The Future of Africa is Agribusiness

By Gem Kodhek, Agribusiness Advisor, AECF

The Future of Africa is Agribusiness

AECF

Since the global economic crisis of 2008 a number of interesting trends have been going on. Economic growth rates globally, and in key parts of the global economy like Europe, and recently, even China have fallen. The recent slowdown has hit the prices of key commodities like oil, and precious metals. But not those of food and agricultural products. Since 2008 we have seen the phenomena of Africa rising, and African countries dominating the league tables of the fastest growing economies. Africa is seen as the next big investment destination with its large and youthful population, massive amounts of mineral and land resources and its burgeoning middle class. Global corporations looking for growth must have an Africa plan, and are racing to implement these plans.

Financial services, mobile phones and IT, power generation, transport infrastructure and equipment, consumer durablesas well as fast moving consumer goods and retail are some of the favoured areas. But under the radar, out of the public limelight, a new area is emerging. Agribusiness.

Africa is short of most products that its youthful and urbanising population with rising incomes, standards and expectations are going to demand. Carbohydrates – Rice, sugar, and wheat flour, protein sources – legumes, beef, milk and other dairy products, chicken and eggs, mutton, sheep, pork, and fish as well as horticultural produce – fruit and vegetables and vegetable oils. And global markets are demanding products that Africa can supply more of like coffee, tea, and quality cocoa.

Global capital, global firms and global markets are looking to African agribusinesses as places to invest, and as sources of supply. One of the biggest early investors in this space is the Africa Enterprise Challenge Fund. AECF was launched at the Gleneagles G8 Summit and is a special initiativeof AGRA – The Alliance for a Green Revolution in Africa. AECF is a $251 million fund currently invested in 194 agribusinesses in 23 African countries. The Fund manager of the AECF is KPMG International Development Advisory Services Africa.

AECF has launched the second round of its Africa Agribusiness Window. AAW R2 is a challenge fund competition where business ideas compete for a mix of grants and interest free loans ranging from US$ 250,000 to US$ 1,500,000 for an agribusiness idea to be implemented anywhere in Africa. The business idea must be commercially viable, and must have an impact on the incomes of poor rural people who are either customers or suppliers of the business. Applicant companies must match the funds requested over a period of 3 years with assets, cash, borrowings, and in-kind.

The AAW R2 competition closes on the 28th of February, 2015. Take a look at www.aecfafrica.org/aaw to register, to download an application form and to access guidance notes that willhelp you develop a competitive application. The competition is open to agribusiness ideas that will be implemented anywhere in Africa by companies involved in agribusiness production, processing, marketing, exports, information or financial services for agriculture.

As I explored in a recent entrepreneurs forum at ihub, one of Kenya’s most techpreneural spaces, the missing link in the growth story of agribusiness in Africa is entrepreneurs and entrepreneurial companies able to move from small to medium size. Most AECF companies are not start-ups and have a turnover of between US$100,000 to US$ 1m. But all of them are planning to grow. AECF also provides a service – AECF Connect – that helps these firms find investors that can help them grow to the next level with investment amounts much larger than the AECF can provide.

I am passionate about the potential of agribusiness to change lives in Africa. If you can also see the potential and have an agribusiness idea that needs funding to get to the next level then check out the AECF!

About the Author

Gem Argwings-Kodhek, AECF Agribusiness Advisor and AAW Window Manager.

Gem Argwings-Kodhek is an agricultural economist who completed his BSc and MSc at the University of Arizona in the US in 1988. He worked for 15 years in agricultural policy research at the Tegemeo Institute of Agricultural Policy of Egerton University before being seconded to government where he helped develop the agricultural chapter of Vision 2030 and the consolidation of agricultural legislation while he was Coordinator of the Agricultural Sector Coordination Unit driving reforms and coordinating donors in 10 agricultural sector ministries. In 2009 he served as acting Managing Director of the Pyrethrum Board of Kenya before leaving to join the Africa Enterprise Challenge Fund. At AECF, Gem is the agribusiness advisor and coordinates agribusiness investment activities of the fund. Gem is passionate about the potential of Africa to grow its economy through the agricultural sector and sees young people and technology being key to this happening.

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