May 11, 2017
Finnfund to invest in Ethiopian poultry company – aiming to improve food security and living standards
By producing chicks which will provide eggs and poultry meat, EthioChicken supports families to improve their nutrition and livelihood, particularly in rural areas.
Finnfund begins to finance EthioChicken, which aims to improve food security and reduce poverty in Ethiopia. By producing chicks which will provide eggs and poultry meat, the company supports families to improve their nutrition and livelihood, particularly in rural areas.
Currently, the company operates three poultry farms, where it produces chicks. It sells the chicks to agents, who are often young people under 30 years old and with university degrees. Their task is to grow and sell the chicks when they are around 4-6 weeks old to families, who are then able to produce eggs and chicken meat both for their own use and for sale. Approximately 85 percent of the end customers live in rural areas. Usually, the chickens are taken care by the mothers among other home work. The agents, together with governmental agricultural experts also give training on chicken breeding.
EthioChicken focuses on breeds that are more profitable than indigenous Ethiopian chicken breeds; for example, they grow faster and produce eggs more. They are also healthier, as all chicks are vaccinated before they are sold to agents. Eggs and poultry provide important protein to the diet. In addition, they can be an important source of income.
“This investment from Finnfund will allow us to invest in more poultry houses, incubators, feed processing machinery, along with investments which will further strengthen the hygiene, sanitation, health, and safety of our workplace. This will enable us to move closer to our vision of one chicken per person per year in Ethiopia in a sustainable way,” says David Ellis, CEO of EthioChicken.
The company, established in 2010, has already produced and sold 13 million chicks in Ethiopia. The company currently employs directly more than 700 people, of whom 40 percent are women. In addition, the company cooperates with approximately 1800 agents employing thousands of people. When the number of households buying the chickens are added to this, it can be estimated that the company positively affected for example in 2016, up to 1.6 million households, or more than 6 million Ethiopians.
Finnfund has granted Agflow Poultry, owner of EthioChicken, loan of USD 10 million. The aim is to support the development and expansion of the company’s operations in Ethiopia.
“EthioChicken is doing important work, and we are glad that we can finance the development and expansion of their operations. Improving food security and job creation, particularly for the young, are playing a key role in the development of Ethiopia and the region as a whole,” says Jaakko Kangasniemi, Finnfund’s Managing Director.
”The business model of EthioChicken is almost unique in Africa; it is the only poultry company that has succeeded on a large scale to reach specifically rural households while being able to operate profitably,” says Jari Matero, Senior Investment Manager at Finnfund.
The company has gained international attention and praise for their work. Improving food security is particularly important in Ethiopia, which is among the world’s poorest countries. The country has recently suffered of exceptional drought, which has affected particularly farmers and other people living in rural areas. There has also been political unrest in the country. At the same time, Ethiopia is one of the countries where the population is growing fastest in the world: the United Nations estimates that the population is expected to double from the current 99 million to 188 million by 2050.
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Developing the agricultural sector improves food security and reduces poverty
78 percent of the world’s poor live in rural areas and work in agriculture. Agriculture and farming are the most efficient way to increase their income. Half of the agricultural work is done by women.
Due to population growth, the efficiency of food production must be improved; the agricultural sector must produce 50 percent more food in order to feed 9 mrd people living the world by 2050.
Every day 790 million people do not have enough to eat. If this continues, it will be impossible to achieve the second sustainable development goal, no hunger.
Every fourth (25%) child, i.e. 160 million children, under 5 years of age is suffering maltrutrition. 75 percent of them are living in Sub-Saharan Africa and South Asia. Almost half (45%) of the deaths of children under 5 years of age are caused by malnutrition.
Sustainable development goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture