Are you ready to hear more about some less known and pretty crazy facts surrounding Africa’s agricultural sector? Ernst & Young have forecast that African agriculture will be the second biggest sector on the continent in about a decade – it has simply incredible potential and will be key in creating jobs and reducing poverty. So a pretty dynamic industry, but some facts may be a little unexpected. But before we dive in, please remember that our African Business Jumpstart blog is not here to merely entertain. Instead, I want to really give my best to empower you in your own business endeavors: If doing business in agriculture is of interest to you, take the insights on board, so you can make creative, informed, and strategic decisions when doing business in Africa.
So let’s have a look!
1. Strange Fertilizers are hitting the market….”I mean you would have never thought of it, right?”
If you are not an expert in the fertilizer industry, you may think cow dung or potash and then you hit a dead end. The enormous growth in Africa’s agriculture sector results in a significantly growing demand for fertilizers. In Nigeria, for example those figures have sky-rocketed in the last few years. The need for fertilizers receives particular attention from stakeholders who try to increase local harvests on widely depleted dryland soils. There seems to be growing interest in Africa to use organic fertilizers, as they are often much cheaper. But they also decrease the risk of harmful residue; this way it is easier to comply with the high standards set by certain buyers, such as hotels for example, or US and European firms who want to import the products.
Now, a Somali lady I met in Nairobi was importing organic fertilizers from far shores. But it wasn’t the usual stuff. Her fertilizer product was made of the mud that the producers extracted from the grounds of Baltic lakes thousands and thousands of miles away to the North. She met the traders during a trade show and decided that this would be good for farmers in Kenya. According to her, women coffee farmers who tried her fertilizers saw an increase of 2-3 times their original harvest in three to six months. Seems to be like some good stuff there down the lake. I wonder if this could even be somehow sourced in African lakes.
You can also produce fertilizers using water hyacinth. It grows like an aggressive weed jamming many African rivers or lakes and reducing fish stock. Collect for free – process.
But the first prize for unusual fertilizer production in Africa goes to Madagascan accountant-turned-entrepreneur Erick Rajaonary who had the idea in 2005…..here it comes….to collect bat poo in caves. Yep, that’s right – he turns that into fertilizers and now even exports to Europe and the US. His approach has paid off: According to media, he has grown his company into a million Dollar venture. Here is his story:
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2. Africa has shortage of food …..”Yes, but tons of it goes to waste.”
When we think of Africa we often think of poverty and food shortages. And while this is absolutely correct, most of us do not think about thousands of tons of agricultural produce such as tomatoes or fruits going to waste in Africa each year. The reason? Lack of dynamic local markets, transportation, storage, and cooling facilities. In short, farmers have often not the means to transport their bumper harvests or surplus to bigger markets to sell them. And if they do, the transportation cost is often so high that they cannot market their products for a profit.
Eric Muthomi from Kenya started Stawi Foods when he noticed how some local farmers were regularly throwing away their banana harvest, because they were unable to transport the fruits to the far away markets. Eric is buying these wasted bananas off poor farmers, dries them locally and produces banana flakes, which he sells as baby food, among other. It’s a total win-win situation. Think rotting tomatoes in Zambia or wasted mangoes in Nigeria. Buy cheap, add value – in form of a tomato paste or a fruit juice concentrate for example – market and sell.
But there is also ample opportunity in finding solutions regarding the lack of transportation, storage, market information and marketing links between producers and buyers, which could be made available to local farmers via special apps.
3. Africa is importing tropical fruit products from Europe …….”What !? Why?”
Yep, here we go. Did I not say we are looking at some crazy facts today? Nigeria was said to have imported $140 Million Dollars worth of orange fruit concentrate from Europe last year. The Europe with an all-year long tropical climate and huge orange plantations? Hmm, that has to be the one…..Well, it does not add up and as unbelievable as it sounds – sadly, it is correct. Africa exports its tropical fruits at a cheap rate and then imports tropical juice concentrate and fruit juice selling to those who have enough spending power.
Now think about rotting fruits again …. then recall the $140 Million Dollars yearly for orange fruit concentrate in Nigeria alone. Put the dots together. I guess you are in business.
4. Lack of milk on the continent……”Drive slowly, Jeremy, there is another herd of cows crossing the road.”
This is quite mind boggling. Africa has some of the highest farm animal densities in the world but, yes you guessed it: there is a huge shortage of milk. In some areas you will find goats and cattle crossing the roads – but when you stop at a local shop or supermarket, there is often no milk or it is imported. This is truly crazy. The reason for this is often a denial by African governments that the livestock sector has as much (if not more) potential as crop based agriculture, for decades Africa’s livestock sector at large has seen little investment. And this is really only slowly shifting.
Rwanda is leading by example. It has decided to invest into dairy processing a couple of years ago. Great decision. The income from dairy exceeded that of traditional coffee exports in 2014. Among the top buyers: Tanzania.
I hope it just demonstrate to you the huge potential of diary business and investment in Africa.
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5. The problem with packaging agricultural produce: “If we can’t transport it, let’s sit on it.”
Agricultural produce does not only have to be grown, transported, and processed – it also has to be packed. And the availability of affordable and appropriate packaging is a problem in many areas. I remember a story written in a Zambian news paper a few months ago featuring a group of farmers who had made a call to the government to quickly send them some packaging. They had harvested their crops (can’t remember what it was) and had built a big mountain collecting all the produce on the ground. As they had no means to package it to send it to the city markets, they decided to sit on it. Literally. Farmers reported they worried that wild animals would eat the produce, so they worked in day and night shifts to guard and protect their riches. This is when they sent a message to help them out. I don’t know what happened to them – but there is clearly a market gap that you could fill.
6. I am producing cocoa, and I ….. – “Deal, I am buying.”
The Western world loves chocolate. A lot. But the new emerging Asian market will probably grow bigger than that. In the meanwhile cocoa production is still mainly taking place on African soil. But it is not growing anywhere near as fast as the global demand. There is currently a cocoa fret going on in the industry. There is simply a worrying shortage of it. And that means: not enough chocolate. This is a non-brainer. It may take 3 years to grow the trees (using special hybrid seeds, otherwise it can take up to 5 years), but once the trees produce, oh, you will sell.
Not to mention the fast rising African upper middle class who has a sweet tooth as well. I will never forget how I was stuck at Nairobi Airport on my way to Kigali with some dear Rwandan colleagues who bought chocolate for family and friends – duty-free. The prices were three to four times higher than those in Europe! This chocolate that I would just throw into my trolley as a bonus when shopping at my local supermarket in Frankfurt or London cost an absolute fortune! They spent $16 on a simple pack of pralines, which would cost me $4…..and they figured there were four families who wanted chocolate gifts. It was a lot of money for not so much chocolate.
Test the local conditions. Get some farmers on board. Start planting. Become the Charlie of your African Chocolate Factory – it’s not a difficult production concept at all. Cocoa beans or chocolate – and you are so in business.
So what was the most crazy fact for you? Please let us hear it. 🙂 By the way, if you want to be notified about my latest blog posts as they come in, not to miss out, just click the little box below under the comment section: “Notify me of new posts by email.” See you soon!
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Thanks Dr Harnet for sharing. It is quite an eye opening information for all.