Impact Investing and Primary Production in Africa: The Opportunity

Impact Investing and Primary Production in Africa, holds the key to addressing the severe food shortages many are forecasting over the forthcoming decades. Currently, there are over one billion inhabitants living in the continent of African. And the African population is set to double by 2050. This very quickly, tells you just why Impact investigating in South Africa and the rest of the continent is just so important.

With such unprecedented growth, a number of existing challenges around food security will become even more acute if there are not adequate interventions from governments, NGOs and – most importantly – the private sector.

That’s where investing in primary production comes in. Primary production, or the production of raw materials for industry, has become a key investment opportunity within Africa. Food scarcity is not a new phenomenon, but by investing in new technology into Africa’s primary production market, we can see food scarcity become more limited.

Poor utilization of available arable land fit for agriculture production, post-harvesting losses estimated to be 40%, declining productivity, farm degradation and poor production management have resulted in increased food prices.

However, investing in Africa’s primary production market will help the industry create wealth within agricultural production and find solutions to the various challenges that face Africa’s primary production market – ultimately helping feed the fast-growing African population in the years to come.

In this report, we will take a look at Africa’s primary production challenges and how those challenges can turn into investment opportunities for investors.

CHALLENGES FACING AFRICA’S PRIMARY PRODUCTION

Because Africa is huge, diverse, and complicated – it is difficult to make sense of what is going on in the continent. As countries across Africa grapple with the challenges of sustaining high levels of economic growth, plunging commodity prices, and the effects of climate change, revitalizing agriculture must become a priority on the continent.

Food production in Africa needs to increase by 60 percent over the next 15 years to feed a growing population, according to the latest World Bank report. And while the continent is bursting with potential, there are problems that are hindering it from moving forward.

First, African farmers need new technology – higher-yielding, more resilient food crops that deliver bountiful harvests. New techniques are beginning to boost yields in rice and cocoa, among other crops.

Second, African farmers need more electricity, more irrigation, and better infrastructure that links them to lucrative regional food markets.

And lastly, a robust and enabling policy framework is urgently needed. It would help remove existing constraints on agro-industrialization and encourage investments. In order to stimulate agricultural investment, governments need to secure property or tenure rights, develop rural infrastructure and public services, and ensure that their institutions are functioning.

Impact Investing and Primary Production in Africa

As policymakers struggle to accelerate growth and tackle prevailing headwinds, it investment from private investment that can really help grow this sector to where it needs to be.

impact Investing and primary production in Africa

The private sector is responsible for most of the investment in agriculture (including through foreign direct investment), and this is expected to continue in the future. At present, investment is mainly from domestic sources, while the relative importance of official development assistance is likely to decrease.

Africa can feed Africa. It is well endowed and has the markets, but it needs more than good technology policies. We take a look at four existing challenges and the investment opportunities each brings:

1. Scaling Productivity

Scaling up productivity can come from a variety of activities. A few ways include:

· Tapping water resources for irrigation

· Providing stable prices

· Using seeds with better yields

· Providing basic transport infrastructure

· Providing incentives to invest in agriculture

Lessons drawn from other similar regions, such as Asia, Argentina and Brazil, is a great way to turn Africa’s fortunes around gradually and increasing its agriculture productivity.

2. Turning Africa’s Population Growth into an Asset

According to the World Bank, in 2050, Africa’s youths alone will constitute over a quarter of the world’s labor force. Urbanization, at 3.7%, is taking place at more than twice the global rate.

Agribusiness holds the key to meting urban consumers’ demand for food, particularly processed food. Emerging countries will also increase demand for Africa’s farm commodities.

That means there is a vast potential for establishing production and trade links. This shift from primary production to modern integrated agribusiness could provide lucrative opportunities to many smallholder farmers, as well as generating modern jobs for the continent’s youth.

3. Investing in Infrastructure

There are growing opportunities for investment in infrastructure that will overcome the current challenges associated with poor access between farm-level production and downstream activities.

This would open the door to increasing the production of higher agricultural value-added products while continuing to produce popular commodities such as coffee, tea, livestock products and more. While regional integration is expected to help countries reach economies of scale, it should also help minimize high transaction costs associated with fragmented markets and price controls.

