Ethiopian Business Review

"It is more challenging to be young than a woman as a CEO."

Hilina Belete is one of the few entrepreneurs in Ethiopia who have managed to take a family business to the next level, making it a successful and strong contender in the food industry. She is the CEO of Hilina Enriched Foods Processing, at which she worked in various posts before taking it over from her father. It took Hilina more than a decade to be what she is today. When the 32-year old entrepreneur took the CEO post, the company was not well-known as it is now. But after a joint venture agreement with ONYX.S.A.S (Group Nutriset) of France, overseen by Hilina, the company pioneered the production of high quality nutritional and fortified foods for both the institutional and commercial market in Ethiopia and East Africa region. This includes Plumpy‘nut (RUTF), Plumpy’ sup (RUSF), Sheba Peanut Butter and Sheba Peanut Splits. With hundreds of employees and through its network of local suppliers, Hilina attempts to fill the gap in the country’s efforts to raise food security.

As one of the youngest CEOs in Ethiopia, Hilina believes investors are not still aware of the big opportunities in the country’s food sectors. Mentioning the challenges she faces to get raw material, Hilina thinks ventures should be incentivized to invest in the food sector. EBR’s Samson Berhane sat down with her to learn what makes Hilina tick.

EBR: It is rare to see a successful second generation business person who has inherited a family business in Ethiopia. What has your experience been?
Hilina: Although I am the second generation to run my family’s business, I learned everything from the start. Before I become CEO, I worked in every department of the company for almost ten years. I also attended every board meeting. Even though I didn’t have a say, I was able to learn a lot.  I used to be the head of operations, quality control and commercial departments. In doing so, I was able to know the company better than anyone. I also trained and worked with our partners. In terms of education, I have a master’s degree in business leadership.

Your company produces a range of goods, many of which are designed to reduce malnutrition. How much have you achieved in this regard?
We have worked on reducing malnutrition since 2007. In order to be part of Ethiopia’s fight against child malnutrition, we produce foodstuffs, such as Plumpy Nut. In the last year, we managed to fulfill Ethiopia’s child nutrition demand, which was formerly satisfied through imports from France, United States and others. After addressing the national demand we are now working on malnutrition prevention, in addition to treatment.

Plumpy Nut is supposed to be supplied only to malnoursihed children, and patients with HIV/AIDS. But the product is available on the market.
Plumpy Nut is used for children with iron deficiencies. Physicians usually prescribe enough for two weeks, on average. But the children’s families sell half the prescribed ration, and only give the child what’s left, which does not help anyone because it is below the prescription volume. In Ethiopia, many people think what is prescribed for others will work for them without being examined by a physician.

It’s been difficult for us to ensure malnourished children get the right amount. Meanwhile, the government has introduced a two-year prison sentence for beneficiaries found selling Plumpy to a third party. We produce and deliver it to UNICEF. There are many stakeholders in the supply chain so it is difficult to control. I can only be sure that our company is not selling the product to any third party that is not licensed and not a part of the nutrition program.

Has the company not considered producing a large supply and selling it to the public if there is such a gap between demand and supply?
Only children who fulfill the criteria can get the product at health centers, according to instructions from the Ministry of Health. If, for instance, the height and weight of a certain child is disproportional, medical doctors can prescribe the nutrient. It is difficult to manage Plumpy as a commercial product since it is subsidized by the United Nations and is given as aid. We are preparing to launch similar products in the next two years.

Can we say there is a need to incentivize investors to join the sector?
Yes. For instance, there are no tax breaks for importing nutritional inputs that are essential to produce food products to fight malnutrition. We once tried to set up a factory called Tafo Salt to produce iodized salt. We were shortly forced to shut down our plant because of the huge costs we were incurring. For example, we had to pay excise tax because extracting salt is considered mining in Ethiopia.

Despite the government’s repeated attempts to prevent malnutrition in Ethiopia, the stunting rate is still 38Pct. Do you believe the private sector should step in to avert this by producing more fortified products?
The government subsidizes flour and similar products that can be fortified with vitamins and other things to reduce malnutrition, but there is a huge problem of accessing foreign currency to import them. There is also a technological gap that makes it hard to produce them here, but there are NGOs like Global Alliance for Nutrition, and Nutrition International, that are trying. Regarding the private sector, although there are opportunities to work in the food sector, only a few investors are aware of them.

Many investors have left the salt market for various reasons. What are your recommendations for improving the situation?
We used to get salt by buying it from brokers and market suppliers. It is difficult to get as much as you want because they usually supply it as iodized salt. When we checked the mined salt in a lab, it did not meet requirements. The government must create a space where everyone in the salt market competes fairly. Informal operators must be pushed into the formal sector and must be treated equally to formal operators.

