Pearl Dairy secures $35m loan to expand into Kenya
Pearl Dairy Farms is expected to use some of the money to acquire a packing plant in Kenya. Photo / File
What you need to know:
- The loan was secured from the International Finance Corporation, a unit of the World Bank that manages investments in the private sector, and the Dutch development bank FMO.
Pearl Dairy Farms, which manufactures the Lato milk brand has secured a $35m (Shs130.2b) loan that will enable it to fund its expansion in Uganda and Kenya.
The loan was secured from the International Finance Corporation, a unit of the World Bank that manages investments in the private sector, and the Dutch development bank FMO.
The loan, which consists of a $21m (Shs78.1b) senior loan and an additional $14m (Shs52.1b) to refinance an existing Standard Chartered Bank loan in Uganda, will support the company’s capacity expansion plans, which include upgrading and expanding the powder milk plant in Uganda and acquiring a packing plant in Kenya.
Under the Lato brand, the Mbarara-based dairy company, founded in 2009, offers ultra-high temperature milk, powder milk, flavored milk, yogurts, butter, and honey.
Pearl Dairy Farms gets its milk from over 15,000 farmers, with two-thirds of them in Uganda and the other third in Kenya.
Through 80 sales points in the two operating countries, the company distributes its products to retailers, wholesalers, and end-users across the continent.
The expansion is part of the company’s strategic plan to increase production and distribution capacity, while improving regional competitiveness.
This is not the first time IFC has invested in Pearl Dairy. In 2018, it loaned the company $6.5m to build a cutting-edge milk processing plant in Uganda.
During bilateral talks between Uganda and Kenya following a ban on Uganda’s milk products, Kenya allowed Uganda’s Lato to invest in its local dairy factories in an effort to increase competitive advantage.
Uganda’s milk has on various occasions been blocked from entering Kenya.
Last month, Kenya suspended a decision in which it had indicated that it would unilaterally reduce the import of milk due to expected increase in production as a result of the upcoming rainy season.
However, the decision was rescinded because it violets the East Africa Customs Protocols.
Before, this Kenya had banned powdered milk imports from entering its market, citing the need to protect its milk processors.
However, Uganda reacted, threatening to institute a ban on selected imports from Kenya.
Details revealed that Lato signed an agreement with Kenya’s state-owned financier, Kenya Development Corporation, to invest jointly in dairy ventures aimed at revitalising the region’s lucrative milk sector.
