agric master 16x9 - covenant · pdf file• market aggregation centres. ... agrolay...
TRANSCRIPT
ADA OSAKWE
CEO, Agrolay Ventures
• Former Senior Investment Adviser to Dr. Akinwumi Adesina,
Nigeria’s former Federal Minister of Agriculture and Rural
Development.
• MBA (Kellogg School of Management)
• Kellogg Leadership Award
• MSc in Economics and Finance (Warwick)
• BSc in Economics (First Class Honours) (Hull)
• Forbes 20 Youngest Power Women in Africa (2014)
• Archbishop Desmond Tutu Leadership Fellow.
• Founding board member, SHAPE initiative and IMPACT.
• Nigerian citizen.
Nigeria’s Agribusiness Investment Opportunity
22nd August 2015
Ada OsakweCEO, Agrolay Ventures
SME OPPORTUNITIES IN NIGERIA’S AGRIBUSINESS VALUE CHAIN
A Covenant Capital Seminar
116116
NIGERIANo. 1 Tomato Producer In Sub-Saharan Africa
117117
118118
NIGERIANo. 1 Producer Of Citrus Fruits In Sub-Saharan Africa
No. 2 In The World
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NIGERIANo. 1 SoyabeanProducer In Sub-Saharan Africa
Note: 1Excludes Oranges, Lemons and Grapefruit Source: FAO Stat; Index Mundi
Nigeria Is An Agriculture Super Power?
Note: 1Excludes Oranges, Lemons and Grapefruit Source: FAO Stat; Index Mundi
Groundnuts
3,070
Citrus
fruits1
3,900
Rice
4,833
Fresh
Vegetables
6,200
Sorghum
6,900
Maize
9,410
Yams
30,000
Cassava
52,404000’s Tonnes, 2012
Nigeria’s Top Staples
1st 1st 13th 1st 4th 17th 2nd 3rd
Global
Ranking
121121
60% LOSSES
122122
Spends $500million Annually Importing Fruit Concentrate
123123
Over 50% Of Edible Oils Is Imported
YET
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125125
60% Of Arable Land Is Unutilized
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Less Than 1% Irrigation On 3 million Hectares Potential Irrigable Land
127127
80 Million Youths But 54% Of Them Unemployed
128128
Markets
GROWING CONSUMER MARKET
OPPORTUNITY OPPORTUNITY
OPPORTUNITY
Where Are The Specific Agribusiness Investment Opportunities ?
Tomatoes
250340
407507
880
180
1,500
Nigeria Cameroon South
Africa
Kenya Ghana Tanzania Benin
Nigerian Farmers Produce 65% of All The Tomatoes in West Africa
Processing Is Where Investors Capture The Greatest Value
Aggregation and
Logistics
Processing (both paste &
concentrate)1
Retail Production
Economics of the Tomato Value Chain in Nigeria
Note: 1 Concentrate can be an intermediate product of tomato paste with less water content; concentrate is generally produced for industrial use while paste is for
domestic use
Source: Industry Interviews
1%
Initial Aggregator Retailer Transport
55%
3%
Customer End-Use Processor
4%
37%
Farmer
% of End Price Captured through the Value Chain
Tomato Paste Local Demand Estimated at 200,000 Tonnes per AnnumNigerians Consume 2.4kg / Person per Year
Low Cost . Available All-Year Round
No Company In Nigeria Locally Produces Tomato Concentrate To Make Tomato Paste
Instead, Local Demand Is Met By Extensive Imports
2010
Rank
Country Imports
(Thousand Tonnes)
1 Germany 226
2 Italy 174
3 United Kingdom 154
4 Russia 147
5 France 109
6 Japan 105
7 Iraq 100
8 Nigeria 86
9 Poland 79
10 Libya 70
Nigeria Spends 16 Billion Naira AnnuallyImporting Tomato Paste
The Need For Import Substitution Creates A Domestic Investment Opportunity
� $1.3 Billion Market (> 200 Billion Naira)
Estimated to reach $2 Billion by 2020
� Ongoing Protection from imports
Tomato Paste on CBN Banned Forex List.
