Sky Brands, the biofortified food start-up founded by two young entrepreneurs in Zimbabwe, is ready for significant scale up after securing financing from Empower Bank, which offers specialized financial services for youth. To fuel its expansion, Sky Brands will contract many more smallholder farming families to supply it with biofortified crops, offering these families a welcome livelihoods boost.
Takudzwa Gahadza and Tinashe Mbiriri (pictured right) launched their agricultural enterprise, Sky Brands, in 2017. They wanted to be at the forefront of providing easy access to nourishing staples in the form of processed biofortified crop varieties such as vitamin A orange maize and iron beans.
In 2018, the start-up received technical, logistical and marketing support for its biofortified crop products from HarvestPlus Zimbabwe, under the Livelihoods and Food Security Programme(LFSP), which is managed by the Food and Agriculture Organization and Palladium, and funded by the UK Government. The program is engaging youth to equip them to broaden their horizons and work on their business ideas to shape and influence the direction of Zimbabwe’s future food and nutrition security.
For many years, Zimbabweans have associated yellow maize meal with drought relief, hence there was concern among millers that consumers would not accept vitamin A biofortified orange maize for its similar look to yellow maize. Thus, it was encouraging that after tasting the sadza (a cooked, pulverized grain meal that is the staple food in Zimbabwe) made with the biofortified orange maize and understanding its benefits, many consumers in the country now choose orange maize meal over the white maize meal, and are willing to pay a premium for the orange meal.
“Realizing the sheer commitment of these young social entrepreneurs to go against the white maize milling tide to adopt the orange colored vitamin A maize instead, all for its importance in combating micronutrient malnutrition and in a country where yellow colored maize was stigmatized, we knew they needed our support, and we were confident of their potential to succeed—and we were right” said Sakile Kudita, interim Country Manager and Demand Creation Specialist at HarvestPlus Zimbabwe.
“It is with food industry partners such as Sky Brands that HarvestPlus can achieve its goal to reach 1 billion people worldwide with biofortified staple crops by 2030,” Kudita added.
The Financial Challenge
Even with their hearts in the right place and access to support from HarvestPlus to make Sky Brands work, it was not all smooth sailing for Gahadza and Mbiriri. One of the biggest challenges for Sky Brands, as well as other agri-startups, has been access to finance. Financial institutions require collateral to access loans. For young entrepreneurs, it is difficult to show a viable form of collateral, and most financial institutions consider it risky to do business with them.
“Access to finance in Zimbabwe is a problem all young people face because of the requirements and prerequisites of banks and microfinance institutions. Finance has been a major issue because every business needs some financing to help scale up operations and grow the company,” said Mbiriri, who is Operations Director at Sky Brands.
“We tried approaching commercial banks and it was difficult as we didn't have enough collateral security and we were just a year old in operations. So we couldn’t purchase grain and beans in bulk and take advantage of the economies of scale,” he added.
The company was kept afloat through order financing and small loans from family, friends, and relatives. There was increased demand for the nutritious foods that Sky Brands had on offer but no way to scale up production.
Securing the Loan
However, the company has now reached a turning point with a USD 100,000 loan which would be disbursed in USD 25,000 portions granted by Empower Bank. The loan was approved in June 2019 and the first installment was paid out in August 2019. The LFSP, through FAO and Palladium, was instrumental in assisting Sky Brands to access the loan through the provision of technical support for the Sky Brands business model.
The loan will assist Sky Brands to scale up their business venture. Previously, Sky Brands produced 15 MT of orange maize but this doubled after securing the loan. Similarly, there were a total of five staff working at Sky Brands till mid-2019; after receiving the loan, the company hired 15 more people.
“Sky Brands qualified for the loan purely on the basis of the project viability that was apparent from the project proposal. The other factor was that they are youths—that resonated with the bank’s mandate to empower young entrepreneurs,” said Patience Chakuvinga, Empower Bank’s Head of Credit. “These youths showed commitment and seriousness in the business and had such a passion for its success and in the process created employment for other youths.”
Benefits Trickle Down to Small Farmers
The loan to Sky Brands has not only helped the company, but has helped improve the lives of several hundred smallholder farmers, many of them women, who have benefited from selling their biofortified crops to Sky Brands. The company will be contracting many more smallholder farmers as a result, helping improve their livelihoods. Most smallholder farmers struggle with access to markets, which prevents them from making a decent living from their land.
“During the 2018/19 farming season, I harvested 15 bags of orange maize. I kept 3 bags for my family consumption and sold 12 bags to Sky Brands and managed to get USD 120. I used the money to buy a cow for myself. Owning a cow as a woman is a dream come true,” said Bajamba, a farmer from Chiweshe, Mazowe District.
With financial assistance from Empower bank, Sky Brands contracted more than 300 farmers to produce the Vitamin A maize and iron bean grain for them for the 2019/20 season, up sharply from only 120 farmers the previous season.
The crops being packaged and sold by Sky Brands are not just ordinary crops. They are highly nutritious crops rich in vitamins and minerals. Sky Brands supplies its products to local stores and restaurants. Consumers can also purchase Sky Brands vitamin A orange maize porridge, maize meal, iron beans, mahewu (a fermented non-alcoholic maize beverage) and orange maize samp (pounded, dried corn) directly from the company’s website.
COVID-19 Impacting Sky Brands
Currently, with a national lockdown in place in Zimbabwe because of the COVID-19 pandemic, Sky Brands remains open for business because it falls under essential services which were allowed to operate by the government. However, like many businesses around the world, Sky Brands is weathering some shocks related to customer demand: the main customers for iron beans are schools and hospitals, which are closed and therefore not buying because of the national lockdown; supermarkets and shops were also citing weak business.
Furthermore, the company is behind schedule in preparing for the purchase of grain from farmers as movement to and from farmers was restricted. With packaging prices shooting up as they are imported from China, the costs of production are also increasing. Sky Brands is working hard to navigate these challenging times. The founder duo is thinking of ways to make the best of the current situation, and are in a stronger position to do so thanks to the funds they now have available.
At least one in five Zimbabwean children under the age of five suffers from vitamin A deficiency, and one in every three children lacks enough iron and zinc. These deficiencies increase their risks of illness and compromise their growth and development. With biofortified food options, as those provided by Sky Brands, these young entrepreneurs are giving the children in their country a shot at a brighter future by increasing their nutritional status.