Eric Muthomi – The Kenyan lawyer who built a successful business from a simple ‘banana idea’

KENYA -
Africans consume up to 40 percent of bananas
produced in the world every year. Like maize, rice
and wheat, bananas are one of the most important
and widely eaten food staples in East Africa. Kenya,
Uganda, Tanzania, Rwanda and Burundi are among
the world’s largest producers and people in these
countries eat up to 400 kilograms of bananas every
year – the highest consumption rate in the world!
Despite this huge demand and market, many
smallholder banana farmers in Kenya do not make
enough money from their harvests due to poor
storage, wastage and exploitative middlemen. In just
three years, Eric Muthomi, a 27-year old law graduate
has built a successful business from solving the
banana problem in Meru, his Kenyan hometown.
This article tells the inspiring story of this young man
and his brilliant idea which has won several awards
and placed him on the 2013 Forbes List of Best Young
African Entrepreneurs.
The 'banana availability' problem...
In our previous article, 3+ guaranteed ways to find profitable
business ideas in Africa, we identified problem solving as one of
the easiest ways to find lucrative business ideas on our continent.
If you can solve a serious problem that affects people in their
work, business or daily lives, there is a high chance that you will
make money. This is exactly what Eric Muthomi is doing by
solving the ‘banana availability problem’ in his native Kenya.
Due to the huge demand for bananas and its strategic importance
in food security, there are over 400,000 smallholder banana
farmers in Kenya. More than 60 percent of these farmers (who are
mostly in remote rural areas) earn a full income from selling raw
bananas (both ripe and unripe) on the local markets. However, due
to the production cycles of the crop, there is an excess supply of
bananas to the markets during harvest time. As a result of this
oversupply, many farmers make very little money from their
banana harvests and are routinely exploited by middlemen who
take advantage of the low market prices.
Harvested Bananas ready for sale in a local Kenyan
market (photo credit:
eastafricanhighlandbananas.org)
Because raw bananas have a short shelf life (can rot easily), they
have to be properly stored or processed if they must last long. Due
to a lack of storage and processing facilities, bad roads and poor
access to markets, about half of the bananas harvested in Kenya
every year get rotten, are wasted and never get sold. As a result,
many Kenyan farmers suffer serious losses after all the money,
time and effort invested in farming bananas during the year.
Bananas are not available all year round; they become very cheap
during harvest time and expensive in the dry season. This is
dangerous for a crop that is used to avoid famine and serves as a
food buffer in times of scarcity between cereal harvests. In
addition to this problem, thousands of farmers remain poor as a
result of waste and poor yields from their banana harvests.
Eric Muthomi’s solution to the rescue…
Eric is a 27-year old graduate of law from the Catholic
University of East Africa. From an early age, he had made up
his mind to start his own business after school. He first noticed
the problems most banana farmers were facing in Meru, his
hometown in Central Kenya and one of the largest banana
producing regions in the country. He decided to start up a
company that would buy raw bananas from local farmers at
guaranteed prices, process them into banana flour and package
them for sale in the market. This is the idea that formed his
company, Stawi Foods.
Stawi Foods(stawi means ‘prosperity’ in Swahili), has improved
the lives of thousands of banana farmers by providing them
with sure income. It has also helped to increase the shelf life of
bananas which would have rot and wasted if they are not sold
soon after harvest. The banana flour, which is made from
processed green bananas, is gluten free, nutritious and can be
used to make baby food, porridge, mashed food, baked foods and
soups. This versatile branded product which is sold as ‘Stawi
Natural Banana Flour’ is distributed in several major supermarkets
across Kenya.
Eric Muthomi’s idea now allows smallholder banana farmers in
Kenya to earn 30 percent more on their bananas than they would
have made if they sold it in the local markets. In addition, selling
their banana harvests to a guaranteed buyer (Stawi Foods),
protects them from the low and fluctuating prices of banana in
times of harvest and scarcity. This is helping many young people
to remain gainfully employed as banana farmers.
At the moment, this young company (which only started business
in 2011), works with more than 100 groups of farmers in Meru
which supply the raw bananas used for making Stawi Banana
flour. The raw bananas are processed using both manual labour
and processing equipment by a team of full-time employees and
casual workers. As his Stawi Banana Flour gains popularity across
Kenya and the East Africa region, Eric Muthomi expects to partner
with more farmer groups across the country to get the raw
materials (green bananas) it needs to produce more flour to meet
the growing demand.
