Starting up a new business in Africa
Dr Henry Wainwright is joint managing director of The Real IPM Company, with his wife Louise Labuschagne. The Real IPM Company specialises in crop protection and was established in Kenya in 2003. It focuses on promoting ‘integrated pest management’ (IPM) crops in Africa and reducing pesticide use by producing and selling biocontrol agents. All-year-round growing conditions make pest populations a continuous challenge compared to Europe, but this in turn has some advantages for the production and use of biological control agents. Wainwright, a member of SCI’s horticulture group since its creation, is committed to supporting growers through environmentally sustainable practices. Here he provides insight to his experiences in a new overseas start-up.
What led to your business idea?
My wife and I were both working in Kenya for the same company and were already involved in IPM and biological control. Then, in 2003, we were both made redundant. Many people say that redundancy was the best thing that happened to them. Well it certainly changed our lives – until then we had no business ambitions. With redundancy came decision time, and it was then that we decided to set up our own biological control business (The Real IPM Company) in Kenya, which now employs over 70 people.
How did you decide on your location?
We were already working in Kenya and had got to know the country. We knew that there was a large horticultural industry that represented a significant customer base. Therefore, deciding the location was one of the easier decisions in setting up our business.
What were the most difficult challenges and how did you overcome them?
One was technical – there are many variables with biological systems and getting consistent production was, and still is, a challenge. Another difficulty is the business environment. Kenya is supposed to be more business-friendly than some African countries, and this is probably true. However, bureaucracy, lack of transparency and very few places to go for help were some of the obstacles we faced. The tax authorities are keen to recover taxes, but very slow to pay rebates. For instance, VAT returns can take over three years; people in the UK are spoilt where VAT returns are concerned!
What does your typical day involve?
As our house is on site there is only a 100-metre walk to work – a tough commute! I start work at 7am and the staff come in at 7.30am. Business and technical issues take up most of the time. We have customers visiting for at least a day each week. Chasing outstanding invoices is also a major occupation. Finally, a gin and tonic at 7pm.
What are the latest developments in the trade?
Kenya supplies over 30% of all flowers in the EU. Currently, pesticide reduction is what European customers demand. Clients (who are often the UK supermarkets) are asking the growers to reduce residues, not only on food crops but also flower crops. This is a great driver for our business.
What advice would you give to someone interested in business opportunities like these?
There are opportunities in Africa and they are supposed to give investors one of the highest rates of return in the world, but there are higher risks of failure. My advice is to do realistic budgets and keep close control of costs. You should allow lots of time, as everything takes twice as long (or more) than you expect. Finally, diversify your income streams, especially in the set-up period, to facilitate cash flow.