In East Africa, the climate is well-suited to flower production, and the potential for growth is high. Norfund’s new investment supports the utilization of this growth potential.
Background
Kenya is one of the biggest flower exporters in the world. The industry employs around 100,000 people directly, and 2 million people indirectly. One of the most successful and profitable flower businesses is Kariki Ltd Kenya. They are specialising in the production and marketing of selected summer flowers. Marginpar BV is a successful Dutch flower import agent. They hold exclusive rights to import of a number of summer flower varieties from growers – such as Kariki – in Kenya, Ethiopia, Tanzania and Zimbabwe.
Cooperation = Productivity
To strengthen its position, Kariki Ltd wanted to acquire two underperforming producers of summer flowers in Kenya and Ethiopia. To increase the company’s access to international markets and improve efficiency of their distribution, they also wanted a closer integration with their distribution partner Marginpar BV. In 2018, Norfund allocated USD 8.5 million in equity through Kariki Ltd for them to acquire the two East African flower producers Carzan Flowers Kenya and Marginpar Ethiopia, as well as the Dutch import agent Marginpar BV.
Kariki’s high productivity and positive development is a result of the implementation of the Japanese leadership model ‘Kaizen’
CEO, Richard Fernandes
This has resulted in a new consortium, known as the Marginpar Group, which will facilitate a common strategy of sustainable growth and innovation. Norfund will provide expertise in business development and focus on the company’s development and monitoring of corporate governance and environmental and social issues.
The Kaizen model
The Kaizen model stresses the importance of delegating responsibility to the workers – the ‘value adders’. Following the acquisitions in 2018, the kaizen management model was also introduced to the new assets in the Marginpar Group, now comprising more than 2,800 permanent staff in Kenya and Ethiopia. “We grow people, our people grow flowers” is their new common motto and it has already contributed to increases in productivity.
Business Support
We believe that implementing the Kaizen model in Ethiopia will empower and strengthen Marginpar’s employees. This will give higher productivity and better financial results for Marginpar, and better working conditions and satisfaction for their workers. With co-funding from Norfund’s Business Support, the Kaizen Institute will be contracted to implement the Kaizen model on all Marginpar farms in Ethiopia during 2020.
