First Kenyan firm enters Ethiopian Diary market

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September 19, 2013

PHOTO | FILE Brookside Dairy chairman Muhoho Kenyatta at a past event.

By John Njiru
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Brookside Dairy is set to be the first Kenyan firm to enter the Ethiopian market through acquisition barely two months after 30 local companies paid a visit to the landlocked state.

The local milk processor is seeking to acquire 20 per cent stake in Elemtu Milk Integrated Industry, which is erecting a Sh277.82 million dairy factory in Sululta, 25km north of the capital, Addis Ababa.

KEY MARKETS

Brookside first expressed interest in joining the market last November after Ethiopia’s Prime Minister Haile Desalegn paid a visit to its premises.

“We would like to include Ethiopia as one of our key markets in this region,” Brookside’s chairman Muhoho Kenyatta had told the premier during the visit.

Kenya and Ethiopia have already signed Special Status Agreement (SSA) that allows free operations of local firms without restrictive and prohibitive regulations such as price controls and non-tariff barriers.

According to Addis Fortune, Ethiopia’s English paper, Brookside signed a memorandum of understanding with Elemtu in July on how to develop the milk processing plant.

“They (Brookside) sent their lawyers, who deal with us at different times, and we have almost finalised the deal,” Elemtu’s director-general Tesfaye Hailu was quoted by the paper.
The factory, which can produce 30,000 litres of milk a day in one shift of eight hours is expected to start its milk production in November.

Elemtu was established three years ago and floated 80,000 shares worth Sh185.21 million. It has increased the number of company shares that can be acquired by the public to 152,000.

Some of its 1,517 shareholders include Oromia International Bank (OIB), the Cooperative Bank of Oromia (CBO) and the Oromia Insurance Company (OIC) with current subscribed capital at Sh194.47 million, out of which Sh162 million is paid up.

MARKET SHARE

Brookside, whose market share in Kenya is 38 per cent, mainly collects milk from smallholder farmers and processes about 700,000 litres of milk daily.

It has already set its eyes on Buzeki, a firm largely synonymous with Molo milk.

The move by Brookside is expected to spur action from the rest of Kenyan investors, who have shown interest in joining Ethiopia.

The interested companies include Equity Bank, Bidco, East Africa Breweries Limited, Kenya Commercial Bank, Commercial Bank of Africa and Stanbic Bank.

“The missions to Ethiopia will undoubtedly open doors for more opportunities and lessons as Kenyan investors claim a larger market share in Africa,” said Kenya Association of Manufacturers chief executive Betty Maina during the Ethiopian visit in July.

Ethiopia and Kenya has GDP of $40.5 billion and $41.117 billion respectively, while their combined population total to 125 million.

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