Will “Grown in Africa” become tomorrow’s equivalent of “Made in China” ?

By | July 15, 2013
PhotoCredit: Niti Bhan Kenya 2012

Even as experts and specialists split hairs in their current debate over Africa’s rise, one has begun to see some weak signals of  the economic potential of private agribusinesses on the continent’s economy. Granted that the emphasis on agriculture itself by a variety of organizations is not insignificant, particularly in the context of the continent’s food security. However, what we’re sensing now is the entrepreneurial opportunity being embraced by youth and yuppies – non traditional segments – who bring more education, training and exposure to a wide variety of value additions.

Miss Gratitude Ntonda Mandiangu of the DRC is but one example.  A young professionally trained food technician in her twenties, she saw wealth in the wasted fruit from neighbourhood orchards, unable to reach any markets in time due to lack of infrastructure and transport.

“Passion fruit juice here, mango juice there, the ginger and orange juices at the back. And here the honey and mead used as sweeteners,” says Gratitude. The sound of clinking glass bottles fills the 25sqm workshop where the young Congolese woman turns surplus fruit into delicious drinks. “We had to find a way to add value to this readily available raw material,”

And she isn’t the only one – there are the “rice brothers” in Mali and a Nigerian aspiring to emulate the success of the Amul farmer’s cooperative, now one of India’s most valuable brands. These are only a handful of known examples, where there must be many many more. The big difference here is the startup opportunity by private entrepreneurs building brands is as much of an upwardly mobile movement as large scale agribusinesses or horticultural plantations geared for lucrative export markets.

PhotoCredit: Niti Bhan Kenya 2012

Private equity has picked up the scent and begun entering this space. Here’s a snippet from the news:

At the end of last year private equity firm Silk Invest noted that the food industry is the most obvious way to tap into increasing spending power in Africa. The firm manages the Silk African Food Fund, which is a private equity fund that invests in processed food, beverages and quick-service restaurant companies on the continent.The fund has so far invested in a confectionery company in Egypt, a quick service restaurant brand in Nigeria, and a biscuit manufacturer in Ethiopia.

Last week The Abraaj Group, a private equity firm with operations across the world, announced that it will acquire a 100% stake in Fan Milk International, one of West Africa’s largest dairy companies. Established in Ghana more than 50 years ago, Fan Milk is today one of West Africa’s top producers and distributors of frozen dairy products and juices.

In addition to Ghana, the company also operates subsidiaries in Nigeria, Ivory Coast, Burkina Faso, Togo and Benin. It is estimated that Fan Milk currently sells more than 1.8 million products on a daily basis throughout West Africa.

Towards the end of 2012, South African consumer goods giant Tiger Brands bought a majority stake in Dangote Flour Mills (DFM), one of Nigeria’s largest flour and pasta producers.

With all the natural resources required for agriculture and other farm related produce, there’s as much of a chance that “Grown in Africa” just might become the “Made in China” by the end of this decade.

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