Africa investor upbeat about e-mobility and affordable construction equipment
In part one of our interview with Charlie Tryon, CEO and co-founder of investment holding company Maris Africa, we discussed opportunities in the continent’s agriculture and forestry sectors. In part two, we delve into his perspective on the growth potential in e-mobility, construction equipment distribution, warehousing, and gold mining. Additionally, we explore the challenges and emerging trends that may influence the future trajectory of these industries.
Maris is active in renewable energy and recently sold a majority stake one its companies – Equator Energy. Do you see future potential in the sector?
We started developing Equator seven years ago and it has grown from a start-up to a solar business with over 100 projects. We announced a transaction to sell the business to a consortium comprising the IBL group from Mauritius, and STOA, an impact investor from France. The new business partners can take the business forward as they have stronger balance sheets than we have.
In the sector, we focus on one core area at the moment: electric mobility.
E-mobility, specifically four-wheeler for long-haul logistics, is going to be revolutionary.
When it comes to two-wheelers we want to look at developing solar plants that could charge batteries for these motorbikes. There are other opportunities as well as it is clear that the price and economics of renewable energy storage is a very topical issue in the world at the moment.
You need political will, and you need investment, to make these projects work and unfortunately, you still find a lot of regressive policies in sub-Saharan Africa that count against renewables. You see it in South Africa where the government has been extremely slow to embrace renewable energy due to vested interests in a state utility like Eskom, despite it failing the nation. We see this across Africa: in Kenya, it is difficult to develop solar projects and then secure bankable long-term and lasting power purchase agreements. Quite often the Kenyan government has been renegotiating these agreements.
African governments should be thinking ahead and realise the impact of buying huge monthly volumes of oil products and spending 20% to 40% of their forex earnings. If a country can drive the renewable energy transition, for example in the direction of electric vehicles, it could preserve its forex earnings.
Maris owns 50% of the META Group that distributes construction equipment in various countries on the continent. What trends in this industry can you capitalise on?
Over the last 12 months we have seen good growth across our group of eight dealerships in the eight countries where we operate (Angola, Zambia, Mozambique, DRC, Tanzania, Rwanda, Uganda and Kenya). The growth is part of a post-Covid recovery, but also supported by continued infrastructure development and urbanisation in these markets and a relatively strong commodities sector.
The results of this division reflect the opportunity that exists to transition away from more expensive Western brands like Caterpillar or Hyundai towards newer economy products from India and China. We are increasingly looking at brands from lower-cost producers, and that seems to be working for us. Many of our markets are very price sensitive and an excavator from India at 25% less than the one from Europe, makes sense to them.
You predicted substantial growth in online retail and e-commerce when we last interviewed you in October 2020 – did that materialise? Did it have the impact you expected on Maris’ warehousing operations?
The rate of growth in online sales has been a bit slower than where we thought it would be, but we remain committed to our logistics focus through our companies OSS in Mozambique and Africa Logistics Properties in Kenya.
We have just agreed to a deal with a South African consortium where we will sell the largest site we have developed, a warehouse facility in Tatu City in Kenya. This allows us to recycle that capital into new developments in the sector where we feel growth is possible, e.g. data centre development or low-cost, high-density housing.
The cost of capital is rising, making funding projects more challenging. Not just because of the higher cost, but also because investors are looking for higher returns relative to that cost. People are not interested in a 10% internal rate of return on investment in Africa if they could get 4.5% from a treasury bond in the US.
You’ve previously stated that Maris’ gold mining interests have been some of its most successful investments. Is that still the case?
It has been a real success story for us and continues to be, but I would say our mining focus is very specific. We like gold as a mineral. It is USD-denominated, and it is easier to develop smaller-scale operations in the gold sector.
We have faced challenges in the last couple of years, and most of them are political. In Kenya, we hope the new administration will address some of the uncertainty we’ve seen, e.g. a moratorium placed on mining licences. In Zimbabwe, where we have two operations, we have seen long-term challenges build up over time like chronic power shortages due to under-investment in infrastructure projects.
Are there any sectors Maris is keen on exploring, but hasn’t made any investments in so far?
At the moment I would say we have our hands pretty full. Within our focus sectors, we see an expanding range of opportunities.
In the future, I believe that our level of involvement in real estate and mining may decrease, and we may instead focus more on exploring opportunities in greener, emerging sectors such as energy production and food technology.
Maris Africa CEO Charlie Tryon’s contact information
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