How AquaRech is Revolutionizing Aquaculture in Kenya with Digital Technology

Interview with Dave Okech

Can you give a brief background of the company?

I am the founder, and I prefer to go by the title Chief Imagination Officer at AquaRech. We established the company in 2019. I initially went fishing in Victoria, engaging in cage fish farming where we raised tilapia. However, we encountered several challenges during the farming process. Being a part of a small-scale fish farming community, we faced issues such as the lack of access to high-quality feeds. At the time, we relied heavily on sinking mesh feed, which prolonged our production period by almost eight months.

Another significant challenge was the lack of a structured fish marketing process, which often resulted in us being unable to sell our fish. On the other hand, traders were desperately searching for fish, creating a market disconnect. Additionally, there were limited credit facilities available from commercial banks, so we had to rely on personal resources for production, which made it difficult to maintain continuous operations. Producing fish requires at least eight months of capital solely for feeding.

Moreover, many fish farmers lacked the technical expertise needed to run their farms effectively. While many entered the industry with enthusiasm, they soon realized that aquaculture requires specific scientific knowledge. These challenges across the aquaculture sector inspired the idea to develop an innovative solution using mobile app technology. This platform would allow us to reach thousands of farmers, enabling them to access products and services to enhance their productivity.

Our mobile application allows farmers to obtain top-quality fish feeds with a better feed conversion ratio, directly from their farms. This reduces the production period from 16 months to 8 months and increases productivity by nearly 40%. Additionally, the app connects farmers to the fish market through a buyback system, where we purchase fish from farmers on our platform and sell them in the market.

We have also introduced a credit financing platform featuring a “buy now, pay later” system. Farmers can access feeds on credit and repay by providing us with fish of equivalent value when ready. Currently, we are expanding this credit facility in collaboration with Equity Bank, creating a blended financing product. This will launch within the next two to three months, allowing farmers to access higher credit from the bank and maintain steady production.

In summary, aquaRech is a digital platform leveraging mobile app technology to increase farmers’ productivity and transition them to profitability. We achieve this by enabling access to high-quality feeds, market connections, technical support, and credit facilities, ensuring that farmers can remain in production.

Do you own farms?

We do not own farms; however, we work directly with farmers to support fish production. The farmers themselves own the farms, and we provide support for the ecosystem in which they operate.

Can you walk us through how the app works and its main features?

We have a mobile app system that includes both a USSD version and a smartphone version to cater to the needs of all farmers, whether or not they use smartphones.

The USSD version works on feature phones. Farmers dial *789*4# to register on the platform. Once registered, they can access various services, such as purchasing feeds, which can be delivered to their doorstep or farm gate. Farmers also have the option for self-collection. We introduced the USSD option because a significant number of our farmers do not use smartphones, but still need to access our services. The USSD platform also has an e-commerce feature where users can buy feeds and register as fish traders, allowing them to access fish that we aggregate from farmers.

The smartphone version, available on Google Play and the App Store, goes beyond e-commerce. It allows farmers to record daily production metrics, tracking fish growth and feed consumption, which helps them monitor fish growth in relation to feed usage. Additionally, it connects to IoT water temperature sensors, which we are piloting with 100 farmers. This enables farmers to practice precision feeding based on climate conditions. The app also generates performance reports, such as feed conversion ratio (FCR) data, for specific ponds or cages.

Lastly, the smartphone app provides farmers access to our fish market through the digital platform. We have also vertically integrated the system to connect consumers directly with locally farmed fish. Our aquaRech Fish Farmer app supports farmers, while the aquaRech Fish Deli app is consumer-facing. The consumer app allows customers to order Kenyan-farmed tilapia, which we prepare using air-frying technology to maintain nutrients, and we deliver it to their doorstep. We have five outlets in Kenya, including two in Nairobi, where consumers can access high-quality, value-added fish through the Fish Deli app.

In summary, our three apps consist of two horizontal platforms (for farmers and traders) and one vertical platform (for consumers), all working together to enhance the aquaculture ecosystem.

What trends do you see in the growing industry, and how has digital adoption been? What challenges have you faced?

The aquaculture sector in Africa, particularly in sub-Saharan Africa, is set for continuous growth. This is due to overfishing in our lakes and rivers, which has led to a decline in fish supply. Additionally, Africa’s population is growing rapidly, with projections indicating that the continent’s youthful population will surpass that of India and China by 2030. This creates a significant demand for protein, and aquaculture can help fill the gap left by the declining wild fish population.

The food systems in Africa will include a mix of large and small-scale fish farming, with smallholder farmers playing a crucial role in providing fish for the masses. Supporting these farmers is essential for sustainability, but it is equally important to ensure they become profitable. Transitioning smallholder farmers to profitability requires structural changes in their production systems, as the method of production directly impacts output and productivity.

