With large swathes of arable land and a huge food import bill, Africa’s agriculture and food industry holds immense potential. However, identifying the correct opportunities and devising a winning strategy around them can be difficult. How we made it in Africa’s editor-in-chief Jaco Maritz looks at some interesting agribusiness-related ideas and success strategies that came across our desk in the first half of 2022.
1. Industry-focused B2B marketplaces. Singapore-headquartered GUUD has implemented a number of tech-enabled solutions to streamline trade in Africa. For instance, in the East African Community it has developed a Single Customs Territory platform, and in Togo, it introduced a digital trade certification system. Apart from implementing systems for governments, the company now also wants to launch private sector-focused solutions in Africa. One promising idea is industry-specific business-to-business (B2B) online marketplaces.
GUUD has developed Singapore’s first digital B2B seafood marketplace that helps traders sell their goods more effectively. The company believes there is potential for similar platforms in Africa, and is already in discussions with stakeholders in several African countries with large fishing industries. GUUD’s marketplaces are differentiated from platforms like Alibaba, in that they target specific industries. “Our take on B2B platforms is to focus on an industry and then bring all the stakeholders in that industry together and create a community,” says founder and CEO Desmond Tay.
In addition to connecting buyers and sellers, GUUD integrates the entire ecosystem – including the certification process and logistics – into its marketplaces. “Seafood trade is not as simple as someone selling the fish and someone buying the fish. For example, supplying seafood to a retail chain is very different from selling seafood to a processing plant that makes fish filet or fish fingers. There are also different stakeholders for farmed seafood versus wild caught seafood. Likewise for logistics – there is frozen seafood, there is fresh seafood, there is live seafood and all of these have different logistics requirements,” Tay explains. Beyond seafood, he sees potential for similar marketplaces for various other commodities. For instance, GUUD is working on launching a marketplace for the coffee industry. Read more: Singaporean entrepreneur spots gap to streamline African trade
2. Niche food items in Zambia. The local production of processed food items that are currently imported presents attractive opportunities in Zambia, according to Tue Nyboe Andersen, managing director of Lusaka-based Kukula Capital.
“For processed food products, I think the opportunities really lie in niche products with limited competition. As a landlocked country, Zambia has some built-in import barriers; imported products need to be transported over long distances. For example, there is a company called Meraki that produces cakes and supplies them to big retailers like Shoprite. It has grown rapidly with decent margins because its competition is imported products that are way more expensive. Zambia has limited food processing and a lot of items are imported.” Read more: Zambia-based investor highlights promising business opportunities
3. Growing Rwanda’s fleet of refrigerated trucks. Rwanda has a shortage of commercial refrigerated vehicles, presenting a potential business opportunity for entrepreneurs. So says Mark Sproston, CEO of food distributor GET IT. The company is a Rwanda-based distributor of fruits, vegetables and dry goods to businesses and households. It sources its fresh produce from both its own farming operations as well as third-party smallholder farmers.
“At one point there were only six refrigerated trucks available for commercial rental in Kigali. While there are more now, it is still not enough, and we often have to rent directly from private operators. I have been approached by various players in the region who are considering a business to address this shortage. I expect a large player on the ground very shortly,” he explains. Read more: Building a food distribution business in Rwanda and beyond
4. Using technology to predict fish sales. Kenya’s Victory Farms, which produces the tilapia fish species, has built a vertically integrated business that includes everything from a fish-farming operation in Lake Victoria to its own distribution network and retail branches.
The company has a highly efficient distribution and retail model powered by technology. It has 56 branded retail branches, which in turn sells fish mostly to informal shopkeepers. None of Victory Farms’ retail outlets have ice or refrigeration equipment; all the fish is sold within one day. To make this possible and not lose any fish to decomposition, Victory Farms maintains a data set on every single market trader to predict how much fish they will sell. The market traders input orders and sales via an SMS platform. “We can accurately forecast exactly how much fish to stock in the branch tomorrow, so we have no spoilage. Our wastage is below 1%,” founder and CEO Joseph Rehmann reveals. Read more: Kenyan company tapping into ‘multibillion-dollar’ fish-farming opportunity
5. Replacing Congo’s palm oil imports with local production. I recently attended the Forum PPP conference in the Republic of Congo, my first visit to the central African country. At the event I met Michel Djombo – founder of Congolese palm oil company GTC and managing director of fertiliser producer CA Agri. In an interview following the conference, he highlighted palm oil as a commodity with significant growth potential in the Congo.
