While Sub-Saharan Africa may include some of the world's poorest nations, economic progress is being made. “On average the gross domestic products in sub-Saharan Africa have grown between six and seven percent in the past three years and the number of democracies has increased from four to 25 since 1999,” says Pieter Kriel, chief executive of South African private equity firm Sanlam Private Equity.
Sanlam is one of the organisations behind Johannesburg-based agribusiness fund Agri-Vie.
Agribusiness is the lifeblood for most Sub-Saharan African economies. In a region in which per capita income is amongst the lowest in the world, agriculture is often the dominant driver of economic growth. In Tanzania, for example, it accounts for 45 percent of GDP and 65 percent of the nation's jobs.
Agri-Vie, a fund launched last year to make agribusiness investments, is now close to completing its first investment in an Ethiopian tropical fruit juice producer, having agreed terms in December last year.
“We will not invest in farms, but rather in the processing and marketing of farming outputs such as food, certain beverages and fibre products,” said Kriel.“By following the route of expanding the industry, it will ultimately create new growth opportunities for existing and emerging farmers,” he continued.
Agri-Vie is on track to hold its final close in March on $100 million, having held its first close last September on $40 million. It counts amongst its LPs insurance companies, development finance organisations and US charitable trust the WK Kellogg Foundation.
SouthAfrican investment firm SP-Aktif is the other firm behind the Agri-Vie joint venture. Herman Marais, executive director at SP-Aktif, is leading the new fund's investment programme.
“Over and above the opportunities associated with the prevailing global food and commodities cycle, there is growing demand globally for various African exports such as organically grown vegetables, fruit and flowers, processed natural fibre for industrial applications as well as natural supplements and health products,” says Marais, who goes on to explain that limited access to capital and restricted market knowledge is holding back many of the existing agri-enterprises across the region.
According to Marais, the fund is currently evaluating more than 20 investments in South Africa and a similar number in countries such as Botswana, Tanzania, Uganda and Kenya.