Sahel Capital is a private investment firm focused on food and agriculture in West Africa. In a recent interview with the African Private Equity and Venture Capital Association (AVCA), Sahel managing partner Mezuo Nwuneli was asked to identify some of the investment opportunities in the region’s agriculture sector. Here is his response:
“There are three different investment areas we find exciting and where we are focusing our attention.
“The first is logistics and distribution – from plain logistics to last-mile distribution and cold-chain. There are many bottlenecks in getting food products to end markets, and capital investments in this sector can help increase the efficiency of moving goods around. Addressing and allocating capital to this sector is top of our agenda for the next couple of years.
“The next area of particular interest to us is import substitution – investing in sectors with significant import activity, even though the items can be produced competitively domestically. One example of this is our investment in Coscharis Farms, a large-scale integrated rice company with 2,500 hectares of commercial rice farmland and a 36,000 MTPA rice mill. Coscharis also sources rice from farmers throughout the community. Nigeria currently consumes seven million tonnes annually of which one-third of the volume is imported, and there is significant potential to ensure self-sufficiency.
“The third investment area we are focused on is packaged foods and snacks. Around half of Africa’s population is already urban and with one of the highest projected urbanisation rates in the world, consumption patterns are rapidly changing. People now look for more convenience and seek out packaged foods, which is different from what they would eat in rural areas. There is a huge opportunity to invest in companies able to produce a packaged food product at the right price point, which is key because many consumers in the region are price sensitive. We invested in Polyfilm Packaging in 2019, which produces the packaging material that wraps food and consumer products, to capture value from the growth of companies within this sector. The company has exceeded its business plan in the two years since we invested.”