Entrepreneurship Zone: 03 November 2021 ::10 business ideas to pursue in Africa: Packaging, baked goods, affordable housing and more

Wed Nov 3 07:00:39 CAT 2021

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Entrepreneurship Zone: 03 November 2021 ::10 business ideas to pursue in Africa: Packaging, baked goods, affordable housing and more

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>From the manufacturing of packaging material in Malawi to supplying baked goods to Kenyan hotels, here are a selection of potential business opportunities that came across our desk in Q3 2021.

1. Growing market for locally produced fish. Aqua-Spark’s new Aqua Insights report shows the continent will consume up to 29 million tonnes of fish annually by 2050, up from the current 10 million tonnes. On the menu is farmed tilapia, a freshwater fish, which according to Aqua-Spark, offers a scalable, sustainable and affordable means of feeding the region’s growing population. “Due to overexploitation, wild catch can’t be increased and thus won’t be able to meet the additional demand. We believe that aquaculture production will have to accelerate and have identified tilapia to be the fish to do so: it’s scalable and it’s healthy, sustainable and affordable.”  

2. Creating regional champions in French-speaking West Africa. There are considerable prospects in Francophone West Africa for companies to offer their products and services throughout the region, believes Jean-Marc Savi de Tové, co-founder and managing partner at Adiwale Partners. The West African Economic and Monetary Union nations – which all use the CFA franc currency – comprise Benin, Burkina Faso, Guinea-Bissau, Côte d’Ivoire, Mali, Niger, Senegal and Togo. These countries are relatively small with limited manufacturing capacity and import many goods from outside the continent. Companies that have achieved success in their home markets are therefore well positioned to cater to the broader region.  

3. Consumer goods packaging in Malawi. Malawi’s packaging suppliers cannot meet the demand and specific requirements from businesses in the country. According to Victoria Mwafulirwa, founder of agro-processor Homes Industries, this means companies are turning to imports to find what they need to get their products packaged and ready for the market. Mwafulirwa believes a packaging venture would not require a lot of start-up capital to get off the ground. “You don’t need to start big. At first, if someone can just make the required packaging readily available – even through imports – and then grow it into a fully-fledged plant as the business expands,” she says. “The demand for packaging is so high and at the moment we are making do with an imperfect system, so any way of getting the local businesses what they need is already a start.”  

4. Affordable housing developments in Kenya. The Kenyan government’s Affordable Housing Programme is viewed as an opportunity for property developers to diversify their portfolios, according to a recent report by property services group Broll. There has been a limited supply of affordable housing units in the recent past, with government projects holding the largest market share of 83% from 2019 to 2021. This is compared to 17% delivered by private projects. This trend is expected to change in the next two years as private developers become more involved in the delivery of affordable housing with the introduction of innovative building technology.  

5. Potential for economy and mid-range hotels. Hospitality investment firm Kasada Capital Management sees potential for affordable hotels catering to Africa’s middle-income population. “We believe this is the time to invest, focusing first on the emerging African middle class, representing 80% of guests to provide them with a new, modern and attractive offer at an affordable price while bringing internationally recognised brands and standards to Africa. Africa’s growing middle class will drive the demand to the sector. Over the next 10 years, thanks to the African Continental Free Trade Area, we can expect domestic travel within Africa to increase,” maintains the company.  

6. Nigeria’s tech industry still has considerable room for growth. Early-stage investor Olumide Soyombo has invested in more than 30 Nigerian start-ups over the past decade, including Paystack (payments), Piggyvest (savings and investments), Spleet (furnished living spaces) and TeamApt (financial services for the underserved). Yet, he believes it is still early days for the market in general. “There is a huge group of people that is going to transact online in the coming years. When Generation Z – those who have been born with a tablet in their hands – reach working age, they are not going to walk into a branch to open a bank account. They will shop online and when they become merchants, they are going to sell online.”  

7. Unmet demand for camel milk in Somaliland. Camel milk is a critical product for both consumers and businesses in Somaliland. Evidence from the research organisation RTI International shows dairy companies see great economic potential in the camel milk market and are actively seeking support from producers to expand their businesses. Demand for the product is increasing – with camel milk kiosks selling out of product on a near daily basis – thanks to its nutritional properties and the camel’s unique ability to produce milk during drought.  

8. Industrialisation of cassava in East Africa. Agriculture-focused private equity firm Pearl Capital Partners sees growth potential in the cassava value chain in Uganda. The firm recently invested $2.5 million in cassava producer Pura Organic Agro Tech Ltd. The funding will be used to set up a vertically integrated cassava processing plant to produce high-quality cassava flour, tapioca starch (an industrial input used in the packaging industry) and sago (an edible starch delicacy popular in India). “Uganda, and East Africa as a whole, imports almost its entire starch requirement. There is a big market opportunity to replace these imports and bring in new knowledge and technology to produce cassava starch and sago,” notes Wanjohi Ndagu, partner at Pearl Capital Partners.  

9. Africa’s rapidly urbanising cities are a money-making opportunity for food producers. The centre of gravity in Africa’s agri-food systems is shifting inwards and towards towns and cities, the 2020 Africa Agriculture Status Report suggests. Farmers who rely on overseas exports are likely to benefit from markets closer to home. The most rapidly growing urban food markets are processed, prepared and perishable foods – especially dairy, poultry, meat, fish and horticulture.  

10. Supply of frozen baked goods to Kenya’s hotels. The lack of a consistent supply of quality products has meant many hotels, restaurants and catering companies rely on expensive imported goods. It is estimated that last year, Kenya imported 2.5 billion in food products, many of which can be produced locally. Hotels in Kenya are increasingly outsourcing activities such as baking because large kitchens take up space that could be used more profitably for beds and conference facilities. Steven Carlyon, president of SimpliFine Foods, says Kenyan hotels import large volumes of frozen baked goods – such as bread and croissants – from Europe and the Middle East because there are very few local companies producing frozen baked items of consistent quality on a large scale. 

A retail outlet in Abidjan, Côte d’Ivoire. There are considerable prospects in Francophone West Africa for companies to offer their products and services throughout the region.

Invest Wisely!

Bulls n Bears 

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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