIF is seeking approximately $20 million in debt and $120 million in equity for its immediate expansion plans. This funding will be directed towards establishing three new plants in Ghana, Zambia, and Ethiopia, each slated to cost around $43 million. A $120 million initiative to expand into Nigeria is pending approval from a cautious board.
Moochikal himself is entirely dedicated to this mission. “I have made it clear that if we want to create the kind of impact we seek in Africa, we need to be present,”
he asserts.
Among the three countries identified for expansion, Moochikal sees Ethiopia as the most advanced regarding plans. “We already have a project execution plan in place. If we secure funding tomorrow, we can commence immediately,” he reveals. “Ghana is currently in the pre-feasibility phase, while Zambia will follow last. The sequence will be Ghana, Ethiopia, and then Zambia,” he adds. The selection of these countries was based on various criteria as determined by AIF’s team in consultation with six experts familiar with the market dynamics in the region.
Ghana was selected for its position as the manufacturing hub of West Africa, strategically located among Francophone nations, and for its weaker currency compared to the more stable CFA of neighboring countries. Furthermore, Ghana has strong agricultural output and political stability, making it a solid foundation. Moochikal identifies Ethiopia as the second choice due to its significance, despite existing challenges. AIF has already partnered with Unilever there to bolster consumer distribution, an area Moochikal acknowledges is not AIF’s core competency. Similarly, in Zambia, AIF plans to collaborate with Trade Kings for distribution. “In each of these three countries, we’ve formed partnerships, secured sourcing, and now we need to set up the plants to expand our footprint,”
he states.
In Rwanda, Moochikal reports that last year the company exceeded its production capacity. “The factory’s installed capacity is around 47,000 tonnes. Last year, we managed to produce 64,000 tonnes without any new fixed asset investments. I believe we can justifiably claim to be front-runners in our field in terms of efficiency, safety records, machinery, and systems,”
Collaboration with Farmers
This success also illustrates AIF’s strong relationships with farmers, a vital element for the success of an agro-based industry. Moochikal emphasizes AIF’s dedication to aiding farmers in improving both production and quality.
“When we began our operations in Rwanda a decade ago, 98% of the maize supplied to our factory was rejected due to aflatoxin, a significant issue for African crops resulting from inadequate post-harvest practices. Through collaboration with 200 cooperatives, we have now reduced that figure to merely 1%,”
he notes.
For the agricultural sector to flourish across the continent, Moochikal stresses the need for robust support from both governments and private sector stakeholders involved in agricultural production.
“Anyone purchasing commodities from these communities must take on the responsibility of guiding them through processes and educating them on optimal agricultural practices. Only then can they prosper. If these communities do well, so will African agriculture,”
he asserts.
He stresses that policies alone won’t suffice, especially in light of looming challenges from climate change and related weather events.
Engaging with Investors
Moochikal is hopeful about AIF’s endeavors to attract investors. To date, the company has received tentative commitments from seven investors, each pledging between $20 million and $30 million. While he acknowledges that these commitments are currently only verbal agreements, AIF is also engaged in productive discussions with the Africa Export-Import Bank and the African Development Bank.
“Before my arrival, we were solely interacting with European development banks, which yielded minimal results. However, we are optimistic about the enthusiasm and dedication expressed by AfDB and Afreximbank. Clearly, we align with their criteria – focusing on children, women, agriculture, farming communities, and agro-processing,”
he notes.
If AIF’s investment campaign proves successful, Moochikal asserts that the company would be eager to thrive independently.
“Every organization reaches a point in its development where it requires a parent. DSM has been an invaluable guiding force, offering technology, support, credentials, and expertise in food production. However, I believe the time has come for commercial-minded partners in Africa to spearhead our growth. It may be more beneficial for us to connect with long-term investors who can accelerate our expansion,”
