What problem are we trying to tackle?
Agriculture is the backbone of the Rwandan economy, it generates more than 70% of the country’s export revenues, accounts for a third of GDP and engages close to 80% of the total population. Over 70% of young people aged 14-35 are employed in agriculture, yet two-thirds of youth in the sector are underemployed and working in positions with very low earning potential. The government and experts alike have stressed that agro-processing is the key to unleashing the full potential of Rwanda’s agricultural sector. However, at present the sub-sector remains very weak.
Major constraints include inadequate processing methods and standards, a lack of access to equipment and unsatisfactory marketing and packaging of products. The cost and complexity of turning agricultural products into high-quality processed products that can be sold in supermarkets and compete with imported products are insurmountable for young entrepreneurs. Value addition is, thus left to seasoned entrepreneurs with the backing of big investors, leaving the sub-sector largely underexploited.
To date, supermarkets offer mostly imported, premium products and a few poorly packaged local products. The problem extends beyond Rwanda. These challenges can be observed across the continent, which is a growing importer of processed foods. According to the World Bank, it imports nearly $400 million of processed fruit juices and canned fruits and vegetables. The irony is that many of the processed products are grown in Africa, shipped abroad for processing only to be returned as higher value products. There is also a demand for quality, fair trade and inclusive African products in Europe and the US, however the low quality and packaging of products remains a barrier for exporting processed goods. Consumers are willing to pay premium prices for imported products due to their superior processing and packaging. We want to assist young entrepreneurs in developing high-quality local food products that can compete with imported goods.
What is our solution?
We believe that a key ecosystem player is missing! In high-income countries, like the U.S., farmers as well as micro- and small entrepreneurs can contract a co-packer that can cost-effectively produce high quality products according to their specifications. The specialty food sector in the US is a booming sub-sector of food and beverage. Specialty foods are broadly defined as products that have limited distribution and a reputation for high quality. They typically have also focused on beautiful or unique packaging. Co-packers have enabled small players to enter the booming specialty food sector without the constraints of setting up their own certified manufacturing plant and distribution logistics. Co-packers also offer advice, guidance and a range of complementary services to support entrepreneurs and farmers successfully get their unique products to supermarkets and other outlets.
FreshBlends will be the first co-packer Rwanda; a one-stop service center that enables farmers, cooperatives and young entrepreneurs in Rwanda to access specialty food markets by offering a comprehensive support package consisting of a range of services. We will link clients to already existing services and provide in-house only those services that fill current gaps in the market. Every new client will receive a business-checkup to determine specific needs. From there, we will, together with clients, develop a premium product, create a brand (incl. logo, corporate identity and marketing materials), and link them to potential financing partners and retailers. Services are bundled into 3 basic support packages that are targeted to the specific needs of clients.
Where did this Idea come from?
The idea for the co-packer was inspired by our past experience with the Youth Trade Initiative, which supports young farmers and entrepreneurs gain access to premium markets through their partnerships with leading retailers like Whole Foods Market. Through Youth Trade, we had the opportunity to explore helping young farmers in Sierra Leone get into Whole Foods’ supermarkets. Our meetings with Whole Foods buyers in the US indicated a strong interest in stocking more products from African entrepreneurs, they also helped us understand what it would take to get into such markets and stay on the shelves.
We spent over a year researching the most effective and sustainable approach to achieve this goal, and discovered that most of the current solutions to value addition were not working. Many programs offered farmers inputs, machinery and training. However this is fixing the wrong problem! As long as farmers don‘t have access to markets, they cannot reap the benefits of increased productivity. Other programs add on processing machinery and more training but that just overwhelms the farmer. They now have to run their farm and a processing unit. When one factors in the cost and complexity of repairing and maintain machinery in the rural context, its easy to see why such programs often yield limited results.
We watched Youth Trade young entrepreneurs and farmers in the US get into Whole Foods within months once they had the right access to markets. Their advantage was that they could rely on a co-packer to package and process their product at an affordable cost. This is what was missing in the African countries we worked in! We chose Rwanda as a pilot country and are adapting the co-packer model to this context. Should we be successful here, we want to expand the solution across the continent.
Who are we?
FreshBlends is an initiative of Endeva and thus a part of our core internal activities. For nearly 10 years, Endeva and our dedicated network of experts around the world have worked on research and consultancy projects, as well as building ecosystems for inclusive business. Through past projects and independent research with farmers in Africa, and Rwanda in particular, we know that smallholder farmers lack access to premium local and international markets due to the poor quality of processing and packaging. We believe that our model offers a business solution to connect youth smallholder farmers to these markets.
The initiative was developed by a team within Endeva. As we moved closer to the piloting phase, we enhanced our team by building a connection to strong local partners, who can manage the day-to-day activities of FreshBlends. Bruce will operate the business in Kigali full-time, and Christian will develop the relevant partnerships in Germany and Rwanda with half of his time. The Endeva team in Berlin will maintain a regular role in providing strategic direction and communication with our partners.
Our multicultural team based in Rwanda and Germany brings over 25 years of multi-disciplinary knowledge and experience in several key areas:
- Creating economic opportunities for low-income youth through entrepreneurship
- Developing and implementing a challenge fund for youth entrepreneurs in West Africa
- Managing agro-processing plants in Rwanda
- Researching sustainable and inclusive agriculture
- Working closely with smallholder farmers in East and West Africa
- Supporting partner organisations in specific value chains
- Building relationships with key political and private actors in Rwanda’s agro processing sector, as well as international experts in co-packing
- corporate partnerships management
- starting and managing a business across borders
Where are we now and where do we want to go?
We’ve achieved a lot on our own, but now we need the support of others to continue our success. So far, we’ve:
- Conducted extensive research on the co-packer model in the US
- Conducted a two-month feasibility study in Rwanda to identify partners, research the market and speak with small holder farmers and young entrepreneurs
- Developed an initial business plan and financial model
- Officially registered as a local company in Rwanda
- Built a strong team with extensive experience in agri-business, in Rwanda and beyond
Currently, we’re seeking partners to provide the necessary financial and technical support to help us implement the pilot phase. If our solution works in Rwanda, we believe it can be adapted and replicated across Africa and beyond.
The Amplify program would be an excellent opportunity for us to take our idea to the next stage. Particularly, we would benefit from:
- Using a human centered design approach to guide us further adapting the co-packer model
- Design support to help us test parts of our model
- Seed funding to pilot the idea