With COVID-19 disrupting supply chains, industries, and markets across the globe, we’re checking in with GAFSP Private Sector Window clients to see how the health and economic crisis is affecting their businesses and the smallholders in their supply chains. In the first of our “COVID Conversations” series, we talk with Nadeem Ahmed, Founder and Chairman of Global Tea and Commodities Ltd., an integrated tea, coffee, and macadamia nut company. IFC and GAFSP’s joint investment in Global Tea has helped the company expand its tea, macadamia, and coffee processing operations in Africa. The investment was backed by an advisory program that is providing financial literacy and agricultural training to about 3,000 macadamia nut farmers (about half of them women) in the company’s supply chain in Malawi. Global Tea operates in Kenya, Malawi, Tanzania, Somalia, and Sudan. In this interview, Ahmed, who is based in London, talks about soaring demand, port delays, Kenya’s mandatory curfew, and why frayed nerves are helping his business weather the COVID-19 storm.
Question: How has COVID-19 impacted your business?
People are drinking more tea and because of the uncertainty they are stocking up. We’re one of the few industries that hasn’t been negatively affected and we’re even tracking ahead of last year. Instead of buying one package of tea, people are buying three or four cartons. It’s part of a larger trend of stocking up on long-life items, including nuts, coffee, and porridge. We’re seeing a slowdown in the food service industry because people aren’t drinking tea in restaurants or hotels, but the net impact is still positive. However, it’s a pity we’re in a better position because of a bad situation. I would, of course, be happier to be in a better situation without the pandemic. Whatever happens during these unusual and challenging times, keeping our staff safe remains our top priority.
Question: How are COVID-19 restrictions impacting your supply chain?
In Kenya, many tea outgrowers have other jobs, with tea providing only a supplemental income. However, because many outgrowers are facing travel restrictions, or are unable to work their other jobs, they are devoting themselves full time to the tea fields—and sometimes even their family members are joining them. This means that more people in Kenya are plucking tea than in previous years, resulting in record crop sizes. In Malawi, our macadamia business is continuing at pace. We sold our 2020 crop before COVID-19 hit, so now we need to make sure we produce it. Our factories in Malawi are running normal hours because COVID-19 has been very limited there, with just a few isolated cases. Macadamia nuts are part of the larger trend we are seeing with tea: People are consuming long-life products, and because nuts have high nutritional value, they are popular because people are concerned about staying healthy.
Question: What precautions are Global Tea taking to keep workers safe?
We have more than 3,500 employees across our operations in Africa. In Kenya and Malawi, everyone uses sanitizer before entering our factories and they must wear masks and gloves. We are also strictly enforcing distance between workers. Government inspectors have visited the factories to ensure hygiene and social distance guidelines are being obeyed. It hasn’t been a difficult transition as our employees are already used to strict hygiene protocols. Many of our operations are automated with conveyer systems, and so it’s possible to enforce social distancing. We have not made a single employee redundant in our Malawi factories and in Kenya, we’re employing more people because we are buying more and packing more.
Question: How has the mandatory country-wide curfew in Kenya, from 7 pm to 5 am, affected your operations?
Because tea is an essential commodity in Kenya, tea manufacturing has not been affected. Kenya depends on the offtake tea industry, which exports about a billion dollars’ worth of tea every year. It’s critical to the country’s foreign exchange earnings, so tea factories have been operating as normal. We’ve also added another shift at the factory to help our efficiency, so workers arrive in the evening before curfew and leave in the morning after the curfew is lifted.
Question: What impact is the dramatic slowdown in travel having on your international business?
Many of the services we rely on—couriers, banks, or loading at the port— are all slower because of COVID-19 restrictions. Our documents go to customers by courier, for example, and the delay means that instead of getting paid in three days, it’s taking 10. Flights are canceled, couriers work shorter hours because of curfew, and the banks are all working with skeleton staffs. The slowdown is everywhere. Once we buy tea, we take seven to 10 days to pack it and then we ship it. But because of the curfew, transport to the port and our ability to load the containers have been slowed. Before COVID-19, we could load 20 containers a day, but now we are loading 10. When it takes longer to load, we may miss a vessel, which means waiting for the next one a week later. Our cash flow working cycle is slower and cash flow is tight. But we’ve managed to cope, even with higher demand, by being very efficient.
- Access to Finance