Africa – Food & Beverages 2019

Africa's Food and Beverage Industry Attracts Investment

Published: 25 March 2019

 

1. North Africa

Egypt: From beverages to candy factories

PepsiCo plans to invest a total of US$ 515 million in Egypt by the end of 2021. Around US$ 16 million is earmarked for the renewal of beverage production lines. PepsiCo will also invest in the production of salty snacks. The company will also increase its own cultivation of raw materials, renew its transportation fleet and invest in the company’s distribution centers. PepsiCo also aims to expand its exports of snacks and beverages to various African countries.

Murban and Al Ghurair, from the United Arab Emirates, are planning a sugar factory worth US$ 400 million in Egypt, in addition to growing sugar beet. The project is scheduled for completion in 2020.

The Export Development Bank of Egypt, together with the Misr Al-Khai Foundation, published plans for the construction of 50 greenhouses in autumn 2018. Production capacity is estimated at 2,800 tons per year.

The Egyptian Amaar Group and undisclosed Saudi partners intend to build two shopping centers totaling US$ 52 million. Both will be built in the 6th of October City near Cairo.

According to a report by local business newspaper Al Mal, the Ministry of Supply has announced the winners of a tender. Seven retail complexes in Cairo, Alexandria, Giza and Qena are due for restoration. The contracts went to the supermarket chains HyperOne, Seoudi and Carrefour.

Manfoods will invest around US$ 14 million in Egypt in 2019. The company is a McDonald’s franchisee and plans to set up 13 new branches, among other things.

Arma Food Industries plans to acquire new production facilities in Egypt and train workers. The entire Arma Group has US$ 9 million available for both activities. Arma supplies food, edible oils and cleaning agents to 27 countries.

Unspecified Chinese investors are planning to build an animal feed factory in Luxor in 2019. This was announced by the head of the investment authority of the Luxor Governorate in January 2019. A feasibility study for the project will be completed by March. The Chinese entrepreneurs plan to invest almost US$ 7 million in the project.

Trading Partners for Food Industries is switching to the production of frozen fruit and vegetables in Egypt. By 2021, the company intends to build its own factory instead of importing products from suppliers. Initial work on the plant has already begun, but it will take two years before 5 tons of goods can be produced per hour.

According to Al Mal, the Ismailia Development and Real Estate Company is also planning a food complex. In Ismailia, facilities will be built for the production of jams and juices.

Egypt Today reported in November 2018 that the Indonesian company Nabati is planning a biscuit factory in Egypt. After a delay in obtaining the license, the Indonesian ambassador in Cairo hoped for a quick implementation.

Cold Alex Food Industries is aiming to expand its exports of frozen fruit and vegetables. In autumn 2018, the company reviewed the required capacity and estimated costs of new facilities in Egypt. Commissioning of a production line is planned for 2019. Due to the favorable world market situation, Cold Alex is considering further possible investments as well.

Al-Baraka Sweets plans to construct a candy factory in Egypt in mid-2019. The export-oriented company intends to invest a total of US$ 3 million to increase its exports. The new plant in the 10th of Ramadan City will produce 20 tons of candy per day.

Om El Nour anticipates a cost of almost US$ 3 million for the modernization of a factory and the purchase of new facilities in Egypt. These are packaging lines for margarine and edible oils, goods that the company is currently importing from Belgium.

Organic Green is planning a factory for drying medicinal herbs, costing almost US$ 800,000. The Egyptian plant will be built in the 6th of October City and will begin operation in 2019. According to the Daily News Egypt, the company envisions a capacity of 30 tons per day.

Badr El-Deen Food Industries, which produces dried fruits and juices, is anticipating a massive increase of its exports. The company wants to increase the capacity of its factory from 800 to 1,500 tons per year.

The Egyptian Countryside Development Company is in talks with an investor who wants to produce olive oil. In autumn 2018, the state-owned company conducted talks with other potential agricultural investors from Saudi Arabia, the United Arab Emirates, Libya, Sudan and Jordan.

Algeria: US signs several letters of intent

During a January 2019 visit to Sacramento by Abdelkader Bouazghi, the Algerian Minister of Agriculture, Rural Development and Fisheries, the US-American Roberts International Agricultural Development signed a total of four Memoranda of Understanding with Algerian partners. These consist of three projects for breeding 70,000 dairy cows and one project for processing potatoes. On the Algerian side, the private companies ETRHB Haddad, CATM, Palma Groupe and Groupe Benaini are involved. Bouazghi later explained that Algeria would no longer import potato seeds starting in 2021, citing that good progress is being made in expanding seed production capacity. According to the Ministry, Algeria currently imports between 120,000 and 150,000 tons of potato seeds per year.

