5 African Countries That Are Great For Agricultural Investments
by John-Paul Iwuoha and Dr. Harnet Bokrezion
You are probably one of the many people who associate more traditional economic activities in Africa straight away with agriculture.
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! 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. With an ever growing world population, many predict that Africa will become the world’s food basket. 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
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 international private equity firms that operate in Africa have now included agriculture as a key focus, international 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: According to Vanguard 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. Investment into seeds and fertilizers by the way is very profitable across Africa.
4) These countries drive the sector forward like no other
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 and accelerates growth. 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 or invest in that sector from afar.
5) Become rich, while fighting poverty
This is a difficult statement many to make, but you know what, it’s a true statement and a ethical one too: Input, motivation, and efficiency are increased among various stakeholders when they all benefit out of their involvement. Important is that you help build responsible businesses where small farmers or employees in Africa receive the share they truly deserve. Building successful businesses in agriculture will create hundreds and thousands of jobs and thatis a crucial aspect in Africa’s ongoing fight against poverty. And looking at some of the new African-lead enterprises, you will see success stories and gains for the wider community, which many governments and NGOs were simply unable to build. Doing business and investing in Africa’s agricultural sector is both profitable and meaningful. Go for it!