African agricultural land becoming more attractive to investors

In recent years investors have started discovering the potential of agriculture more and more. Especially Africa is interesting to these investors. That’s partly due to the enormous amount of agricultural land available, according to the FAO sub-saharan Africa has 90 million hectares of arable land available. Only 25 percent of this vast acreage is used for agriculture. On the other hand, infrastructure and telecommunications is quickly developing in African countries. Within the fruit cultivation, investors also know how to find the continent more often. Considerable sums of money are invested into the production of profitable products such as avocado, pineapple, mango, melons and bananas.

“It’s difficult to say when this trend started,” says Doug Hawkins from Hardman Agribusiness. The British company advises entrepreneurs and investors in the agrarian sector. From this position, he paints a picture of investors in fruit cultivation in Africa. “Companies such as Sipef and Kakuzi are established names, other projects are more recent. I’d say there’s increasing interest in owning or developing cultivation or processing companies in sub-Sahara Africa.” Various international parties, both quoted on the stock exchange and private companies, have shown an interest in horticulture in Africa through Hardman, and especially West and East Africa are interesting.

Financiers from Europe and Middle East
Ralf Schmauder works as an agronomist in Kenya and Ethiopia. He has observed the same trend. “I can only speak for Kenya and Ethiopia, I don’t know much about the other countries,” he says. “It mostly concerns Italian investors in dairy products. Additionally, Italians, Dutch people, Russians, German people, Indians and Israelis are investing in the cultivation of herbs.” The nut cultivation is also an attractive sector, especially the production of cashew and macadamia nuts. Fewer investors invested in the ornamental plant cultivation in recent years, although existing companies are growing. “The investments in herbs started about four to five years ago,” Ralf says. The exchange rate also plays its part. In 2006, investors still received 87 to 90 Kenyan shilling for 1 euro. Nowadays the exchange rate is 115 to 118 shilling per euro.

The investors can be divided into two groups: companies with knowledge of the fruit cultivation and investors who have little or no knowledge of the fruit cultivation. “Investors without the know-how usually approach existing companies, consultants or agronomists,” Ralf says. “Other investors, who are more knowledgeable, send their own people.” The investors generally come from European, North African and Middle Eastern countries.

Legislation in Kenya makes it easier to invest
There are three ways to invest in the cultivation of fruit: starting your own company, taking over a company, or just investing money. In the first case the investor is in control of everything, and they start a company with the help of local people. The exact rules vary per country, but Ralf paints a picture of the situation in Kenya. “That mostly happens if you want to bring your own production to, for example, Kenya, and you want to be sure the project reaches its goal,” he explains. The Kenyan government has adjusted the rules, so that this investing procedure has become simpler. “A local person isn’t necessary anymore to start or establish a company. In the past, you needed at least a manager from that country. Investors from abroad have to prove they invest at least 100.000 USD before the company can be registered. It’s advisable to register the company via a law firm’


More information:
Hardman Agribusiness
Doug Hawkins

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Farmers Review Africa
Farmers Review Africa
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