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Monday, May 25, 2020

Yalelo set to grow after signing a US$10.5 million loan agreement with Dutch bank

Economy Yalelo set to grow after signing a US$10.5 million loan agreement with...

PRESIDENT Edgar Lungu feeds the fish in one of the ponds. This was during the official opening of Yalelo Fresh Zambian Fishing farming company at Kamimbi village in Siavonga district
File:PRESIDENT Edgar Lungu feeds the fish in one of the ponds. This was during the official opening of Yalelo Fresh Zambian Fishing farming company at Kamimbi village in Siavonga district

Zambian tilapia operation Yalelo is embarking on an ambitious growth path this year, after securing a $10.5 million loan from Dutch development bank FMO.

While the funding should help it more than double its production volumes this year, another big focus will be furthering its processing and retail footprint, Adam Taylor –CEO of FirstWave Group, Yalelo’s parent company – told Undercurrent News.

At present the Lake Kariba-based firm produces and sells just over 1,000 metric tons of tilapia per month. With this additional funding, sales should double, Taylor said.

“We have the hatchery ponds and production pens necessary to double production, but that’s a relatively minor part of the picture; fish pens are not a high-cost item.”

“Doubling sales depends on a wide range of functions across the firm, from recruiting and training several hundred new staff, additional boats, trucks, warehouses and retail shops, maintaining and securing each of those and launching dozens of new retail locations. Developing scalable systems such that we can do that in a controlled manner has been a significant area of investment over the last 18 months.”

With its plan in place, Yalelo should be able to grow sales by around 7,000t per year, he said. Sales in 2019 should lift to 1,600t per month.

Laying a strong foundation for scale has been necessary when it comes to Yalelo’s retail side.

“There are a lot of things that were simple with a handful of retail shops, however now that we operate 50 shops, growing towards 100, it is a sizeable business in itself and one of the larger cold-chain footprints in East Africa,” said Taylor.

“There are many factors in operating a successful retail chain in such a challenging environment, from data analytics to operations auditing.”

As well as its own retail shops, Yalelo also sells through most of Zambia’s major supermarket chains.

In each supermarket a Yalelo merchandizer staffs a fresh fish concession.

“Additional processing is an important focus for us this year. We see an opportunity to leverage our existing distribution to the 40 fresh fish supermarket concessions we operate to also include frozen retail packaged products, such as gutted and scaled family packs,” he said.

“Frozen product can also be distributed into additional third-party retail locations which, unlike fresh fish, does not require full-time merchandizers at each location.”

The firm already produces a moderate amount of frozen product, sold in bulk 10-kilogram packs for export markets such as the Democratic Republic of Congo and the foodservice segment, but now it is investing in gutting, scaling, filleting, and consumer packaging for formal trade across the region, he said.

Most of its tilapia is currently sold as fresh – that’s where it has the competitive advantage over smaller, frozen, glazed fish imported from Asia – but there is a niche for higher-margin processed products, he feels.

Another good opportunity to sell the extra volumes lies across Zambia’s borders.

That country, Yalelo says, is a 180,000t-per-year market, while the region – the Congo, Kenya, Malawi, South Africa, and more – is much larger.

He specified that exports and packaged, processed products should represent an increased revenue share over time, naming supermarkets in South Africa and further wholesale in the Congo as high priorities.

“Zambia will naturally continue to be Yalelo Zambia’s primary market, but there are some great opportunities in cities in other countries to attract higher-margin sales,” said Taylor.

“Prices in neighboring countries can be materially higher, more than enough to justify the additional transport costs.”

In each of those markets, as in Zambia, Yalelo will look to sell larger, higher-quality fish, attracting a price premium relative to Asian imports.

“We do charge a quality premium relative to Asian imports which are smaller-sized with a high glaze, but we’ve found this is a premium our customers are happy to pay.

Brand loyalty is high, even in these very price-sensitive markets. Our current retail pricing is $2.10/kg, relative to imported product at $1.70.

Lake Kariba, of course, is enormous. Africa’s “inland sea” is 223 kilometers long and 40km wide at its extremes, and has a surface area of 5,580 square kilometers.

The Netherlands’ Wageningen University is in the process of establishing the lake’s tilapia farming capacity, but internal analysis suggests the figure could come out at well in excess of 100,000t, said Taylor.

“Assuming the carrying capacity of the lake isn’t a near-term limiting factor in aquaculture — and the addressable regional market is upwards of 500,000t and growing — what might be?

