The African Agricultural and Alied service sector is growing by the moment. I want to know your take on investing in this sector, reasons why you would not invest and reasons you will
Shlomi, the question Paul asks is not pointless at all, and quite to the contrary of your opinion holds value, and great value. Evaluating a company without evaluating the larger sector or economy with which it is in is both naïve and arguably near sighted. You are an investor, and you are telling me you never evaluate the sectors of your investment? Really?? I have never met one investor who invested this way.
Paul, I can only speak with regard to a Kenyan colleague of mine I worked with for a couple of years. The politics and infrastructure posed challenges as Dane pointed out. In the case of the energy sector, the political elements came into major play and that was a hurdle he faced…the overall American perception of the continent, despite there being differing countries with different economic standings. While I did not move forward with the project, one of the major points my colleague presented was that his family was involved at a very high level in the Kenyan government and politics, and he therefore had the needed access to gain approval on various permits and support..that otherwise would make an investment highly volatile in a considerably corrupt and one sided government.
You are absolutely correct to evaluate the larger challenges of a “sector” of the economy, especially when it is in an area that most of the western world views as unstable. I can not speak to the politics of Nigeria, however you will have to address this if you are seeking western investors.
Granted your question is general, but as it is intended, you will have to address all the general plusses and negatives of investing in African Agriculture. Part of your role as the entrepreneur is to do the research and lay out the benefits and drawbacks…and then when an investor becomes stumped, illustrate why it is worth his or her time.
You might try connecting with US, or UK based investors and investment firms already invested in Africa…and build from that. Just depends on what you are looking for.
To your credit, it appears you are wanting Africa to be seen for what it can become. Unfortunately the view of Africa in the US by most is a poor continent with people who need help in every facet of life. Only when African entrepreneurs start pushing back on that and reshaping the perspective to “there is a foundation here for great economic prosperity” and lay out the plan will that change. So to do that, you have to fully evaluate the dynamics of building a business in the specific area you are interested…then build a business plan with the operational strategy and advisors who instill confidence that it will be successful.
I see corruption as one of the main impediments to progress and rising above the poverty level. I am working toward a program to provide clean water, affordable power for computer access to education and affordable tractors that can be privately owned. All of these are part of the same concept and mutually collaborative. People of any class, condition or degree of hunger can be motivated when they seee a possibility. They can see more clearly and understand the route around or through government maze or tribal annimosity. That is my premise.
I agree the opportunity is great, however the political instability and lack of infrastructure will greatly impact interest for some time.
That said, if you have a regionally stable environment with a more robust infrastructure, there are big opportunities because of the intense need given the growing population.
Agriculture is one sector where an investor can earn decent returns and have a positive impact on people's income and wealth. Generally the best opportunities involve adding value to raw materials, i.e. processing, cold storage, or logistics. The continent is not a monolith. It's not all unstable and not everyone is corrupt. That said nearly every country has challenges related to infrastructure as well as financial and human capital. Investors should find experienced experts and trusted partners in-country to help you understand the culture and business practices.
Africa is almost totally green, There are immense opportunities in this sector. Example in Nigeria where I am from, half of the entire land mass are not cultivated, especially in the southern part of the country where white collar jobs is preferred. In some countries foreign investors often get free land and tax cut to set up. I agree with @ Darnley Howard