De Villeneuve has decades of experience in Africa’s agriculture sector. He is the CEO of COBASA Business Advisory and founder of SAPA, an investment vehicle that supports the entry of European agribusiness groups into East and Southern African markets. He spoke to Betsy Henderson about the region’s top agribusiness prospects and some of the investment lessons he has learnt.

What are the top agribusiness opportunities you see in East and Southern Africa?

In my experience, agribusiness is much more vibrant in Southern and Eastern Africa – including the Portuguese-speaking countries – than in other regions of the continent. There are far more interesting businesses – successful and proven models – and well-performing companies, many of which did well through Covid-19 over the past year.

Secondly, compared to the rest of the continent, distribution is better developed in Southern and East Africa; there is a more mature formal market, such as retail stores and supermarkets. This means consumers can easily obtain the food and final products, unlike West Africa where distribution is more informal.

Southern Africa also has a lot of available arable land and the weather makes it possible to develop a variety of products. In South Africa, for example, you have four seasons and can grow crops such as strawberries and cherries (like one of our investees, who exports them to the UK), which would be a challenge in a country like Côte d’Ivoire, for instance.

Other agribusiness opportunities we are seeing in this region include feed and seeds. From chicken to pork, more than 60% of the final products’ price is made up of input costs like feed. We’ve discovered this is particularly the case with fisheries. Increased production from fisheries means more feed. The feed industry is critical and one of the most important agribusiness challenges, after water, in this region.

The same is true for seeds; for example, the French Limagrain group invested in the Zimbabwean company Seedco for this reason and is doing quite well. There is another venture in Zimbabwe led by the French company Lesaffre that is producing yeast for bakeries. Producing these types of inputs in East and Southern Africa presents a great prospect.

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SAPA has also identified poultry in Angola and Mozambique as an investment opportunity. Elaborate on this.

Poultry is a large market and in the context of Africa, chicken is at the top of the list. To be successful in poultry you must be integrated and control the value chain, starting with the feed. The cost of the feed often accounts for about 70% of the price of the chicken. If you can control the price of the feed, you can better manage your profit margins.

Secondly, don’t produce chicken for local consumption close to the sea, because you could be impacted by imports from Brazil or elsewhere. Instead, produce chicken away from the coast as high inland transport costs create a barrier to entry for competitors.

Source: Further Africa