The AADF Assessment Mission

Report
AADF Assessment Mission to
Kenya and Tanzania
21-28 April 2012
Tim Roche
Enterprise Ireland
Participants
•
Department of Foreign Affairs and
Trade
– Sean Hoy
– Dr. Sizya Lugeye (Irish Embassy Tanzania)
•
Department of Agriculture, Food and
Marine
– Colm Hayes
•
Enterprise Ireland
– Dr. Tim Roche
Mission objective
To Assess:
1. The current investment climate in Kenya
& Tanzania
2. Opportunities for possible trade and
investment by the Irish Agri-food industry
and
3. Options for support from the Africa AgriFood Development Fund (AADF)
Irish Food Exports to Africa
Kenya
3%
Ghana
10%
Tanzania
3%
South Africa
25%
Nigeria
59%
Source: 2011 ABR
Overview
•
26 separate meetings in Kenya & Tanzania
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Five site visits
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Government sector
Private sector
International agricultural researchers
Public academic and research institutions
Irish citizens currently involved in business.
Factories,
Retail outlets,
Food markets
Research centres.
Morogoro, Tanzania
–
Being developed for investment incl. FDI.
Itinerary
Key Meetings
1.
2.
3.
4.
5.
Bidco
Vegpro
Kenyan Ministry for Agriculture
Kenya Agricultural Research Institute
Canadian International Food Security Research Fund/International
Research Development Centre (IRDC)
6. International Livestock Research Institute
7. Kenya Agricultural Productivity and Agribusiness Project (KAPAP)
8. KenInvest
9. Agriculture Enterprise Challenge Fund
10. Syngenta East Africa
11. Tanzanian Ministry of Agriculture Food Security and Cooperatives
12. Tanzanian Ministry of Livestock Development and Fisheries
13. USAID
14. Sokoine University
15. Dakawa Agriculture Research and irrigation trials
16. Financial Sector Deepening Trust (FSDT)
17. Investment Climate Facility for Africa (ICF)
18. SAGCOT centre; public/private sector investment on agriculture
19. Bakhresa & Co. Ltd. (Azam Group)
Findings
•
Discussions confirmed interest in
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Expanding output
Addressing value chain deficits
Diversification
Partnership with foreign investors including
those from Ireland
Findings contd.
• Opportunities exist in both countries for investment in the Agri-Food
sector
– Improved economic performance
– Rapid urbanisation
– Increased demand for processed food
• Very low Agricultural and industrial Productivity and innovation in
both countries due to lack of
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Scale & integration
Expertise
Skills
Suitable technology
Operating capital
Market access
Under-developed private sector
• Evident throughout the value chain from primary producer to
processor.
• Need and opportunities for relevant technical and business
development knowledge transfer in several sectors
• International industry partnering and knowledge transfer important to
addressing deficits and stimulating trade and investment in the
region.
Findings contd.
•
Business-to-business support and
development opportunities exist for
companies with expertise, technologies
and services aligned to production and
processing of
– Dairy milk
– Fruits and vegetables
– Beef, Poultry & Fish
Potential to beneficially impact the
economics of primary production
• Expertise/technology relating to
– Soil fertility management,
– Water management/conservation,
– Crop and livestock husbandry,
– Fertility management (e.g. Artificial
Insemination and semen sexing),
– Nutrition-based preventative health
management
– Postharvest quality management
Potential to beneficially impact the economics
of the Processing sector
• Reduce operating overhead costs arising from underutilisation of capacity
– Discontinuity of raw material inputs (supply chain management)
– Interruption of power supplies
• Technologies, practices & training to
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Reducing handling and improve processing efficiency
Improved shelf-life
Improved quality & safety assurance and traceability
Improved production and logistics planning,
Improved ERP,
NPD planning
• Commodity risk management instruments and services
as a possible lower-cost alternative to vertical
integration.
– Mitigate domestic and international price volatility
– Improve security of supply
– Stabilise input prices and operational costs
Findings contd.
•
Significant presence of successful Indian and Arabowned ventures
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Independently wealthy
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Diversified business interests across East Africa
Maintain links overseas
Vertically-integrated to control supply and quality variables
Adequate resources to pay for independent expertise and
technology to modernise production
B2B opportunities e.g. value-added processing,
distribution & dairy ingreds.
Kenya
• Gaps in ability to transform commodity outputs into products for
defined markets
– Production constraints
– Market access constraints
• Technology gaps relating to processing and storage
– 40% Post harvest losses are common
• Competence/investment in risk mitigation across value chain and
meeting standards required at the end are critical
• Lack of working capital is a general business constraint
• Opportunities
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Juices, pastes, sun-dried fruit & Veg.
‘Urban Veg’ for growing middle class
Reduced cost chicken protein production
Soya bean and yellow maize growing
Private sector disease testing/analytical services
Tanzania
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Very significant agricultural base
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But significantly underdeveloped
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Only growing at 4.2% p.a.
44M ha arable land but only using 20%
V. low productivity of commodities (low tech, high input costs)
Over-dependence on rain-fed agriculture (<1% irrigated land)
High post-harvest losses
Young/underdeveloped private sector
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Fragmented businesses; high scaling costs
Potentially significant opportunities in
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77.5% population employed in agriculture
Produce 95% own food requirement;
33% export earnings
Beef/meat processing (1 M cattle slaughtered/yr)
Dairy (relatively new to Tanzania)
Animal feed quality improvement
Fruit and vegetable processing sectors
Nutritionally improved horticulture
Improving energy security
Could position Irish companies as early movers in a manner that
does not exist in Kenya (due to its more advanced economy).
Some issues
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High rates of corporate tax
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37.5% for foreign business in Kenya; 30% in Tanzania
Lack of capital investment and employment grant
supports
Non-transparent business costs,
Ambiguous regulation re foreign ownership of assets,
Logistical difficulties
Unreliable energy supplies.
Visa costs
ES&H Compliance requirements
Infrastructure Issues
• Power Supply
• Transport
• Urban Vs rural
Dried Fruit NPD -Tanzania
Conclusions
• Currently there are identifiable Irish manufacturing,
processing and service companies with expertise,
products and solutions that can be brought to bear on
these issues and opportunities
• The challenge lies in developing propositions which
effectively appeal to and engage them in a way that
significantly enhances the indigenous value-chain
proposition without conferring disproportionate
reputational or business risk on the Irish partner(s).
• Involvement of relevant Irish private sector expertise is
key to effective assessment and development of these
opportunities

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