Founder & CEO, Lovegrass Ethiopia
Yonas Admasu was born in 1968 into a rural farming family in northern Ethiopia. He graduated with a BSc in Electrical and Electronics Engineering from the University of Greenwich in London in 1996, after which he began his first job as an engineer—working on mobile technology at Chase Electronics. Thereafter, he continued his studies and received his master’s degree with distinction in Business and Information Technology in 2001.
As Yonas had always wanted to work in the banking and finance sector, he pursued further trainings in financial risk management and quantitative finance—becoming certified as a Financial Risk Manager (FRM) from the Global Association of Risk Professionals (GARP) in 2004. This paved his career towards working as a Support Analyst at the interest rate derivatives desk of the global banking giant BNP Paribas. He then proceeded to join the world-renowned investment banks JP Morgan and Credit Suisse, ascending to Vice President (VP) of the emerging markets division of the latter in 2013.
After having built a career that many would envy, Yonas decided to return home to start a health-food processing facility in 2015. Although this had always been a dream, his decision was triggered by an encounter that he had with teff products at a supermarket in Britain which were clearly not of Ethiopian origin.
Growing up in a rural teff farming family, he had the sobering realization that others were taking advantage of one of the foundations of Ethiopian cuisine and culture. Yonas and his family thus began experimenting in their home kitchen to better understand what innovative products could be made out of the Ethiopian super-grain.
Subsequently, they began taking these new ideas outside of their kitchen to multiple manufacturing plants around Europe—where they realized Ethiopian teff was a versatile ingredient that could become a global super food. Energized by this discovery, Yonas packed his bags and moved to Ethiopia to begin the journey that has now become Lovegrass Ethiopia.
The health food company that began exporting authentic Ethiopian teff, now sells its products like teff pasta, breakfast cereal, and snacks globally. It also operates a factory with cutting-edge technology that produces a range of teff-based products from the hills of Sululta, 20km north of Addis Ababa.
Yonas talked to EBR’s Addisu Deresse about his journey of investing in Ethiopia.
You came from a teff-farming family, and now you are back in a teff-based business. How does that feel and what does it mean for you to do what you are doing now after years in a high-profile professional career in Europe?
It means everything to me! It isn’t only the business; there are a lot other aspects to it. I came here seeking meaning as my kids are all grown-up and my career has reached all possible heights. Yet, there was a certain void in me while working on the trading floor in London. It all just became satisfactory no more. There was always something missing and I knew what it was.
I regularly come to Ethiopia to visit my family and I have a house not far from my factory. The reality I was living was that I had personally moved on and indulged my own privileges. I didn’t really see much change happening for the community I left behind and so, there was always a void. This hollowness grew to the point of making my stay abroad almost untenable. So, what I do now means a lot more than just an investment.
What are the major milestones for Lovegrass Ethiopia after it was launched?
We were able to raise ETB200 million for the initial capital. We set up the factory and mobilized all the necessary skills and expertise from both Ethiopia and abroad. In the last couple of months, we have been able to manufacture, pack, and deliver our products.
What is your opinion on the whole teff patent issue; we hear many bad news?
The issue of the teff patent given to the Dutch company is extremely painful for me. Reading and digging into it more, it reached the point where I could not even do my job. One thing that should be clear at this point is that as long as we sell teff in its traditional form, there is no problem with them. So we can sell it in the form of flour and bake injera. However, we cannot do anything else with it—snacks, pasta, macaroni, energy drinks. All of those things we are trying to do now, we cannot produce and avail to European markets.
The other issue is how ignorant us Ethiopians have been about our potential that could change the millions of lives in the form of job provisions —if tapped into. We have lived thinking teff is this miracle that grows only in Ethiopia. That is not true. Teff is now growing in South Africa, Germany, Spain, and the United States—all patented to grow inorganic teff. All those thousands of years, we were just sitting on it and baking only injera from it. It is all painful.
Most people simply see it as a matter of pride; but it is also a matter of priority. From a material point of view, the damage was done when these guys were given the go-ahead to spread this CD genome around the world. So, everybody here in Ethiopia must know it is a matter of time before we became a net importer of teff.
Are you saying Ethiopia will become a teff importer?
Yes, no wonder! It’s a matter of time.
If you go to a restaurant in London or Frankfurt, it is likely the injera they will be serving in an Ethiopian restaurant is made with teff from South Africa or elsewhere. So that’s where the damage was done—when this thing spread. The policy that we took was just to sell teff in Ethiopia and not to export manufactured items. We created this vacuum around the world while there was high-demand for gluten-free, healthy, high-fiber grains [and teff is such].
