Dave Okech studied Mathematics and Statistics at the university but his heart was in the fish industry. He started small, as a fish farmer, then saw a business opportunity in the inefficient value chain.
To boost fish production in Kenya, and ensure traders earn good money for their catch, the value chain must be efficient so that fishery businesses receive high-quality feeds and other input, and find ready markets.
While interacting with other fish farmers, Mr Okech realised that fish farmers had little knowledge of how to access high-quality feed manufacturers, and likewise the feed makers could not reach a substantial number of farmers. There was also the challenge of finding good fish markets.
In 2020, just before the pandemic struck, he started AquaRech, a business that links all traders in the value chain.
“I was a medium-skilled farmer in Lake Victoria for about four years doing cage fish farming and encountered myriads of challenges. I saw the same problems replicated in the aquaculture sector. We couldn’t access fish feeds easily; we couldn’t access markets because there was no proper route to the markets,” he adds.
The Mandela Washington Fellow says AquaRech acts as a link for fish value chain traders, enabling smallholder farmers to reach top feed manufacturers.
The initial plan was to build a digital platform but many small traders still prefer physical locations so he invested in infrastructure.
He built cold chain facilities and warehouses for bulking fish feeds, providing a one-stop shop for input suppliers, producers, cold chain providers, marketers, and consumers.
AquaRech buys feeds in large volumes, delivers them to its warehouses, and transports them to farmers.
“I sold my stake at the fish farm to raise money to start AquaRech, in addition to funds from an angel investor and my father. Some non-hard cash capital also came in form of business development training,” he says.
Mr Okech says they work with cold chain suppliers to provide the necessary facilities to enable AquaRech to aggregate fish. In doing so, he says they provide immediate market access to farmers.
"We offtake the fish, bulk them at the cold chain facility/aggregation centres,” he points out.
“We supply franchisees with fish, they invest in infrastructure and professionalise fish trade. We target women and youth who are willing to engage in the fish trade,” he adds.
Capacity
Within three years, the business has grown and now employs 21 workers. Mr Okech says currently AquaRech does 100 tonnes (100,000 kgs) of fish feed sales per month, serving about 400 farmers mostly small-scale, generating revenue of about $100,000 (Sh12.4 million).
The company has a 10-tonne capacity cold chain facility and can process five tonnes of fish daily.
“We cover Kisumu, Siaya, Kakamega, and Homa Bay counties and looking to scale up to Nairobi,” he says, adding that they have plans to set up operations in Kirinyaga and grow aggregation capacity to about 60 tonnes of fish per day in all its outlets.
Demand for fish in Kenya outstrips supply, with a current supply of 163,600 tonnes in 2021, according to the latest data from Economic Survey.
The annual demand is an astronomical 600,000 tonnes.
"There is a huge demand for fish locally that we do not need to export our fish,” he says.
Affordability Part of the challenge is that fish is unaffordable to many households because the farmers buy feeds at high prices and pass on the additional cost to consumers.
“We look at affordability on two fronts. Our data shows that if you buy locally-manufactured feed that cost Sh100 per kg with low crude protein content and with a feed conversion ratio of about three, you need 3kg of the low-quality feed to raise 1kg of fish and if you do that as a factor, you end up with Sh300 as your cost of production for the fish,” he says.
“That fish will probably be sold at Sh290 so the farmer makes losses. We source feed that costs Sh142 per kg, with a food conversion ratio of 1.5 and a guarantee to buy back the fish at Sh300 per kg. The farmer makes a profit of about Sh80, takes eight months to produce the fish while those who buy the low-quality feed take 13 months to produce and end up making losses,” he adds.
What he has learned so far? “Be quick to accept failure and change course if your product or service is not doing well. That’s how you’ll survive the entrepreneurial journey,” he says.
Operational challenges
He may be counting his gains three years into the business, but he has had his fair share of challenges. Getting a startup off the ground is not easy, he says.
“Raising funds is not child’s play and getting people to believe in your entrepreneurial story is a tedious process. Commercial banks would not lend to a startup because they look at things in black and white – money and collateral. You’ll be lucky if you get investors who don’t care much about collateral and believe in your story,” he says.
The second challenge was profit. When he started, he says, he imagined he would make a profit as soon as he hit the ground running.
In reality, he realised AquaRech could only work without the supporting physical infrastructure and so he needed to invest heavily.
As a founder of the company, Mr Okech says that what gives him joy is that the platform has moved farmers from loss-making to a profit zone.
“It was sad seeing farmers take 13 months to produce fish and make a profit of only Sh13,000. I’m happy seeing franchisees earn from their businesses, move volumes and be able to qualify for loans from their respective financial institutions. That makes me happy,” he says.
For those looking to invest in the aquaculture value chain, Mr Okech says Kenya’s fish industry is still nascent with lots of job opportunities, but also requires government support.
“Policies regarding the importation of fish feed inputs, for instance, import duty waiver on certain fish feed production equipment, waiver on feeds itself are essential policies that need to be put in place by the government to boost the sector,” he says, adding “I hope for an aquaculture sector that works for the well-being of all. Everybody should be able to access fish affordably at one point.”
