Tea-time in Tanzania : 13,000 jobs

o ---C-z:2 1006 NEWS ABOUT WORLD BANK GROUP SMALL AND MEDIUM ENTERPRISE INITIATIVES Vol. 1, No. 11 September 2000 13.000 Jobs Tea-Time in Tanzania Although little known outside its home coun- IN BRIEF A try, Tanzania Tea Packers Ltd. (TATEPA) provides a fitting example of the ways that well- Seven years ago two entrepreneurs directed venture capital and technical assistance came to the Africa Project can yield enormous dividends, both from the Development Facility (APDF) financial and development perspectives. with an idea. Although no one had yet done so, they thought Conceived to take advantage of economic liberal- Tanzania 's delicious locally grown ization, the project sought to satisfy a market tea could become the basis of ia niche for a good quality blend of tea, which successful business, and were will- offered continuous supply, choice and was both ing to risk $200,000 of their own affordable to the majority of Tanzanians, and f unds on trying to build one. With.. fuD suontr tobil comne competitive in the export markets. Before TAPDF support, their company TATEPA's entry, the domestic tea market was E-Thnzanian Tea Packers, Ltd.- has since evolved from an untested fully controlled by the state-owned Tanzania Tea start-up to having $7 million in Blenders (TTB). Perennially undercapitalized and annual revenues. Through direct over-dependent on government subsidy, TTB was employment and supply networks severely constrained in its effort to develop the I from localfarms, tea sector and alleviate unemployment and rural it now provides the livelihood for 13,000 people, - pioneering an A : B I ' SMEFACTS f industryof clear is a publication competitive ___E of the ~advantage in one ofthe |~~ of the worlds ,,, World Bank Group o h ol' SME Department. poorest countries. 7- X Director~ Harold Rosen For Information Contact: XI! Rob Wright Tanzania Tea Packers: An East African emerging growth Rwright@ifc.org company Tel. # 202 473 7997 Fax # 202 522 3742 F COPY  poverty, as well as penetrate the international * In addition. APDF mobilized $24,000 in techni- market controlled by Sri Lanka. Kenya and India. cal assistance funds to enable the new venture to The absence in the Tanzania market of the big execute an aggressive marketing and promotion- multinational corporations that dominate the al campaign. as well as to set up internal con- world tea trade left big opportunities for local trols. An elaborate marketing strategy was devel- entrepreneurs. oped with help from an international company. In 1993 TATEPA's principal founders, Joseph The project, estimated to cost a total of $950,000, Mungai, a two-time agriculture minister, and was to be implemented in three phases. The first George Theobald, a British investor, sought gov- (costing about $500,000) was financed entirely by ernment approval to establish the country's first equity from the sponsors, other private sector private tea blending, packaging and marketing investors and Thomson Lloyd and Ewart Ltd., a business. Their idea was to supply around 5,000 leading British international tea broker. This imi- metric tons of processed tea in the domestic mar- tial investment facilitated production in rented ket and gradually build an export presence in the premises in Dar-es-Saalam. A strong promotion Common Market for Eastern and Southern Africa campaign followed to allow penetration of the (COMESA) countries, the Middle East and Dar-es-Salaam market, then accounting for about Central and Eastern Europe. 30% of the national tea consumption. In the busi- ness plan, the objective was to increase this share Between them, the two entrepreneurs had rapidly. $200,000 in cash and an industrial site at Mafinga, a leading tea-growing area in Tanzania's TATEPA commenced sales in mid-1995, with its Southern Highlands. Theobald, who, as general debut brand Chai Bora (Swahili for "high-quality manager of the Tanzania branch of Lonrho, a tea") becoming an instant success; in the first six pan-African multinational, had heard of the work months of operation, TATEPA managed to pene- of the Africa Project Development Facility trate the market more rapidly than anticipated, (APDF) with the continent's SMEs, suggested surpassing the initial target by 50%. Within a they contact APDF's office in Nairobi. year the company had virtually eclipsed its