I own some land. How do I start a profitable African business with it?That is the question I have received several times, both from people in the Diaspora and from those living on the continent. So I thought I write a blog post about how to start a business in a profitable way using your land.
Allow me to bring in non-traditional and more creative business concepts that feed into today’s growing demands in Africa’s emerging economies. The traditional concepts will serve well-established markets, which are sometimes harder to enter as a new business, because competition is greater. While creative ideas enable you to carve out a niche for yourself and start selling faster even as a newcomer. They can both drive you equally towards success, but the latter allows you to position yourself much faster.
You can become a market leader even if you start serving only a small niche in the beginning. Why, because you have little competition, yet the demand is there. So keep that in mind while reading and working on your business concept.
Let’s go straight to the point. There are three dynamic growth sectors in Africa that you could tap into with a piece of land. They are:
2) Tourism / leisure
I don’t want to go into the property sector here, I wrote a post titled ‘5 Bold Facts You Should Know About Africa’s Property Sector Before Getting Started’ if you want to understand some trends. So in this blog I will focus on the two first growth sectors: agriculture and tourism/leisure.
I think one issue that is very important is that you are prepared to widen your horizon. Owning land does not necessarily mean you have to plant something. You can also use it to teach something, provide a service, or gather people and that applies both to the agricultural or the tourism sector.
Before you start thinking about a successful business concept for your land, I suggest you make a list of the advantages of your land area and a list of the disadvantages.
What is there that you consider favorable? (e.g. situated close to town and markets, beautiful scenery, near a body of water, fertile soil, safe area etc.) – just write down all the benefits even if they do not seem of importance.
Next to it write down the limitations of your land (e.g. difficult accessibility, rocky ground etc).
Then make a list of what you are able to add to the land to make it profitable. And please think of anything that you could contribute:
– Financial capital (yes or no and how much)
– Your labor
– Your skills, certain talents, creativity
You see, many factors play into the actual feasibility of making your land profitable and in which way to do so. It depends on the size of land, geographical positioning, climate, soil, surrounding environment, infrastructure, your capital, your skills and optimism to learn, and what you want to create. So the conditions are very different for all land owners and all I can do here is give you some general guidance to tips in finding the best business concept for you. Listing some ‘characteristics’ of your land and looking at them on a piece of paper will enable you to understand your own situation better.
1. Using your land for agricultural purposes
Produce and sell
This is the most conventional way to use your land. You grow something and you sell it.
But here is how we will tweak it: Instead of planting traditional crops (where competition is high and profit marigins usually low), you now focus on planting non-traditional crops.
You may be able to make a decent income from traditional crops, but let’s face it, most smaller land owners selling their agricultural produce locally remain relatively poor or doing just fine. So a simple strategy to produce carrots, maize, or sorghum and sell your produce will usually not get you far. Local traditional markets are often weak, your margins are low, prices fluctuate, or you are depending on middle men. That’s widely Africa’s reality. and it will be yours when you start small planting traditional crops.
But I know that you have one advantage: You are reading this, which means you are educated, you are able to access the Internet to learn from other success stories and find better solutions, and you will even be able to market and make connections through social media. That’s your plus, it’s free, so utilise it well!
Before you start, you really need to ask yourself this:
1) What do I produce that is profitable?
2) Which niche do I serve – who are my buyers?
And there are two basic decisive factors that are important for a profitable agricultural business :
1) Which quality am I able to deliver?
2) Which quantity am I able to deliver?
To achieve a high quality output in great quantities is a hugely difficult undertaking as a start up, especially when your resources are limited.
And, here is an important rule: If you do what everyone else is doing or what you have been doing so far with little results, your chances for greater success are limited. And that is what most small African land owners with various backgrounds do: They grow what they know and what others around them grow, and they market and sell in a way others try to market their products. These are the points where I want to challenge you today.
If you want to successfully jumpstart a new Africa business using a piece of land with an investment of limited financial resources, then I believe to stand out of the crowd is your way to get profitable fast as a new business.