So, what have other players done? There is a classic example of exactly the same scenario. The grain is called quinoa and it grows in Latin America—mainly in Bolivia and Peru. It has now become a kind of global phenomenon for health-food lovers and high-protein diet fans. Its nutritional profile is similar to teff. Yet, they didn’t follow the path of claiming this is just ours and no one is going to touch it. To the contrary, they worked on how they could add value and become part of what was becoming a global phenomenon.
Now, in Bolivia, it has become its oil—an engine for economic growth—and this is what we need. Actually, quinoa grows in Ethiopia; I know of some charities that grow it.
So, with teff, we have to let the rest of the world know about its taste its benefits, and take advantage of our competitive advantage which is that we know how to grow it and create a brand using our history and culture. That is what we need.
How did you work around the restrictions related to the patent to avail your products in Europe?
You know all it takes is one phone call for the patent owners to have all our products removed from all European store shelves. It is just that easy. But we were initially able to find the appropriate channel to talk with them and successfully show that we are not a threat and presented all the historical, cultural, and social attachments we have with teff. Also, I think the division amongst themselves has made things a little easier for us. Our assessment shows that they will not be a threat to our products any time soon.
What are your major products in the market currently?
We have availed teff flour in very convenient packages—available in all major supermarkets in the capital. We also have teff snacks in four different flavors, offered to both local and international markets. We also have what we call ‘Teff Flex’—something which can easily be mixed with milk for breakfast.
Soon, we will start delivering energy drinks in two flavors. There is also teff pasta, though not made here in our factory. Rather, we send the flour abroad to be manufactured—for the time being—with hopes to set up machinery for local processing very soon.
For your information, I am very much in love with the energy drinks made out of teff. In this country with severe malnutrition, you can just carry these items in your pocket, mix with milk or water, and be energized for the entire day. We are also seeing a lot of whey [a byproduct of the manufacturing of cheese] products. With the expansion of gyms and exercising as a habit, people are becoming accustomed to using whey products. Our energy products made out of teff can replace those [imported items] and we are working towards that.
Where are all these products available?
We hit the market probably three or four months ago and we are in most big supermarkets in Addis. We’re expanding to small kiosks and independent retailers in Ethiopia. Our idea is to go nationwide in some exclusive areas.
The UK is our major export destination. Ireland is another one and we’re pushing into Germany, France Sweden, and other European nations. Towards the end of the year, we want to launch aggressively in mainland Europe.
How do you evaluate the progress made in farming teff?
Apparently, there is not that much progress! Talking about the agricultural side, we can produce infinitely more than what we are doing at the moment. Yields are pretty much fixed at 1.8 tons per hectare.
The production in Ukraine is your classic example where farmers have patented technology that can yield up to 3.84 tons per hectare. They only started five or six years ago but we have been on it for millennia. Now, that is where we need to focus. As a company, we are also looking at the yield side of teff and not only the value addition and marketing sides. We work with farmers’ unions on ways to introduce technology into their workings and give technical expertise. We are also working with the Ethiopian Institute of Agricultural Research (EIAR). These are some of the efforts underway at the moment.
How have farming practices progressed between now and the time you left Ethiopia decades ago?
If you travel around Ethiopia, you’ll see a scene that has hardly changed much, starting with how we sow and plow. There is a myriad of reasons why our productivity might not have progressed. There is, however, extensive use of fertilizers which wasn’t the case in my childhood days. I will defer to agronomist experts to discuss whether that’s good or bad but there is an organic movement worldwide which Ethiopia could take advantage of. There are certified organic farmers in countries that started farming teff just ten years ago. There isn’t a single farmer that’s organically certified in Ethiopia and that is just painful for me. We need to be a part of this movement and market, and take advantage of the trend.
How do you evaluate the investment banking climate in Ethiopia?
I think it’s pretty similar to what I see on the rest of the continent. There is very little development in that space. There is no stock or commodities exchange and traditional local markets are still the norm. So we have a long way to go in that space. We really need markets for money, commodities, equities, and debt market. They’re not well developed in Ethiopia and, one can say, across the continent except for South Africa.
But there are a few interesting developments that are surfacing and I am sure the future will be better. We will be following what others have done. We’ve seen it in the Far East countries, in the Tiger economies [of southeast Asia], in the US, and Europe. The investment banking industry exists there, because there is a need. That need exists in Africa and in Ethiopia, as it does in Singapore or the UK.
