This is the first interview in our Malawi series on intra / entrepreneurs in inclusive business: many thanks to Navin Kumar for sharing his time and his insights!
Organisation: Universal Industries Ltd (UIL)
In Malawi since: 2005
Relation to BIF: Client for BIF cost sharing project, Universal Industries High Quality Cassava Flour (HQCF) Production.
What do you do? How did you end up doing what you do? I come from a background of agronomy and specifically coffee farming in India. I originally came to Africa because I wanted to gain experience in coffee production on all three continents – so I still have South America to go! I am currently the General Manager of Universal Farming and Milling, the agro-processing business unit within UIL. Our mandate is “adding value to Malawian crops from the soil to the supermarket shelf” and we focus on four crops, including cassava. I also manage the Kamba Snacks brand for the company.
So you have been at UIL for quite a few years – why is it a good place to work? How has the company enabled the innovative development of products such as HQCF? Dinshi Amin, our Chairman, is a real entrepreneur and he gives staff the freedom to look around and explore the potential of new ideas, although there is also high pressure to deliver results. He leads the culture of the company and is a dynamic person who is willing to take risks as long as they are calculated. This environment allows us to experiment with innovative projects. For example, we developed an aeroponics system for potato seed multiplication in partnership with the International Potato Centre.
What are the main challenges for your business in Malawi? We have identified five key challenges: access to FOREX; an enabling environment which allows our manufacturing industries to be competitive, particularly in the export market; access to venture capital; technology transfer and corruption in the operating environment. UIL was honoured recently to receive a visit from the British Secretary of State for International Development. He was very serious about understanding the difficulties the private sector in Malawi face and identifying ways in which the UK could help.
How do you think Universal contributes to improvement of economic welfare of the people at the “base of the pyramid” in Malawi? Universal as a whole employs 1,657 staff. UFML employ over 600 people, of whom 570 are non-managerial grades, and are employed in a rural area at Njuli where the estate and factory are based. By siting our production out of town we make a major contribution to the micro-economy both through employment and by the knock on effects of having industry there. Despite the recent economic difficulties we are pleased to have been able to avoid laying people off or closing our production lines and instead have managed to keep going by reducing costs elsewhere. We have also increased wages following the recent currency devaluation.
The BIF project is helping UFML to source cassava from over 2,500 smallholders within a year as we believe that this is both commercially viable and also important to support local communities by including them in our supply chains; we hope this number will increase to several thousand as the product takes off. We also source Irish potatoes from 850 smallholders.
What is the most important thing you have found to enable successful inclusive business? The relationships with local communities are critical. We meet with the local chiefs quarterly and believe that a participatory approach in business. We consult them about what we are doing and their inputs are part of our decision making process, e.g. on pricing. We also send teams to visit farmers and NGOs with whom we are working.
What role do you think donors should play with respect to the private sector? What has been you experience with donor involvement at UFML previously? Donors can be particularly helpful in enabling technology transfer and facilitating access to venture capital and markets. NGOs can be useful in organising farmer groups. Our experiences have generally been good, but there have been some bad ones too. I have realised that you need to look for partners who are systematic and professional in their approach. An NGO partner should be able to demonstrate that they have detailed information about the farmers they are working with and have a strong team who are fully engaged in fieldwork.
Do you see donor support to individual companies giving an unfair advantage / distorting the market? I have not seen that happen in Malawi. For example, the cassava project was driven by the Gates funded C:AVA initiative (http://cava.nri.org/) and five firms were involved initially. Now is it just UFML taking the idea from concept to implementation, but not to the detriment of other companies; they chose not to go with it at this time.
Why did you see BIF as a good fit to support your project? We found BIF easy to work with and quick to respond. We needed an independent look at the market as well as support to develop the supply chain with the smallholders. Yes there was paperwork involved but I think that’s to be expected when you are getting financial support!
What issues have you faced in accessing soft (donor) funding? We had a bad experience with one particular fund when they suddenly stopped communicating and after we had completed application forms and been told we had got through to the next round, so we had wasted our time. Generally we have had to partner with non-commercial partners to access funds as many donors will not deal directly with the private sector. For example, we were able to access aid funding from Irish Aid as a result of our collaboration with the International Potato Centre.
Do you think the consultancy element of the BIF approach is a good one or would you prefer all the funding to be in the form of a grant? We found the consultancy element of BIF to be very beneficial. We would not have undertaken the work on key performance indicators without BIF’s suggestion and it has proved a great example of how we learned something new that otherwise would not have been done. We have been very happy with the BIF support – the only thing I think I would change would be to have had a kick off meeting at the start of the project to ensure everyone understood the activities and timeline for the work.
Is there a need for an inclusive business community or do businesses in your country operate effectively without much knowledge sharing? There is a lot of networking in Malawi between those at senior level in business through personal networks. However there are definitely silos and some fierce protection of information where companies are competing for resources. People are happy to share information about business processes and technology but not on markets and supply chains. The recent WALA-lead initiative (a large food security donor programme: http://www.acdivoca.org/site/ID/malawi-WALA) for market fairs, introducing the private sector directly to farmers is a good idea. It cuts out the traders who otherwise take a large share of the farmers’ profit and also promotes information sharing.
What do you recommend to other entrepreneurs who want to set up/ develop/ implement an inclusive business idea in Malawi? Partnerships are critical and roles in these partnerships need to be clearly defined. When working with smallholder farmers, you need to be clear from the outset what you need and there needs to be a mechanism to have sustained contact. A good foundation needs to be laid and then you need patience and perseverance to wait for results, and that normally takes several years.
Where do you see your business/ yourself in the next ten years? I see UFML as a leader in innovation in agri-business in Malawi and also one of the largest manufacturers in the country. It also makes sense for me to stay here - the recent changes in the business environment mean that we have very positive projections for the future!