Africa Improved Foods, a for-profit joint venture of the government of Rwanda and a consortium of development banks, is reducing reliance on foreign aid by bringing the production of relief foods into the local economy while maintaining European level food safety standards. Their products, designed for children and mothers, are made using locally grown maize and soya, which are blended with a nutrient mix to address the physical and cognitive ‘stunting’ that results from malnutrition. The factory makes a million servings a day and pumps around $20 million into the local economy every year.
Results & Impact
Africa Improved Foods currently produces one million servings a day. The factory itself has created 300 jobs, and they estimate 500 have been produced elsewhere in the supply chain as a result of them. They also work with 9,000 smallholder farmers, whose yields have increased by 20%. Between 60-70% of their spending goes back into the local economy, which amounts to around $20 million a year. By 2025, they aim to have reduced stunting by 16% and to have had more than a billion dollars’ impact on Rwanda’s economy.
Africa Improved Foods, Government of Rwanda, and a consortium of Royal DSM, the Dutch development bank FMO, CDC Group plc, and the International Finance Centre
Africa Improved Foods (AIF) is a joint venture of the Rwandan government, various development banks and the multinational agricultural business Royal DSM. The government is a shareholder and helped fund the $60 million factory alongside the development banks. Royal DSM ensures that the products meet European food safety standards. The products were developed to be nutritious, cheap and made with locally grown crops. AIF works with 9,000 smallholder farmers who supply them with maize and soy; other ingredients are currently imported. The factory’s products are principally sold to the UN World Food Programme and national governments in Africa, including Rwanda, Somalia and South Sudan.
Children, low-income people
Cost & Value
It cost AIF $60 million to build the factory.
Running since November 2016
The factory was designed and is run to meet European-level food safety standards and regulations. For Rwandan contractors and employees who are not used to such standards, this culture change is an ongoing challenge. Similarly, as they are trying to source raw materials for their products locally, they have encountered problems sourcing steady supply chains. Severe droughts and pest invasions mean that there is great variability in yield that must be anticipated and adjusted to keep the factory running at full capacity.
They are currently looking at expanding into Ethiopia or elsewhere in East Africa.
Africa Improved Foods (AIF), a for-profit, public-private partnership of the Dutch nutritional company DSM, the Rwandan government and a range of development banks, has built a factory in Rwanda to tackle malnutrition in East Africa. Since November 2016 it has been producing a million servings of cheap, nutritious food every day.
Malnutrition is severe across East Africa and often results in “stunting,” which impairs both physical and cognitive development. Stunting affects 40% of children in East Africa.
The aims of AIF are two-fold: they want to reduce stunting while also bringing the business of food production back into the local economy. They use locally grown crops in factories based in Africa, then sell their products to the World Food Programme and national governments.
“The manufacturing for the World Food Programme’s relief foods has always been done outside of Africa,” said Amar Ali, CEO of AIF. “That’s hundreds of millions of dollars of food every year manufactured in Europe and America. Our first aim was to bring that money into the local economy: Africa feeding Africa. The second is related to reducing malnutrition and stunting—and the critical period for this is the first 1,000 days of life.”
AIF specifically produces foods aimed at addressing malnutrition in that early window of a child’s life. They work with 9,000 local smallholder farmers who produce maize and soya that they mix with nutrients, soya milk and milk powder to create cheap and nutritious products. In the process, they have increased those farmers’ yields by 20%.
By buying locally, they are having a substantial impact on the Rwandan economy. They use 20,000 tonnes of maize and 11,000 tonnes of soy every year. Overall, 60-70% of their spend goes back into the local economy, which equates to around $20 million a year.
In addition to that, by 2025 they aim to have reduced stunting by 16%. Coupling the economic boost from this workforce fulfilling its potential with the direct spending in the local economy, AIF estimates that by 2025 it will have had more than a billion dollars’ impact in Rwanda. As the country’s GDP stands at $8.5 billion, that is a significant amount.
“We function as a flagship of what can be done,” Ali said. “[Our partner] Royal DSM places a very high standard of quality and hygiene, and we take those standards seriously. We’ve raised the standard for the rest of the region.”
Still, building a factory with European-level safety regulations in a country unaccustomed to them was a challenge.
“Building and running a plant of this quality and size, particularly with these safety standards, is a huge challenge,” said Ali. “We were dealing with contractors who have not encountered these kinds of standards before: things like wearing goggles when you’re welding or wearing harnesses when you’re on scaffolding.”
“Raw materials supplies were another challenge. There’s been a big drought in East Africa this last year which has caused lots of famines, as well as pest attacks. It’s been a very unstable year from that perspective in this region.”
Nonetheless, Rwanda was a good place to set up shop. “It’s stable, it’s a business-friendly environment, and there’s relatively little corruption,” said Ali.
It’s also surrounded by potential markets. Their relief food is currently going out to South Sudan, Somalia, and the Democratic Republic of Congo. There are plans to replicate this model across Africa, too.
For DSM and other stakeholders, it’s a new way to bring both aid and development to Rwanda in the same package: they fund the construction of a factory, and then a model emerges that is economically self-sustaining and locally supported: “Africa feeding Africa.”
(Picture credit: Pexels)