There has been much talk about the potential for investment in Africa’s agribusiness and food industries. But what are the particular opportunities? In a recent report the United Nations Development Programme (UNDP) revealed nine specific investment options for business people and entrepreneurs.
1. Fruit juice concentrate processing facility in Nigeria
Around 90% of the fruit juice produced in Nigeria is based on concentrates imported from abroad. Nigeria’s fruit juice market is projected to be worth more than US$2 billion per annum. Interested investors could have discussions with established fruit juice producers such as Coca-Cola Nigeria and Chi-Nigeria to investigate their quality specifications, volumes and potential prices.
2. Cassava value chain investment
While cassava is one of Africa’s main staple foods, the opportunities for the crop in ethanol, bio-fuel, processed foods, industrial starch and pharmaceutical applications have not been exploited. There is a huge market for starch in Nigeria and other countries, with strong demand from textile and food processing companies. Currently Nigeria’s local textile industry and food companies import over 90% of their starch requirements.
“One weakness along the cassava value chain is the absence of in-country large-scale cassava processing facilities, which could turn cassava from subsistence use into industrial use,” notes the report.
3. Cultivation of soya bean and other oil seed plants
“Soya bean has become a strategic commodity for sub-Saharan African countries,” says the UNDP. The crop’s importance in the food, animal feed and edible oil industries have grown in recent years. Sub-Saharan Africa however contributes only 0.2% to global soya bean output.
Africa presently has a large demand for soya bean related products – including soya cake and soya oil. BIDCO, a company with a presence in a number of east African countries, could process an additional 30,000 tons of soya beans using its existing processing capacity.
According to the UNDP, the demand for crude palm oil is even higher than that of soya beans.
4. Sorghum production
Sorghum has evolved from a commodity for subsistence farmers into a popular household and industrial crop. East African Breweries, Nigeria Breweries and Ghana Breweries have started using sorghum for beverage production. The report notes there are currently opportunities for the private sector to invest in sorghum production expansion and mechanisation.
East African Breweries is currently seeking farmers to produce sorghum on contract to reduce its reliance on more costly barley. It is expected that by 2015, demand in Nigeria for domestic use and exports to neighbouring countries will reach over 980,000 tons.
5. Intensive production technologies for fresh vegetables
The growth of modern supermarkets in Africa coupled with urbanisation and a rising middle class, has led to a high demand for quality vegetables that can be obtained using intensive production technologies.
Earlier this year How we made it in Africa reported that in some places in Africa, fast-food giant Kentucky Fried Chicken (KFC) doesn’t serve lettuce on its burgers. This is not to save on costs or due to a difference in local tastes, but rather because there are no local lettuce producers who can supply the quantities and quality required by KFC.
The use of intensive production technologies has transformed the horticultural industry in Kenya. West Africa holds considerable potential for the introduction and commercialisation of intensive vegetable production systems.
“The investment opportunity does not only reside in production but a strategic and integrated approach to market production equipment, transfer technologies and provide market linkages for producers,” says the report.