Africa | May 7, 2020

East Africa Fruits raises $3.1 million to address Tanzania’s food distribution challenges

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, May 7 – Tanzania’s East Africa Fruits is a produce distributor that works with smallholder farmers to acquire, store and deliver goods from farm to market. The company estimates that half of crops grown in Tanzania are wasted because of inefficient supply chains and an unreliable cold chain for storing food. East Africa Fruits says its cold trucks and warehouses cut food waste while its logistics service improves supply chain efficiency and transparency, keeping food prices down.

The seven-year-old company is profitable, but lack of working capital and growth capital have restricted it rate of expansion.

It has now raised $2 million in Series A equity funding from Goodwell, FINCA Ventures and elea, and roughly $1.1 million in debt. MCE Social Capital contributed a portion of the debt.

East Africa Fruits’ model is similar to Twiga, in Kenya, which raised a $24 million funding round in December. While Twiga is shifting focus towards bigger growers as it expands operations, while East Africa Fruits plans to use its funding round to reach 10,000 small farmers and 6,000 vendors in the next three years.

East Africa Fruits plans to establish collection centers in farming communities. Those centers will eventually become hubs for expanding farmer services.

“There’s significant room for them to grow, as a profitable, sustainable, high-growth small-to-mid-sized business,” FINCA Ventures’ Alex Evangelides tells ImpactAlpha.

COVID resilience

East Africa Fruits’ customer base is comprised of informal vendors and mom-and-pop shops, as well as high-end hotels and restaurants. The company’s decision to focus more on its underserved customers has helped it weather COVID, Evangelides said: East Africa Fruits’ sales have continued to grow amid the pandemic because of demand from grocery stores and kiosk owners.