East Africa Foods raises $40 million to take its produce business into new markets
East Africa Foods has built its business around buying produce from farmers and getting it to shops and other customers in cities.
East Africa Foods
East Africa Foods has built its business around buying produce from farmers and getting it to shops and other customers in cities. Now the Tanzanian company has raised about $40 million to expand that operation across East Africa.
The company works with more than 28,000 registered smallholder farmers and supplies over 10,000 retailers. It wants to grow its farmer network to 100,000, with plans to expand beyond Tanzania, including into Kenya.
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East Africa Foods has built its business around buying produce from farmers and getting it to shops and other customers in cities. Now the Tanzanian company has raised about $40 million to expand that operation across East Africa. The company works with more than 28,000 registered smallholder farmers and supplies over 10,000 retailers. It wants to grow its farmer network to 100,000, with plans to expand beyond Tanzania, including into Kenya.
The funding includes a $26 million Series B equity round led by the Private Infrastructure Development Group (PIDG), through its investment arm InfraCo. Dutch development bank FMO, impact investor Oikocredit and existing investors also participated. The wider raise includes debt funding from the Schmidt Family Foundation and additional investment from existing shareholders. East Africa Foods plans to spend the money on storage, processing, transport and its digital platform. These are the parts of the business it will need to expand if it wants to handle more produce and supply more customers.
The work does not end when crops leave the farm
“Joining a supply network does not guarantee a better price or a bigger income.”
Moving fresh produce is a difficult business. A farmer can have a good harvest but still struggle to make money if there is no buyer nearby, transport is expensive or the produce spoils before it reaches the market. Buyers have their own headaches. Small retailers and food vendors need produce in quantities they can sell, at prices that leave room for a profit. Sourcing from different suppliers takes time, and deliveries are not always reliable.
East Africa Foods buys produce from farmers, collects and sorts it, then distributes it to urban retailers. It also processes some products and sells them under brands including Onja and Golden Banana. The company is betting that it can make money by organising a part of the food trade that is often handled by many separate farmers, traders and transporters.
More farmers will not automatically mean better incomes
East Africa Foods wants to increase its farmer network to 100,000. Women are expected to account for 45% of that target. Having a regular buyer can make selling a harvest easier, particularly for farmers who struggle to reach larger markets on their own. But joining a supply network does not guarantee a better price or a bigger income.
Farmers still need to know what the company will buy, how much it will pay and when the money will arrive. Transport costs also matter. If getting produce to a collection point takes too much money out of the sale, the benefit of having a buyer nearby can be limited. East Africa Foods plans to provide more training in climate smart farming methods as it expands. How much farmers gain will depend on whether the company buys from them consistently and whether the arrangement makes financial sense.
Retailers have to see a benefit too
The company supplies more than 10,000 urban retailers. For these businesses, the appeal of buying through East Africa Foods is straightforward: they need stock they can sell without spending too much time chasing suppliers. More storage and better distribution could help the company deliver produce more consistently. But retailers will still compare prices, quality and delivery times with other suppliers. That matters for small shops, restaurants and food vendors, where wasted produce can quickly eat into earnings. If East Africa Foods can supply the right quantities at competitive prices, it has a reason for customers to keep coming back. If it cannot, a larger distribution network will not be enough.
The next stage will cost money
Expanding into new markets means building relationships with more farmers and buyers, finding suitable storage and transport, and managing produce across longer distances. Those costs will have to be covered by the business. The $40 million gives East Africa Foods more room to do that, but the figures worth watching are not just how many farmers sign up or how many markets the company enters.
What matters is how much produce it can sell, how much gets lost along the way, whether farmers are paid on time and whether retailers continue to place orders. East Africa Foods has found a business in the gap between farms and city customers. Its expansion will depend on whether it can manage that gap profitably as the operation gets bigger.
