The khumbo oil refinery is located near Michiru in Blantyre district. As an OVOP project they are making oil products such as cooking oil, soap, and body lotion which are extracted from plants like Moringa, Jatropha, Sunflower and Baobab.
In 2004 JICA through OVOP programme supplied them one set of oil filter and oil extracting machine. The group had already been producing vegetable oil products even before the group approached OVOP. However they only had manual machines, so their production was very limited as compared to their production now, since they are using the electric machine.
From the time they received support from OVOP, their production increased rapidly and their sales are improving as well. Their oil products are not only looking at the domestic market but also international market such as South Africa and Botswana. The products have already been exported to a South African University for research purposes. The group has now expanded its business besides oil production into other areas such as fish farming and bakery.

Our Main Products

Group Information

[Support from OVOP/JICA]
Motor, oil extraction and filtration machinery (JICA). Total amount is MK 606,000.
[Support from Other Organizations]
The Group has raised a loan from National Bank of Malawi, MK3,000,000 to buy a new oil extraction machine.
[Contribution by members]
Those members who want to use machinery must pay the membership fee.
[Support by District Assembly]
Agricultural extension worker gives the Group advice, and invites the Group to agriculture fairs.
[Background]
When the Group was incorporated in 1996, there were 150 members. When JICA's assistance required contribution of members, most of members quit and only 5 families (10 members) remained. After the refinery activities are in operation, most members came back to the Group. Seeing the lack of commitment of members, the leader is currently preparing a new constitution which enables the expulsion of the members who do not pay the membership fee. One of the qualifications for members in the new constitution will be that the member should have at least 2 acres of land. The Group intends to move its factory to Lunzu due to its proximity to the raw material.

Strength and Opportunities

[Human Resources]
The leader of the Group exercises leadership in all activities. Most of the members are simply suppliers of raw materials.
[Materials]
The Group buys materials from members. Malawi government has recently adopted a policy to ban import of crude vegetable oil. In order to capture the demand of crude oil, the leader is encouraging members to plant sunflower by creating model farms. The factory is making payment to farmers (suppliers) in 30 days after the purchase.
[Product]
The price of sunflower oil (MK360/l) is cheaper then its competing product: Kazinga oil (MK553/l).
[Production]
The current level of production is 3,000 liters per month, but the Group claims that they can raise a bank loan whenever market opportunities opened up.
[Market]
Due to the State's ban on import of crude oil, Capital Oil Refinery Company made an inquiry to the Group for the possibility of supplying 300,000 liters of crude oil. The Group is also exporting Baobab Jam regularly: 500 bottles x 3 times/year. Export is made possible with letters of DG of MBS, the president of Chamber of Commerce and Industry, and OVOP Secretariat (The Group has to pay for them). The Group usually sells their products at the factory and through door to door visits.
[Transport]
In order to transport raw materials, the Group purchased a 3 ton van at MK600,000 in 2006, using the profit.
[Quality Control]
Members in charge of quality control always monitor production. The Group had its oil checked by Bunda Univ. and knows its chemical composition.
[Sanitation]
Factory workers are keeping the strict hygienic regulations, such as wearing work suits and head covers, washing hands, etc.
[MBS]
The factory has applied to MBS, received a notice of accreditation and paid for the certificate (MK37,800). However, the factory has not received the certificate. Renewal of the certificate will cost MK37,800 every year.

Challenges

[Materials]
Sunflower is only available from Oct to February; the factory is not operational during the rest of the year.
[Market]
Supermarkets do not deal with the Group’s natural vegetable oil, not recognizing its potential demand as well as its competitiveness.
[Administration]
The Group does not have sufficient capability to conduct proper cost accounting.