Ramesh Moochikal, the CEO of Africa Improved Foods, has revealed that the company plans to secure hundreds of millions in investments to support its growth across the continent, with a focus on transitioning to commercial food production.
Africa Improved Foods was formed through a collaboration between Royal DSM from the Netherlands, the Dutch development bank FMO, and the International Finance Corporation, the private sector arm of the World Bank. The company currently operates in Rwanda under the subsidiary AIF Rwanda, which sees the Rwandan government holding a 7% stake.
Currently, the primary clients of the company include the Rwandan government and various international organizations such as the World Food Programme (WFP), Catholic Relief Services, and the Red Cross. These entities use AIF’s products in initiatives across multiple nations, including Ethiopia, South Sudan, Uganda, and the DRC. Moochikal mentions that at this time, only around 5-7% of AIF’s production is geared toward commercial distribution.
As the company seeks to grow, it is set to change its operational model.
“As we enter new African markets – namely Ghana, Ethiopia, Nigeria, and Zambia, where consumer markets are notably more developed, a significant part of our business will be directed towards consumer demands,”
Moochikal states. This transformation will flip the current structure, with 70% of production aimed at commercial distribution and 30% focused on humanitarian support.
Dissatisfaction with the aid sector
This shift may be influenced in part by the loss of an important client, the WFP, which stopped purchasing from AIF at the beginning of 2024. Moochikal candidly shares his frustration, as he believes this undermines African manufacturing.
“It’s ironic that the poorest people in Africa were receiving food from a factory in Belgium, relying on Belgian crops, subsidies, labor, and assets while contributing to carbon emissions to transport food to Africa. Why not leverage an African facility that can utilize local labor and crops?”
Despite this challenge, Moochikal insists that AIF has kept its commitments to out-growers and has increased sales through other channels. With new global funding for relief on the horizon, the WFP may resume its purchases by 2025.
As the company progresses commercially, AIF aims to reduce its dependence on individual buyers. Moochikal highlights that, whether through commercial or humanitarian channels, their mission remains focused on providing better nutrition at affordable prices to the most marginalized populations.
“Our prices will consistently be 30-40% lower than those of Cerelac, a leading infant cereal from Nestlé, for example. Our target is to reach consumers who lack access to existing products,”
he explains. In West Africa, where humanitarian assistance is less common, the commercial route will be more effective in meeting this goal, he notes. AIF is also pursuing partnerships, similar to its collaboration in Ethiopia with Unilever to enrich the popular local staple Shiro.
“The format of our products will vary based on the specific country we operate in.”
Plans for expansion
Moochikal notes that AIF is seeking approximately $20 million in debt and $120 million in equity for its immediate expansion plans. These funds will be allocated for establishing three new plants in Ghana, Zambia, and Ethiopia, each estimated to cost around $43 million. A $120 million initiative to expand into Nigeria is pending approval from a cautious board.
Moochikal himself is fully dedicated. “I’ve communicated to them that if we want to make the impact we strive for in Africa, we need to establish our presence there,”
he asserts.
Among the three targeted countries for expansion, Moochikal identifies Ethiopia as the most prepared in terms of actionable plans. “We currently have a project execution plan ready. If we secure funding tomorrow, we can commence the project right away,” he reveals. “Ghana is in the pre-feasibility stage, while Zambia will be the final country to proceed. The timeline will be Ghana, followed by Ethiopia, and then Zambia,” he adds. The choice of these countries was based on various factors, as determined by AIF’s team in collaboration with six experts knowledgeable about the continent’s market dynamics.
Ghana was selected for its role as West Africa’s manufacturing hub, strategically located among Francophone countries and featuring a comparatively weaker currency than the more stable CFA of its neighbors. Additionally, Ghana has robust agricultural outputs and political stability, making it a solid foundation. Moochikal regards Ethiopia as the second choice due to its significance, despite its challenges. AIF has already partnered with Unilever there to ensure effective consumer distribution, an area that Moochikal acknowledges is not AIF’s strength. Similarly, in Zambia, AIF intends to collaborate with Trade Kings for distribution efforts. “Across these three nations, we’ve formed partnerships, secured sourcing, and now need to establish the plants to strengthen our presence,”
he states.
In Rwanda, Moochikal reports that last year the company produced beyond its capacity. “The factory’s installed capacity is roughly 47,000 tonnes. Last year, we produced 64,000 tonnes without any increase in fixed assets. Through enhanced efficiency, safety, machinery, and systems, I believe we can confidently assert that we are leaders in our sector.”
Collaboration with farmers
This success reflects AIF’s strong relationships with farmers, which are vital for the success of an agro-based industry. Moochikal emphasizes AIF’s commitment to assisting farmers in improving both production and quality.
“When we started operations in Rwanda a decade ago, 98% of the maize supplied to our factory was rejected due to aflatoxin, a significant issue for African crops stemming from inadequate post-harvest practices. We collaborated with 200 cooperatives, and today only 1% of the maize is rejected,”
he notes.
For the agricultural sector’s success throughout the continent, Moochikal stresses the importance of committed support from both governments and private sector players invested in agricultural production.
“Anyone purchasing commodities from these communities must take on the responsibility of guiding them through processes and educating them on good agricultural practices. Only then can they thrive. When these communities flourish, so will African agriculture,”
he asserts.
He stresses that policies alone are not enough, especially in light of the challenges posed by climate change and related weather events.
Engaging with investors
Moochikal is optimistic about AIF’s work to attract investors. To date, the company has received tentative commitments from seven investors, each pledging between $20 million and $30 million. While he acknowledges that these commitments are currently just verbal, AIF is also having positive discussions with the Africa Export-Import Bank and the African Development Bank.
“Before my arrival, we were exclusively negotiating with European development banks, which yielded limited results. However, we are thrilled with the excitement and commitment shown by AfDB and Afreximbank. Clearly, we satisfy their criteria – children, women, agriculture, farming communities, and agro-processing,”
he comments.
If AIF’s investment campaign is successful, Moochikal asserts that the company would be eager to operate independently.
“Every organization reaches a point in its development where it needs a guiding hand. DSM has been an incredible support, providing technology, help, credentials, and expertise in food production. However, I genuinely believe the time has come for commercial-minded partners in Africa to lead our growth. It could be more beneficial for us to engage with long-term investors who can accelerate our growth efficiently and extensively.”
