Client: USAID & SSG Advisors
About one-third of infants in Burkina Faso suffer from malnutrition. The main causes are poverty and a lack of affordable high quality baby foods, such as baby cereal fortified with vitamins and minerals. On the one hand, quality imported products are unaffordable to most parents and only available in cities. On the other hand, locally manufactured products may be affordable but do not have the nutritional value nor the hygiene standards that are desirable for infants
SODEPAL is a food processing company that has been in business for over 20 years and is located in Ouagadougou, Burkina Faso. By producing high quality baby cereal (high in calories, protein, and vitamins) locally, SODEPAL hopes to contribute to combatting malnutrition. It already sells its products at affordable prices throughout the country, and supplies to Word Food Program feeding schemes in the region.
However, in order to grow and take advantage of the fast growing market, SODEPAL requires a substantial expansion. It needs to move to a modern factory in an industrial zone with an automated processing line including a modern packaging line. In addition the business needs to invest in marketing and developing a national distribution network.
Mme Zoundi, general manager of SODEPAL, put together a preliminary business plan for the expansion. She turned to the West African Trade and Investment Hub, financed by USAID, for support in updating and completing the business plan and producing financial models adequate for investor due diligence. In light of the nutritional benefits of local baby cereal production and the economic benefits of job creation, the need to make a success out of the expansion of SODEPAL was high. Therefore, USAID called on Sense’s proven business development and finance facilitation skills as well as its experience in West Africa to assist Mme Zoundi in the expansion.
Sense took responsibility for the three key ingredients to the business plan. For this, it cooperated with Mme Zoundi, local consultants, and engineers specialised in cereal production.
- Market research. Sense conducted market research in 12 cities to determine the size, potential, product perceptions and buying patterns of the various market segments. Based hereon, a comprehensive strategy for the marketing and distribution of the increased production was developed.
- Factory design and production plan. Using our own technical know-how and that of the equipment suppliers, Sense provided the design for a state of the art factory with a capacity of 3,300 MT/year, tailored to the industrial environment of Ouagadougou. The design came hand in hand with a raw material procurement plan with an emphasis on sourcing from local farmers.
- Financial modelling. Sense realises that hard numbers have the final word when it comes to business, and produced a financial model including cash flow, profit and loss, and balance sheet forecasts for 10 years. The model was made duly detailed and geared to convince investors of SODEPAL’s economic viability: it took into account various scenarios to display the risk resilience of the business.
This mix led to an impressive business plan which is now being used to secure the finance necessary to make SODEPAL’s expansion happen. The first step is to partner up with an equity investor. With equity on board, the next step is to obtain a bank loan to finance the remainder of the investment. Sense actively reaches out to these institutions and works together with Mme Zoundi throughout the process.