The Covid-19 crisis is disrupting businesses across Africa. Vertical Agro, a Norfund investee exporting fruits and vegetables to Europe, has a challenging time.
Vertical Agro – exporting fruits and vegetables
Vertical Agro Ltd is a family owned fully integrated vegetable and fruit processer with farming and processing operations in Kenya and Tanzania.
The company farms and processes about 6.500 tons of vegetables and fruits annually, including beans, carrots, broccolini, corn, herbs and avocados. Close to 100% of the products are exported, primarily to Europe. Vertical Agro has gradually moved its product offerings towards value-add products and is the largest exporter of organic fruit and vegetables in Kenya. The company has also developed a unique technique for frozen vegetables. More than 1,000 people works for Vertical Agro on a permanent or temporary basis, in addition to 1,000 small scale farmers depending on Vertical Agro to train, certify, process and export their crops.
Since our first investment in 2014, Norfund has helped Vertical Agro funding expansion, developing cost efficient operations and improving financial performance. This effort has paid off during the previous two year’s challenges with floods and drought, and today the Covid-19 crisis.
Handling the covid-19 challenges
Although the European and African demand for vegetables and fruit has continued during the Covid-19 crisis, exporting the goods has become extremely complicated. While fresh produce is hindered from being sent due to cancelled flights, frozen goods and avocados can still being exported by sea. However, the travel restrictions imposed in Kenya is a big challenge for the transportation of goods from farms to the processing facilities and to the harbour in Mombasa. And the availability of ships is limited, too.
Due to partial lockdown in Kenya, Kenyan employees are hindered from leaving their home and only those who have received a required travel passport can go to work. Drivers need a certificate for the freight to get through frequent road controls, making it even more complicated to running the business.
Norfund has helped us professionalise, going from being commodity based primary producers to professional value-added providersasit Shah, Managing Director, Sunripe
Building a robust and resilient company
The last years’ measures taken to strengthen Vertical Agro’s operation and financial performance is of high value today, making the company more resilient to this crisis. The convertible loan facility provided by Norfund in 2014 helped the company investing in new modern facilities, expanding its product range, improving yields and increasing its productivity. Other measures taken to make the company robust are professionalizing the organisation, streamlining the value-chain, optimizing farming and the development of out-grower schemes to increase capacity utilization. As a long-term investor, Norfund is also prepared to contribute with additional support if needed to overcome the Covid-19 crisis.
Contributing to the building of robust and resilient companies with growth potential is at the core of Norfund mandate. Now, during the Covid-19 crisis, we are in close contact with all our investees trying to help them overcome this challenging situation.Ellen C. Rasmussen, EVP Norfund