Pearl Dairy Farms, a leading East African dairy processor, has secured $35 million in debt financing to fund its expansion across the region, in a deal that underscores the growing importance of the dairy sector in East Africa's economy.
The financing, arranged by advisory firm Delphos, comes from the International Finance Corporation (IFC) and FMO, the Dutch entrepreneurial development bank.
It will be used to upgrade and increase capacity at Pearl Dairy's powdered milk plant in Uganda and to acquire a packing facility in Kenya.
This expansion is expected to have a significant impact on the dairy value chain in both Uganda and Kenya.
Pearl Dairy plans to implement a robust Dairy Development Program, supported by the IFC, which aims to benefit over 15,000 local farmers.
The programme will provide training on best practices and access to data, helping farmers boost their productivity and profitability.
Amit Sagar, CEO of Pearl Dairy Farms, described the financing as "an important milestone" that demonstrates the company's "commitment to driving growth and excellence in the dairy sector."
The deal highlights the crucial role of the agricultural sector in Uganda's economy. Agriculture employs approximately 72per cent of the population and contributes about 24.1per cent to the GDP.
The country's dairy sector is now valued at $3.8 billion, with exports bringing in $106.2 million annually.
Bart Turtelboom, Chairman and CEO of Delphos, emphasized the potential for inclusive growth in the sector, stating that "investment in modernizing the dairy value chain creates significant economic returns for the community and the country as a whole."
This transaction also aligns with broader efforts to enhance food security in the region. By increasing access to dairy products and strengthening the supply chain, the expansion is expected to help the sector better withstand macroeconomic shocks.
The financing for Pearl Dairy Farms represents a continuation of Delphos' active involvement in African agriculture.
The firm has raised over $4.7 billion for transactions across the continent over the past 37 years, contributing to the United Nations' Sustainable Development Goal 2, which aims to end hunger and achieve food security.
As East Africa's dairy sector continues to grow, deals like this one may become increasingly common, potentially attracting more international investment to the region's agricultural value chains.