Investisseurs & Partenaires (I&P) is an impact investment firm with offices in seven African countries. The firm invests across a wide range of industries and deal sizes, both directly and through a series of independently managed funds which it sponsors.
Nouss Bih is based in Abidjan and oversees I&P’s portfolio of investments in Côte d’Ivoire. She spoke to How we made it in Africa to discuss the firm’s investments into the healthcare, education and agriculture sectors.
I&P has made several healthcare investments in Côte d’Ivoire. How do you approach investments in the healthcare sector?
As an impact investor, healthcare is a particularly interesting sector because there is huge under-capacity. The vast majority of medical supplies in the region are imported, so we see a lot of opportunities in import substitution.
One example of this is our investment in Pharmivoire Nouvelle (PHN), which manufactures soft-packaged intravenous (IV) solutions. Across the West African region, 90% of IV fluids are imported, so there is a massive market beyond just Côte d’Ivoire. Since our initial investment, PHN has started selling products in both Burkina Faso and Niger.
Another area we like is medical clinics and diagnostic centres. As the population expands and demand for healthcare increases, there is a crucial role for the private sector to play in expanding healthcare capacity. Local diagnostics centres and clinics are still scarce, with the most affluent travelling abroad for treatment; there is a real need for quick, effective diagnosis in the local market.
In this sector, we look for businesses with a clear differentiation angle and the potential to become leaders in a particular niche. We recently invested in Procréa, a reproductive health clinic in Abidjan that specialises in techniques to help couples with infertility issues achieve parenthood. As with many clinics in Abidjan, it started operations in a residential building but the business has grown very quickly and no longer has space to properly welcome the patients. We are currently investing in the design and construction of a new purpose-built facility, which we hope will consolidate its position as the leading fertility and mother-child health centre in Côte d’Ivoire.
I&P is also active in Côte d’Ivoire’s education sector. Talk about some of your investments and which areas of education offer opportunities for entrepreneurs and businesspeople.
Education is another area with a shortfall in capacity and growing demand. Though there is an increasing young population; many of them leave the educational circuit early and with few qualifications. From an employer’s view, there is still a huge gap between traditional theoretical training and the needs of businesses.
Our investments in the education space are geared towards businesses that focus their training on a clear market need. We have invested in technology-enabled solutions that can address this need on a large scale (for example, our investment in online professional training platform Etudesk) but we are also conscious that for a lot of vocational training, there is still a need for in-person learning. We have invested in a number of businesses with a physical presence, such as Institut de Management, de Gestion et d’Hôtellerie (IMGH) and the Centre des Métiers Michèle Yakice, which specialise in hospitality and tailoring training respectively.
Tell us about the untapped opportunities in Côte d’Ivoire’s agribusiness sector.
Like most sector-agnostic investors, we don’t invest in primary agriculture, which requires specific capital and expertise that we cannot provide.
However, we do see a lot of opportunities to invest along the value chain. In Côte d’Ivoire, crops such as cacao have typically been exported as raw materials and processed elsewhere, but there are opportunities for more value to be captured domestically. An example is Rama Cereal, a business that processes and packages grains and spices – such as millet, maize and ginger – for sale to major supermarket chains like Citydia and Carrefour.
There are also a lot of opportunities for companies that can address specific inefficiencies throughout the value chain, especially those that contribute to achieve better agricultural yields or assess the quality of products, either raw materials or processed food; businesses that provide soil analysis, mechanisation, irrigation or sale of agricultural inputs like seeds and fertilisers.
One area we are looking at is organic waste. There are growing environmental concerns about the quantity of waste generated from large-scale cocoa and cashew farming, and there are several uses of interest from an investment angle: using cocoa by-products to produce fertiliser, cosmetic products or combustible fuels.
While agribusiness is an important sector in the Ivorian economy, a large proportion of the agro-processing businesses operate informally on a small scale. Our strategy is to invest in businesses at an earlier stage (usually through our smaller funds) and bring them to the point where they could be eligible for funds with bigger deal sizes. Larger companies are still of interest, although less common; we haven’t yet finalised any large agribusiness investments in Côte d’Ivoire, as we have done in other countries in the region.
What are some of the biggest difficulties you have when searching for investment opportunities?
As an investor targeting deal sizes above €500,000, the biggest difficulty we have is finding companies with reliable financials, that are sufficiently formalised and with a proper/efficient organisation. There are companies turning over millions of dollars but are not structured in a way that can absorb that amount of capital. They may not have proper accounting structures in place, or they may be keeping different books for the management, the investors and the tax authorities.
Another thing we look at is the entrepreneur. It is important they are able to articulate a clear vision, and build and lead a structured team. For us to work with a business, we need to be sure the management team is open to change. A lot of SMEs aren’t particularly good at recognising their shortcomings, which is a huge hindrance to growth.
What do you see as some of the greatest risks for businesses in Côte d’Ivoire’s economy today?
There has been a lot of progress in recent years but politics is still a tangible risk. As we’ve recently seen, elections can cause lengthy slowdowns in the economy. There are also a lot of businesses that are still exposed to the state as a client. We avoid investing in companies reliant on public tenders because fiscal instability at a government level can lead to concerns over the recoverability of receivables.
Even for those not reliant on tenders, taxation can be an issue. Fiscal policies change year on year and the fiscal charge is unevenly distributed throughout the economy. Because there are relatively few of them, formal companies can become targets and bear a particularly heavy fiscal load.
And as much as progress has been made, regional (ECOWAS) integration is still not where we want it to be. We specifically look for businesses with regional growth potential and there is still a lot of work to be done to make cross-border trade more seamless.