Give a person a fish, and they’ll eat for a day; create a company that significantly lowers the cost of fish production, and you can supply an entire population with healthy and affordable protein. We spoke with Tembwe Mutungu, co-CEO and co-Founder of FirstWave Group, to learn about the company founders’ incredible journeys into accidently becoming market leaders in aquaculture, and the fantastic changes they are making in Africa now that they have committed themselves to this impactful work.
“FirstWave is a low-cost producer of fish and an aquaculture pioneer in Africa,” Tembwe told us. “We have developed the complete value chain; fish feed production, fish production, distribution, and retail. Our mission is to become the most affordable producer of animal protein on the continent.” FirstWave’s founders began their journeys in aquaculture through the companies, Yalelo Zambia and Aller Aqua. In Tembwe’s case, this began when he became Yalelo Zambia and Aller Aqua Zambia’s CFO in 2016. “I joined Yalelo a few years ago in – post-revenue but pre-operating profit, essentially – and it was very clear to me that this was a business that had all the characteristics I was looking for.” Tembwe was seeking businesses which had the potential for not only profitable growth, but also a significant local impact. To identify such an opportunity, he was looking for a number of factors:
“Looking through an investment lens, I was looking for a business that had the chance to be number one or two in its market, could be expanded into the region, had a wide economic moat – classical private equity characteristics – but then, also, for me, being Zambian and African, I was looking for an opportunity for significant impact. I moved to Zambia in 2011 and Bryan [McCoy, fellow co-Founder and Yalelo’s CEO] moved to Zambia a year after me. While he started with Adam at Yalelo in 2012, I spent a few years exploring businesses in other industries like; energy, food, agriculture that fit the bill. “My attention turned to Yalelo at a time when the company was beginning to prove out the production model, and the irony was seeing exactly what I had been seeking; a company with the potential to make protein available at an affordable price on a large-scale throughout not only Zambia, but Africa. There was potential for expansion, and even more importantly, the real opportunity to change and improve lives. Even then, we were not sure we were quite ready for how successful the venture could be.”
“Initially, we thought, ‘Let’s be the team that knows how to launch businesses in frontier markets.’ We moved from that position to, ‘We just need to lead African Aquaculture as a whole’.”
Fish production is a far cry from the careers that the co-founders originally saw for themselves. Instead of moving into careers in venture capital, private equity and management consulting, they found themselves looking at a future in fish. “Adam [Taylor, FirstWave Chairman and co-Founder] will often remind people, ‘There are easier ways for us to make money.’ Our backgrounds are not in aquaculture. They are not in food or in supply chain management. For example, Adam started his career as a hedge fund manager on London’s High Street!
“However, when you very quickly find yourself, at the beginning of 2018, after essentially four or five years of operation, the largest producer of fish on the African continent, and then the most efficient producer of fish of the African continent in 2019, probably leading on a global scale in terms of production efficiency. Then from an impact perspective, there’s almost a moral obligation to push this as the solution for delivering affordable protein to the continent. I think we started to see that at the beginning of 2018. In some ways, where other people have tried to do this and failed, and we’ve been fortunate to see success up to this point, as industry leaders, we’ve got a responsibility to not just sell this off and let this go.”
The decision to walk away from their imagined futures seemed like it would be a difficult one, but instead, it was unanimous and almost unspoken. “The decision to commit to this mission was easy. It wasn’t even a decision, it was coming together to say, ‘Okay, so Adam has had this idea and this is what we’re doing and this is why we’re doing it.”
At the end of 2018, FirstWave Group was founded, taking in Yalelo and Aller Aqua Zambia as subsidiaries, and all non-aquaculture ventures for the team ended. Instead, they focused on their new mission to produce affordable protein for Africa. “We’ve got the opportunity to make fish as affordable as chicken, and it’s healthier, and it’s better for the environment. So, we should probably do that.”
Headquartered in Johannesburg and Amsterdam, the company currently has a market reach in southern and eastern Africa. Since the team already had experience and a presence in the country, FirstWave began its operations in Zambia, where it is still thriving today. From one farm, the company supplies Zambia with affordable fish through over 120 distribution points including 50 company-owned outlets, as well as through other traditional trade outlets and various supermarkets. FirstWave recently launched operations in East Africa through its subsidiary, Yalelo Uganda. The new facilities are still under construction, but that hasn’t stopped it from producing fish, and recording its first harvest is June.