It’s a question of time. As long as our country is peaceful and the development continues, we will be there and the services will also be available. If entrepreneurs are allowed and encouraged, things could also speed up. There are a lot of restless entrepreneurs. Ethiopia is a nation of entrepreneurs. I can tell you that for sure.
As an investor, what are major challenges faced to get where you are?
[That is like asking] how long is a piece of string. It is our own challenge and that’s the way I want to understand it. I stopped blaming others long ago; it’s my own challenge. If anyone is going to address challenges, it’s you. It’s not the government and I don’t blame anyone.
Entrepreneurs must take it upon themselves to solve their own challenges. I’m not expecting the Chinese, or Indian, or British to come and solve my problems here.
There are plenty of problems but the most important thing is that it is doable—we can design, brand, and market. From a shortage of the right skills to a lack of finance and everything else in between, there are plenty of challenges. But, it’s our own challenge. Challenges for an entrepreneur are opportunities.
What are your plans for expansion?
What you are seeing here is phase one of our project. There is a second phase and we want to make all the products ourselves as we are currently outsourcing abroad the production of pasta. We will further add more products to our portfolio and reach more markets.
Tell us about what you are doing to be certified by the British Retail Consortium (BRC)?
BRC is actually a global consortium but is called British only because it started there. It’s a set of procedures, protocols, and guidelines that need to be fulfilled when producing food. It’s incredibly strict and very difficult to achieve. Actually, almost everyone I consulted told us we would never survive the scrutiny. But the way I perceive it is like a culture. It’s a culture we need to set.
For example, [it mandates that] if anything drops to the floor, you must put it in the bin. That’s difficult for us and our hearts tell us not to do that. But my take here is that as Ethiopians, and Ethiopia as a nation, we really don’t have a good brand especially when it comes to food and readymade food. [Thus, the certification] is important to penetrate the global market. Despite the cynics, we are making all the necessary preparations to be certified and we are committed to achieve it. Once you’re BRC certified, you can sell your product anywhere.
Given what Ethiopia has undergone in the past few years, what do you see when you look into the future?
I am actually very positive about Ethiopia and the continent in general. I’m not saying that there are no challenges, but I genuinely believe in the real wisdom of the people. Even with all those differences on the political level, I don’t consider them all bad. Let all the crazy ideas come out on the surface. I came here in 2015 during challenging times. Do you remember how bad things were in 2016?
I did not leave even though I came here against the advice of everyone around me. People took me for insane, wondering why I would leave a finance career in the heart of Europe which had taken 18 years to build. But with all honesty, I have total faith in the people around me here. I have never met locals with ill intentions. By virtue of the fact that I came to their neighborhoods to build something, I can only say one thing—I have faith in them. Otherwise, I would have built a rentable tower in the middle of Addis or buy property in London or New York.
The entire world is full of problems. Fractures along language, ethnic background, or religious lines also exist elsewhere. So, I see hope and that is why I am here. We train and work with the youth.
Ethiopia’s government has recently announced its intention of opening up the financial sector to foreign investors—evidenced by the Council of Ministers’ recent decision. In light of the weak financial position of Ethiopian banks, do you think this decision is beneficial to the country?
I am sure the government has taken all visible concerns into consideration. We will see how they plan to mitigate risks when a detailed plan of action is tabled. So let’s wait and see how the government is planning to go about it. As Ethiopia integrates more into the global economy and prepares to join the World Trade Organization, it can’t remain closed to foreign investors forever.
In any case, the model in which these banks will operate will determine if the decision is going to benefit or hurt the country. The devil is definitely in the detail.
Let’s discuss on the benefits and demerits of liberalization.
Our financial institutions are pretty weak. They use low-level technology because of the lack of financial capacity, knowledge, and international exposure. So the opening up of the sector would definitely bridge these gaps as the internationally-experienced banks have all the human, financial, and technological capacity to expand their services in a cheaper and business-friendly manner.
In the meantime, it is beneficial to be aware of the challenges the government bears everyday as it remains in control of the economy. The pressure from international financial institutions and donor countries isn’t easy. I think Ethiopia is one of the last nations whose government has a strong control over the economy.
It is not going to be in the financial or telecom sectors alone; all sorts of influence to liberalize and open-up the economy will continue to come. These are not pressures to escape from; we should only prepare well and ensure our best interests while conforming to the inevitable. EBR
10th Year • Sep 2022 • No. 110