For an individual farm, biosecurity and health management are important considerations, along with diminishing economies of scale above a certain point. Eventually, multiple locations are required, both from a production risk management and distribution perspective.”

For Yalelo, the limiting factor, for now, is managing growth.

“Yalelo Zambia has the same challenges as would be experienced by rapidly growing companies anywhere in the world, plus the added challenges of Africa.

Issues such as increasing headcount while maintaining the company’s culture; more refined delegation of authority across diverse functions; standardization of processes without stifling innovation; and ensuring management information systems are suitable at 2x and 10x today’s complexity of activity,” he said.

“This is the case across each of our group companies, and we’re fortunate to have a deep team of senior professionals leading our development. In this environment, having the right team with a clear direction is 90% of the answer – everything else follows from there.”

The only other major aquaculture operation on the lake is Lake Harvest, which has operations both in Zambia and Zimbabwe, but the majority in the latter.

Its website states it produces 9,000t per year.

There’s also very little smallholder farming on the lake, Taylor said, despite Yalelo trying to encourage it.

“Unfortunately, it’s not really taken off on Lake Kariba. Through our company Horizon Aquaculture we are trying to make fish farming more accessible to smallholder farmers by providing feed, fingerlings, and equipment in a one-stop-shop concept,” he said.

Undercurrent News

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  1. Lungu and debt are like siamese twins conjoined at the hips.Well ,i hope Yalelo fish farm becomes a success regardless.


    • If you got a loan from them then expect them to tamper with your account with impunity. That is becoming a norm in the sector… and unfortunately there doesn’t seem to be much you can do about it other than channeling most of your transactions through mobile booth dealers

  3. Big No Longer Strong. My account at Zanaco was cleared over the long weekend check that this is not the case for you

  4. Do we really need foreigners to run our fishing Industry?
    What company does Fisho Mwale have?

    • Is there a law against Zambians going into fish farming? I think not. We all want to get rich fast. We opt for the black mountain.

    • Zambians do not think global…this is why our home based entrepreneurs need to partner with Zambians in diaspora and tap into these low interest funding strategies from abroad as opposed to Zambian banks that charge you 45% APR…in hope that you default.

    • I am equally disappointed. I thought Yalelo was the brainchild of Fisho Mwale kanshi there is a whiteman behind it. I was impressed with his level of knowledge when he was interviewed on TV. I should have known better what fishing industry is there in Eastern Province compared to Luapula or Western Province.

    • Senior Engineer RTD – I think he has sold out as this Yelelo is part of a Group and Yelelo itself has revenue in excess of $150m…I am surprised IDC is not doing this on other dams as Tilapia is the less fussy when it comes to feeding no wonder the Chinks it feed raw sewerage

    • Fisho Mwale is a founder and shareholder in Yalelo: this is the top of the food chain. The CEO works for him. It is like this: shareholders own a company. The board of directors supervise the company and report to the shareholders. The CEO reports to the board of directors. The managers report to the CEO. This is how business works.

  5. #5.3 so called Senior Engineer, Mr Taylor is quoted as CEO, what does that tell you? Please read and research and find out how Fisho Mwale’s role in Yalelo and educate fellow Zambians rather than expressing ignorant sentiments. You must be a trib.al, with that amount of academic laziness.

    • Just educate me. What is ba FIsho Mwale’s role. Simple! We call it chimbuya. Not tribal.

  6. Bravo to Fisho Mwale, Yalelo is now a household name. This is better than getting involved in shoddy vulture fund deals. I still don’t understand why you wanted to be Mayor of Lusaka if you’re able to do business at that level. The loan amount seems to confirm the long standing rumor that there’s a very big fish, bigger than tilapia behind Yalelo. That fish is said to like nkongole very much.

    • This company is backed by some equity shareholders like Oikocredit who invested $2.5 m …all those names you are mentioning even CEO Bryan are just employees, their website doesnt give any information but the artile does say its a subsidiary I remember reading an article not long ago on LT …Fisho is merely an employee as well.

    • Mr Fisho Mwale sold Yalelo in the same way Ba Bwalya sold MTN(Telecel). Its normal in business you can start a business grow it to a level of attraction and sell it. The only question is where are Zambians with money to buy? If there’s no local serious buyer they sell it to other nationals besides we are in a global village now. So this Zambian talk won’t take us anywhere.

    • AK – This is what I meant when I said very few Zambians think Global …I bet you Fisho was only thinking of selling fish at Soweto Market not envisaging $150m in sales!!

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