“Afri-Nut aims to be a benchmark business that focuses on food safety, particularly in relation to aflatoxin control of peanuts produced for domestic, regional and international markets. It has the potential to have an impact on the health status of millions of people.”

The proposed inclusive business initiative

The commercial arm of NASFAM currently exports unprocessed groundnuts produced by smallholder members. They are sold to domestic and regional markets, and through TWIN and TWIN Trading, unprocessed Fairtrade peanuts are exported to Europe, including UK supermarkets. In Europe, raw kernels are currently traded through Liberation, an existing joint venture between TWIN and NASFAM. The new processing facilities of Afri-Nut will enable expansion into value added processed nut products including blanched peanuts,  roasted kernels, and peanut paste for peanut butter and for nutritional supplements. 

All partners are committed to Afri-Nut being a commercial success returning strong developmental benefits to farmers in Malawi.

The business of business: what are the commercial drivers?

Afri-Nut will be a specialised groundnut processing and distribution marketing business. In a sector that has suffered massive decline in exports and inadequate investment, this initiative creates a viable business thanks to the blend of commercial and development investors that have come together, bringing long experience in the sector, expertise and new finance, plus access to expanding markets. Moving beyond production of raw groundnuts into a range of value added products with higher profit margins will mark a significant shift up the value chain. The business plan anticipates reaching profitability and a modest return on capital employed in the short to medium term, and prospects for significant expansion thereafter.

An inclusive business: how does the business support development?

Afri-Nut will move Malawian smallholder organisations move up the value chain and expand the volume of Fairtrade and other value-added peanuts produced for international, regional and domestic markets.  Groundnuts are a key staple crop amongst smallholders in Malawi, providing a vital source of cash income and highly nutritious food for rural households. They are considered to be ‘women’s crop’- with women carrying out the majority of pre and post harvest activities. Participation of women as suppliers of groundnuts to Afri-Nut is a key indicator that will be tracked. 

Afri-Nut will make a particularly distinctive contribution to the agricultural sector by tackling the problem of aflatoxin contamination and thus increasing food safety. Aflatoxin is a carcinogen produced by a fungus that grows on crops as a result of poor pre and post harvest practices. There are various health risks associated with aflatoxin and the global disease burden linked to aflatoxin is estimated to cause up to 36 million DALYs  pa. The trade losses attributed to aflatoxin contamination are $1.2 billion globally and $450 million pa across Africa. Afri-Nut aims to be a benchmark business that focuses on food safety, particularly in relation to aflatoxin control of peanuts produced for domestic, regional and international markets. It has the potential to have an impact on the health status of millions of people.

Afri-Nut will sell ‘safe’ peanut paste to manufacturers of Ready to Use Therapeutic Food (RUTF) – an important treatment of malnutrition and in HIV Anti-retro Viral programmes – such as Valid Nutrition, a social enterprise based in Lilongwe. Demand in Africa is growing rapidly, but is constrained by lack of locally produced low aflatoxin groundnuts.

Afri-Nut will be able to play a coordination role to build efficiency into the peanut supply chain, providing other nut manufacturers reliable access to quality-assured supplies from small-holders, and bringing farmers into the  feedback loops with processors, manufacturers, distributors and consumers.

Support from the Business Innovation Facility

Support from the Business Innovation Facility aims to finalise the company's shareholder structure, recruit the two key senior positions, conduct a groundnut value chain analysis, develop KPIs and deliver a review of the first year's operations. 

Pursuing innovation and scale in Inclusive Business

Innovation in this project lies, firstly, in the blend of social and commercial investors that have come together, for the first time in Malawi, to establish and run a profitable agro-processing business.  The social investors aim to secure a profitable return which drives change in the sector to improve food standards, public health and farmer livelihoods.  The farmers’ association recognise that a commercially-structured profitable business will provide expanding market opportunities for Malawian producers. Commercial investors recognised that the sector, currently underperforming, provides a viable long-term business proposition.

Secondly, the project is leading the way in seeking to tackle aflatoxin and extend aflatoxin risk management from export market to the regional and domestic markets. Thirdly, Afri-nut will not just be processing nuts but developing a new role in supply chain coordination, facilitating communication and trading between players (producers, processors, other manufacturers, distributors and different types of consumers). Lessons learnt from the project on these innovative challenges, will be shared via the Business Innovation Facility. There is potential for impact at scale among: thousands of groundnut farmers in Malawi; many more thousands who consume domestically traded groundnuts at risk of aflatoxin; plus the potential boost to the provision of nutritional supplements to malnourished and HIV-positive people in several African countries.