What about Plumpy Nut? How do you access raw materials?
For Plumpy Nut, we buy peanuts from farmers in the states of Amhara and Benishangul-Gumuz. We used to buy from Harar and Assosa, but there are high rates of Afflatoxin, which is caused by a chemical secreted by a fungus when the peanut is exposed to moisture. We sponsored a number of researchers to find the reason, and we discovered that the farmers soaked the peanuts in water because removing the shell by hand is difficult.

Combined with oxygen, this creates a fertile environment for the fungus to quickly reproduce. So we started buying peanuts harvested using machines. There was an NGO that supplied the machinery, but it stopped working because of a lack of finance.  Then we signed an agreement with a big cooperative in Harar, with 40,000 member farmers, but they did not have the machine.

Since buying peanuts from farmers became difficult, we switched to middlemen.  We also shifted our sourcing to the north-western part of the country. Even though peanuts from the east are tasty, they are expensive.

How much of your raw material demand is satisfied by the local market?
We still fulfill 40Pct of our demand with imported peanuts. Local peanut availability is limited since it is harvested once a year.

How much hard currency you need annually to import peanuts?
We generate USD10 million from our exports every year, but we spend half of it to import raw materials, minerals and packing materials.

Do you think the government pays enough attention to agro processing?
I do not think it is totally overlooked. But I do believe that the government should pay more attention to increasing agricultural production and improving productivity. The domestic price of many agricultural commodities is more expensive than the international price, with the difference between international and local peanut prices reaching USD200 a ton. We have also recently stopped using soya beans because the supply shortage has become critical.

Agricultural output must be significantly improved to avert shortages of agricultural raw materials. The government needs to support commercial farming because it is difficult to fulfil industrial demand with the existing small scale farmers.

Beer companies are successfully sourcing locally by partnering with small scale farmers who produce barley and malt. Why don’t companies like yours follow this strategy?
Working with many small scale farmers needs huge capital. We cannot compare ourselves with multinational companies. If loans were provided and cooperatives could mechanize and buy harvesting machines, we could work with them.

Do you plan to engage in large scale farming?
It is not in our current plan, but if the supply shortage is not averted in the next two three years, we might consider large scale farming as our next priority.

The government is currently constructing integrated agro-industrial parks. Do you plan to work in these parks after they are completed?
We previously attempted to join industrial parks, but it was expensive. If it becomes affordable, we really would like to join the ready-built facilities.

Industrial and agro-processing parks in Ethiopia located are far away from where the raw materials are produced. Don’t you think that is going to be a big challenge?
Obviously, it [is a big challenge]. Export companies prefer to be located near ports or railway lines, in addition to proximity to the area where they get raw material. For me, it is more advantageous to be close to our customers.  

Usually, Ethiopia is a “price taker” in the international agricultural commodities market. Does this apply to your company?
I do not think Ethiopia is a price taker when it comes to grains. Ethiopia’s agricultural commodities are organic, so they fetch higher prices. Very few countries have organic products like ours. Many international producers’ use genetically modified seeds.
Our company has patents on our products, and our buyers are limited to maybe three or four, so we decide the price. If we sell value added products, we might become price takers.

There is a social bias against women in Ethiopia, especially successful women. How challenging has that been for you?
It is more challenging to be young than a woman as a CEO. Many people fail to believe I am the CEO when they come to our office. They directly go to my mom’s office. She is the head of finance and administration. I understand that. But I did not face any other challenges because I am a woman. Naturally, I am a bold person.

You are married and have two children. How do your responsibilities as a mother go with your career? Many women in Ethiopia tend to leave their jobs after becoming mothers.
This is a challenging part of my life. I go to work early, work late and travel, and I have many others engagements that are required of me as a CEO. You cannot cope with such activities when you are a mother, especially when your children are not wells. Luckily, I have support from my family, so I succeed in both.
I sometimes bring my children here with their nannies so I could breastfeed them while working. It would have been difficult, without a support system. I believe mothers need enough leave to nurture their babies, so we extended maternity leave at our company to four months. I understand the challenges, especially at the managerial level. It is difficult to balance.

What should young leaders learn from you?
I believe in developing myself. They should invest more time and energy in developing their potential. For instance, I use even Facebook to acquire new information and knowledge, and I enjoy that. I never misuse my time.


8th Year • Jun.16 - July.15 2019 • No. 75


 

Samson Berhane

Editor-in-Chief

samson.b@ethiopianbusinessreview.net

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