INTRODUCTION
Most of our household items come packaged in plastic containers, from our cooking oil to yogurt, and butter. Silafrica is the industrial name that ensures that those containers are readily available to manufacturers and are of a quality standard.
Founded in the 1960s with a presence in Tanzania, Silafrica boasts of a magnificent footprint across Africa with potential growth outside the continent. Over time, they have diversified from basic packaging of rigid products like cooking oil jars to a much bigger scope including flexible plastics. Their manufacturing arm has grown to include supply to different international and local brands.
The story of SilAfrica begins 60 years ago.
How it started
Silafrica’s journey has evolved through the course of 60 years, changing hands from different family generations and taking different organizational stances to improve business efficiency. Starting as a family business, Silafrica is the perfect example of a business that has weathered the storms of time, economic hardships, and different leadership models but is still a giant in its industry
The factors driving SilAfrica's growth
Over the last 60 years, Silafrica has changed hands between generations, building a legacy both in the manufacturing industry and within the space of family-run businesses. Rising from the hearts of a family with a deep business and engineering acumen, they have married innovation and professionalism thus steering the business into a great success. The business ascribes its success to the following factors:
1. Strong family ties
Starting out as a family business, Silafrica leveraged its strong familial ties to make it thrive. Having had business exposure in other markets as well as education that would help the business stay afloat, these relationships became pivotal to its success. From generation to generation, Silafrica has credited much of its upward trend both in profits and legacy to family and tradition of first insisting children of the next generation achieve quality education and outside professional work experience, then empowering them to improve and grow the family business.
Having these family relationships has also served to be the cornerstone of the business through their market expansion, with key members taking key leadership roles. This worked to ensure that the core of the business remained undiluted even as private equity came on board much later. Holding fast to these relationships has enabled traditions to hold fast and protect the generational continuity of this family business.
2. Business acumen
The bold move to buy and start a plastics company in the 1960s was greatly influenced by a combination of family partnerships, prior experience, engineering know-how, and entrepreneurial spirit. Having experience in the manufacturing industry in plastics in India and the United States of America and bearing a Master’s degree in Engineering and entrepreneurial success in trading in East Africa, they were market ready to build a successful business in plastics manufacturing.
Shortly after setting up shop in Tanzania, the country went through nationalization, a period when the government of Tanzania was nationalizing many private companies. While many company owners opted to flee this jurisdiction, Silafrica’s founders saw an opportunity to stay and consolidate the market by further entrenching their position as a resilient and dependable packing supplier. This move allowed them to gain an advantage when Tanzania’s political and business climate settled; having made critical business decisions to stay when it was easier to leave.
Decisions such as these have not only grounded Silafrica but allowed the business to thrive in what would seem to be rather difficult situations by the ability of the sitting heads to make hard yet timely and wise decisions.
3. Risk taking
Founding a manufacturing company in the 1960s, in the East Africa region was a big leap of faith. Both Kenya and Tanzania had just attained independence, making the establishment of business and trading profitably rather difficult. However, that did not deter the founding of Silafrica. Even with the nationalization in Tanzania, years later, they saw a silver lining, and yet again pounced at it.
This risk-taking tradition is further demonstrated when Silafrica took calculated risks in buying molds to produce and sell products in their local market. Without any competition or market research, this was an opportunistic risk that could have had a tragic monetary loss for them. This venture was a learning opportunity for them, with some designs taking off and others failing.
Moving from a family-led business to a corporate and finally to inviting private equity, has to be their hallmark of risk-taking tradition. However, all of these risks have worked to get the business to what it is today - a business with a bigger market, a bigger product base, and with a wider reach of partnerships. Silafrica demonstrates the foundational truth that business is about faith and risks.
4. Inviting Professional Management & Private Equity
After 30 years of successfully running the business internally, bringing in external management was not an easy endeavor. There was a sentimental attachment to how decisions were made and how operations ran. This transition was only possible due to the change of generations in leadership and the exposure and experiences these new coming family members had before joining SilAfrica. Looking back, however, inviting professional management has allowed the business to grow rapidly as business needs are matched to the needed professional role. Adopting a corporate approach freed up family resources, both money and time which allowed them to focus on strategy and steering the company forward. It has also allowed the family to exonerate themselves from the everyday duties of the business and are now focused on making core decisions that would fundamentally shift the company and building the legacy that will leave for the next generation.