“Our ability to develop large-scale multi-million dollar projects in frontier markets is exemplified by the team’s achievement in Uganda – safely continuing construction and launching operations in the middle of a global pandemic is a testament to that unique capability in of itself.”
FirstWave‘s data-driven approach has enabled them to study both their successes and challenges, allowing the business to quickly learn and develop its strengths. This makes for an extremely tight and efficient operational machine. Tembwe told us that people often ask why the company doesn’t diversify in the types of fish it supplies, and the answer is one of priorities and also one of business; the team’s mission is to be the lowest-cost producer of meat in the region, and that means streamlining operations.
Instead, the company is expanding in reach. Setting up a new production site in Uganda, from construction to equipping, cost FirstWave between $10-15 million, and this is the figure the company is looking at for all subsequent sites as well. Located on Lake Victoria Yalelo Uganda will serve as FirstWave’s hub for reaching the east African market, with plans for further expansion across the continent. The company also plans to establish a hub in West Africa in the next three years. In the meantime, the Zambian site is expanding its reach too, with exports starting to ship to Malawi, South Africa, Democratic Republic of Congo and Kenya.
While the company isn’t looking to introduce new fish species into its mix, it still does offer variety in its products. Its fish are available either ‘whole round’, or gutted and scaled, and as Tembwe mentioned when describing the company’s full value chain, the company produces fish feed that other fish farmers can purchase. The company is also looking to introduce higher-margin products such as fish fillets, marinated fish, and dried and/or smoked fish. “We will also introduce modern trade packs in the fourth quarter of 2020. Modern trade packs are a new processed product line created specifically for our supermarket customers and target a higher income consumer. The packs will be sold in the two largest supermarkets in Zambia; Pick n Pay and Shoprite. We will also introduce frozen fish products that will be sold to our export markets, as frozen products are easier to distribute.”
Making affordable and healthy meat available to the African markets is not the only way FirstWave is looking to make an impactful difference within the continent. The company is also passionate about the wider economic impact of generating business. “We see the world of affordable fish through the lens of the Prosperity Paradox. By constantly innovating across our local supply chain, we can unlock pent up demand while transforming protein nutrition.” It is also involved in numerous corporate social responsibility (CSR) projects, including the support of local small-scale soy bean farming, again to promote and increase the availability of protein in the region. Lastly, the company also seeks to make a difference in the life of its employees.
“We invest in our people and our teams, ensuring that FirstWave not only achieves success as a business, but as an employer and workplace.” The company currently has a team of over 1000 staff. In addition to careful learning and development and a focus on promoting from within, the company provides for its staff through various benefits, such as optical care, a bicycle loan scheme, and a motorcycle ownership scheme. Yalelo is also in the process of building a clinic in Siavonga which will offer basic health care to the surrounding community.
Through a vertical integration model and a deep management team, the structure of this workforce has been built with smooth scalability in mind, allowing efficient operations to continue no matter the reach FirstWave expands to. Planning ahead in this way is always the sign of smart business and will enable the company to keep its levels of efficiency and reliability as it grows. From staff structure to supply chains, exports and company relations, the inner workings of FirstWave have all been prepared for and geared towards growth. “Quite frankly, what we see in the end is a billion-dollar business. As soon as you see that, you naturally build an enterprise orientation.”
This is a company that strives to rise to anything. Despite the current pandemic, FirstWave Group is looking at ways to stay in operation. After all, as not only a food producer, but such an affordable and effective one, its produce is needed now more than ever. The food industry is one of those that will be operating on the front lines in the coming weeks and months. So, we tip our hats to Tembwe and his team. With the determination, passion, and entrepreneurial spirit FirstWave’s founders all seem to share, it seems that this current global situation will simply be the latest in the line of challenges that they have risen to.
What FirstWave Group has managed to achieve is extremely exciting, and the only thing more exciting is the prospect of what it could still go on to achieve as this business and operation model spreads. We hope that the current blow to the world economies does not hinder such a fantastic company. FirstWave is tackling something that could truly improve the state of the world, and we look forward to watching it continue to thrive, and to help Africa to thrive with it.