USAID INVEST: A step in the right direction

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Oct 1, 2020

Mira Mehta is on a mission. Through her company Tomato Jos, she hopes to make tomato paste affordable to the average Nigerian, increase local farmers’ income by making tomato farming more productive, and make tomato processing, distribution, and sales more profitable for entrepreneurs. What Mehta is doing might seem an impossibility—not only is Nigeria an economically poor country, but it’s also often ranked as one of the most difficult places to do business, according to the World Bank. Still, Mehta is undeterred.

Tomato Jos Founder & CEO Mira Mehta

In Nigeria virtually all tomato paste consumed in the country is imported. Considering the country’s vast population, Mehta figured there would be significant opportunity to increase local market share if she could only increase productivity in this space. To do so, Mehta has had to invest significant resources in farming, processing, packaging, and developing a branded tomato product. Were she in a wealthier country, the business infrastructure would already exist, but in an emerging economy like Nigeria, Mehta’s investments aren’t an anomaly. In fact, they remind me of one of the boldest entrepreneurs who changed the landscape of industry in the United States, and globally: Henry Ford.

In the early 1900s, Ford had a similar vision, not for tomatoes but for cars. At the time, cars were expensive and only affordable to those who were extremely wealthy. But his vision to make the car affordable to the average American caused him to figure out ways to improve and reduce costs in production, distribution, and sale and service of cars. Many of us are familiar with the famous Ford assembly line, but that was not his only innovation. Ford also came up with new ways to create value by investing in gas stations, freight lines, paint and glass factories, and even steel mills. Considering how expensive the undertaking was, several of his investors pulled out. We know today that was a missed opportunity.

In addition to the direct outputs of new markets—new jobs, investments in infrastructure, etc.—one of the most fascinating things about creating a market is the impact it has on other parts of the economy. Ford’s Model T, for instance, spurred significant investment in American infrastructure by providing a tax base to support construction of roads. Before Ford democratized cars for the average American, the government had tried to develop a road network but lack of funding slowed its development. After the Ford Model T, the government was able to generate enough revenue from gasoline taxes to enable the sustainable development of roads in the United States. Additionally, the ability for people to move around more freely enabled investments in other businesses such as restaurants, farms, schools, and suburbs.

Catalyzing development through smart investments

While the impact new markets generate is often immense, the difficulty of creating a new market for people who historically never had access is equally so. That’s why the USAID INVEST program is a significant step in the right direction.

After spending more than five years improving the productivity of tomato farms and learning how to build a new market for agricultural products, Mehta was ready to build a tomato processing plant. The investment seemed too much for most investors, but fortunately USAID INVEST stepped in. By helping Mehta secure the outside funding she needs to expand production, the program got her one step closer to increasing incomes for Nigerian farmers and making tomatoes more accessible to the average Nigerian. In the middle of the COVID-19 pandemic, Mehta’s Tomato Jos closed on $4.2 million of funding from a consortium of investors, including Acument Capital Partners and VestedWorld. 

USAID INVEST is a part of the USAID foreign aid program with the goal of unlocking “the power of private capital to drive inclusive growth in countries where USAID works.” By developing an extensive network of investors, consultants, and other private sector players, USAID INVEST is creating an ecosystem to support entrepreneurs like Mira Mehta. Our research suggests that one of the best ways to spur economic development in emerging economies like Nigeria is for development organizations to support organizations like Mehta’s Tomato Jos. Organizations like hers, working to create new markets that make products available to the average person in poor countries, have multiplier effects on the economy. Not only do they necessarily pull in the resources, infrastructure, institutions, and human capital needed to deliver the products and services sustainably to market, but they also create much-needed tax revenue for governments.

The untapped market for tomatoes

Nigeria currently imports approximately $1 billion of tomato paste annually, though Nigerian farmers grow over two million metric tons of tomatoes a year. One of the challenges local farmers face is that more than half their harvest rots before reaching the customer. By making farming more productive, Tomato Jos stands to help local farmers reclaim some of the market. Combined with the fact that the average Nigerian household spends more than half their income on food, making tomatoes more affordable will not only create a huge market for those who’ve previously been unable to afford them, but it will expand the existing one. 

If Mehta’s Tomato Jos is able to capitalize on this opportunity, the organization will transform the lives of Nigerian farmers and entrepreneurs while making her investors a healthy return. By following USAID INVEST’s lead to empower entrepreneurs steeped in the local context, other development organizations can accelerate their progress on eradicating poverty and creating prosperity in emerging economies.

Efosa Ojomo is a senior research fellow at the Christensen Institute, and co-author of The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty. Efosa researches, writes, and speaks about ways in which innovation can transform organizations and create inclusive prosperity for many in emerging markets.