Investing in Burkina Faso: 8x returns possible in the agribusiness sector

Sinergi Burkina invested in agro-processor Rose Eclat in 2019.

Sinergi Burkina is an investment firm focused on SMEs in Burkina Faso. Managing director, Job Zongo, speaks to James Torvaney about opportunities in the country’s livestock and agro-processing industries, and reveals the investment that bagged his firm an 8x return.

Tell us a bit more about Sinergi Burkina. What is the firm’s structure, and what was the rationale behind launching it?

Sinergi Burkina was created in 2014 and was the first impact investment fund dedicated specifically to Burkina Faso. Sinergi Burkina is a generalist fund, and we invest in SMEs across all sectors and all regions of Burkina Faso. The fund is sponsored by pan-African impact investment group Investisseurs & Partenaires (I&P).

Beyond financing, Sinergi Burkina provides technical assistance to its portfolio companies and allows them to access support from the wider I&P group.

What exactly is the relationship between I&P and Sinergi Burkina?

Sinergi Burkina is I&P’s partner. Both are impact investors, but I&P invests at bigger ticket sizes. I&P worked with local partners in order to target smaller businesses. Similar funds include Sinergi Niger (Niger), Comoé Capital (Côte d’Ivoire), Teranga Capital (Senegal) and Miarakap (Madagascar).

I&P was the keystone investor, and remains the largest shareholder, in Sinergi Burkina. Other investors include local banks and insurance companies, international investment companies, and entrepreneurs

Describe you investment criteria.

Our equity funding is designed for companies already in operation, with strong growth potential and in need of long-term financial support. Based on our experience, the turnover of these companies is usually between €300,000 and €2.3 million. They typically need between €200,000 to €450,000 in financing. Companies with bigger needs are reoriented toward I&P’s pan-African IPAE fund, which has ticket sizes of up to €5 million.

Sinergi Burkina has invested in a number of businesses within the livestock industry. What attracted you to these companies?

Livestock farming is integral to the Burkinabe economy – it employs nearly 86% of the country’s working population and contributes between 10% to 20% of the country’s GDP. It is the second largest contributor to agricultural value added in the country, after cotton.

The country produces more than 30 million tonnes of beef, 264 million tonnes of milk and 6,000 tonnes of eggs per year. However, unfortunately, the security crisis that we have been facing since 2015 has considerably affected this sector, particularly in the north, which is where much of the livestock industry is based. This has created a shortfall in production which means there are more opportunities, and higher prices, for farmers elsewhere in the country.

Can you provide some examples of companies within the livestock industry that you have invested in?

Afrik Bovia is a cattle farm specialising in the production of cow milk, located in Bobo-Dioulasso, in the west of the country. We have been supporting the company to get adequate materials and human resources to establish a yoghurt and pasteurised milk production unit to increase its production and create more added value.

FasoPro is another company we invested in that creates food products based on locust and shea caterpillars. Locusts are bought from Niger and the company works with a network of women that collect shea caterpillars. We helped the company to purchase production equipment (oven, fryer, semi-automatic welding machine, etc) and raw materials. Unfortunately, the seasonality of the caterpillars and the increase of insecurity didn’t permit the company to grow, but the entrepreneur didn’t give up and is currently working with CNRST – a public research centre – to grow the locusts himself, rather than import them from Niger.

Maize processor Agroserv is one of Sinergi Burkina’s successful investments; it exited for an 8x return on its initial investment.

We also supported Faso Elevage Bio. This young company specialises in producing breeding materials for poultry farmers, including breeding equipment (incubators, cages, brooders, etc), implementation of farm monitoring systems, rent of livestock buildings, and training of poultry farmers on good breeding practices.

Your firm has also backed a number of agro-processing businesses. What are some of the trends and opportunities you see in this space?

In general, I can say that the agro-industrial sector is booming in Burkina Faso. There are many opportunities in farming and the processing of cereals (maize, sorghum rice, fonio and millet), oleo-proteins (soya beans and sesame), fruits and vegetables, and trees (shea and néré trees), and also in support services such as transport, storage, and mechanisation. Around two thirds of our portfolio are agro-industrials.

Right now there is a lot of nationalist sentiment, with domestic consumers increasingly wanting to consume locally produced products, meaning that there are many industrial companies trying to transform local produce. Whilst some businesses are focusing on this local market, it is relatively small and most of our portfolio companies’ are looking to export their products. The government is providing a lot of support to help companies export, including helping companies attend trade fairs and link with international buyers.

Talk about some of the investments you’ve made in the agro-processing industry.

When we first met Mr Siaka Sanon, CEO of Agroserv in 2016, we recognised an entrepreneur with a vision. He wanted to increase the capacity of production of his maize processing company. Sinergi Burkina funded the company in 2017 with an initial investment of €260,000, and with a subsequent follow-on investment of €305,000.

Five years later, the company had managed to multiply its turnover sixfold (to €4.8 million in 2021), consolidate a network of nearly 6,000 small maize producers, build an in-house laboratory and receive HACCP and ISO 9001 certification for its products, and employ 122 people (up from 22 in 2017). In 2022, the company fundraised more than €8.5 million from larger impact investors including I&P, Oikocredit, BIO, AgriFI. We exited the business for an 8x return on our initial investment.

There is also Kokuma, an industrial unit for processing paddy rice into whole white rice, broken rice, and rice bran. It is one of the best paddy rice processors on the Bagré plain, in the eastern part of Burkina Faso. The company collects its paddy from a network of more than 500 smallholder farmers.

Rose Eclat is another portfolio company that processes fruit and vegetables for national and international markets. The company produces BIO and HACCP-certified processed and dried products including mango, banana, strawberry, pineapple, and okra.

Which other industries in Burkina Faso offer untapped opportunities for entrepreneurs and investors?

The mining sector is booming here in Burkina Faso. The country is the fastest growing producer of gold in Africa, and is now the fourth-largest producer of gold on the continent.

In September 2021, the government adopted a decree requiring mining companies to dedicate a percentage of their spend to local vendors. There are opportunities for investors. Many local companies have the necessary expertise, for example in transportation and hiring of equipment, but need additional capital to be able to serve the mining sector.