Although ‘Stawi Natural Banana Flour’ is only
available in 400 gram packs, the company plans to
introduce one and five kilogram packs very soon.
Since he put this amazing idea to action in 2011, Eric Muthomi has
attracted a lot of local and international attention. In the same year
he started Stawi Foods, Eric won the top prize in the 2011 Nature
Challenge Africa competition sponsored by the Worldwide Fund for
Nature (WWF) Kenya in partnership with NETFUND which
encourages businesses on sustainable use of natural resources in
Africa. In 2012, he won a business plan competition organized by
Kenya’s Ministry of Industrialization which looks out for innovative
business ideas every year. Eric beat over 3,000 other contestants
who own young and startup manufacturing businesses to become
the 2012 winner.
In the same year (2012), Eric Muthomi won another award for his
brilliant business idea in the Chase Bank Enablis ILO Business
Launch Pad Competition in the Agribusiness Agro-processing
category. This award rewards the most exciting and promising
business plan among Kenyan entrepreneurs. He was also listed by
Forbes Magazine as one of Africa’s Best Young Entrepreneurs.
With all this attention, Eric believes it will not be long before he
penetrates the East African regional market which will act as his
stepping stone into international markets like Europe and North
America.
3 Things we should learn from Eric Muthomi’s
success...
Our goal for sharing the success stories of African entrepreneurs
is to inspire you and also show you what is possible. However, on
the road to success, there are often hard lessons, tough choices
and rough challenges. Eric Muthomi’s experience on this road is
rich with lessons that will inspire you to take action on that
business dream of yours. Read and learn…
#1 - There will never be a ‘perfect time’ to start your own business
Eric Muthomi has caught the world’s attention because he
decided to take action on his dream even though he had a
reason to postpone it or wait for the ‘right’ time. When he
started his business, Stawi Foods, he was only 25 years old
and fresh out of university. He didn’t even have any money to
start a business so he borrowed from his family. In a previous
article, we explored 10 interesting ways to raise the capital you
need to start a business. You should check it out!
Apart from the challenge of getting start up capital for his
business, Eric had to scale through the long and tiring licensing
requirements and approvals that are compulsory for ‘food
processing’ and ‘manufacturing’ companies in Kenya (a similar
experience across many African countries). In addition to all
these, he also faced the problem of inadequate and expensive
power supply that seriously affects manufacturing businesses
in many parts of Africa. In the face of all these excuses
(problems), Eric is now the CEO of a successful business that
is changing lives in his country. If you keep waiting for the
‘perfect time’ to start your business in Africa, that time may
never come. You can either keep making excuses or start doing
something with what little you already have! (photo credit:
beyondblessedblog.com)
#2 – Inspire yourself with the problems around you.
One of the things that stand out from Eric Muthomi’s story is
the simplicity of his business idea. He didn’t invent it; it’s a
problem that has always existed for centuries. Smallholder banana
farmers in his country have always suffered from wastage, low
prices from middlemen and poor access to good markets. By
thinking of a way to solve these nagging problems, Eric stumbled
on an idea that is today a lucrative and successful business.
Many of us spend too much time complaining and whining about
the many problems that surround us here in Africa. We are blinded
by all the complaining that we often do not see the huge goldmines
that lie in solving these problems. Eric’s story shows that if you
take the time to think of creative solutions to existing problems
around you, it’s very likely that you will stumble on an interesting
business idea. The lesson here is simple: don’t let problems
frustrate you, use them to inspire yourself!
#3 - Make money and help people at the same time
Eric Muthomi says “ I am happy when farmers come up to me and
thank me for getting them a market for their product. It is such a
satisfying feeling.”
While the goal of starting a business is usually to make money,
touching lives and affecting people positively can be a rewarding
experience which money cannot buy. The great thing about using
‘problem solving’ as the basis for your business idea is that it
removes pain, frustration and/or suffering that already exists in
people’s lives. In the case of Eric’s business, it allowed thousands
of poor rural farmers to remain in business while earning more
money from their banana harvests. His business is creating jobs
for Kenyans and will help to earn foreign exchange for his country
when he starts exporting his ‘Stawi Natural Banana Flour’ product.
It’s always a ‘win-win’ situation when you have a business idea
that can make money and help people at the same time!