Newman Foods Limited, a Ugandan agro-processing company, has secured a UGX12.3 billion (US$2.93 million) mezzanine loan from AgDevCo Ventures to expand its food processing capacity, diversify its product range and increase purchases from smallholder farmers.
The investment will support the company’s next phase of growth as it seeks to meet rising demand for locally manufactured food products.
The funding will enable Newman Foods to increase production, expand its range of nutritious food products and strengthen its agricultural supply chain by sourcing more raw materials from local farmers.
Based in Kampala, Newman Foods transforms locally grown agricultural commodities into value-added food products, including packaged snacks. The company also specialises in fresh fruit and vegetable packaging.
It currently sources agricultural produce from more than 3,000 smallholder farmers across Uganda and supplies thousands of retailers through both formal retail chains and informal markets.
Managing Director Nasser Ssegujja said the financing would strengthen the company’s ability to respond to growing market demand while creating additional opportunities for farmers supplying its processing operations.
AgDevCo Ventures Supports Agricultural Growth
The investment also marks an important milestone for AgDevCo Ventures, the early-stage investment arm of specialist African agriculture investor AgDevCo.
The US$3 million facility is at the upper end of the investment vehicle’s financing range, which targets small and medium-sized agricultural businesses across East Africa with investments of between US$1 million and US$3 million.
Mezzanine financing combines features of debt and equity, allowing growing businesses to access expansion capital without necessarily giving up ownership stakes.
The facility is designed to address financing gaps faced by agricultural businesses seeking to increase production, strengthen supply chains and improve market access.
Previous Investment Supported Factory Development
Newman Foods’ latest financing follows an earlier investment from the Yield Uganda Investment Fund, which approved approximately €1.9 million (US$2.12 million) in equity and quasi-equity financing in 2022.
The funding supported the construction of a processing factory, the acquisition of modern equipment and improvements in packaging, branding and the company’s farmer supply network.
The facility was commissioned in August 2023, providing the company with additional processing capacity to support its operations.
Boosting Uganda’s Agro-Processing Sector
The latest investment comes as Uganda continues to promote agricultural value addition through increased domestic processing of locally produced commodities.
Expanding agro-processing capacity can create additional markets for agricultural produce, reduce post-harvest losses and support the growth of domestic food manufacturing.
For Newman Foods, the expansion is expected to strengthen relationships with existing suppliers while creating opportunities to work with more smallholder farmers.
However, Newman Foods and AgDevCo have not disclosed the loan’s repayment terms, interest rate or specific production expansion targets.