CARDBOARD BOXES are not sexy. But they are useful: imagine trying to shift a lorryload of eggs from farm to shop without packaging. Because boxes make it easier to move things around, they allow shops to stock a wider variety of goods at lower prices. So to run a cardboard-box factory in Africa is to put more and better food on African plates.
The Riley Packaging plant in Uganda is quite a sight. From wall to wall and floor to ceiling, it is crammed with vast rolls of paper. A visitor feels like an ant gazing at stacks of toilet rolls. A management consultant might ask: why does Riley need to keep so much inventory—three months’ worth—heaped idly on the floor? Surely there are better uses for the firm’s capital?
Actually, no. The paper has to be imported. Uganda is landlocked. The nearest port, at Mombasa in Kenya, is more than 1,000km (620 miles) away on iffy roads. Containers passing through customs there face long and unpredictable delays. The factory keeps masses of inventory because it cannot rely on supplies to arrive just-in-time. And “we can’t ever let customers down,” says Ashish Thakkar, a part-owner of the firm.
Ignorant investors beware