5 Golden Facts About Starting An African Business In Agriculture

5 Golden Facts About Starting An African Business In Agriculture

Have you been thinking about starting an African business in agriculture? You may be one of the many people who associate more traditional economic activities in Africa straight away with agriculture. Images of women who are bending to the ground to weed their plots – children wrapped around their backs; farmers who proudly sell two sacks of produce on the local market; failed crops after another late arrival of the raining season leaving thousands and sometimes millions food insecure.

These images of Africa’s agricultural sector still stand today, but what is shifting is the outlook for the sector in the context of Africa’s growing economies, and frankly, the prospects are simply phenomenal! In order to make informed decisions and consider highly profitable activities in Africa you simply need to be informed about Africa’s agricultural sector. You may not even have thought about ‘farming’ as a profitable or possible business venture – you know what: you should.

Here are some golden facts you should consider:

1) Tap into a sector that will feed Africa…..and the world.

Africa has the fastest growing population in the world – and every single person needs to eat several times a day – every day. The demand for food will always be there and it will grow immensely. No other sector in African can possibly match that. But it gets even more interesting. According to the World Bank, around 60% of the world’s arable land that is currently not under cultivation is found in Africa. Did you hear that? 60% on a single continent! With an ever growing world population, many predict that Africa will become the world’s food basket. Well, not everything in this outlook is ethical (the world rarely is) and land grabbing by foreign companies – facilitated by African states – is already happening at the expense of millions of Africans. So you need to make sure, you are leading a responsible business. But coming back to our point: With a business in agriculture you will not only be tapping into Africa’s growing demand for food, but also into a market that is globally on the rise. What an incredible outlook!

2) AgriBusiness is becoming hip & trendy

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The success stories of new businesses in the agricultural sector are increasing and word is spreading fast about the great potential in this sector. As a result, agricultural entrepreneurship and commercial farming are becoming increasingly trendy – even among the young. In Kenya for example, ‘doing agribusiness’ is becoming hip; an increasing number of university students are skipping the job search to build agribusinesses instead. Join the trend.

3) Great prospects for agricultural business financing

There are many organizations and companies that offer access to financial capital (you just need a strong Africa business concept that works!). Among them are banks, development institutions, and private equity firms. Many private equity firms that operate in Africa have now included agriculture as a key focus, development institutions are supporting private sector initiative in agriculture as part of the wider context of poverty reduction in Africa, and some banks are showing an increased readiness to make loans available.

In Nigeria for example, lending in that sector has sky-rocketed:

Speaking at the International AgrikExpo in Lagos in June, the Agricultural Minister Adesina said the financial sector is seeing the profitability and viability of the sector and are lending more than ever: “Bank lending to seed companies and small agricultural input retailers rose from zero in 2011, to $ 10 million in 2012 and $53 million in 2013. Bank lending to fertilizer companies rose from $ 100 million in 2012 to $ 500 million in 2013. It is remarkable that the default rate has been zero percent over the past two years.” (quote Vanguard)

 4) These countries drive the sector forward like no other

african business agri 1

Agriculture is without a doubt a top sector for doing business across Africa and is a development focus for most African governments. Taping into a sector that is part of a country’s national development agenda is always helpful, as it usually makes the operating environment more conducive for you. But there are some countries, who stress on agriculture like no other. They are: Nigeria, Ethiopia, and Angola, while a significantly growing commitment can also be witnessed in Zambia and Mozambique. Include those countries in the top of your list if you want to do business in agriculture.

 5) Become rich, while fighting poverty

This is a difficult statement for me to make as a food security expert who has worked in rural development in a charitable context for over 12 years. But you know what, it’s a true statement and a healthy and ethical one to. And here is why: Input, motivation, and efficiency are increased among various stakeholders when they all benefit out of their involvement. Important is that we build responsible businesses where small farmers or employees receive the share they deserve. Building successful businesses that create hundreds and thousands of jobs is a crucial aspect in Africa’s ongoing fight against poverty. And looking at some of the new African-lead enterprises, I see success stories and gains for the wider community, which many governments and NGOs were simply unable to build. In fact, just look at the many businesses that earn a fortune by enabling millions of Africans access to ICT or micro-credits, which in turn allows poverty-stricken segments of Africa’s societies to be empowered and even start their own businesses in the agricultural sector.