The Office Algérien Interprofessionnel des Céréales (OAIC) announced the implementation of nine grain storage projects with a total capacity of 3.2 million quintals. Algeria expects to produce 90 million quintals of grain in the current 2018-19 harvest season, assuming good weather conditions. Cereals and milk are the two basic agricultural products for which Algeria has not yet reached self-sufficiency.

Morocco: Agricultural agreement with EU

Moroccan company Cosumar plans to produce around 35,000 tons of vegetable fats by the end of 2020. Together with Wilmar from Singapore, around US$ 36 million will be invested in Casablanca for this purpose. Cosumar is diversifying its product range, focusing less on its previous concentration in sugar production. Additionally, Cosumar is increasingly targeting markets in Africa. This is demonstrated by its 55% stake in the Guinean company Comaguis, which will use the invested funds to build a sugar factory near the port of Conakry.

Following the adoption of an agricultural agreement between the EU and Morocco in January 2019, Moroccan exporters are preparing for increasing demand. The Association of National Chambers of Agriculture is imploring the government to improve transport infrastructure. Investments in packaging and refrigeration facilities are also necessary. After the relatively long negotiation phase, the legal certainty that has been gained is being welcomed. One controversial issue in the negotiations was Morocco’s demand that the agreement should also apply to the Western Sahara territory.

Tunisia: Olive oil extraction is expanded

According to the Tunisian investment agency APIA, private investment in agriculture increased by 3.7% to around EUR 209 million in 2018. Agricultural services in particular benefited, with an increase of around 45% to EUR 34 million, followed by the first-stage processing sector. Aquaculture, on the other hand, declined by 56.3%.

Société Tunisienne du Sucre (STS) will receive around EUR 1.7 million for investments. In Beja, STS resumed production in May 2018 after a fire in the warehouse the year before. The money will be used to make up for deferred investments and to purchase new equipment to expand production.

The German Society for International Cooperation (GIZ) and the Tunisian Agence de Promotion des Investissements Agricoles (APIA) are expected to extend the “Agripreneur 2.0” project beyond June 2019. The project aims to increase agricultural yields through the development and use of apps and other IT applications. The main target group are young Tunisians from rural regions.

The investment company Gulf Capital from Abu Dhabi has invested around US$ 22 million in the Tunisian Groupe CHO. CHO specializes in the production and export of organic olive oil but also produces cosmetic products based on olives and waste products from olive oil extraction. According to newspaper reports, CHO seeks to expand its activities with the entry of Gulf Capital. According to CHO, it currently has the capacity to extract oil from 1,000 tons of olives per day.

 

2. West and Central Africa

Nigeria: Growing market for soft drinks

The British investment fund Duet has invested US$ 50 million for shares in the Nigerian soft drink producer AJEast, which is a subsidiary of the Peruvian AJE Group (http://www.ajegroup.com). The company manufactures brands such as Big Cola, Big Orange and Big Lemon in Lagos/Ikeja. Investments in production lines for soft drinks in Nigeria are increasing. Among others, US-company Royal Crown Cola (RC Cola) completed the construction of its first factory in Nigeria in 2018.

Burkina Faso: Dutch investor committed to Burkina Faso

At the end of 2018, the Dutch investor Oikocredit (https://www.oikocredit.coop) announced that it would invest EUR 2 million in Anatrans. The grant will enable Anatrans to expand its processing capacity. The company is one of Burkina Faso’s leading cashew nut processors. It purchases the nuts from around 3,500 local farmers and then processes them for customers in Europe and the USA.

Ghana: New beverage factory in the Ashanti region

The Ghanaian beverage manufacturer Kasapreko (http://kasapreko.com) is building a second factory in Tanoso, in the Ashanti region. The company will receive a loan of US$ 20 million from Ghana Eximbank. The loan will be granted as part of the government’s “one-district-one-factory” program. The construction, which has just begun, should be completed by June 2019. With the new factory, Kasapreko wants to improve supply in the north of the country. The company has already invested massively in the expansion of its filling lines in the Accra area in recent years and has become an important customer of foreign technology suppliers in Ghana.

