Private equity firm sees opportunity in South Sudan agriculture

“Africa is long on opportunities, but short of capital and short of experienced general partners.”

So said Marwan Elaraby, managing director of private equity firm Citadel Captial, at the Republic of South Sudan Investment Summit in Juba.

“We believe that private equity can play a transformative role in Africa …” said Elaraby. “We are working in partnership with the government and people of South Sudan to make investments in agriculture and related infrastructure, thereby improving food security in Africa’s newest nation and delivering tangible benefits to the surrounding community,” he added.

Last year South Sudan became Africa’s newest country after the region voted in favour of secession from Sudan. The referendum was a core component of the 2005 Comprehensive Peace Agreement (CPA) that ended decades of conflict between the Southern Sudan People’s Liberation Movement (SPLM) and the Khartoum government.

Citadel holds a stake in Concord Agriculture, an agricultural company operating in South Sudan. Formed in early 2009, Concord owns a large area of agricultural land, situated 600 kilometres north of the South Sudan capital of Juba. The company focuses on the production of locally demanded food crops such as sorghum and maize, as well as sunflowers for cooking oil.

Concord managing director Peter Schuurs also attended the summit. “Experience has taught us that large-scale farming using the latest global best practices is the most efficient, scalable and sustainable way to make significant strides in boosting productivity, while ensuring that smallholders and pastoralist migrants continue to have access to land and resources,” he commented.

A satellite land cover survey by the Food and Agriculture Organisation (FAO) has revealed that only 4.5% of South Sudan’s available land is currently under cultivation, highlighting the agricultural opportunities in the country.

There has recently been an increase in private equity activity in Africa. In a new report, Ernst & Young says that “in 2007, sub-Saharan Africa accounted for 3% of emerging market fund-raising; by 2010, this had doubled to 6%. Strong growth prospects, particularly in contrast to those in developed markets, are attracting private equity capital. GDP growth across Africa is expected to average 5% over the next 10 years, with many countries, such as Ghana, Ethiopia and Uganda, projected to exceed 7% GDP growth per year. Private equity’s penetration in the region also remains low – representing just 0.11% in sub-Saharan Africa – which translates into less competition for deals and substantial opportunity for growth.”

Ernst & Young continues: “New funds are emerging to join the established players such as Kingdom Zephyr, Ethos and African Capital Alliance. At the same time, large international players such as The Carlyle Group are raising funds for Africa, joining the established global emerging markets players like Actis. The private equity landscape is diversifying to offer financing to businesses in every stage of development.”