Ramesh Moochikal, the Chief Executive Officer of Africa Improved Foods, has shared that the company is working towards acquiring hundreds of millions in investments to support its growth throughout the continent, with a primary focus on shifting towards commercial food production.

Africa Improved Foods was founded as a joint effort between Royal DSM, a Dutch company, the Dutch development bank FMO, and the International Finance Corporation, which is the private sector arm of the World Bank. The company currently functions in Rwanda under the subsidiary AIF Rwanda, where the Rwandan government holds a 7% stake.

Currently, AIF’s clients mainly include the Rwandan government and various international organizations, such as the World Food Programme (WFP), Catholic Relief Services, and the Red Cross. These organizations incorporate AIF’s products in their initiatives across multiple nations, including Ethiopia, South Sudan, Uganda, and DRC. Moochikal notes that presently, only about 5-7% of AIF’s output is allocated for commercial sales.

As the company aspires to broaden its horizons, a shift in its operational framework is on the horizon.

“As we explore additional African markets – such as Ghana, Ethiopia, Nigeria, and Zambia, where consumer markets are much more developed, a significant segment of our operations will focus on consumer demands,”

states Moochikal. This transition will essentially reverse the existing model, with 70% of production directed towards commercial sales and 30% dedicated to humanitarian assistance.

Dissatisfaction with the aid sector

This evolution may be partially motivated by the loss of a vital client, the WFP, which halted purchases from AIF at the beginning of 2024. Moochikal candidly expresses his discontent, stressing that this has detrimental effects on African manufacturing.

“The irony lies in the fact that the most impoverished people in Africa were being fed by a factory in Belgium, relying on Belgian crops, subsidies, labor, and resources while contributing to carbon emissions to transport food to Africa. Why not utilize an African facility capable of producing food with local labor and resources?”

Despite this hurdle, Moochikal insists that AIF has maintained its commitments to out-growers and increased sales through alternative pathways. With fresh global funding for relief on the horizon, the WFP may resume its purchases in 2025.

As the organization advances in the commercial sector, AIF aims to become less reliant on individual clients. Moochikal emphasizes that, irrespective of the sales channel – commercial or humanitarian – their mission remains to deliver better nutrition at affordable prices to the most disadvantaged communities.

“Our pricing strategy will consistently be 30-40% lower than that of Cerelac, a leading infant cereal from Nestlé, for instance. Our aim is to reach those consumers who currently lack access to available products,”

he explains. In West Africa, where humanitarian assistance activities are less frequent, pursuing a commercial route will better fulfill this objective, he observes. AIF is also considering partnerships, similar to its collaboration in Ethiopia with Unilever, to enhance the nutritional value of the popular local dish Shiro.

“The format of our products will vary based on the country in which we are operating.”

Plans for expansion

Moochikal mentions that AIF is seeking around $20 million in debt and $120 million in equity to support its immediate expansion projects. This funding is set to be invested in the establishment of three new plants in Ghana, Zambia, and Ethiopia, each estimated to cost roughly $43 million. A $120 million plan for expansion into Nigeria is pending approval from a cautious board.

Moochikal expresses his full commitment. “I have informed them that if we aim to create the type of impact we aspire to in Africa, we must be present there,”

he affirms.

Among the three targeted countries for expansion, Moochikal identifies Ethiopia as the most prepared in terms of plans. “We currently have a project execution plan ready. If we secure funding tomorrow, we can kick off the project right away,” he reveals. “Ghana is in the pre-feasibility stage, while Zambia will be the last to proceed. The order of implementation will be Ghana first, then Ethiopia, followed by Zambia,” he adds. The selection of these countries was based on a variety of criteria set forth by AIF’s team in consultation with six experts well-versed in the continent’s market dynamics.

Ghana was selected for its strategic position as the manufacturing center of West Africa, its accessibility to Francophone countries, and its relatively weaker currency compared to the more stable CFA of its neighbors. Moreover, Ghana benefits from strong agricultural output and political stability, making it a solid foundation for investment. Moochikal cites Ethiopia as the second pick due to its significant potential, despite existing challenges. AIF has already formed a partnership with Unilever there to strengthen consumer distribution, an area that Moochikal admits is not AIF’s core competency. Similarly, in Zambia, AIF plans to collaborate with Trade Kings for distribution initiatives. “In these three countries, we’ve established partnerships, secured sourcing, and now we need to set up the plants to expand our presence,”

he states.

In Rwanda, Moochikal mentions that last year the company produced beyond its intended capacity. “The factory’s installed capacity is approximately 47,000 tonnes. Last year, we reached 64,000 tonnes without investing in any additional fixed assets. Whether it’s through efficiency, safety measures, machinery, or systems, I believe we can confidently claim to be leaders in our field.”

Collaboration with farmers

This achievement is also indicative of AIF’s positive relationships with farmers, a critical aspect for the success of an agro-based industry. Moochikal underscores AIF’s commitment to assisting farmers in enhancing both production and quality.

“When we started our operations in Rwanda ten years 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. We collaborated with 200 cooperatives, and today, just 1% of the maize is rejected,”

he notes.

For the agricultural sector’s success across Africa, Moochikal emphasizes the necessity for proactive support from both governmental and private sector players involved in agricultural production.

“Anyone purchasing commodities from these communities must take on the responsibility of guiding them through processes and educating them on effective agricultural methods. Only then can they flourish. If these communities prosper, so too will the agriculture sector in Africa,”

he asserts.

He stresses that policies alone are inadequate, especially given the looming challenges posed by climate change and related weather disruptions.

Engaging with investors

Moochikal feels hopeful about AIF’s endeavors to attract investors. So far, the company has received tentative commitments from seven investors, each willing to invest between $20 million and $30 million. While he acknowledges that these commitments are currently mere verbal agreements, AIF is also engaged in productive discussions with the Africa Export-Import Bank and the African Development Bank.

“Prior to my arrival, we were exclusively in talks with European development banks, which delivered limited outcomes. However, we are thrilled with the enthusiasm and dedication shown by AfDB and Afreximbank. Clearly, we align with their interests – children, women, agriculture, farming communities, and agro-processing,”

he comments.

If AIF’s investment campaign yields positive results, Moochikal firmly believes the company would be keen to become self-sufficient.

“Every organization eventually reaches a point where it needs a guiding hand. DSM has been an invaluable support, providing technology, backing, credentials, and expertise in food production. However, I believe the moment has come for commercially focused partners in Africa to spearhead our expansion. Connecting with long-term investors who can swiftly facilitate our growth may be more beneficial for us,”