Profiting from processing milk

Yogurt from pasteurised milk contains probiotics, a common source of bacteria that aids digestion.

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With about Shs1 million, she started the milk processing business in 2008. But keeping it afloat meant some of her employees going for months without pay.

Ms Justine Nalubanjwa is one of a kind.
Her resilience and passion has seen her build an enterprise worth more than a billion shillings. Speaking in an interview last week, Ms Nalubanjwa said she did not go through formal education. However, her inborn entrepreneurial instinct and attitude to a large extent explain her achievements in business to date.

How Mama Omulungi Dairy limited came to fruition

Before venturing out on her own in the early 2000s, Ms Nalubanjwa worked in her brother’s dairy shop in Katwe, a Kampala suburb, where she gained the much-needed experience that later proved handy when she eventually started vending her own milk within the same vicinity. “I started with one fridge and a 10-litre jerry can of fresh milk. It was not long before I bought a 750-litre milk (facility). As time went on, I kept reinvesting the proceeds in cooling facilities.”

She continued: “At about the same time I started travelling to Kiruhura in Western Uganda to ensure the quality of milk I get is right. After doing that I would hire a vehicle to transport the milk back to Kampala.”
As the business grew, she stopped hiring vehicles and bought her own that kept trekking the western Uganda terrain in search of fresh milk.

Following the government policy to have value added to raw milk, in 2008, Ms Nalubanjwa, who was by then an experienced milk vendor, started the journey to graduate from vending raw milk to adding value to what many have become to describe as white gold—milk.

After saving some money, in 2008 Ms Nalubanjwa started bit by bit procurement of the necessary equipment for Mama Omulungi Dairy processing plant, which is based at Masajja, off Entebbe road.

Shortly, she searched for land, settling for nearly an acre of land at Masajja, off Entebbe road.
“Accomplishing all that was not easy,” she said. “Many times, my workers would go for some time without payment as I struggled to set up the processing plant while at the same time some of my friends told me I was spending a lot of money on it. But I managed to see that through.”

In the course of her journey, the regulator has been helpful. By her admission, the guidance she got from the Dairy Development Authority (DDA) has been invaluable, right from the day she decided to venture out in early 2000 until she started adding value and packaging milk.

Money spent in buying the milk processing equipment
Like any other entrepreneur, she would not rest until her mission came to fruition. The several sleepless nights she spent working hard to establish Mama Omulungi Dairy Limited later paid off. In an interview, she disclosed that the equipment alone cost her more than Shs340 million to assemble.

Initial capital
Ms Nalubanjwa started out with Shs1 million as her initial capital. With that money she paid rent, bought a fridge, and 10 litres of raw milk which she started vending. Many times she would take the milk on credit and pay after selling it.

Market
She holds reservations about some big stores (supermarkets) on grounds that some of them rarely pay her what is due to her. She said she has suffered at the hands of big retail outlets, some of which are brand names across the region.

However, there are those that are good and she is proud of the business she transacts with them. Among the outlets that she supplies with her brands—particularly Mama Omulungi dairy milk and yoghurt include, Kenjoy supermarkets, occasionally Uchumi, and a host of shops and schools such as Taibah High, Victoria schools, Kabojja, St Lawrence schools and Entebbe Junior, among others.

Volumes stocked and amount sold
Ms Nalubanjwa is not happy with her volumes. She believes she can do better and is determined to do exactly that. At the moment, she stocks about 10,000 litres of milk per day and processes nearly half of that. She vends the rest of the unprocessed milk. A litre of her processed and packaged milk costs Shs1,800, while the unprocessed goes for Shs800 per litre.

Number of employees
She employees 35 people, all of them Ugandans including the senior managers. Even though she didn’t have a formal education, she employs professionals whom she consults with from time to time. She said she does not tamper with professional decisions and advice because she understands the implication of doing so.
“All I do is to consult and discuss with these professionals then we agree on the way forward,” she said.

Opportunities

According to a report titled ‘White gold- Opportunities for dairy sector development collaboration in East Africa,’ milk is a bulk and perishable commodity therefore trade primarily takes place in milk powder, UHT milk and luxury products such as cheese and yoghurt.

The potential for intra-regional trade in these products is still in its infancy as seasonal variation in supply is similar across EAC partner states and all are normally in a deficit situation. Kenya is by far the region’s strongest dairy producer and exporter. Uganda ranks second after Kenya with 9 per cent of regional dairy exports.

With recent installations of milk drying facilities in Mbarara and further expansion by SALL, Uganda is becoming the largest producer of powder milk in the region and is now exporting powder milk to Kenya. This is happening despite challenges in milk quality and is a result of direct benefit from EAC regional integration.

Achievement registered thus far
Over the years, she has won three dairy awards. But importantly, her dream to put up a processing plant is an achievement that she has been dreaming of for many years. She is also proud of the fact that her children will not be job seekers as she has prepared a foundation for them to build on.

Most businesses in Uganda and most parts of Africa die when the founder breathes his or her last. But Ms Nalubanjwa said that is not something she is anticipating. She stresses that she is optimistic that the business she worked so hard for will grow into an empire even long after she is gone.

The managing director, Ms Violet Nakanjako Tamale, a teacher whom she fondly speaks about, is her first child. The other two—both boys are still in school, one studying procurement at Makerere University Business School (Sam Tamale) and the other one is a Primary Seven candidate due to sit for his final exams (Henry Ssali Tamale).

Challenges
Like any other enterprise, Ms Nalubanjwa didn’t have a smooth ride. When she started the processing plant in 2011, there was no water and electricity. She had to fetch water from the nearest water point and she relied on a generator for at least a year.

All these challenges have since been overcome.
The introduction of tax (18 per cent VAT) on each litre of milk, according to Ms Nalubanjwa, is more of a disincentive to an upcoming processor like her. That levy is already taking a toll as consumers would rather buy unprocessed milk instead of the processed one.

Future plans
She would want to expand the capacity of the factory. This, she says is good in terms of economies of scale—spending less for much rather than so much for so little. And she wants to install another line that will process milk into ice cream and Ultra-heated Treated (UHT) milk—with a longer shelve life.
Importantly perhaps, she is also keen on conquering markets beyond the border as well.

Advice to women and young entrepreneurs
Women should be patient and acquire experience before venturing into businesses such as this one—dairy processing.
For young entrepreneurs, Ms Nalubanjwa advises them to respect their supervisors if they want to learn or be trusted.

Lesson learnt
Her involvement in business has turned her into an astute negotiator. She said she never gets intimidated by the banks anymore.
She knows what she wants and she concentrates on how to get it.
Experience has also taught her to spend borrowed money wisely.