Agribusiness Sector in Uganda: Fresh Fruits and Vegetables by Dilocs Development Services

Interview with Shannie Miiro, CEO of DDSL (Dilocs Development Services Limited)

What is a major challenge to develop your business?

Access to capital is the biggest challenge. Being in Africa, capital investment is very low. We are outside the government so everything we have to do is dependent on us. Even if we come up with a very good proposal and present it to the bank or the government of Uganda, you cannot access capital just like that. They look at things in a different way, like how they can benefit. We have that challenge as Africa in general. We are not like Mark Zuckerberg who presents a proposal to an investor and automatically gets funding. We have to fight to get to where we want to be. We might get a huge order, but we pay the farmers in cash, and then we wait for payment upon shipment. In the interim, you cannot supply other buyers. They accept payments on delivery everywhere here Uganda. Right now, with this kind of challenge, we do have some repeat clients that we can ask for payment up front. This only applies to Europe, not the Middle East or Asia.

Are you actively looking for investors?

We are open to investors. We have been putting out proposals across the world, not only in Africa. For example, I had a proposal presented to investors in Malaysia. But when you borrow money, you realize that you will not be able to make money. The best would be to get either venture capitalists or angel investors to join with us. We are willing to give away our shares so that person gets onboard and invests with us so we can move the business forward. At the end of the day, we know how our business works.

How much funding do you need?

We are promoting a farm about 160 km away from Kampala. There is about 3.2 mi² of land there that we wanted to acquire to do organic farming on. Right now, everyone is doing conventional farming. But especially in Europe, there is a big market for organic foods. We are looking for investors to join with us. We had a budget of about 3.2 million. But we wanted to start smaller at about 350,000 USD and see how that grows and then move into other development stages.

Is this your current priority investment?

We want to do pineapples, avocados (we have both types here), we have passion fruit, okra, and hot pepper and chilis. Our hot peppers are one of our best-selling products.

We wanted to start this venture because we are not directly involved in farming, rather we have a network of farmers. We want to help these farmers by giving them capital to develop their farming. We need this funding because we know that we already want to invest in organic farming, but these farmers do not have the capacity. To build that capacity, we need to empower them. So, we wanted to start with a small group first and grow in stages until we get to a peak. In terms of capacity issues, we once were asked to place an order for 50 tons per month of passion fruit in the Middle East, but we could not fill that even all over Uganda. This is another reason we want to expand and have our own farm.

Would you provide the farmers with the land as well?

The land belongs to the government of Uganda. We do not want to buy that land because it is very expensive. We want to use the available land now. If you include the cost of purchasing the land, it takes up the entire budget. We want to go straight into direct production and produce for the market. This funding will help provide training, etc., for the farmers to begin organic farming.

Where does your revenue come from?

We export fresh fruits and vegetables which we buy from the farmers directly. We have farmers who own one or two acres or ten acres. We go to them, buy directly from them, they are coded with their own code. After, we pay them cash, then we ship and get paid after supplying.

Why should investors come to you to invest? What do you offer that is different?

My competitive advantage is the labor cost in Uganda. We are organized and know where to go for labor at a good price. It will not be expensive for an investor to get more profits. If you have labor at the right price, then profits are guaranteed. Land is available and is fertile here. We can produce crops without the cost of additional fertilizers. That is why we want to do organic farming. It is very easy to switch to without incurring a lot of additional cost in fertilizers, pesticides, etc. Uganda is also very rich in water. We do not need irrigation. We have two rainy seasons a year. There are no costs on irrigation during those seasons to have crops grow, only as an additional backup measure. You will find that production of fruits and vegetables in Uganda is very cheap compared to other areas.

What are your competitive advantages as a company that attract investors?

I already have the system in place and ready to go, we are just waiting for investors to join. I have done a proposal and feasibility study of what is needed from the investor, the land is available, and the cost has already been calculated. I will not tell the investor to buy land like my competitors might. If an investor has an exit strategy after five years, it is easy to accomplish because you are not held to that land.

What have been the challenges to find investors?

I have not had enough interactions with investors. Even getting access to investors is difficult. We have a loans facility available now, but it requires security with small-scale holder farmers. They cannot provide that for UDB. We are looking for angel investors who would not need that backup security. If we had that security, Uganda Development Bank could provide us with that kind of investment. The interest rates in Uganda are also very high at 12%. In farming, that is a very difficult figure to meet. Because this is farming, you cannot guarantee good results every time, but you still must pay back the bank. That is why we are looking for someone with a passion in farming who is ready to invest and incur a profit or loss and move forward. With that support, we could approach the Development Bank.

What products would you like to grow and export?

We want to do pineapples, avocados (we have both types here), we have passion fruit, okra, and hot pepper and chilis. Our hot peppers are one of our best-selling products. There is a lot of demand in Europe, especially. We cannot even provide half of the demand here in Uganda because it is so popular. That is why we need an investor who can do a real critical study of the pests that attack hot peppers so that by the time it reaches Europe, the quality is where we want it to be. Pests that attack hot peppers are one of our biggest challenges right now. If we have our own farm it will be easy to monitor what we put out into the market. When we have farmers scattered all over Uganda, it is difficult for us to control pests and production.

What do you bring to the market that is different from your competitors? What is your strength as DDSL (Dilocs Development Services Limited)?

One of our strengths is that because we work directly with the farmers and cut out the middleman, we can control the price. We also control the production and get to know the quality coming out of Dilocs Development Services and it can be easily monitored. That is something which the government is requiring of all exporters now, but we already have this in place.

What are your current projects?

Right now, we are working on improving our online marketing and automation. We want to follow more of a system like Amazon has where it is click to order and click to pay. We want to make it very easy for people to make orders online, pay online, and get them delivered. We also want to work with buyers and target upfront payment. At the moment, we sell and get payments after delivery. We have had people who have defaulted under that system. We want to streamline that process where you pay up front and then the products are delivered through DDSL. We will cover the entire value chain. Another project is under shipment. We want to have direct flights, for example, an order from the UK, not to first go through Turkey, then Berlin, then finally to the UK. We want to enter into contracts with the big airlines like Emirates. We have had challenges with the products reaching the buyer in poor shape because of the many stopovers.

What are your projects in the transport and logistics sector?

I have been all around the world to New York, Paris, Japan, etc. That is how I get my clients. But I had a challenge in the transport business where I would want to move from one destination to another and have to go to a travel agent for multiple modes of transportation. Even here in Uganda, we have the same problem. I had a project where you can do everything from home on your computer. I presented a summary to investors and had a lot of interest from a group in Paris. I was putting up a platform where everyone around the globe could plan their next destination. It focused on all different public transportation methods, air, road, water, train, etc. I invested 46,000 into the project and also have a development team behind it.

Project yourself to the medium term, three years’ time. What do you see the company achieving?

Post-COVID, we will be moving to a larger location where we can accommodate more processing of fruits before sending them to the market. We want to expand gradually so that we can learn and to also keep track of the progress being made. We want to have controlled expansion.

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