Friday, December 01, 2006

Made in Africa!

Recently I have had some very interesting conversations about doing business in Africa. Namely on the type of businesses that are both profitable and deliver tangible benefits to the communities in which they operate. The recurring theme that seemed to come up in each of these conversations was that they would like to see more export and/or added value oriented businesses. Let me note that there is nothing wrong with starting a business in Africa that is based on imports from another region. However, this shared sentiment did highlight two things:

  1. Export oriented businesses such as manufacture, agriculture, fishing, textiles, etc tend to employ larger numbers of workers.
  2. There seems to be less competition here thus the potential for more profit.
  3. These types of businesses can help a local economy earn much needed foreign exchange.
With this converation as the backdrop I present to you some pieces to a really fascinating article that I saw in CNN Money :

"Africans feeding Americans - it sounds like one whopper of a fish tale. Africa remains a continent of episodic starvation and chronic food shortages; tens of millions of sub-Saharan Africans are unable to reliably and consistently feed themselves. But as implausible as it might seem, these imbalances coexist with pockets of increasingly vibrant commercial farming throughout much of the continent.

Africans are starting to prove that not only can they feed themselves, but they'll help feed the rest of the world too," says Ken Stalder, president of SW Africa Holdings, of Rockville, Md., which ships lobster tails from Mozambique to Florida and the Northeast.

Investors and agriculture experts from the world over are flocking to Uganda, seeking ways to ride the emerging boom in African agribusiness. Israelis are building greenhouses and setting up the latest in hydroponic irrigation systems. Indians are growing rice and sunflower seeds. South Africans and Americans have invested in cotton gins. Europeans have opened fish-processing plants.

A few years ago, Uganda suddenly emerged as, in Murphy's view, the world's highest-quality supplier of vanilla beans. Prices soared because of a crop failure in Madagascar, traditionally the vanilla king. Ugandans filled the breach, reaping large revenue increases from 2002 to 2004. At the peak of the boom in 2003, cured vanilla beans sold for about $200 a pound, 20 times the historical rate.

One recent morning Veverica is showing the Ugandan owner of the country's largest fish hatchery how to best separate different sizes of baby catfish. Digo Tugumisirize, a former air traffic controller at Entebbe, operates the complex of spawning ponds, covering about a dozen acres. He watches Veverica prepare bait in a fish trap; there are 9,000 baby catfish in the pond, and with the help of the trap, the scavenger fish that eat the young fingerlings will be captured and removed. Tugumisirize now sells about 200,000 baby catfish a month, mostly for use as live bait by people fishing for the Nile perch being exported to the United States and Europe. "We need to first double and triple our output, and then double and triple it again," he says. Then our fish farmers can start feeding the world--and agribusinesses here can get rich!

Africans need help finding markets and establishing links to far-flung customers. Americans are good at knowing how their own markets work."

I am really glad to have come across this article from CNN. Hopefully, you enjoyed it too. Please let me know your thoughts...Of course, I love your comments. But, if you can't comment at this particular time- but would like to let us know that you were here; please sign and View my guestbook


Charles Deline said...

Hey Benin! Thanks for researching and bringing such articles to our attention. I can still remembered back in the 80's when Liberia used to supply the Japanese markets with fish. the truth is that we have many commodities that can be supply to the world, but we cannot get them to our own markets first because of the lack of good roads and poor communication system. Again, I just wanted to say hi and thanks.


Benin "Mwangi" said...

Charles, no problem.

That is a very good point. You are right, there are parts of Africa that lose production due to inadequate infrastructure. I guess it all boils down to comparative advantage and core competencies.

If a region is poor in road or port infrastructure, but strong in the area of education; it would be better for that region to focus on building businesses around their highly educated workforce-such as maybe customer service outsourcing or IT outsourcing.

If that region is able to retain tax earnings, then they maybe able to invest in infrastructure.

Of course, in reality it is always much more complicated that my basic example but the point that I am trying to make is that no matter whether were talking about people, businesses, cities, regions, or countries going with your strenth can accelerate your overall growth.

Thanks again, for coming back, you are very insightful. We've gotta do this more often-you with me?


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