Shopping malls and sugar cane: Investing in Angola’s economic diversification
The recent plunge in the price of oil has again highlighted the need for Angola to diversify its crude-dependent economy. One company that is making strides in this regard is Angola’s Cochan Group, which manages a diversified investment portfolio in the areas of agribusiness, distribution, energy, real estate and transportation and logistics. How we made it in Africa asked its CEO, Mário Lourenço, about the potential he sees in the country’s agriculture, retail and property industries. Here are excerpts.
Biocom, part of the Cochan Group, has invested in a sugar cane project in Malanje Province. What was the motivation for this investment?
The civil war and mine-clearing activities in Angolan territory delayed investment in the farming sector, but Angola’s potential has always been remarkable. The country is estimated to have 35 million hectares of arable land. Even so, more than half the food products consumed by the Angolan population are imported. The farming sector only accounts for 11% of the country’s GDP.
Biocom is not the only example of the Cochan Group’s commitment to the sector. DT Agro, another of our investments, aims to be the largest passion fruit producer in the country.
Cochan Group’s strategy has always been to diversify the economy. That’s why from early on we’ve been committed to positive investment, in various industry sectors, to explore the potential of the country and its resources.
In addition to sugar cane, which other crops in Angola hold potential for agri-processing?
As previously stated, Angolan agricultural potential is outstanding and Cochan is aware of the opportunities for positive investment. For example, we may highlight the great work DT Agro has been doing. DT Agro has been developing Angola’s agribusiness since 2012, with a clear focus on technology and the latest techniques for boosting the land’s yield and fostering competitiveness.
In 2016, DT Agro produced 2,200 tonnes of bananas, 99 tonnes of passion fruit (its goal is to become the country’s biggest producer of passion fruit), 143 tonnes of tomatoes, 110 tonnes of watermelons and 61 tonnes of bell peppers. The information from the last six months shows us a growing trend. This growth comes with great opportunities for the country, mainly in terms of food processing businesses.
The Zahara Group, of which Cochan is a main shareholder, recently opened the Xyami Shopping Kilamba retail centre. Describe the potential you see for modern retail facilities in Angola.
The middle class in Angola has been growing over the last few years, resulting in different lifestyle and consumer needs. We are paying attention to the Angolan population and working to grow with them, with their goals in mind.
Cochan, through Zahara Group, has developed five shopping facilities in the country, and has provided Angolans with a wide range of services and opportunities which they didn’t have access to before. As the market is growing, we are working hard to be aligned with other nations in Africa and to bring to Angola high quality and modern facilities and services. For example, as an investor in KERO supermarkets – a sophisticated hypermarket chain of around 13 stores across the country – we are improving Angolans’ lives as KERO was the first hypermarket chain to open in Angola and continues to create thousands of jobs and deliver local and international products to consumers.
How would you describe the opportunities for modern retail in urban areas outside Luanda, or is the market predominantly in the capital?
As the country’s capital, Luanda is far more developed than other provinces and has the most people, hence the demand and need is much greater. However, some of the larger provinces are benefiting from modern retail opportunities which Cochan is creating as a contribution to the development of other regions. KERO for instance started in Luanda, but is gradually spreading across the whole country.
Describe the size and strength of the Angolan consumer class.
According to the African Development Bank, Africa’s middle class in on the rise and this trend is increasing in Angola as well. A recent Standard Bank study for Angola concluded that 21% of the population is middle class and that by 2030, the country will have an additional one million households in this category. We are aware of the difficulties some people face in the country, but we invest in order to grow with them and to provide employment, services and products according to their growing needs. As a result of increasing income, the Angolan middle class is getting stronger and is driving the huge demand for consumer goods.
In addition to retail developments, which other opportunities does Cochan Group see in Angola’s real estate industry?
We will continue our strategy of investing in retail property and we are planning more developments in the future. Moreover, Cochan is developing an outstanding project in downtown Luanda, expected to open by 2018, that contributes not only to the revival of luxury residences in the city but also to the traditional markets. Kinaxixi Center comprises a gross construction area of 320,000m2 and includes luxury apartments, a business centre and a shopping centre.