Kenyan Manufacturer HACO Bets Big on Africa's Industrial Future, Expanding Reach and Local Sourcing

In a bustling Nairobi factory, HACO Industries is a hive of activity, with a continuous flow of household, hair, and skincare products emerging from its production lines. The Kenyan-based company manufactures approximately 90 distinct products tailored for African consumers. These brands currently reach over 3 million families across the continent, and importantly, HACO sources its raw materials from more than 500 African farmers. Mary-Ann Musangi, whose family established HACO over 50 years ago, sees immense potential in manufacturing goods within Africa for its people, emphasizing a deep understanding of local needs. "How do we reach African consumers with products that they want and need, manufactured by a company that understands them — understands African skin, African hair and African needs?" she stated.

HACO's export market spans eight African nations, with Kenya being its primary market. The company also has a significant presence in Uganda, Rwanda, the Democratic Republic of Congo, and Zambia. Musangi acknowledged the logistical hurdles, noting, "Distances can be a challenge and African logistics is one of the key challenges in terms of penetrating across the continent."

The company's manufacturing capabilities are substantial. Its plastics plant, responsible for producing product packaging, can generate 5 million components monthly, according to manufacturing director Peter Ndichu. A separate facility is equipped to process and pack 1,365 metric tons of products each month.

HACO is actively working to bolster its supply chain by increasing its procurement of ingredients from within Africa. The company collaborates with small and medium-sized suppliers of natural oils, providing them with technical assistance to meet HACO's stringent quality standards. For instance, shea butter is now sourced from Uganda or Ghana, a significant shift from its previous practice of importing it from the United States at a much higher cost (1,000 Kenyan shillings per kilogram compared to 5,000 Kenyan shillings). Ndichu also highlighted HACO's plans for automation, aiming to increase packing efficiency from 3,000 pieces per hour to approximately 12,000 pieces per hour with new machinery. This expansion necessitates the construction of a new factory to house these upgraded operations.

Hubs and Partnerships for Growth

To achieve its ambitious goal of exporting to 30 African countries by 2030, HACO intends to establish five regional hubs across the continent. Ghana is slated to become its West African manufacturing hub, facilitating exports to neighboring markets. Musangi stressed the importance of local collaborations for this expansion, stating, "Africa is so fragmented in many ways: the countries, the boundaries, our taxation laws, our policies, our culture, our language, our money, currency. We’ve got to see, how do we reduce these points of fragmentation?" She believes that "the only way we can do it is through these partnerships, working with local people."

In Ghana, HACO has partnered with Ayewa Labs, a firm specializing in product development and manufacturing using African ingredients. Nanayaa Bates, Ayewa's founder, noted that the African Continental Free Trade Area (AfCFTA), established in 2019, is instrumental in attracting clients from other African nations. HACO supplies raw materials to Ayewa, which then manufactures products for other companies, significantly boosting Ayewa's output tenfold.

Driving Manufacturing and Value Addition in Africa

Manufacturing is widely recognized as a crucial driver of economic growth and job creation in Africa. However, in many African nations, it represented less than 15% of the gross domestic product in 2023. Musangi advocates for African countries to capture more value from their natural resources, asserting, "It is unacceptable that we continue to simply extract raw materials from Africa and send them out to the West for them to manufacture and send us the finished product to consume at much higher prices." She emphasized the availability of skilled and educated youth in Africa, underscoring the need to "develop and continue developing the manufacturing sector so that we can add value to these raw materials."