Plenary 3: Agribusiness and Food Security

1. Africa Investment Forum 2012 Plenary 3: Agribusiness and Food Security April 2012

2. Who we are and Why Agribusiness? Injaro Investments Key Results • A West Africa fund manager with focus on SMEs • Pursuing value creation opportunities along agricultural value chains • Present in both Francophone and Anglophone West Africa • Believe that financial and social goals can be achieved so seek double-bottom-line returns Financial Returns Job Creation The Agribusiness Potential Wage Growth • Food demand expected to reach US$100 bn by 2015 in sub-Saharan Africa (UN) • Africa’s food production needs to more than double by 2025 to feed its population (FAO) • Africa has 898m ha of cultivable land of which only 197m ha (or 24%) is under cultivation (FAO, IIASA) • Low farm yields and productivity e.g. average maize yield in developed countries is 8.6 tonnes/ha compared to 1.4 tonnes/ha in Africa (FAO, IITA) • 70% of SSA populationis involved in agriculture thus offering high impact at B.O.P. Local Sourcing Tax Revenue Etc…

3. Investment Opportunities in Agribusiness Description Typical Investments Primary Agriculture • Primary production of food or cash crops under irrigation where applicable. Farms may utilise a cluster model to include smallholder farmers in the supply chain. Additional opportunities available in vegetable oils (e.g. soya and oil palm), dairy, cereal production, ranching and aquaculture • Food production • Cash crop production • Aquaculture • Dairy Secondary Agriculture • Wide range of value-enhancing activity including basic oilseed processing, grain processing, animal feed production and branded consumer food products (e.g. processed juice, cereals, sauces etc.) • Vegetable oil processing • Grain milling/aggregation • Branded foods • Animal feed Inputs, Services and Infrastructure • Includes grain aggregation and storage, cold storage supply chain (e.g. for vegetables and fruits), seed production, fertilizer production, logistics, leasing and financial services. • Seed Production • Storage • Leasing • Fertilizer

4. Improvement Areas for Agribusiness Challenges Potential Solutions • Management Capacity / Quality of Entrepreneurs • Agriculture not generally viewed as a business • Generally considered unattractive by the youth and the highly skilled • Results in badly managed businesses operating in a challenging sector • Non-existent or Low Quality Financial Management • Agribusinesses and SMEs generally lack basic financial reporting and analysis skills • Reduces ability to perform efficiently and affects ability to access finance • Availability of Essential Infrastructure • Limited access to irrigated land introduces significant volatility to farm yields and profitability • Many prime production areas inaccessible • Reduces attractiveness of agriculture sector to commercially oriented investors • Market and Support Agribusiness Investment • Actively market agribusiness sector to young entrepreneurs and new investors • Government incentives such as tax breaks and soft loans for the highly skilled to invest in sector • Publicize success stories • Provide, Market and Distribute Essential Training • Mobilize resources (Govt, NGOs, private sector) to pay for financial management training and support • Make this support accessible to agribusinesses through appropriate channels (e.g. banks) • Provide and Actively Advertize Infrastructure • Governments should continue to increase the supply of essential infrastructure • Active marketing of infrastructure resources such as irrigated fields to the private sector • Subsidies to support early stage businesses should be considered