Ortega’s struggle to send Uganda’s goods beyond borders

By Ian Ortega

President Yoweri Museveni’s administration is actively promoting value addition to boost exports, increase foreign currency earnings, and strengthen the local currency, the Uganda shilling. Central to this initiative is the creation of more jobs for the growing number of unemployed people, along with accelerating Uganda’s overall economic growth.

According to multiple government reports, as of March 2023, Uganda’s export sector saw remarkable growth, with exports totaling $674.54 million—a sharp 93% increase from the previous month. This surge was primarily driven by strong performances in mineral goods, tobacco, maize, and cotton.

The East African Community (EAC) remains Uganda’s largest export market, accounting for 35.7% of all exports. Key export products include gold, coffee, fish, and raw sugar, with major destinations being the United Arab Emirates, India, and Kenya.

Furthermore, in 2022, Uganda’s total exports reached $3.99 billion, with gold leading at $1.92 billion, followed by coffee at $753 million.

While the private sector plays a significant role in driving Uganda’s exports through investments in various industries, some testimonies from key stakeholders have raised concerns about whether the government is fully committed to export promotion or simply expressing rhetoric.

Below is Ian Ortega’s touching story- verbatim

One thing I have learned about business, especially in this part of the world, is that it’s going to take much longer than you expected.

About two years back, I got excited about Food Export in Uganda. I have always had an itch for agriculture. Deep down, I believe among the first securities a country must guarantee is food security. You must be able to feed your people not just today but for a considerable time in the future.

With this passion in mind, a friend came around that shared a similar passion. And he said, can we venture into this world of food export. At that point we were totally clueless.

So, we started talking to some people and looking for people that were already in this business. I remember some people telling me; “those licenses are given by Salim Saleh.” That was the time when Saleh was shifting camp from Kasese to Gulu. I kept imagining that I had to make a trip to Gulu for a food export license.

Anyway, we decided to eat this elephant in chunks with this friend. The web information said that one needed to belong to a horticulture association. We looked for one and paid for membership. After we paid, it just became hard to meet the chairperson to get more information on next steps.

Then we met someone who was an active exporter. They gave us an hour of their time and never opened their space to us again. I soon realized that some exporters were gatekeeping information. But onto that story later.

With our membership, we called on the Uganda Export Promotion Board (UEPB). They had certain requirements. UEPB existed to assess one’s export readiness. So, things like your bank account balance. Initially, they rejected us. So, we had to raise some more money and build some credit worthiness.

Now, UEPB gives you a later that you then attach with other documents and submit to the Ministry of Agriculture. This included getting an MOU with a packhouse that is already certified by the Ministry and your list of farmers. Boom, we submitted and then got the email that we now had a temporary license to export. I must say, this whole process was corruption-free. I didn’t have to make the trip to Gulu.

As soon as we had the export license, it hit us that the real problem was getting the client. That’s when I realized that some people existed just to sell clients. There were some online websites where we signed up and they link you to clients. I also realized that many people were no longer exporting, they had become consultants, and you pay them to teach you the game of exporting. Things such as pricing.

Luckily, we got our first client in UAE. At that point, I was busy with my other job, so my partner was at it. It was avocado. Once we solved the client problem, it opened us to the new problem of supply and then quality. Most avocado comes from the Fort Portal/Kabarole region. But you don’t get all the avocado from one farmer; you have to aggregate.

Then you bring it to your packhouse in Kampala, do the cleaning and sortation, and then pack. At that moment, you have to schedule a flight. The thing is, you could book a flight and fail to aggregate the quantities. But avocados at that moment are also ripening. The way we harvest avocados in Uganda is just wrong. If you see how it’s done in Mexico, the trees are short, but also the avocado never hits the ground. In Uganda, the trees are tall, and the avocados often hit the ground.

By the time Ugandan avocados arrive in Dubai or Sharjah, a good number have ripened. The client will usually offset that quantity from you. Imagine doing all that hard work just for the avocado to arrive ripened.

The Middle East market was tricky, first, it couldn’t fetch the right price. Second, a number of buyers are scammers. They will be loyal for the first 5 shipments and then just disappear on the 6th shipment. There is always a new African exporter to supply.