4. Overcoming Africa’s Energy Challenges

African energy use per capita is currently only one quarter of the global average. Yet Africa’s renewable energy potential is substantially larger than the current and projected power consumption of the continent.

With abundant low-carbon renewable resources, a growing energy demand and falling technology costs, Africa has the opportunity to deliver economically competitive energy solutions for both remote rural and growing urban locales.

Getting involved in Impact Investing and Primary Production in Africa

As Africa’s population continues to grow, it will require a significant increase in food supply – providing investors with lots of opportunities to get involved in the primary production market. Instead of increasing the dependence on food imports, which would pose an increasingly large risk in the future, Africa should focus on increasing domestic production sufficiently.

However, there are still a lot of challenges that Africa faces and long-term support, both financially and from the public sector, are needed to get these challenges solved in the next coming years. Additionally, awareness has to be created about these challenges and the new technologies that can help change the continent’s food supply. Here are ways to get involved:

  1. Understand the Landscape:

    Before diving into impact investing, it’s crucial to understand the landscape of primary production in Africa. Identify key sectors such as agriculture, forestry, and fisheries, and assess the social and environmental challenges these industries face. Recognize the potential for positive impact and sustainable growth in these sectors.

  2. Research Impact Investment Firms:

    Research impact investment firms that specialize in primary production in Africa. Caban Investments in South Africa is an exemplary impact venture capital firm, focusing on sustainable investments. Familiarize yourself with their investment criteria, portfolio, and impact metrics. Similarly, explore Caban Capital in the UK, known for providing corporate finance advisory services.

  3. Align Values and Objectives:

    Impact investing is inherently values-driven. Ensure that your values and objectives align with those of impact investment firms. Understand the specific social and environmental goals that Caban Investments emphasizes, and how Caban Capital’s corporate finance advisory services contribute to sustainable entrepreneurship in Africa.

  4. Build a Strong Knowledge Base:

    Knowledge is a powerful tool in impact investing. Stay informed about the primary production landscape in Africa, emerging trends, and best practices. Familiarize yourself with impact measurement methodologies and frameworks to assess the effectiveness of investments in creating positive change.

  5. Network and Engage:

    Actively engage with the impact investing community. Attend conferences, seminars, and networking events where you can connect with professionals in the field. Caban Investments and Caban Capital are likely to participate in such forums, providing opportunities for meaningful interactions.

  6. Explore Co-Investment Opportunities:

    Many impact investment firms, including Caban Investments, may offer co-investment opportunities. Explore the potential to collaborate on impact-driven projects. Co-investing allows you to leverage the expertise of established impact investors while contributing to the positive transformation of primary production industries.

  7. Seek Guidance and Mentorship:

    Reach out to mentors and advisors who have experience in impact investing and primary production in Africa. Their guidance can provide valuable insights, helping you navigate the complexities of impact investing and make informed decisions aligned with your goals.

  8. Evaluate Risks and Returns:

    Impact investing involves a careful balance between risks and returns. Assess the financial viability of primary production projects while considering their potential social and environmental impact. Caban Investments’ track record in sustainable investments can serve as a benchmark for evaluating the risk-return profile of similar ventures.

  9. Stay Adaptable and Responsive:

    The landscape of impact investing evolves, and adaptability is key. Stay responsive to emerging trends, regulatory changes, and evolving impact measurement standards. Being adaptable allows you to seize new opportunities and address challenges in the dynamic environment of impact investing.

  10. Explore Caban Capital’s Advisory Services:

    For entrepreneurs in Africa, Caban Capital’s advisory services present an opportunity to receive strategic guidance and financial expertise. If you are an entrepreneur looking to make a positive impact in primary production, consider engaging with Caban Capital for corporate finance advisory services tailored to the African business context.

Engaging in impact investing for primary production in Africa is a multifaceted journey that requires a strategic and informed approach. By understanding the landscape, aligning values, building knowledge, networking, exploring co-investment opportunities, seeking guidance, evaluating risks and returns, staying adaptable, and considering advisory services from firms like Caban Capital, you can actively contribute to sustainable growth and positive impact in Africa’s primary production sectors. As the impact investing ecosystem continues to flourish, your involvement can be a catalyst for transformative change, fostering a more sustainable and socially responsible future for the continent.

