Value addition, the way to go!

Recently, I joined a team of Trade officials as a consultant to establish a one-stop-business centre for a County government in Kenya. One of the most interesting ideas about the project is the opportunity to work and with the smallest of the small business people at the community level and to help them to grow. I loos like community service...and it is. 

During my first field visit, I had a chance to share ideas with a group of women involved in poultry, farming, food processing, energy saving stoves and other little businesses. I was able to discuss value addition using very familiar examples..and I can share that right here. In Kenya, we all know what a chapati is. A 2kg packet of wheat flour makes 40-45 commercial size chapati selling at KES 10-15 each. Someone will make a profit margin of approximately KES100 - 150 from one lot. How many pieces will you sell to make a decent living? 

Now, lets say you decided to be more innovative in value addition and you make samosa out of the same size of chapatis. You may choose to make the tiny ones so that you get 4 pieces from each chapati selling at KES 10 -20 depending on whether you use fish, chicken, rabbit, beef, vegetable or other meat. If you make a bigger size, lets say 2 pieces from each chapati, you may sell a piece at least KES 20 so that one piece of chapati gives you KES 40. Therefore, a 2kg packet of flour gives KES 1,600 in sales value. If you use chicken meat, you can actually use all the parts including the neck. What does this tell us? By so doing, you accelerate the value many times more by doing almost the same amount of work. At this point, how many pieces do you need to sell to make a decent living? 

You can get more for less work if you changed the location of selling point to a place next to a supermarket, bigger town, bus station, specialized food store, etc and sell more at even double the price. What happens with such little food stuffs? Just like with fruits, most customers will tell 'give me for a 100 bob, give me for 200 bob, 50 bob, etc. My experience as person who at one point sold fruits for survival, I am familiar with buying behavior in Kenya urban centre. Majority of people find it easy to buy something costing 20 bob, 50 bob, 100 bob up to 200 bob. 

Does this give you an idea of value addition? My next write up will be value addition on fresh fruit. I have done this sort of thing for 7 years now.  Keep it here.  Your comments are welcome, let build our potential and make it right here in Kenya!