At that point, I tell my friend that we need to speak unit economics. We need to know what it took to get a kilogram of avocado to the Middle East. From the cost at the farm, the transport to the packhouse, the packhouse labour, the water, the boxes, the freight cost, etc.

So, we had to make a hard call and say, this is not our product of choice at the moment. A month back, I heard of a Ugandan who lost a whole container of avocado. The whole avocado supply chain in Uganda is currently screwed. You can’t think of a proper cold chain system. Even quality analysis.

At that point, we made a business decision to call off avocado. So then, we picked on pineapples. We wanted to go into the production of dried pineapples. Again, my partner tends to move faster (of course we knock more). As we were busy developing the pineapple farmer groups, we were also ordering a drier from China. We met the farmers and we now needed to convince them to dedicate some acreage to organic farming. We then onboarded a consultant to support us on organic certification. When we’d paid him most of his money, he became elusive and abandoned us.

As we were on that journey, we decided that we would pursue the European market. Early this year, one of us left for Germany to attend two exhibitions. First was Fruit Logistica and BioFach. Fruit Logistica brings together over 3000 exhibitors. It’s the largest expo for fruits and vegetables. It is sad, that Uganda didn’t have a single stall at the expo. So, we kept wondering, are we serious about export promotion?

And while there, my friend soon realized that we couldn’t compete on most products, especially those that do well in greenhouse environments. It was here that the ginger insight hit. It’s a product that wasn’t taxing on cold chain requirements. Ginger can stay in the ground for over a year. And while at the expo, a relationship was struck with one of those German companies.

We went ahead and prepared, and got the German counterparts to Uganda. We went through intense negotiations and arrived at an MOU with ginger being one of the products to kick off. Now that meant going into the Ginger value chain. So, we started those endless trips to Maya and Mpigi.

Usually, you will find no more than 6 farmers that control every product in Uganda. There are those 5 to 6 farmers that grow 80% of the ginger in Uganda. And they are proud. Their pride is largely because they have made it with almost zero government support. They have had to learn the hard way, try different chemicals. One of the farmers showed me their bleached body. They used a disastrous chemical. That chemical is banned on the world market but it was sitting on a shelf in a Ugandan chemical shop.

So, it took us time to break into the circles of these farmers, to gain their acceptance, and build a relationship. Here’s the challenge with the European market, it’s heavy on certifications. The more certifications you have, the better. But the thing is, most certifications last for only a year and they are for a specific product.

At that time, we start on a journey to getting a GAP certification for ginger. At this point, we have already been cash-strapped by the trip to Germany. Now we need to look for more than USD 3000 to handle the certification. To get just one farmer to the Global GAP standards is crazy. You are buying the PPEs, you are taking them through training, you have to facilitate the agronomist, and you have to document their whole process. Now you can imagine, for two years, this business has done nothing but take money from you. At that point, I also had Ortega Group which was now starting to take its share of the money.

Long story short, we finally got GAP certified for Ginger and it is now time to get a client. Then the first story you hear, the Chinese have flooded the European market. They can deliver a kilogram of ginger at a cheaper price. Can you beat the Chinese? That’s when you realize you have been playing Chess while the Chinese are playing 3D Go.

Now I partly understand why many Ugandans have been exporting for over 10 years and they are still small players. They make just enough to exist. They just never scale. There is no qualitative change.

Personally, it’s been a great learning experience, it confounds all theories you will acquire in a business school. There are many layers and many dependencies.

By the way, let’s suppose we get a European client. There is also a working capital constraint. At some point this year, a sack of Ginger went for as much as Shs600,000. At a bare minimum, you will need Shs300 million in working capital to keep up. I remember visiting the Uganda Development Bank. The only thing that worked well in that office was their free office coffee. For them to fund you, you must put up enough collateral. We need something else, like a Uganda Investment Bank, that works as a venture capitalist of sorts.

In this kind of business, you must keep over 100 things intact and in sync at the same time. You sync financing, you sync supply, you sync logistics, you sync quality. Back and forth. But it’s exciting.

Sometimes these days, I listen to government officials speak about agriculture in Uganda and just keep quiet. Have you ever seen a child speak about a topic? Let me go back to eating this elephant… End.