Growing so rapidly, they opened their doors to private equity, a move that they regard to be their biggest transformation yet. Being equipped to scale, they are able to innovate, diversify and increase their human capital with a greater room than they previously did. Silafrica has traversed many pivot points from a capital perspective, a matter that leaves them visualizing what the next 10 years in business will look like for them and the heritage that future generations will inherit.
Business Values
Silafrica has steadily built its reputation in this industry through a set of guiding principles they call “The Silafrica Way.” The Silafrica Way is deeply entrenched in the businesses’ five core values with the aim to uphold world-class operations and standards. The Silafrica Way has stood the test of time, creating a brand like no other and pioneering great innovation in the plastics industry. “The Silafrica Way” is founded upon 20 Gears which is their secret to building an operations excellence DNA.
Beyond these, it is also founded on 5 core values, and these include:
1. Doing the right thing
Silafrica has pursued integrity with a hard fist. The shareholders, Board, management, and employees always choose the right path. This value has over and over ensured that SilAfrica maintains a standard, not only in their products but also in its reputation. Silafrica’s consistency in choosing to do the right thing has time and time again yielded fruit in the form of trust with its customers; trust that has eventually made them the dominating giant in this industry. It is a legacy true to Silafrica and one that the current generation is entrenching in the company culture as their future legacy.
2. Being authentic
The Silafrica team firmly believes in showing up as veritable ambassadors of the brand that they have built over the years. Authenticity, the top management says, has been foundational to building a transparent brand and culture with customers, suppliers, and employees. In a brand that has had time to weather the storms of time and different management styles, showing up rightfully has been critical in ensuring that the image of the business is still not compromised. Silafrica chooses to match its brand name with its products, ensuring that its products are of high quality. Over and above this, employees seek to keep their word when dealing with customers to foster a sense of trust and loyalty.
3. Being Open & Inclusive
Since its inception, Silafrica demonstrates an eagerness and openness to learning. In being open to learning & unlearning, the business has undertaken seemingly impossible ventures that have turned out to be passion projects and good income streams. It is in this openness that the business was not sold but became a foundation for growth led by the next generation. Furthermore, they took the leap of faith to venture into a highly expensive innovative production process both from a machinery and talent angle in order to be the best in the market. In so doing, they were open to change and learning new production processes. With a hunger to better improve their processes, Silafrica onboarded hard-to-find skillsets to produce products that would differentiate them in the market. They sunk heavy costs into equipment and would sometimes make losses when they mistakenly made the wrong purchase but all of this was in their openness to learn the best practices in the plastic manufacturing business. Later on, this value would shine through in their commitment to the environmentally sustainable manufacturing process. Beyond product development, Silafrica has shown openness in opening itself to private equity, and in so doing allowed itself a chance to increase its product base and scale rapidly.
4. Keeping it lean
In the 1960s, Silafrica stayed in the market, breaking even fairly easily by leveraging the skillsets of family members. During this period, they learned how to keep business overheads low as a means to keep profit margins high. As the business got into the growth stage, the purchase of machinery was not only based on price but was also dependent on output. Silafrica was keen on purchasing machinery that had the highest quality output, lowest energy consumption, smallest space occupied on the factory floor, and the safest to operate and maintain in the East African environment.
This efficiency model within Silafrica ensured that quality is not hampered on account of efficiency, and neither is waste encouraged on account of volumes. Silafrica prides itself in having a balance between quality and efficiency. Through this model, Silafrica continues to remain relevant and competitive for quality packaging that helps customers elevate their brands and improve their supply chain efficiency.
5. Being world-class together
Everyone at Silafrica - Board members, staff, and investors have a commitment of meeting the highest quality standard of the task they are entrusted with and that of the business as a whole. This cohesive passion allows everyone to rally their efforts towards a world-class brand and reputation. It is, therefore, no surprise that Silafrica is the giant it is, winning numerous awards and onboarding business partnerships with many international and local companies such as.
Business Model
Silafrica’s business model is embedded in its culture of great tenacity and grit. It is primarily anchored in a B2B model, having both major international and local companies as their clients. However, this model has encountered a metamorphosis through the years even as it changed leadership hands.
1. Product Development
Quality products have always been at the core of Silafrica. They have sustained this culture even as the business went through different leadership phases. Product development was initially founder-driven, then moved to customer-driven. Typically, customers in the market would approach Silafrica with the need to change the product packaging from tin to plastic. In order to serve this market model, Silafrica would find suitable existing designs globally, and adapt them for the local market. At this point, in the late 1960s, Silafrica was yet to adopt an innovative approach to its product development process. However, as they grew their customer base, they started attending trade fairs in China, Germany, India, and North America with the aim of learning what these markets were offering. In so doing, they introduced product designs from these markets into the local market, with the hope that investing in the type of molds and designs present in markets abroad would ultimately pay off locally. It was an expensive risk which paid off in certain designs but not all.