Palm oil is used throughout central and west Africa for cooking and it is also an important ingredient in the global processed foods and beauty products industries. Djombo says it is not necessary for extensive market research to gauge the potential for the local production of palm oil: Congo’s official customs data shows the large volumes of oil currently brought in from as far afield as Malaysia. The prices at which the commodity is imported can also be found in the customs numbers. And if potential investors want to know the yields that oil palm trees in Congo can deliver, they can just visit some of the small- and medium-enterprises already growing in the crop. According to Djombo, the Congolese market can absorb a few hundred thousand tonnes of palm oil annually. Read more: Mango, maize and palm oil – opportunities in Congo’s agriculture sector
6. Insect farming. Several entrepreneurs (here are some of them) in Africa have tapped into the opportunity to use insects as an alternative form of protein and other products such as fertiliser. In 2018, economics graduate Simon Hazell co-founded the South African insect protein company Inseco with Jack Chennells. Its core business is to use black soldier flies to convert low-value organic waste into insect-based animal feed, oil and fertiliser. Read more: Building an insect farming business in South Africa
In Zimbabwe, Brighton Zambezi also ventured into black soldier fly maggot farming after identifying demand for cheaper, more nutritious animal feed for backyard chicken farmers in Harare. “I don’t think I will ever return to formal employment. I have found my calling. I want to be a commercial black soldier fly farmer,” he said. Read more: Zimbabwean proves maggot farming can be a viable business
7. Increasing sales by revealing information about a product’s origin. In the past, many consumers haven’t thought too much about where their food came from, and information about its origin was opaque and difficult to track. However, concerns over factors such as environmental impact and farmers’ living conditions mean many people are paying far more attention to where their products come from. Some African companies are now looking to engage with customers and increase sales by allowing people to trace each bag of produce all the way back to the individual farmers who harvested the ingredients.
Tahira Nizari, founder of Tanzania-based tea producer Kazi Yetu, has made transparency a core part of the company’s identity. Each packet of Kazi Yetu tea sold in the United States, Europe and East Africa is printed with a QR code. When scanned with a smartphone camera, it reveals a web page containing detailed information such as the name and location of the farm where each ingredient was sourced, and a step-by-step description of how the item was made.
Cashew nut company YYTZ Agro-Processing, founded by Fahad Awadh, also based in Tanzania, believes that sharing with its customers how the products were made and who grew them is a key part of the brand’s appeal. Awadh also uses QR codes on his packaging to allow people to learn more about the origins of YYTZ’s cashews. “I can’t quantify the exact effect the codes have on the sales, but it is an important part of our brand and our commitment to transparency. We put our code right on the front of the pack, so it stands out on the shelf. It’s definitely something that sets the product apart.” Read more: By uncovering the story behind their products, these African companies are boosting sales
8. The enduring superfood trend. As consumers worldwide adopt healthier lifestyles, demand for health and wellness foods is booming. US-based African-food company Yolélé is betting on surging demand for the West African ancient grain fonio in the American market. Fonio – a gluten-free grain with many nutritional benefits – has been cultivated as a subsistence crop in West Africa for thousands of years. It is drought-resistant, can grow without the support of fertiliser and restores organic matter in fallow soil. Yolélé’s products are currently available at over 2,000 grocery stores in the US, including Whole Foods and Target. Yolélé recently partnered with Mali-based agribusiness company Mali Shi to establish a new venture, called West African Ancient Grains, that plans to process thousands of tonnes of fonio in Mali to meet increasing global interest in the superfood. Read more: Company bets on surging demand for West African ancient grain fonio in US market
How we made it in Africa recently also interviewed Zambia-based Moringa Initiative that has established itself as a substantial international bulk supplier of dried moringa leaves as well as branded products that contain the nutritious superfood. The company grows moringa on the family farm outside of Lusaka and processes the dried leaves into seed oil, tea, powder and capsules. Read more: Superfood business tapping into health trend in Africa and abroad
9. Solar-powered cold storage. The United Nations’ Food and Agriculture Organisation estimates over 40% of food in sub-Saharan Africa perishes before it reaches a consumer. This can be as high as 60% for fresh produce, pointing to unmet demand for temperature-controlled cold-storage warehouses and transportation services. There are a number of reasons why cold storage is underdeveloped in many sub-Saharan African countries, including a lack of local manufacturers of cooling technology, inadequate financing options and poor electricity.
Nigerian entrepreneur Nnaemeka Ikegwuonu is addressing this challenge through his company ColdHubs that operates solar-powered cold rooms, providing a pay-as-you-store service for fresh produce to smallholder farmers and market merchants. A customer pays 200 Nigerian naira (about half a US dollar) to store fresh produce in a 20kg returnable plastic crate, for one day. Today, the company has 54 hubs in 22 states, with a total staff of 68. Read more: Pay-as-you-go cold storage – businessman wants to expand beyond Nigeria