As a start-up, it is often challenging to start and grow a business. With a solid own contribution, Abuhbaker Luzinda – the Managing Director and founder of Bestever Paper Industries approached GroFin Uganda in 2014 for working capital needs to start production. The company manufactures quality eco-friendly polypropylene (PP) products.
The business was performing well and there was a need to expand, therefore Abuhbaker solicited GroFin’s help again in 2017 for another round of financing to purchase a third production line. This significantly improved the business’ capacity and enabled Bestever to innovate by adding the production of ropes using waste from bag production.
Initially, Bestever used to pack ropes in bags, and this was quite bulky. As a result, the ropes occupied a lot of storage space and made transportation expensive. Bestever became the first to introduce new packaging for ropes in Uganda where it packs the ropes in rolls. This made them significantly less bulky which freed up some storage space as well as reduced transportation costs for Bestever and its clients.
“Our ropes are stronger and preferred in the market. We initially used to buy sewing yarns, but we started making them for both our consumption and sale to our competitors. This too has increased our revenue streams and improved our profit margins,” – Abuhbaker Luzinda, Managing Director and founder of Bestever Paper Industries
By the time of GroFin’s second investment, Bestever has further diversified their product line from two to six products which include laminated bags, shopping bags, sewing yarns, among others. As part of GroFin’s support to the business, we recommended to Bestever to open regional distribution centres to increase local demand. Upon advice of its GroFin Uganda Investment Manager, Bestever installed a management system to link production to the inventory and its financial accounts. This has, subsequently, increased the productivity and efficiency of the business. With no revenue in 2014 when GroFin first invested in the business, it had achieved a turnover of USD 6.8m in 2019.
However, with the impact of COVID-19, Bestever Paper has seen its turnover decline by USD 1m in 2020. The ban on public transport, as a measure to curb the spread of COVID-19, has made it difficult for manufacturing businesses like Bestever Paper to continue production. One of the conditions imposed by the government to manufacturing company owners was to accommodate all their staff at the factory premises since public and private transports were banned. Given the fact that Bestever Paper employs 363 permanent staff, it could not accommodate all the employees at the factory. Consequently, Abuhbaker decided to completely close its operations.
Abuhbaker explained that this has resulted in a decline in demand.
“We export about 30% of our production but due to closure of borders with neighbouring countries, especially Burundi which is the destination for over 80% of our exports, we saw a sharp decline in revenue for April and May. Local demand also significantly reduced.”
Despite these challenges, the future still looks bright for Bestever. “Our dream is to be the largest preferred producer of quality polypropylene products. Our target is to hit USD 10m turnover by 2022,” says a proud Abuhbaker.