When thinking about infrastructure projects in the context of Sub-Saharan Africa (hereafter “Africa”), a significant deliberation to ponder on is whether the infrastructure should predate demand or the demand should predate the infrastructure. Sometimes the best companies are built from problems that customers never knew they had. This is one of the lessons I learned when reading Peter Thiel’s book, Zero to One. If that’s the case, then it makes sense to build infrastructure that predates the demand because the market in the first place might not be aware that it needs the solution. In the context of Africa, that’s not the case. Most of the infrastructure we need isn’t new. It’s something the developed world has had for decades or years, and for us, it’s just a matter of copying, i.e., globalisation. For globalisation to work, we must prove demand in places where we are replicating infrastructure. There is also an argument about Africa not following the same development playbook as many developed countries and that we will shape our own path. An example of this is M-Pesa. We literally jumped steps and went ahead to mobile money in a few years, while the developed world might have taken lots of time to build mobile or digital payments. The reason M-Pesa was very successful was contextual to the place. There were certain conditions in Kenya that made it successful. Great timing. I’d phrase M-Pesa as a zero-to-one technology rather than a product of globalisation.
In relation to this deliberation about infrastructure predating demand and vice versa, I want to talk about cold chains.
Inspira Farms, a company that has been building and financing cold chains in Kenya for a decade, put the utilisation rate needed to break even at 70%. They build cold rooms, and if these cold rooms aren’t utilised above 70%, they aren’t making a profit. To be honest, they are doing a great job. Their utilisation rate, as they claim, is 92%, and the reason for this is they serve a market where the demand is clear. They serve agribusinesses and cooperatives, and these guys are their natural offtakers. Their volume was already lined up before the compressors of their cold rooms were switched on. In physical infrastructure, utilisation rate is very important, and it’s often a factor that determines the commercial viability of a business model. Source: Inspira Farms research published by Shell Foundation.
Now, in Africa, most cold chain projects, with the exception of a few, get built and run at a fraction of the capacity. There is an absence of someone who promises a cold room a volume and promises a farmer a buyer who buys for quality. These guys are called aggregators. There’s an aggregation of demand problem for cold chain projects.
Now, Absa Bank Kenya, the UN Capital Development Fund, and UNDP announced a financing push for solar-powered cold facilities in September 2026, and the Kenya cold storage gap was estimated to be 2.1 billion dollars after this announcement. Now, in 2024, the World Bank’s diagnostic of Kenyan cold chain infrastructure presented one of the problems as a lack of demand for cooled foods in the local markets. They presented this diagnostic to the African Centre for Technology Studies. In short, local buyers aren’t yet longing for cold. But this seems absurd because the same diagnostic says Kenya wastes 30% of food produced, i.e., 9 million tons a year valued at 30 billion shillings. In Africa, FAO says a lack of cold infrastructure causes 30% of losses of meat and 50% of losses of roots, vegetables, tubers, and fruits.
In 2024, a survey of horticulture farmers in Kiambu County was done in Kenya. The finding was most of them lost their produce because there was no buyer at the right time and the right price. Coordination problem. A cold room won’t fix this; it can only buy time. And buying time isn’t a bad thing. It’s also important.
If we look at the supply structure in Kenya, 90% of the food is grown by smallholders. This is according to Julian Mitchell of Inspira Farms. These farms will produce a few crates at a time on their own schedule, but a cold room needs a steady flow of pallets. Even a thousand farmers bringing 40 kilos each is not enough in a day.
If we look at Kenya, we’ve got a lot of aggregators, brokers, etc. They move huge volumes a day. Why don’t they fill cold rooms? Their business usually runs on speed, that’s my diagnosis, not shelf life. Most farmers sell to brokers at the farm gate and keep a small share of the value. I have firsthand experience because my grandmother is a smallholder farmer, and this is what she usually did, together with so many smallholder farmers around the area. A broker who buys in the morning and sells in the evening has no incentive or anything to gain from storage. The outlets that did pay farmers well were the non-broker channels, and these reward quality and careful handling, and that’s where cold rooms earn their keep. A channel where the buyer pays for what the cold preserves. That channel is the missing piece of infrastructure. Source: 2024 Kiambu County horticulture farmer survey.
What’s missing is an aggregator who signs buyers up front, collects produce from many small farmers on a fixed schedule, grades it, and pays farmers reliably, so the cold room gets a steady, guaranteed volume instead of whatever happens to show up.
A cold room’s cost is mostly fixed, so empty shelves raise the cost of every full one. In Nigeria, research by the International Food Policy Research Institute says utilisation rates average 53% for solar-powered cold rooms for horticulture. It ranged from 15% to 89% across markets. Same equipment, same price. What mattered or predicted the utilisation was the location of the stalls relative to the cold room.
Lari Horticultural Cooperative, working with UNEP in Kiambu, Kenya, had members, i.e., farmers, a collection point, which provided volume, and wholesale buyers who valued crops that arrived fresh. Using a cold room, an insulated vehicle, and a refrigerated truck, members reported income going up 50% and crop loss dropping by 40%. Source: UNEP. The cold chain slotted into a structure that was already there before the equipment.
In energy, no one finances a power plant on the hope that electricity will sell. They finance it on a PPA (power purchase agreement), which is a long-term contract where a creditworthy buyer commits. That is what makes the plant bankable. Cold chains need the same thing.
Sometimes, though, the infrastructure is the genuinely missing piece, and demand cannot come without it, as I said in the beginning. Roads are a classic case. No one can aggregate maize for a market they can’t reach, so the road has to come first, then demand appears later. But this argument doesn’t hold for cold chains. A road is a public good and doesn’t have an operating cost. Cold rooms are private assets with a meter running. Roads can be underused and will still get people to markets. Underused cold rooms will lead to bankruptcy, and the compressor will literally rust.
The utilisation threshold matters a lot. Cold chains will punish premature building in a way roads can’t. FAO’s guidance on cold chain investment in Sub-Saharan Africa says that for it to be economically sustainable, production has to reach a threshold of volume and quality.
There’s also a chicken-and-egg problem. Buyers won’t commit to volumes without cold storage, and cold storage will not fill without committed volumes. That’s where subsidisation works: to let the first buyers say yes. But this will happen where we have an aggregator, a market, an exporter, a cooperative or a processor.
There isn’t a continent-wide, consistent dataset about cold storage utilisation, though. The 70% is Inspira Farms’ operating experience, and the rest are from pilots and diagnostics by different organisations. The thing, though, is that where cold rooms are built without aggregators, they underperform.
I think financing should be tied to a signed commitment, the way power plants are tied to PPAs.