For ten years, Kwasi Nyamekye, metallurgical engineer turned agribusiness entrepreneur, struggled to get his venture Vester Oil Mills on solid footing. Although the company’s soy cake product, used for feed, slowly gained acceptance among Ghana’s poultry farmers, and Nyamekye successfully sold the processed soy to large company’s like Agricare Limited, a leading animal feed producer, and to the 600-member Greater Accra Poultry Farmers Association (GAPFA), meeting the growing demand became a challenge due to lack of financing for expansion.
Denied loans by banks and unsuccessful with investors, Vester Oil Mills turned to the USAID Financing Ghanaian Agriculture Project (USAID-FinGAP). USAID-FinGAP was established to facilitate agricultural financing along the maize, rice, and soy value chains in northern Ghana. In 2014, with USAID-FinGAP’s assistance, Vester Oil Mills accessed financing of over $350,000 from Root Capital, an impact investor, to procure and install a 20 metric ton oil refinery and additional soybean processing equipment. The company also received $200,000 in working capital.
“Support from USAID-FinGAP has enabled us to acquire the financing needed to expand our capacity,” Nyamekye said. “Our performance on the market has been beyond expectation. We shall engage more smallholder farmers in northern Ghana for the production of soybeans to produce at full capacity for the local and export markets.”
Once Vester Oil Mills proved they were credit worthy, financing became a sustainable and reliable tool. The following year, Root Capital extended Vester Oil Mills another working capital loan of $300,000 to procure soybeans from northern Ghana to increase production to meet market demands. Root Capital offered a revolving loan facility payable within 12 to 18 months.
“Working with Vester Oil Mills is exciting,” Bennet Sarpong, Senior Credit Analyst at Root Capital, said. “They are good clients. The repayment of their loans on time has made it possible for them to access financing as and when needed.”
With the acquisition and installation of the refinery and additional soybean processing equipment, Vester Oil Mills has increased the quantity of soy oil processed and sold on the domestic market. Production has doubled from 16 tons/day in 2004 to 30 to 40 tons/day in 2017. The company also expanded into the export market, selling soy cake to customers in Cote D’Ivoire. Vester Oil Mills has increased the number of employees from 19 (all men) to 70 (including 15 women).
The installation of the refinery has also increased demand for soybeans and created a ready market for smallholder farmers in the north of Ghana. Poultry farmers are also assured of a reliable and continuous supply of soy cake for poultry feed production. Before receiving financing for expansion, Vester Oil Mills purchased soybeans from aggregators and Farmer-Based Organizations (FBOs) under outgrower schemes linked to over 5,500 smallholder farmers, 40% of whom are women in districts such as Yendi, Chereponi, Saboba (Wapuli community) in the northern region of Ghana. With the expanded capacity, Vester Oil Mills plans to increase the number of smallholder farmers engaged to 10,000 (including 3,000 women) in the upcoming production season.
Nyamekye’s entrepreneurial spirit continues to urge him on. His next goals are to expand production capacity even more, reduce the oil content of his soy cake for longer shelf life, and meet the needs of poultry farmers locally and in the West Africa sub-region. KPMG, a USAID-FinGAP Business Advisory Service (BAS) provider, supported Vester Oil Mills in securing a blend of equity and debt financing of $3 million from Synergy Capital to acquire a solvent extraction facility capable of processing 100 metric tons of soybeans per day. Vester Oil Mills’ capacity will increase to 140 metric tons per day and successfully extract more oil to produce soy cake with only 1.5% oil content, meeting the requirements of the poultry industry and reducing rancidity in the soy cake produced and stored for sale.
Nyamekye, with the help of financing facilitated by USAID-FinGAP, is spreading success to others in his community. One of Vester Oil Mills’ female employees, 23-year old Gifty Wiredu who works as a stock taker said, “I joined Vester Oil Mills after completing Senior High School as an unskilled person. My job as a stock taker has enabled me to learn a lot about agribusiness and the soybean sector. Income earned from working at Vester Oil Mills has also enabled me to enroll in a diploma program to build a career.”
One day Wiredu may find herself stock taker turned entrepreneur, working to further solidify agricultural infrastructure in northern Ghana.