Overall, investing in Africa’s primary production market not only will provide private investors with a plethora of investment opportunity – it will also help investors contribute to a pressing issue facing the African people, and ensure that its growing population with always be fed.

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Matthew Musgrove

Matthew Musgrove

Matthew is an entrepreneur and business Advisor with a passion for change management and social empowerment. With a background in business accounting and advisory, as well clinical research project management, he strives to find strategic and sustainable solutions to business problems.

Mark

MARK VAN HOFF

Mark Van Hoff comes from background of technical & production planning, budgeting & scheduling of major live events. As the first production co-ordinator at M-NET for Outside Broadcasts, Mark has managed major local and international productions including Miss South Africa, Miss World, multiple music events and major sports events, including the PnP Cycling Tour.​Mark co-founded Van-Man Productions in 1994, Page to Picture in 2000 and Move Media Networks in 2007. All three companies have achieved domestic success and have been well-regarded in the South African production industry.

Olu

OLUWASEUN ADEWUYI

Oluwaseun Adewuyi who is the Group Chief Finance Officer (CFO) at Caban, is a Certified Chartered Accountant, with Fellowship status at both the ACCA as well as the Institute of Public Finance and Accountancy, a UK Based industry body with a specific focus on the management of charities, not-for-profit organisations and NGOs.. Oluwaseun comes with strong business acumen and 20+ years of progressive experience in finance and operations management within well-reputed and high growth organisations Including Next Plc and Royal Mail. He has been heavily involved in impact investment across Sub-Saharan Africa and has been instrumental in the creation of a series of community schools in West Africa. Throughout his career, he oversaw a broad range of operations, including Business Strategy and Business Reorganisation, summarising the organisation’s financial status, and coordinating the preparation of tactical plans, financial forecasts, and budgets. Adept at developing and implementing effective internal control framework to maintain sound financial accountability.

tim scholtz

TIM SCHOLTZ

Tim Scholtz, who's is the Chief Operating Officer (COO) at Caban Investments, is experienced in implementing corporate governance guidelines, formulating risk management structures, process and cost optimization. Tim has a strong corporate background, having worked as COO at the South African Tourism board, was COO at the Nelson Mandela foundation and as a internal audit manager at Arthur Anderson earlier in his career.

Ben Botes

BEN BOTES

Ben Botes is Entrepreneur, VC, co-Founder, Author and Academic with a strong social conscience. Ben Involved with early stage and growth firms for the past 20 years and has been Co-founder of 9 separate businesses across Africa. Ben has directly and indirectly been involved in impact investment and the support of charities and non profits for the last 30 years. Ben is a regular speaker at the African Investment Conference in London and has been featured in Wall Street for Europe, The Guardian Small Business, BBC, the Mail and Guardian in the UK and BizCommunity, Channel 3 TV, Investors Weekly, The Cape Times, Radio 702 with John Robbie and Good Hope FM in South Africa

Dave Romero

DAVE ROMERO

Dave Romero is a venture capitalist and entrepreneur with a passion for making an impact. A qualified Professional Accountant, Dave has been a director in multiple financial institutions and was once the youngest Chairman on the JSE, in addition to being listed as one of Business Times’ Top 100 companies and the 40th fastest-growing company in South Africa. Dave is a core founder of the Caban Group, which aims to provide a comprehensive service offering to small businesses in return for equity. With a passion for nurturing entrepreneurs, Dave can often be found outside of the boardroom – offering advice, creating innovative funding solutions and building communities through sustainable practices.

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Dr RUBEN RICHARDS

Dr Ruben Richards is a truly inspirational South African leader. Through his peace-building seminars for criminal gangs, Dr Ruben has facilitated the longest ceasefire in the history of gang warfare on the Cape Flats. In addition to being Chairman & Founder of the non-profit Ruben Richards Foundation, Dr Ruben is an ordained cleric, company director, non-executive Chairman of Visual International Limited and was once the Deputy Director-General of the now-disbanded Scorpions.