 

3. East Africa

Ethiopia: Industrial parks are booming

In December 2018, Ethiopia opened a modern industrial park in the city of Jimma, Oromia Regional State, in which primarily food processing companies will be located. The importance of the new park was emphasized by the presence of Ethiopian Prime Minister Abiy Ahmed, Sudanese President Omar al-Bashir and Djibouti President Ismail Omar Guelleh. The industrial area covers an area of 510,000 square meters and may employ up to 10,000 people, according to plans.

Prime Minister Abiy Ahmed previously inaugurated the Adama Industrial Park in October 2018, which will also house food processing companies. Further planned openings are the parks Dire Dawa, Kilinto II, Bole Lemi II, Bahir Dar and Debre Birhan. According to observers, these parks are a game changer for Ethiopia because they can produce not only products for the national market, but also for export.

Ethiopia intends to impose stricter controls on food processing companies and thus “enforce” production to comply with internationally accepted quality standards. Companies that do not adhere to the quality rules must expect to be shut down. The first notable victim is the Lemlem Food Complex in Mekelle, Tigray Regional State, which was closed at the end of September 2018 because it had produced “inferior” noodles.

The public was also warned to drink “Classy” brand drinking water bottled by Belay Industrial in Sululta, Oromia Regional State. Bottled drinking water has become a huge market with astronomical margins not only in Ethiopia, but all over East Africa, market experts say.

Ethiopian Lominat Beverages was permitted to acquire the state-owned National Alcohol and Liquor Factory (NALF). Lominat bid the equivalent of US$ 128 million in a tender. Interest in the state-owned company was unexpectedly high: 97 potential bidders bought the tender documents. The privatization of the NALF and its transfer to Lominat will take place gradually over a period of five years.

Lominat is currently building an alcohol and beverage plant in Mojo, 30 kilometers from Addis Ababa. NALF is expected to merge with this company. With a 40% market share in alcoholic beverages, NALF is one of Ethiopia’s most profitable state-owned companies. Despite substantial investments in its four production sites in Mekanisa, Sebeta, Akaki and Maichew, the company is not able to satisfy the rapidly increasing demand for its products, according to observers.

15 Ethiopian producers of iodized table salt have formed a new association, the Ethiopian Iodized Salt Producers Association, to import salt nationwide and expand the sector. So far, only about a quarter of all households have sufficient access to iodized salt. According to a study, 40% of Ethiopian children suffer from iodine deficiency. There are about 1,000 salt-producing companies in Ethiopia. In the future, the association wants to award salt companies complying with international standards with a quality seal.

Kenya: Food industry dwindles

In Kenya, shrinkage of the food processing sector continues. According to the Kenya National Bureau of Statistics, production fell by 4.2% between October 2017 and September 2018. The food sector has long been regarded as barely competitive.

The Kenyan press blames increasing imports for the closure of food processing factories, though that is not the entire issue: due to the population explosion and the usual division of inheritance, valuable arable land is lost every year to construction. In addition, the business conditions are suboptimal (inadequate infrastructure, poor payment morale) and corruption has gotten out of control, leading to higher production costs. Thus, higher import tariffs are not the cure for the food industry.

The Kenyan Nairobi Assembly Environment Committee has called on the country’s government to relocate all slaughterhouses operated within settlements and densely populated areas to less populated areas. Also, the widespread unhygienic conditions should be eliminated. This is particularly true for slaughterhouses in slums, which are beyond government control. Kenyan slaughterhouses have a reputation for falling far short of international hygiene standards and discharging their untreated waste water into creeks or rivers, a practice widely recognized to spread diseases.

The British soft drink manufacturer Vimto plans to permit its drinks to be produced in Kenya. The exclusive franchisee is the Kenyan company Kevian Kenya, which has so far made a name for itself with the drinks Afia and Pick N’ Peel. Vimto is a red, carbonated soft drink from the UK that is sold worldwide, but above all in countries of the Commonwealth of Nations. The product has thus far been imported into Kenya. According to Kimani Rugendo, Managing Director of Kevian Kenya, the deal shows that local food processors are now able to produce international brands locally.

The Kenyan dairy company Brookside Dairy wants to pay milk suppliers according to the quality they deliver, thus encouraging suppliers to improve production quality. The higher-quality milk will then be used to produce butter and butterfat. Butter is currently in short supply in Kenya, which, if available at all, is only offered at high premiums and costs up to US$ 10 per pound in a grocery store. Brookside is going to test raw milk for fat, added water and antibiotic residues. Thus far, dairy farmers have been paid only according to the weight delivered.