� Abundant Supply of Raw Supplies (i.e. Tomatoes)
$40 Million Investment By Dangote Group In A Tomato Paste Processing Factory in Kano
Investment By Agrolay Ventures in Ready-To-Eat Tomato -Based Stew
Securing Raw Materials Is A Challenge For Processors, Significantly Driving Down Profitability
Low Yields
5
49
57
84
22
Kenya China Italy
25
USA Nigeria
Tonnes per Hectare, 2011
Nigerian yields
range from 5-
25 Tonnes per
hectare
• Low Yields
• 45 – 60% Post-harvest losses
• Tomato Prices 5x higher in the South than in the North
• Seasonal fluctuations cause price volatility
These Problems Present Further Business Opportunities • Improved Transportation
Logistics
• Cold Storage Warehouses
• Market Aggregation Centres
Nigerians Fruit Juice Consumptionu
550
320
200
2012 2007 2002
CAGR +11%
Source: USDA Gain Report, “Nigeria’s Fruit Juice Concentrate Ma r k et,” 20 09; FIIRO,
“Industrial Profile on Fruit Juice Production,” 20 13; Business Day, “ Rising middle class
now 23% Population,” September 2011; IndexMundi; World Bank; African Development
Bank; Industry Interviews
Litres MN
Fruits
Fruit Concentrate Juice/Drinks
Fruits are crushed
and the extracted
juice is dehydrated to
concentrate form
Processors
reconstitute the
concentrate into
juice and fruit drink
Ripe fruits are
harvested and
transported to
processing facilities
Fruit Juice In Nigeria Is Mostly Produced From Concentrate
95% Of Concentrate Used To Produce Juices In Nigeria Is Imported
Fruit Concentrate Imports
115
48
20
CAGR +19%
2015E 2010 2005
Annual Imports, Kilograms MN
Oranges and Pineapples Are The Most Popular Concentrates Used By Nigerian Juice Manufacturers
Apple, 10%
Others, 5%
Mixed
Fruits, 20%
Orange,
40%
Pineapple,
25%
Demand For Fruit Juice By Flavour
% Share of ConsumptionChi Limited
Cway
Dansa
Don Simon
Dudu
Coca Cola
Frutta Juice
Fumman
Nature Fresh
SCOA Foods
Local Manufacturers Utilising Concentrate
Teragro Invested Over 1 Billion Naira In Fruit Concentrate Factory in Makurdi
Reel Fruits Produces Dried Fruit Snacks Using Pineapples and Mangoes
Agrolay Invested In The Nuli Juice Co., Which Uses Locally Grown Fruits & Vegetables To Make Fresh Juice
100% Juice Content Demand Is Growing
Juice Drinks
(up to 24%
juice), 13%
Fruit-Flavour
Drinks (No
Juice), 5%
100% Juice,
3%
Nectar (25 -
99% juice),
79%
Demand For Fruit Juice By Product Category
% Share of Consumption
• 100% juice
products was the
fastest growing
product category
in 2011, with
demand growth of
PREMIUM QUALITYBut There Are Limited 100% ALL-NATURAL, Juice Options Available
PREMIUM QUALITYNuli Juices Have Not Just Fruits, But Vegetables Too
PREMIUM QUALITYFruits & Vegetables Are Locally Sourced From Farms Across Nigeria
Many Challenges Face Agribusiness Investors In Nigeria% of the 75 Respondents Citing Challenges, by Categ ory 1
Competitive Environment
5%
Government Coordination
19%
Land
24%
Information &
Communication
28%
Governance
39%
Human Capital
45%
Policy & Regulatory
Environment
53%
Securing Supplies
55%
Financing
56%
Infrastructure
72%
Note: Data from 75 investors; 1Respondents have cited all challenges that are applicable to them
Infrastructure was consistently cited as the
greatest barrier to investment, regardless of
investor type, size, location, or stage of value
chain
152
Government Is Tackling Infrastructure Deficit With Staple Crop Processing Zones To Support Robust Systems for Food Security
Selected SCPZ sites and anchor crops
SorghumBunkure-Kadawa (Kano)
Biu (Borno)
HorticultureBunkure-Kadawa (Kano)
Makurdi (Benue)
Oban (Cross River)
FisheriesKetu-Ereyun (Lagos)
Okorolo (Rivers)
Ebedebiri (Bayelsa)
CassavaAlape (Kogi)
Ososa (Ogun)
RiceBadegi (Niger)
Bunkure-Kadawa (Kano)
Adani / Omor (Enugu, Anambra)
Gassol (Taraba)
Ambrusa / Binji (Kebbi, Sokoto)
LagosLagos
BayelsaBayelsa RiversRivers
ImoImo AbiaAbia
Akwa
Ibom
Akwa
Ibom
AdamawaAdamawa
BauchiBauchi
GombeGombe
KadunaKaduna
FctFctNassarawaNassarawa
PlateauPlateau
TarabaTaraba
BenueBenue
Cross
River
Cross
River
EnuguEnugu
EbonyiEbonyiAnambraAnambra
DeltaDelta
EdoEdo
KogiKogi
OyoOyo
OgunOgun
OsunOsun EkitiEkiti
OndoOndo
KwaraKwara
NigerNiger
SokotoSokoto
KebbiKebbiZamfaraZamfara
KatsinaKatsina
KanoKano
YobeYobeJigawaJigawa
BornoBorno
Lagos
Bayelsa Rivers
Imo Abia
Akwa
Ibom
Adamawa
Bauchi
Gombe
Kaduna
FctNassarawa
Plateau
Taraba
Benue
Cross
River
Enugu
EbonyiAnambra
Delta
Edo
Kogi
Oyo
Ogun
Osun Ekiti
Ondo
Kwara
Niger
Sokoto
KebbiZamfara
Katsina
Kano
YobeJigawa
Borno
153
SCPZ sites SCPZ sites with Masterplans
SCPZs Will Significantly Reduce Operating Costs For Farmers And Agribusiness Processors
Government Infrastructure Assets Leased To Private Sector To Develop Warehouse Receipt System And Facilitate An Active Commodities Exchanges
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0.70%
5%
2010
2013
Commercial Banks’ Agriculture Lending Portfolio 0% Default
Nigerian Commercial Banks Have Increased Their Agricultural Lending Because of the Positive Agricu ltural Policy Reforms & Incentives
The Governments of Nigeria and Germany Launched an Innovative Agribusiness Private Investment Fund, Th e First of Its Kind in Africa
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157
• Funding: Capitalized initially by the Public Sector ($28million ). Scaled to up to $100 million by private sector
• Management: Independent, private-sector fund manager (SAHEL CAPITAL)
• Target investees: Primarily SMEs
• Investment Size: $500,000 - $5 mn
• Instruments: Long-term, tailored financing , as well as quasi-equity, and other innovative financing instruments
• Technical Assistance Facility: 10% of the total Fund sizewww.fafinnigeria.com
Today, Young Nigerians Are Excited About The Agribu siness Opportunity And Becoming Agri-preneurs