One of the biggest business opportunities on the African continent is — perhaps surprisingly — agriculture. As the world’s population continues to grow, so does the demand for food. That doesn’t necessarily mean one has to go there with the intent to export crops around the globe, explains Patrick Devenish, Group Chief Executive of AICO Africa Limited.
AICO is a Zimbabwe-based agro-industrial conglomerate, with a focus on cotton, maize, wheat soya and other commodities. The company is listed on the Zimbabwe Stock Exchange and has a market capitalization of $101.5 million.
“The first opportunity, and lowest piece of hanging fruit, is really the opportunity to help Africa feed itself,” he tells Afribiz. “That’s where our seed business comes in. Seed is the foundation of all agriculture; improved seed is the foundation of improved agriculture.”
Devenish and his partners at AICO emphasize research in order to develop the best possible seeds. They currently have research farms in Zimbabwe, Zambia and Kenya. At the farms they have African scientists, where other companies may import their workers, who research new products and collaborate with others in the industry worldwide.
As much of Africa relies on imported foods, the markets there are both eager and sizeable enough to support many domestic agricultural operations. “We see much bigger opportunities in helping the growing African middle class to get what they want out of life,” he says. “That’s eating better, eating more protein, and protein comes from grains (which feed) chickens, pigs and cows. The increased production of cereals generally leads to industrialization, so that’s another opportunity.”
He also says there’s Africa’s biggest opportunity may lie in its potential to feed China and India, two of the most populous nations in the world.
AICO expanded operations into multiple African countries using a five-step expansion plan, which included exporting from the country, opening a local office and beginning local production activities, Devenish said, adding that transferring head office activities such as human resources and IT to the local office usually follow.
There are three companies under the AICO umbrella, with the seed business poised to expand outside of Zimbabwe, with AICO’s cotton and consumer good businesses to follow. AICO’s five-step expansion plan may serve as a model to companies looking to do business or expand in Africa, Devenish said. By introducing one product initially, gaining a foothold in the market and establishing a strong reputation for the brand, companies can provide a mechanism to introduce several products into a market.
For AICO, one of the keys to success as been the company’s strategy of hiring locally when moving into new markets, Devenish said. By hiring local talent you help to improve the local economy, integrate yourself and your company into the community and eventually win the business of local consumers.
“We would rather find a local who understands the local territory and the customs, culture, language, etc. and then teach him our ways,” he said.
One of the reasons that so many Western companies have traditionally brought workers with them to Africa is that many of the locals were uneducated, but this is no longer the case, he said.
“The standards of education in Africa, over the past 40 years or so, have improved significantly,” he said. “You’re getting a lot more people being educated overseas, so I think there’s a much bigger pool of talent to draw from.”
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