Confident in their growing customer base, Silafrica started investing in innovative product development in the early 2000s, through custom solutions. This meant transitioning from their initial copy-paste product design to customizing a product to what a customer would want and designing it from scratch. They invested heavily in 3D design and hired industrial design engineers for this process. At the time, industrial design software (ProEngineer) cost approximately $15K while the hardware cost $30K. However, Silafrica ran into a translation gap with their customers who would not entirely visualize a 3D product on a computer. To circumvent this, they decided to invest in a 3D printer, an investment that became the hallmark of their quick turnaround to customers making a name for themselves as the best in the market.
Despite their success in quality manufacturing, Silafrica has now committed that by 2025 only 100% recyclable plastics packaging will be produced. Their efforts toward environmental sustainability intensified in 1995 when they started designing products that had a high percentage of recycled content. The innovation has since then become more about the manufacturing process and the material itself than it has been about the product itself. For example, Silafrica no longer uses labels on crates, instead, they emboss, a process that is more environmentally friendly. Moreover, they are keen on investing in equipment that produces higher output while running on lower energy. Silafrica recognizes that participating in environmentally sustainable and conscious practices requires partnerships and works with other organizations like Mr. Green Africa and TakaTaka Solutions to recycle consumer-packaging waste.
The apex of product development for Silafrica has been smart packaging, an innovation that was won them great recognition through Twiga Foods. The design of the 100% recyclable, embedded with Radio Frequency Identification (RFID) and Near-Field Communication (NFC) allows Twiga Foods to track & trace products within the supply chain. The combination of environmentally sustainable production and innovative methods has been the hallmark of product development for this 60-year-old business and they continue to look ahead to further innovate especially for developing 100% recyclable packaging, and packaging using high recycled material content.
2. Customer Acquisition
The customer acquisition journey for Silafrica has evolved in parallel with its product development journey. The first customer was in the area of cooking oil, looking to transition from a metallic tin to plastic. A lot of the customer acquisition in the earlier days was through the family founder relationships in the business community. Upon locking one customer, Silafrica would then venture into the market looking for similar customers and present the product with the hopes of onboarding them. This was often led by the sales team and took the form of direct marketing. It is worth noting that customer acquisition for Silafrica was always business-to-business (B2B), a feature that has persisted through time.
Looking back, Silafrica acknowledges that customer acquisition for them cannot entirely be attributed to efficient sales. Instead, partnerships and referrals, have been of great sustenance for them. Through technical partnerships, Silafrica was able to design and produce plastic crates for leading global beverage and agricultural companies, successfully overcoming both local and international competition. These partnerships enabled them to acquire more customers by building visibility in the jurisdictions that their products traveled to. For example, through the supply of Coca-Cola crates to Rwanda and Burundi, Silafarica roused the interest of Heineken who were looking to upgrade their crates in Ethiopia. From this, a technical partnership was born and Silafrica was invited to open a factory in Ethiopia in 2014.
Today, Silafrica is acquiring customers through the practices of customer relationship management (CRM) and lead generation with the aim of diversifying its customer base and reaching a larger scale. This approach is not only helping in thought-leadership but also aiding in broadening their product range. This customer acquisition point is heavily reliant on engaging customers through a content funnel which establishes Silafrica’s thought leadership in 100% recyclable packaging and socio-environmental impact the further supported by actual case studies and success stories, and finally engaging a wider base of customers for a needs discovery session to develop innovative and recyclable packaging solutions.
3. Production Model
Machinery acquisition for Silafrica has grown through the course of time, adjusting with new technology in the market and availability of talent that can operate it. The initial machinery, at the point of business inception, was largely from the European market. European markets at the time were more friendly in terms of electrical compatibility, time zone should technical support have been needed, and European suppliers had an already existing customer base in the African market which meant that they already understood the context. In addition, exchange rates were quite favorable back then as well. These factors put together made Silafrica opt for European machinery.
