How Agribusiness I...

How Agribusiness Innovation Centers Contribute to Africa's Agribusiness Sector

Case Studies from the International Food and Agribusiness Management Review

As rapid urbanization will soon cause more than 50% of Africans to live in cities, the World Bank estimates that continent’s food market will be worth $1 trillion by 2030. Over the next decade, agribusiness in Africa could hence become the engine that drives dynamic, unprecedented economic growth and development. 

The entire agricultural system will need to adapt and respond to fundamental changes. Food processing will move from the home to organized factories and later sold in grocery stores. Africa needs a vibrant agribusiness industry, well oriented to produce efficiently and effectively, to meet the growing demand of an affluent consumer class. Investing in the people’s talent will provide the industry with the requisite strategic thinkers, business leaders, entrepreneurs, skilled personnel on the continent. Thus, investing in the people’s talent today is a common and binding factor across the value chain of food creation and the essential platform for achieving global nutritional security.

infoDev’s Agribusiness Innovation Program (AIP) represents a new approach to advancing agro-processing by enabling innovative, growth-oriented entrepreneurs to scale with the potential to become market leaders. In order to actively build market linkages across the value chain, both forward into the global industry and backward to small-holder farmers, the AIP cultivates partnerships across the agribusiness sector, both locally and internationally.

In a recent special issue of the International Food and Agribusiness Management Review, experts presented several case studies of innovative agribusinesses, such as tea, shea butter and fruit snacks processing. These examples suggest the need for Agribusiness Innovation centers (AIC) across the African continent, which would offer services to talented agribusiness entrepreneurs including market linkages, finance, technology training, business services, and networks.

Rooibos, Ltd is the largest processor of Rooibos tea. With annual revenue of over $23 million, Rooibos has experienced strong turnover and export growth over the past few years. Rooibos resembles an ideal AIC client for several reasons, including that it sources its raw material from farmers (over 200 suppliers), and targets different markets with different products. In addition, Rooibos’ strengths rely on: 1) Competitiveness in the local market; 2) Health benefits of the product and the demand on export markets; and 3) Distribution of the product through supermarket chains. (Read full case study on page 45 of the IFAMR Special Issue)

Demand for shea is increasing for skin and hair products on the foreign market. Since 1996, Ele Agbe Company has operated as a dynamic SME, whose artisans use traditional Ghanaian tools and methods, and the highest quality materials available to produce shea products. With only 10 full-time workers and roughly 300 casual employees, Ele Agbe is another example of a potential AIC client. While the company has remained sustainable through strong marketing and innovation, AIC may help further increase its efficiency and growth through creating strategic linkages with local shea associations such as the Shea Producers Association and Shea Network. Such connections would help Ele Agbe identify other companies it can partner with for group exports, as the company’s upstream buyers are mostly retail outlets in the US, Japan, and  UK. (Read full case study found on page 65)

Wild Fruits of Africa (Pty) Ltd is an emerging agribusiness in Botswana. Frank Taylor, the CEO, has spent much of his life researching indigenous plants, and processes fruit to make healthy snacks targeting the country’s growing tourism industry. The company is currently marketing and distributing its products to airlines, supermarkets, and safari lodges in Botswana, and is now seeking expansion into regional markets. Similar to AIC’s target client group, the company gathers raw materials through community groups of trained harvesters in local villages and processes and packages the snacks. Although sales of the product have been growing each year, the business is still operating at a loss, which has required the CEO to rely on his own savings to keep the business going. AIC may help identify potential sources of financing in order for the company to make necessary product improvements, such as investing in a new cutting machine to ensure that fruit is cut consistently. (Read full case study on page 71)

This past June, infoDev participated in the annual Agribusiness & Food World Forum in Cape Town, South Africa, organized under the theme “People Feed the World” by the International Food and Agribusiness Management Association (IFAMA). IFAMA brings together business, academic, government, and industry leaders to improve the strategic focus, transparency, and sustainability of the global food and agribusiness system.

Ellen Olafsen, the AIP’s program coordinator, participated in two conference sessions. The plenary session themed ‘Women in Agriculture’ was an opportunity to learn from impactful programs that are successfully integrating women into agribusiness. Attendees were particularly interested in infoDev’s experience in supporting women entrepreneurs and valued the insights about the need to build up women entrepreneurs’ confidence and their network of business partners. Ellen then moderated the session on ‘SME Agribusiness Sustainability: Incubating Agribusiness Entrepreneurs’. This session provided an opportunity for the audience to learn about several innovative public-private partnership models that are helping to support and incubate SME agribusinesses and entrepreneurs across Africa.

In collaboration with IFAMA, infoDev will continue to connect global business, academic, and industry leaders with local SMEs and agribusiness entrepreneurs. As the African agribusiness market sees unprecedented opportunities, the AIP works to create and strengthen linkages throughout the value supply chain, thus contributing to the realization of the agribusiness sector’s full potentials.

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