3 December 2019
Absa Corporate and Investment Banking (CIB) says there are good business opportunities in some markets in sub-Sahara Africa outside South Africa where the bank has appetite to increase its agricultural lending book. Roux Wildenboer, Absa CIB Sector Head (Agriculture) says potential exists in countries such as Kenya, Ghana, Mozambique, Tanzania and Zambia.
He says a gradual improvement in both the regulatory environment and investment climate is good for the agricultural sector. Despite bottlenecks in accessing markets due to poor road and rail infrastructure, the agricultural sector is nevertheless key to economic development and job creation in these countries.
Wildenboer says he is particularly excited about the agricultural potential in markets such as Kenya and Tanzania. Kenya is famous for its tea and horticultural products, while Tanzania is a major producer of cashew nuts. Ghana is already the world’s top producer of cocoa, while Ivory Coast – where Absa does not have a presence – is a leading producer of cocoa and nuts.
“We want to have emphasis on larger presence countries where we already have operations, and this includes countries like Kenya, Ghana and Tanzania. But there is also potential in other markets such as Mozambique and Mauritius, even though the latter sugarcane industry has been suffering, particularly with increasing health awareness where the soft drinks industry and consumers are substituting sugar with other sweeteners which impacts on the sugar industry,” Wildenboer says. “Uganda is another market we want to grow as it is a country with opportunities we can capitalise on.”
Wildenboer says because agriculture still remains a predominantly labour intensive industry in many African countries where mechanisation is yet to be developed, it can provide employment opportunities for young people.
“Agriculture in Africa is by its nature labour intensive. Wherever we engage and assist with finance, the developmental spin offs is significant in terms of employment creation. For example, a viable poultry production business can have a medium size abattoir, delivering say a million chickens a week, can create between 300 and 400 jobs”.
“There is a counter that farmers will over time use technology in order to be competitive but even then, agriculture still has a large potential to create employment, as well as in all downstream businesses such as transporters, retail, parts suppliers and agents. But there is also a multiplier effect we see in agriculture and Absa wants to be at the forefront of this positive impact,” Wildenboer says.
He adds that governments can play a role by ensuring market and regulatory certainty as well as further investments in infrastructure. “The freer the market is the better, as free markets stimulate competition, technology and efficiencies. For small and medium scale producers, governments can assist by implementing sound policies to ensure the growth of sustainable businesses,” Wildenboer concludes.