From Makindye garage to Shs 11bn deal: Ugandan snacks maker Newman Foods secures major investment

Ugandan food processor Newman Foods Limited has secured a $3 million (about Shs 11 billion) investment from AgDevCo Ventures to expand its manufacturing operations, introduce new products and increase purchases from local farmers.

The financing is expected to strengthen the company's position in Uganda's food processing industry while creating more market opportunities for thousands of smallholder farmers.

AgDevCo Ventures, the early-stage investment arm of agricultural investment firm AgDevCo, provided the funding through a mezzanine loan.

A mezzanine loan is a form of financing that combines features of debt and equity investment. It allows a growing business to access capital without immediately selling shares to new investors, although its terms can be more costly than those of conventional bank loans.

Newman Foods processes locally grown agricultural produce into packaged food products, including snacks, and also handles fresh fruits and vegetables.

The company currently sources agricultural produce from more than 3,000 smallholder farmers across Uganda and supplies thousands of retailers in formal and informal markets.

The latest investment will enable Newman Foods to increase its processing capacity, diversify its range of nutritious products and expand its network of farmers.

Founded in 2013, Newman Foods started operations in a converted garage in Makindye, Kampala, before expanding into commercial food processing.

The company initially focused on sourcing and packaging fresh fruits and vegetables before diversifying into processed snacks in 2017.

Its product portfolio includes potato crisps, roasted groundnuts, plantain snacks, pumpkin seeds and biscuits sold under the Newmans Snacks brand.

The business has since expanded its operations and workforce, establishing itself among Uganda's locally owned food processing companies.

Newman Foods managing director Nasser Ssegujja said the investment would help the company respond to rising demand while strengthening its relationship with Ugandan farmers.

"This investment is a vote of confidence in what Ugandan farmers and a Ugandan brand can build together," Mr Ssegujja said.

"It gives us the capacity to meet growing demand, to buy more from the thousands of farmers who supply us, and to put more wholesome, Ugandan-made snacks on the table."

The financing comes as Uganda seeks to increase agricultural value addition, a process through which raw agricultural produce is transformed into finished products that attract higher prices.

For farmers, increased local processing can provide more reliable markets for their produce, while manufacturers benefit from access to locally available raw materials.

AgDevCo Ventures head Christine Mwangi commended Newman Foods for its growth and its contribution to Uganda's agricultural supply chain.

"What Nasser has achieved in building Newman's, a locally owned business with deep roots in Ugandan farming communities, is genuinely impressive," Ms Mwangi said.

She said the investment firm would support the company's management as it increases production and expands access to affordable, quality food products in Uganda and the wider region.

The investment follows earlier financing secured by Newman Foods from the Yield Uganda Investment Fund in 2022 to support business expansion, processing equipment and improved production capacity.

AgDevCo Ventures specialises in providing capital to growing agricultural businesses across Africa, particularly enterprises that face challenges obtaining suitable long-term financing from conventional lenders.

The company has not disclosed the loan's repayment terms or the number of additional farmers expected to benefit from the expansion.

ENS Uganda advised AgDevCo Ventures on the transaction, while BNM Advocates provided legal services to Newman Foods.