Africa’s agribusiness and food sector present significant commercial opportunities. The continent’s population of over 1.3 billion is rapidly urbanising, boosting demand for processed and packaged foods. In addition to catering for locals, businesspeople can leverage the continent’s agricultural resources to produce food products for international markets.
Here are nine agribusiness and food opportunities highlighted by entrepreneurs and investors.
1. Namibia is big and sparsely populated which means imported goods must be transported over vast distances. This drives up the cost of these products. According to Ekkehard Friedrich, partner at private equity firm Eos Capital, opportunities exist for local production of perishable crops in Namibia. “Any goods that are not easily or economically transported lend themselves quite well to local production … Namibia is traditionally a net importer and perishable goods are particularly expensive due to high transportation costs. We are therefore looking at import substitution for a variety of agricultural produce,” he explains. Read the full interview with Ekkehard Friedrich.
2. There is significant and growing global demand for avocados and macadamia nuts. High prices for these tree crops have prompted major plantings across the world and Chris Isaac, CIO at AgDevCo, believes Southern and East African countries – such as Mozambique and Malawi – have the potential to be competitive in the production of avocado and macadamia. To find out more, read our Q&A with Chris Isaac.
3. The maintenance and servicing of agricultural equipment (especially tractors) remain a concern for Nigerian farmers. According to Mira Mehta, founder and CEO of Tomato Jos (a Nigerian operation farming tomatoes for processing into tomato paste), one of their biggest headaches is the maintenance of equipment. Because of a shortage of parts, tractors are sometimes out of commission for weeks. “If you have a business that can provide an efficient service in fixing tractors or industrial agricultural implements, I think it could be a huge success,” says Mehta. Learn more about Tomato Jos’s journey of producing tomato paste in Nigeria.
4. Every year, Ethiopia imports billions of dollars of food products that can theoretically be manufactured locally. Replacing these imported products with locally produced goods presents a significant opportunity, according to Saad Aouad, CIO of 54 Capital. He is particularly upbeat about producing basic food products such as edible oils, pasta and dairy. To explain the potential, Aouad gives the example of sunflower oil: “Instead of bringing in the finished product at $1,200 per tonne, you can import the crude oil at $800 to $850 and refine it in-country.” Discover the opportunities and challenges of import substitution in Ethiopia.
5. The popularity of petroleum jelly as a skincare product has spanned many decades. The process to distil the jelly from a by-product of the crude oil refining process was patented in 1872 by Robert Chesebrough, a chemist in the US. However, Zimbabwe-based entrepreneur Gus Le Breton believes an opportunity exists to grab market share by providing a natural and sustainable alternative to petroleum jelly. “We can make a similar product from mongongo nut oil, marula nut oil, baobab seed oil, etc. It is natural, locally made and doesn’t use any imported ingredients. It is beautiful,” he says. Read more about this niche business opportunity.
6. Most people in Africa consume plenty of carbohydrates and fats but they don’t eat enough protein, according to Roland Decorvet, CEO of PhilAfrica Foods. He believes poultry is the future of protein production in Africa. “I see big opportunities in poultry … Chicken is just so much more affordable than beef. Fish is by far the cheapest source of protein but there are very few aquaculture operations in Africa that are doing well – the quality of water is an issue as well as the sensitivity of the product.” Click here for additional insight from PhilAfrica’s CEO.
7. Africa is home to 86% of the world’s camels. The urbanised public is slowly but surely realising the value of camel milk, which is beneficial for lactose-intolerant consumers and has less cholesterol. Kenyan entrepreneur Hassan Bashir is tapping into this opportunity through his company Nourishing Nomads and aims to produce 30,000 litres of camel milk a day within the next five years. Here’s how Bashir aims to establish an entire value chain around camel milk in Kenya’s Wajir County.
8. There is a large international market for dried fruit as consumers adopt healthier lifestyles. Sub-Saharan Africa cultivates many fruit crops which can be dried for the export market. While entrepreneur Jaco le Roux, founder of Mozambique-based AfriFruta, has built a viable dried fruit business, he says the industry is more complex than many assume. Much of the fruit grown in Africa is not the correct cultivar for drying. For instance, many types of mango are not suitable because they are too fibrous for European consumers’ tastes. A viable fruit-drying business also requires scale; international buyers are not interested in purchasing small quantities. It can take up to 15 tonnes of fresh mangoes to obtain one tonne of dried fruit. Reliable access to large volumes is therefore essential. Jaco le Roux reveals how he went where nobody dared to start drying fruit in Mozambique.
9. Cassava, a root which looks like a large sweet potato, is one of the most widely grown crops in Africa. It is also one of the continent’s least industrialised. Cassava roots can be processed into various products: cassava flour, starch, ethanol and glucose syrup. The crop is also gluten-free which opens up opportunities in the health and wellness market. The reasons for the low levels of processing is because the skin of the root contains cyanide; once the root has been removed from the ground, it must be processed (or at least peeled) within 48 hours, before the skin starts to poison the rest of the crop. Poor transport infrastructure also makes it difficult to get harvested cassava from small-scale rural farmers to factories in time. PhilAfrica has overcome these challenges with a mobile cassava processing facility that travels to where the crop is grown. A handful of other businesses are also taking advantage of cassava’s potential: Faso Attiéké makes fresh and dried cassava couscous in Burkina Faso, and Gabon’s Tuber’Chips has introduced flavoured cassava crisps.