Young entrepreneur builds manufacturing empire from bananas

The manufacturing sector has been on a downward trend, figures from the Kenya National Bureau of Statistics (KNBS) have shown.

The numbers are not necessarily an indicator that the sector is on its death bed, but that players may be running out of ideas. Erick Muthomi, the 28-year-old CEO of Stawi Food and Fruits, is determined to lead the way in getting the sector to put out more innovative products and boost growth.

Kenyans are today more conscious of their health than at any other time, and Mr Muthomi is well aware of this. An idea around this began bubbling in his mind back when he was in law school. He figured he could build a business around health and the fact that in his hometown of Meru, banana farmers were getting short-changed.

“I went back to school and studied business management, and right after graduation in 2010, I wrote a business plan and applied for funding. I got it and in 2011, I started Stawi Foods,” he said, adding that Stawi is borrowed from the Swahili word for prosperity and growth.

His plans were ambitious, but he felt he had to help banana farmers.

“The motivation behind Stawi was to provide a market for small-scale farmers and increase the shelf life of bananas, which would rot in farms, especially those belonging to farmers who could not reach the collection centres set up along the road on market days,” he said.

Muthomi also wanted to provide employment opportunities for the youth.

With assistance from the Ministry of Agriculture in late 2010, he was able to access resources that turned his ideas into a business.

“I had developed a concept of what I wanted to do, which was banana processing. After six months of setting up, I went back to Meru where I teamed up with local farmers,” he said.

Big clients

Muthomi’s firm leased property in the area and started out buying bananas from farmers, which would then be processed and packaged into banana flour.

In 2012, Stawi debuted the flour in the market. It is made from processed green bananas and is gluten free, nutritious and can be used to make baby food, porridge, baked foods and soups. The product is distributed across major supermarkets in the country.

“Nakumatt Supermarket was our first big client, and then Uchumi, Chandarana as well as several mid-sized accounts,” he said.

With the growth and success of his business idea, Muthomi won several entrepreneurship awards that came with additional funding. With the cash, he bought more equipment, hired more people and moved Stawi to Nairobi, setting up a plant in Ruaraka.

The company also diversified its portfolio and introduced porridge mixes for children and adults.

For his efforts to improve smallholders’ earnings, Muthomi got into the Forbes 2013 list of top 30 under 30 African entrepreneurs.

But it has not all been smooth sailing, and the start-up challenges were very real, Muthomi said.

“It took time to set up, get capital and get the business to be profitable.”

Sourcing for raw materials locally has also been very expensive, he said, with Uganda, for instance, being a cheaper market for some products than Kenya.

“One must also consider price fluctuations, seasonal changes and the cost of outsourcing equipment. It’s a challenging business to be in and it’s not the most glamorous, but once you tap into the manufacturing industry, the possibilities for success are endless,” Muthomi said.

He tries to influence change in the banana sector by buying raw fruit from local farmers at guaranteed prices to process and package as banana flour.

Stawi is also always looking for ways to improve business processes for more efficient production and distribution.

“We have been able to get support, particularly through exhibitions like Gulfood Manufacturing, held annually in Dubai,” Muthomi said.

The exhibition is a sector-specific trade fair for ingredients, processing, packaging and food logistics providers in the food and beverage industry in the Middle East, Africa and Far East.

Regional growth

The company’s future plans?

“Once we understand the regional market, we want to recruit distributors and suppliers who will ensure wider market outreach,” Muthomi said, adding that Stawi is planning to target healthcare facilities to push its product line and enhance awareness of its nutritional benefits.

“My goal is to have people associate Stawi’s current products — and our future products in the next five years — with healthy food.”

On the supplies side, Muthomi said the company is keen to be known to strike fair payment terms with farmers.

“We want to practise fair sourcing from local farmers, and support them with inputs, training and capacity building because we want them to be a part of the business since we need them to supply raw materials,” he said.

His vision is to see Stawi become a pan-African industry, similar in size to the Swiss food and beverage firm Nestlé, or British-Dutch consumer goods firm Unilever.

“We see the opportunity in Africa and we hope to build on that strength and prosper. We hope to be in several African markets in 10 years.”

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