I personally believe that doing business in Africa’s agricultural sector is both profitable and meaningful. Go for it!

I would love to hear your comments and questions! And if you’d like to get my latest articles on Africa business opportunities and tips as soon as they are published, feel free to click the little box ‘Notify me’ below the comment section.

Dr. Harnet
Dr. Harnet Bokrezion is the Founder of africajumpstart.com and co-author of the book '101 Ways to Make Money in Africa'. She coaches individuals and consults existing companies assisting them to make smart and strategic business decisions in Africa’s new emerging markets faster and more confidently. Dr. Harnet also regularly writes for the renowned DHL powered publication howwemadeitinafrica.com. Get in touch to inquire how she can be of assistance to your own Africa business endeavors: harnet@africajumpstart.com

User Comments ( 6 )

  • Whenever agriculture is mentioned and Sudan is not top of the list, there is definitely something wrong with the research done !! Sudan is the best suited for agriculture in Africa due to is huge area, flat lands, very fertile, abundant water supply (yearly rains and underground reservoirs at 35 billion cubic meters) and Nile rivers (18 billion cubic meters per year) ! No other country can match this potential and only 20% is now utilised. Add Nigeria (only tropical), Angola (large area, not too fertile), Zambia and Mozambique (tropical) and Ethiopia (drought for 12 years in the fertile zone and heavy rains in the mountainous semi-fertile areas allowing planting only quick growing vegetables and pulses).

  • Dr. Harnet

    Hi Nasser, thanks for your comments and the useful insights you provided in regards to agriculture in the Sudan. Having worked in the Sudan in the context of natural resource management and agro-pastoralism I can only agree with you that the country has great untapped resources for agricultural development.
    My blog posts focuses more on doing business in agriculture in the context of Africa’s economic growth dynamics. The countries I am mentioning are seeing a huge step up in agricultural promotion and investment at all fronts – and they all belong to Africa’s growth countries meaning that you will find a conducive environment for doing business there in that context. – I am comparing the business and investment environment of that sector and less the fertility of soils.This of course does not mean there are not many other African countries worthwhile mentioning – in fact as my post says 60% of the world’s arable land that is yet to be cultivated is spread across Africa. But you are right, I should sometimes maybe take actively countries into consideration that are less in the lime light. It can only widen our understanding and horizon.

    Thanks once more!

  • Joseph ugoh

    Well said guys,agriculture is undoubtably the future of Africa

  • Adolf Luhanga

    Thank you Dr Harnet for this useful information.But there is problem (not a challenge).I am in Tanzania.For the last two consecutive seasons/years we smallholder farmers have harvested bumper stock (excess harvest of maize,rice etc).To our astonishment the government has imported plenty of rice and hinder farmers/businessmen to export maize and rice.Dr with this problem is there any good future to the smallholder farmer?

    • Dr. Harnet

      Dear Adolf, thank you very much for sharing with us the useful insights as a stakeholder in agriculture on the ground. Yes, unfortunately we still come across similar stories where government policies and action still undermines the productivity of local farmers. Are you allowed to export within Africa? Kinshasa, DRC may be one of the best markets for you. Alternatively maybe some organic rice farmers in your area could come together and invest in the processing of rice into ground rice that can be branded and sold as baby porridge – this is the absolute basic of processed baby food for early infant stages here in the West. Every mum buys it! Looking forward to your reply and a warm welcome to Africa Business Jumpstart!

  • Ikenna

    Thank you so much for these inspiring facts Dr. Bokerzion. It’s very encouraging to say the least. As a matter of fact part of my masters thesis was on this exact topic. With oil prices “roller coasting” I am convinced that most African nations will soon return to the farm for its sustenance.

    I am a Nigerian in the diaspora and I want to invest in the Agricultural sector, not just in Nigeria but in other African markets/countries as well. My question to you, how do I get started? Who do I talk too to get the ball rolling? I don’t have a lot a capital, so I’ll like to know if its possible to start with something small.