Here are my ideas for the most profitable agricultural concepts:
#1 Produce something rare for a local niche market that has growing spending power
Of course, what you plant depends highly on the climate conditions in your local area, but I am talking about something like gourmet garlic, cocktail tomatoes, mushrooms, straweberries popular ‘Western’ herbs like basil, dill, or chives for high-end restaurants, hotels, and supermarkets for the upper middle class. All are fast growing market segments in Africa right now. There are so many more things you can produce, but I chose some fast growing crops that allow you to start selling within months not years. The strategy you would be using is that you focus on high-value crops that are not (or very limited) available in your country, so you will certainly find buyers in your niche.
You may later even go a step further and add value by doing some simple processing and branding,
You can for example produce marmalade out of the strawberries in your own kitchen and sell it as a local brand. It is so simple to cook it, just google it! Most marmalade I ate in Africa is of awful quality and it’s imported. Start small and please don’t forget that many of the world’s food businesses started in private kitchens!
Or you could dry a selection of European herbs, mix them, and brand it as ‘herbs en Provence’ (French) or ‘Taste of Italy’.
High end hotels, restaurant businesses, and consumers in Africa want to stand out and they want to try and offer different food of good quality – and this is where you come in.
Do you have a well established beauty industry in your country?
If you do, you may consider growing lavender or Aloe vera. Both grow excellent in drier conditions and are used in perfumes, soaps, crèmes, wash lotions etc. Aloe vera grows actually wild in many parts of semi-arid Africa, but you could cultivate it, process, and market it. I am mentioning the two, because they are not commonly used in Africa’s beauty industry (which is growing, too!), so again, it’s all about leading ahead in a new niche. Remember, this enables you to enter the agricultural and food markets quicker as a small start up. And you will be the person to go to for this particular niche.
#2 Create a farmer cooperative for export
If you want to produce for an export market and your land is not big enough, create a cooperative with other farmers and horticulturists or build mutual business partnerships. You could convince others in your area to join your new project. But traditional ways are often hard to break so make sure you have enough evidence to back up the great potential you see in your new business idea when you present it.
Demonstration is what Africans respond to very well.
Again, if you are a new start up and you need to be able to sell produce fast, I would focus on the same fast growing niche crops I mentioned above for your partnerships.
I suggest to focus on intra-African trade instead of export to the West. Because you can start selling successfully with lower quantities and quality. It takes time to develop.
Fill the same unique gaps in the food and beauty industry regionally that you fill locally, at least for the start. According to Ernst & Young (2013) intra-African trade has been growing at a 32.5% compound rate since 2007, a clear indication that a lot is happening at regional level within Africa. For a start up business it will be much easier to trade within Africa to get your food into profitable trading, as you may have better access to regional buyers and food import regulations are not as strict as they are for the West, for example.
Start your business first, build it, grow it and then you may consider more export markets if you want to focus on that.
Of course there are many other crops, which you could grow that would take you longer to make a profit, and which can be very lucrative if you are prepared to put in the time. If you are interested to produce for the global market, I suggest two particular products (among the wide range that can be produced for export):
Cocoa and honey.
If the climate is conducive for cocoa trees, for example, go for it, even if it is not a traditional crop in your country. The global demand for chocolate is fast growing and you will always be able to sell. Alternatively, you could even produce cocoa for your own small chocolate factory (start the factory in your house if you have to!). Making chocolate is very easy and it would enable you to sell your own brand of pralines or chocolate bars to high-end markets such as hotels and supermarkets in your country and the region.
Honey is another product hugely in demand at the moment. According to USAID, from 2005-2010, global production of honey increased by 10% from 1.4 million metric tons but in 2006, large-scale unexplained losses of honey bees began to occur in the US and EU negatively affecting global supply. The phenomenon, termed Colony Collapse Disorder (CCD), has caused a decline in honey production, and some European and US companies had to suddenly import to be able to continue full supply. It’s an ongoing phenomenon, so again a good global market with high demand (China meeting some of that). Ethiopia is currently Africa’s largest honey producer and from 2005-2010, Ethiopian honey production increased 26% from 36,000 MTs to 45,300 MTs.
