OBRI Tanzania works with women smallholder farmers to produce sunflower cooking oil. This not only helps women increase their income, but also provides low-income consumers with an affordable alternative to re-using cooking oil.
To start, could you briefly introduce yourselves?
Brigitha: My name is Brigitha Faustin. I am CEO of OBRI Tanzania, which I founded in 2015.
Innocent: I am Innocent Ndodyabike, CFO of OBRI. I joined the company because of its impact. My own mother is a smallholder farmer, so I understood what Brigitha was doing.
Could you also introduce OBRI Tanzania?
Brigitha: OBRI is an agri-food company based in Tanzania. We buy sunflower seeds from female smallholder farmers and process them into cooking oil. To provide training and inputs, we work with different partner organisations.
How else does your business model include low-income communities?
Brigitha: They are our target market. Our vision is that every Tanzanian, regardless of income, region or gender, can have access to affordable and healthy cooking oil.
Can you explain more about the special value you create for low-income consumers?
Brigitha: Our cooking oil is accessible and affordable. We sell it to local shops, wholesalers and street food vendors at about half the price of our competitors’ oil. In total, we have reached 5.7 million consumers since 2015. Without OBRI, they would keep re-using cooking oil because they couldn’t afford to replace it. This causes severe health problems.
What impact do you create for the farmers you source from?
Brigitha: We work with 1,872 female smallholder farmers, who produce all our raw materials. They earn 1,400 Tanzanian shillings per kilogram of sunflower seeds, seven times as much as when they sell through middlemen. The training and inputs we provide through our partners also help them increase their productivity. They can produce up to 450 kilograms of sunflower seeds per acre now, three times as much as before.
Why do you only work with female farmers?
Brigitha: They face many additional challenges. Social norms block their access to resources like land, so they can’t access financial institutions to invest in their businesses. It is important for me to support them.
How do you measure the impact OBRI creates?
Innocent: We conduct interviews during harvest and off-harvest seasons. This helps us measure how the income and productivity of the farmers increase. We also collect data on environmental protection.
What makes your business model financially viable?
Brigitha: Our business model is quite different from that of other companies in Tanzania. They import crude oil, refine it, and put it in the market. To have a good margin, they need to sell the product at a high price. Sourcing locally is less expensive. Also, we cooperate with partners to ensure that farmers have access to seeds and training.
How large is the market you serve?
Innocent: Tanzania has a population of about 58 million people. In 15 years, there will be over 90 million Tanzanians. All these people are potential consumers of our product. This makes the market dynamics favourable to new entrants.
Brigitha: As a country, we spend more than 150 million dollar per year to import 300,000 metric tons of cooking oil. This is about half of the oil we use. OBRI can bring the importation bill down.
Can you give us some numbers on the financial profitability of OBRI?
Innocent: We broke even in 2017 and have been profitable ever since. Last year, we had a sales revenue of 701,000 USD despite the pandemic. This year, it will be over 1.1 million USD. We have a gross margin of about 50 per cent and an operating margin of 30 per cent.
Brigitha: My goal is that as we win, our farmers also win, and our consumers have access to affordable cooking oil. It is not about profits, but about earning enough revenue to reinvest in our company and ensure that it fulfils its purpose.
What kind of support do you receive from outside the company?
Brigitha: We have one equity investor on board, Africa Aid Company. In addition, we are members of several entrepreneurship communities that provide technical assistance. We have also won regional awards that came with small investments, among others the UNDP Innovation Award.
How many more people do you think you could reach?
Brigitha: We are looking at over 39 million consumers to be impacted in Tanzania within the next few years.
Innocent: On the supply side, we started with barely 400 farmers in 2015/16, which has more than quadrupled. Now, we are looking to tap into the network of the Aga Khan Foundation to reach 6,000 or 7,000 farmers within the next three years. The median Tanzanian family has six to seven members. This means we will impact about 42,000 people.
Brigitha: We wanted to include even more women farmers into our network last year but there was a shortage of inputs. Our farmers rely on local seed varieties to grow sunflowers. Tanzanian companies just didn’t produce enough to meet the demand. Also, our partners had to cut spending on inputs due to the pandemic.
What do you need to scale?
Innocent: We need funding to sustainably finance our working capital, offer more extension services, and invest in marketing, logistics, and machinery. We need to buy more modern equipment, especially storage facilities. Half a million to 1.4 million USD would take us quite a distance.
Brigitha: We are also interested in research and development partnerships. Companies or universities could support us in developing affordable, high quality seeds, distributing them to farmers, and sharing extension knowledge.
What challenges have you and OBRI Tanzania overcome?
Brigitha: One of the major challenges is funding. I started OBRI with my own small investment, but we need more funding to scale the company. This has been hard to secure since agriculture is often considered risky. The purpose of OBRI is what keeps me trying. Introducing the new brand was a challenge, too, but people accepted it when we presented the price.
How did being a woman affect your journey as an entrepreneur?
Brigitha: The regulatory framework in Tanzania is very supportive of female founders. Still, social norms mean that women have to work twice as hard as men, if they want to combine entrepreneurship and family life.
What recommendations can you make to other entrepreneurs?
Brigitha: Follow your passion and understand the purpose of your business. I live in a society which has many challenges. If each one of us becomes part of the solution through the products or services they produce, then I believe the community will be a better place and money will follow.