As the business grew, machinery purchases took a more strategic approach based on price, output, and the talent required to run it. In the presence of a technical partnership, Silafrica would opt for Tier One Technology machinery. This kind of machinery is considered a global leader/trendsetter in that particular range of technology and would mostly be of European origin. However, in the absence of a technical partnership, Tier Two Technology machinery is preferred because it often comes at a better price point. These are often machinery from India and China. Tier Two Technology is good, with differences in matters like output and efficiency as compared to Tier One Technology. They also cost significantly less.
Having this balance between Tier One Technology and Tier Two Technology made economic sense for Silafrica but also allowed them to produce effectively. Making the distinction of a good Tier Two Technology may prove to be difficult, they say but over time, they have perfected the science of knowing product specifications and purchasing machinery that works well for them.
4. Revenue model
The initial investment for Silafrica was founder capital. Breaking even for them at the time was hardly a challenge because the talent was drawn from the family, they had a minimal competition which made profit margins high and local currency was valued higher. However, in the 1980s, economics changed and profits against costs were affected. At this point, Silafrica was also heavily investing in production machinery. Even though expensive, Silafarica was still making good margins and was able to stay profitable. Like many businesses, Silafrica opted for debt financing from local banks, a model that worked well for them. Their margins allowed them to pay off both principal and interest without much strain on the business, nor impeding on expansion plans. Silafrica in the last five years has moved towards private equity as a way to accelerate growth and invest in the generational growth of the family business.
Market expansion
Silafrica’s drive to grow and expand across the years cannot go unmentioned and it continues to grow with an upward trajectory. Having a professional team and private equity on board can only lead to greater growth. The current generation, however, as they would put it, refuses to view the growth of the business as simply handing it over from one generation to the next. Instead, they are opting to use it as an empowering means to generations to come.
Along these lines, Silafrica has been keen on adopting innovative approaches to business. To this end, they have worked to improve their processes and expansion through:
Industry 4.0
The Fourth Industrial Revolution, commonly referred to as 4IR or Industry 4.0 revolutionizes how businesses manufacture, improve and distribute their products. Essentially, it is a rapid change to technology and the adoption of automation to ease and make efficient processes in industries. Silafrica illustrates how IoT enables manufacturing through the communication of machines that would otherwise break down without any warning and halt the entire production. Their design and production of the Twiga Foods 100% recyclable and traceable crates is an indication of the direction of smart manufacturing and packaging that is being flagged in our market. This smart innovation is now not only about packaging but also a traceability solution to suppliers with features like smart tags and holographic labeling that also work to reduce counterfeits in sectors like pharmaceuticals.
Silafrica has also invested in Industrial IoT to transition toward a Smart Factory by fitting all the equipment with AI-based IoT technology from ThingTrax, which will unlock further efficiency improvements in the years to come.
Embracing the Circular Economy
Silafrica has been committed to embracing the circular economy approach to manufacturing, an approach that is getting popular and upholding rallies towards climate change. With many thought leaders taking a stance on this, the circular economy has had a ripple effect with many international and local brands taking part in the movement.
While this concept is still young in Kenya, Silafrica with its history of boldness has taken the bull by the horns and formed a global commitment in partnership with Ellen MacArthur Foundation to create a circular economy for plastics. This noble initiative is double-edged; not only by reducing plastic waste but also by opening a business stream for recycling waste.
A blend of these factors serves as the foundation on which Silafrica places its market expansion strategy. Growth and expansion for Silafrica is a balance between sustainable profit, sustainable planet, sustainable communities, sustainable talent development, and sustainable future family generations. Silafrica continues to challenge itself to seek growth and innovation, and is likely to see more countries with Silafrica factories as their presence gains wider scope within the Sub-Saharan region.
Learnings/Outlook
Silafrica has withstood the test of time. It has grown in leaps and bounds, evolving in practice and structure yet has still emerged as the best in its field. From its inception, it is clear that even amidst shaky economic conditions, Silafrica’s Board of Directors has been able to steer the business forward. This defying boldness is a large contributor to the success that the business holds today.
Over and above, Silafrica has built a reputation, a legacy for itself that has set itself apart from any other in the industry. With a loyal customer base, Silafrica is now dominating the plastics manufacturing industry and has rightfully owned the “the Lion of Plastics”. To this end, the current generation has upheld the vision of its founders.
With 60 years on its back, Silafrica has done well for itself. It is a clear demonstration of the power of innovation and malleability; having transformed with each stage and adapting well to market changes. Silafrica has not withheld from investing in technology, a feature that has set it apart in the market. With blanket statements being made about the power of innovation, Silafrica stands to be a true testament to how technology transforms business through innovation, allowing for efficiency and scalability.