Investing in Africa Emerging Markets

investing in Africa

Investing in Africa Emerging Markets

There are many opportunities and challenges in investing in agribusinesses in Africa.

The world sees Africa as the next breadbasket due to its potential to feed the world with healthy and diversified food. The debatable issue among development partners and food agencies, investing in agribusinesses in Africa and connecting African markets to global food markets has challenges embedded in the opportunities they offer. From recent discussions, it is obvious that both foreign investors and African agribusinesses are looking for ways to overcome these challenges for a win-win investments strategy.

Africa has – for some time now – been seen by development partners as the hope for feeding the ever-increasing world population. In addition, Africa also has a rapidly increasing population especially in emerging urban areas – thus offering an opportunity for agribusinesses and food markets. Start-ups and small-scale farmers have brilliant and innovations agricultural marketing systems and agribusinesses – hence the sector is booming! Farmers are organizing themselves better than before to benefit financially from new and emerging financing mechanisms. For instance, merry go round village banking that benefits the entire village.

Africa also provides endless opportunities for trade, knowledge exchange and increasing productivity to ensure food security as it has fertile soils, abundant low-cost manpower and sufficient natural resources needed for sustainable farming. Investing in Africa should therefore not be a problem, neither should competing internationally. Why then, is investing in Africa still a challenge? Why is competing globally in the world market still an issue for most agribusinesses from Africa?

The FoodFirst: Team up with African Agripreneurs conference, held in June 2018 in Utrecht in the Netherlands was organised to tackle some of these challenges – with a focus on the ‘Dutch Diamond’ actors investing in Africa. The question of the day was “What obstacles and what opportunities for improvement are there, according to African farmers and experts; and what can Dutch companies and institutions contribute to this?” The conference sought to find ways to connect to the opportunities in African businesses and to establish partnerships to reinforce rural-urban linkages and develop the food chain in Africa. Also, facilitating investment in African businesses and the contribution that the Dutch can offer for companies and institutions.

At the end of the conference, African farmers and experts together with some organisations based in the Netherlands identified some of the challenges they face in investing in Africa markets as follows:

  • Slow pace in which agriculture technology through research is adopted in Africa by entrepreneurs and small-scale farmers.
  • Challenging adaptation of agriculture innovation to the Africa context to make it work.
  • Most small-scale farmers do not have enough information about funding and the market trend about their products.
    Weak political structures, unstable governments and bureaucracies in most African states makes it difficult for foreign investors to invest.
  • Access to finance and credit especially for smallholder farmers and start-ups to boost production is an issue.

Takeaways from the conference

To profit from development aid, grants and loans, African farmers need to organise themselves into groups such as cooperatives or associations. José Graziano da Silva, director of FAO, in his speech at the conference emphasized this, because these groups are the base for small scale farmers who really need the available funding.

Financial assistance should be flexible to embrace start-ups and to scale up businesses and not only already booming organisations.

Adoption of agriculture technology should be made affordable to African entrepreneurs and small-scale farmers. And these technologies should be adapted to African realities especially if the idea was researched elsewhere.

Africans must take the initiative to organise themselves and strengthen their political structures to be more stable and transparent. If this is done, it will be a haven for investors.

Engaging more youth in agriculture was highlighted by H.E Josefa Sacko, AU Commissioner for Rural Economy and Agriculture that making the sector more attractive through making information on good soils, productivity, registration of cooperative and the weather easily accessible to youths and small-scale farmers could improve their operations.

Finally encouraging big steps like the FoodFIRST conference which is providing an environment where investors and African entrepreneurs meet and exchange ideas in one place should be more frequent. The recommendations from such conferences and other platforms should be taken into action to ensure commitment and engagement.

Patience Chindong is an independent consultant and co-founder of EuroAfri Link – EAL, connecting products, businesses and students.