#3 Produce plants for gardens, parks, hotels, homes
Yes, indeed another niche in most African countries! Don’t just produce it, but strive to become a known national market leader for landscaping and gardening plants. Depending where your piece of land is situated, you could even turn it into a popular ‘garden center’ – a one stop shop for gardening plants, fertile soil (which you can produce and pack), seedlings, flowers, and gardening utensils, which you could have produced in local markets or by people in the village – you buy it from them, and sell it at your garden center.
Again, you will need to stand out from the many Africans that are sitting near road sites selling their seedlings and gardening plants.
Africa’s property sector is booming, and most houses and real estates have some sort of gardens that need shrubs for fencing and decoration. People may also want to bring flowers or herbs (still in the pots) into their gardens and houses for decoration or consumption.
De Fynne Nuresery in South Africa is such an amazing success story. They started from scracth with just a few hundred seedlings iin a backyard and now grow hundreds of thousands of gardening plants, because they have listened to what house owners needed. You can get an insight
#4 Integrate training or consultancy services on your land
It’s all about using your land to maximum profitability and being bold enough to offer new aspects to local communities. While planting and running your business you could offer training or advisory services on your land. Maybe you are an expert on a certain crop, or US export regulations, or market value chains. If you can identify a huge knowledge gap in your local area and you add true value with the information and knowledge you share, you could build a consultancy business or training venture at the same time. People who train with you could even start selling to you, as you have the buyers already.
2. Use your land for a business in the tourist or leisure sectors
Now let us look at tourism & leisure, which is another profitable sector, in which you could soon earn money with your land.
Instead of suggesting you build accommodation, which requires major capital investment, let’s again look at some creative ideas for the tourist and leisure industry, something where you stand out, so it will be easier to win customers. Talking about a start up, I am always for relatively affordable easy concepts to get you started – to be always improved and expanded when you have a stable cach flow.
#1 Children recreation & parties
You can combine some of the following for children: build a mini golf course, a horse riding area (get the horse from people in the neighborhood), build a small playground, offer a barbecue area, a mini farm, pottery making etc. People can visit this fun park any time, but you can also package your parties nicely for birthdays and allow school trips and family weekend offers. This is so rare in Africa’s cities and something the rising middle class, schools, and tourists would happily pay for!
#2 Tourist shows
Tourists are always on the lookout for the next experience when they entered a country. Turn your land into a magic place for tourists! Offer a ‘Kenyan night’ or a ‘Senegal adventure’…and then turn your land into a wonderful, mysterious place during evenings. Candles, torches, or bond fire, barbecue or traditional coffee and snacks, local dance or an acrobatic show…I have visited some of those in Morocco under open air and they are an absolute hit with tourists. And who knows, maybe even locals who are out on a special weekend with friends may turn into your enthusiastic customers. If your land is a little further away from the capital city, you could include a camping area or build some traditional village huts where your visitors can spend the night to add to the adventurous experience.
#3 Sports Clubs
Tennis court, mini golf, volleyball, fitness…combine that possibly with a children recreational area or baby sitting services (for parents and mums who want to do sports), a coffee and snack area and offer classes with professional trainers.Important is that you create something unique, with great eye for detail and excellent service. A place where your visitors can relax and enjoy themselves, so the word would spread fast. Market your venture also to tourist agencies, hotels, and other businesses.
When it comes to leisure activities try to be creative! Look what other popular tourist detsinations offer as connected experiences, where tourists get in touch with the country's tradition….ask at your local sport clubs what is missing…..talk to parents what kind of activties they would love to do with ther children and search the Internet in Europe (thigs to do with children) to see which great ideas could be easily replicated in Africa.
Surely there are many ways how exactly to use your land, but I hope this article was able to provide some guidance and inspiration.
Every start is a difficult one, the main thing is you have a very clear vision, strategy, and you do the first step. Good luck, and please let us know how it is going.
Do you own some land, but you have not used it yet? Feel free to share your thoughts, experiences, or ideas in regard to this article below.
I wish you all the best for your venture!