Access to credit is also vital so that farmers can maintain continuous production cycles. Additionally, the market system needs to be structured to benefit farmers while keeping fish affordable for consumers.

In the near future, we anticipate a rise in commercial smallholder farmers who are profitable and play a critical role in the aquaculture sector. This is where we are positioning ourselves.

Are you looking for investors for your app and website, or is it primarily to help farmers elevate their profitability?

Last year, we raised our first seed round of investment, totaling $1.75 million in November. This year, we have raised approximately $750,000 through a couple of debt rounds and secured nearly $600,000 in grants. Overall, we have raised close to $3 million in the past 12 months.

We are focused on rolling out our Series A funding sometime next year. The funds from this round will primarily target improving the productivity of smallholder farmers. A significant portion will go toward credit financing in collaboration with our bank partners for blended credit financing. Additionally, some funds will be allocated for equipment supply to help change the structural production systems of the farmers. We will also use part of the money for working capital to purchase feeds in bulk for these farmers. A significant part will also be directed toward team development, which will be necessary given our planned scale of operations.

In summary, a mix of funds will be directed toward focused interventions that support smallholder farmers.

What is your target for raising funds next year?

8 to 10 million.

What projects are you currently working on?

We are currently working on two main projects. One is the contract farming arrangement with farmers, aimed at ensuring a consistent and reliable supply of fish on our platform for direct consumer access. This aligns with our focus on transitioning farmers to profitability.

The second project is on the Fish Deli side, which is six months old. We are focused on building out the consumer delivery system and completing the validation process. These are the two key projects we’re working on at the moment.

Do you help the farmers with fish fingerlings, or what specific support do you provide to them?

We provide several support structures for farmers. First, we offer flexible payment solutions, allowing them to access feeds through a buy now, pay later model. Second, we provide technical support, including training and capacity building through our aquaculture agents who work directly with the farmers. Third, we offer a fish buyback system, guaranteeing an immediate market for all the fish produced, with bulk purchases paid within 24 hours.

Additionally, we are rolling out a new project on fingerling production, which is a crucial part of the system. The hatchery will go live in January 2025, and farmers will be able to access fingerlings from our platform.

Where do you see the company in the next three years?

In the next two years, our goal is to develop a system with 1,000 commercially profitable smallholder fish farmers. Currently, most smallholder farmers are producing around 3 tons per year, with some as low as 400 kg, which is too small. We aim to increase this to about 30 tons per year—a 10x growth. To achieve this, several changes must occur in their production systems.

Currently, we have 6,000 farmers on our platform accessing our products and services. We’re targeting to grow that number to 10,000 in the next 12 months. Out of these, we will focus on 1,000 farmers who will transition to a commercial level. These 1,000 farmers will produce close to 30,000 tons of fish over the next two years, while the remaining 9,000 will contribute about 5,000 tons.

This approach allows us to have a broad impact, helping thousands of farmers access needed services while focusing on a smaller group for significant production and revenue growth.

Is your platform only for Kenyan farmers, or do you have plans to expand into other East African countries? What’s your international reach?

Currently, we are strictly operating in Kenya due to the need for adequate infrastructure to support our platform. However, by the end of next year, we plan to expand into East Africa, targeting either Uganda or Tanzania, with Rwanda also on our radar. We have received numerous invitations to roll out in Rwanda, and we expect to scale beyond Kenya within the next two years.

What led you to start in fish farming? Do you have a background in this area, or did you see a market gap and decide to get involved?

I studied statistics and mathematics, which shaped my career journey. My first job was as a data analyst at a large mailing company in Kenya, where I focused on developing Oracle functions across various sectors, including manufacturing and distribution. During this time, I developed a passion for animal feed and started my first company producing animal feeds in 2011.

However, that company failed in 2014, leading me to take a sabbatical in 2015 to recover from the stresses of entrepreneurship. Later, I was contracted to distribute fish feed for a Danish company entering the Kenyan market. I noticed that farmers were unfamiliar with extruded, floating, pelleted feed, so I decided to set up a demonstration farm with one of the farmers to showcase how to raise fish.

By mid-2015, I became a fish farmer and grew the farm to a capacity of 200 tons. In 2019, I exited the farm to focus on building a platform that could reach thousands of farmers. I initially viewed farming as a temporary step to get the system running since I needed to demonstrate its potential to farmers.

I suspect I might return to farming in the future, but for now, I’m still involved in farming through the platform. This is my third company; my first failed, and my second was successful. I believe my current venture is performing better than the first two.