The Kenyan Coast Development Authority (CDA), a state-owned development company for coastal regions, wants to revive an abandoned juice factory. The plant went into operation more than six years ago, but was shut down just one year later due to mismanagement. With the help of new equipment, the factory could convert 1.5 tons of mango per hour into fruit pulp in the future. CDA wants to pay farmers the equivalent of EUR 0.17 per kilogram of mango, while middlemen are currently paying only EUR 0.08.

In the never-ending story of the Kenyan sugar industry, commentators see 2019 as a decisive year: since the 1980s, the once flourishing sector has been suffering from dubious trade practices, neglect, a lack of political will as well as outdated technology and agricultural practices. While other African growers have switched to fast-growing sugar cane varieties, Kenya has remained with slow-growing old varieties. Harvesting practices, transport and processing are outdated.

As the Kenyan president has declared the revival of agriculture a top priority, a decision must be made in 2019: Either the public companies are cleared of debt and modernized or the “ruins” should be sold to private foreign investors. Time is pressing because Kenya is causing political friction with other African producers because of its import barriers for sugar.

Tanzania: Cashew nut production is significant

China wants to help Tanzania with the processing and marketing of cashew nuts and is setting up local companies to do so. Tanzanian cashew nut production has been a political issue since President John Magufuli recently mobilized his country’s army to buy the crop at a guaranteed price of US$ 1.40 per kilo. The president was bothered that private middlemen had not followed his price recommendation and offered farmers only half the price.

With an annual harvest of 200,000 tons, Tanzania is one of the largest cashew nut producers in the world. The first Chinese nut processor, Sunshine Industry, now plans to build a 5,000 ton/year plant. Tanzania has nine major private companies with a total installed production capacity of 26,500 tons per year, including Micronix Matwara (2,000 tons), CC Factory (5,000 tons), Hawte Investment (2,000 tons), Amama Factory (2,000 tons), Micronix Newala (2,500 tons) and Yalin Korosho (10,000 tons). However, it is reported that some companies are unable to fully utilize their installed capacity.

 

4. Southern Africa

South Africa: McDonald’s plans 120 new restaurants

Tiger Brands, a South African producer of packaged food, has been allowed to restart its meat processing facilities in Polokwane in the north-eastern Limpopo region of South Africa, according to a press release from December 2018. The company, one of South Africa’s largest food producers, was forced to close the factory because of listeria infestation. Tiger Brands suffered heavy losses as a result of the food scandal.

At the end of 2018, the South African sugar producer Illovo placed an order with ELB Engineering Services, a South African engineering and consulting company, for the planning and delivery of a sugar supply system for its packaging plant in Dwangwa (Malawi). The Illovo Group produces sugar in South Africa, Mozambique, Malawi, Tanzania and Swaziland.

According to a press release issued in November 2018, the South African Taste Group has temporarily halted the planned franchise expansion of the Domino’s Pizza and Starbucks restaurant chains. This is due to the currently weak purchasing power in South Africa and the company’s poor half-year figures.

McDonald’s SA – the South African franchise for McDonald’s – plans to invest the equivalent of EUR 180 million in 120 new restaurants over the next five years. This will create 7,000 direct jobs, according to a company report from October 2018.

Mozambique: Coffee-growing project in Cabo Delgado Province

Italy provides financial support to Mozambique in a project for the cultivation and processing of coffee in the province of Cabo Delgado. The grant is part of EUR 5.8 million that Italy is donating to UNIDO (United Nations Industrial Development Organization) to back three projects in Africa and the Middle East. Partners in the UNIDO project in Mozambique are the Italian coffee company Illy and the Ernesto Illy Foundation.

Angola: Government aims to achieve food self-sufficiency

The Angolan government wants to reduce the country’s dependence on food imports, according to Manuel Nunes Junior, Minister for Economic and Social Development. Speaking at the opening of consultations on measures to support local production at the end of January 2019, he said: “We must be self-sufficient in the first phase of food production and stop importing food that we can produce ourselves”.

In 2017, Angola imported just over US$ 3 billion worth of food, up from almost US$ 2.4 billion in the previous year. The volume of food imports in 2017 accounted for almost 22% of total imports. For the most part, food imports consisted of staple foods such as rice, wheat, sugar and cooking oil. The agricultural conditions for self-sufficiency exist in Angola.