Investing in West-Africa is not for the faint-hearted. Risks are serious. But so are the business opportunities. Especially for agriculture.
Mali assigns 15% of the national budget to agriculture. This is far above the 10% as recommended in the Maputo-declaration, that most African states don’t even reach. And it is the same amount that is allocated to safety.
Moussa Ismaila Toure proudly presents those figures. The general manager of API Mali, the Investment Promotion Agency, is very eager to convince companies to come and invest in Mali. He even invites journalists to come over and show them the opportunities of his country. “We have so many opportunities. All we need are the right players in this country.”
Mali is in the center of West-Afrika. It is part of the economic union Ecowas and, as most of those countries, it needs investors in all sectors. Most important, above energy, infrastructure and telecom, are agriculture and livestock, Toure emphasises.
Jihadism and mafia
Safety problems hamper those kinds of economic development. “But they will be tackled”, Toure promises. The war against Al Qaeda and other Islamic terrorist groups, local freedom fighters and all robberies and criminalities that come with it, make the north of the country a no-go-area.
Yes, it is only in the north. In the southern parts, where it’s green and all economic activities take place, lives around 90 percent of the population. Here it is relatively safe. Toure, however, does not want to diminish the gravity of the safety issue in his country. “The fact remains that we need to tackle jihadism and mafia.” Which is even a bigger problem, he admits. “There’s a lot of trafficking of drugs and weapons up there. They do not want the presence of the government. We really need to work on that.”
One of the ways to work on that is investing in economic opportunities. Mali needs investors `who can improve smallholder farming, to ensure a rural economy to slow down urbanisation. But it will not stop urbanisation, simply because of the huge population growth. The population will be doubled by 2035. “Therefore, Mali needs a transition into agribusiness,” Toure urges.
Large scale and modern agriculture, however, is not quite understood by regional banks, Amadou Sidibe experienced. This entrepreneur has the first and only greenhouse in Mali where he grows vegetables and roses for the local market on about three hectares covered with nets against high temperatures and insects.
His business is booming. He sells quality tomato’s for €1,20 per kilo, while it only costs him €0,30 to grow. Roses are even more profitable. Sometimes he sells them for €2,- per stem, while the costs are too little to mention: “Chicken feed”, Sidibe says.
Now he wants to increase his greenhouse with another five or even ten hectares. “I have space, I have the market, I only can’t get a bank loan.” He wants to equip his greenhouse with the most modern technology for climate control and providing water and nutrients. But banks don’t understand. “They say this is not agriculture; this is industry.” The bank’s industry department, on the other hand, doesn’t know about agriculture. “They say the risks are too high.” So for his investments, he needs a guaranty of USAID or another development bank.
First International Industry Fair
Bridging the gap between agriculture and industry also was a big theme during the opening ceremony of the Salon International de l’Industrie du Mali. The first international fair of this kind in Mali, with 300 exhibitors. Guest of honor was Turkey. It was an event not to miss in the capital Bamako where all streets were decorated with posters where the presidents Ibrahim Boubacar Keïta of Mali and Recep Tayyip Erdoğan of Turkey brotherly announced the industrial trade fair.
Erdoğan was not present at the ceremony, but the promises of Hikmet Renan Sekeroglu, the Turkish ambassador to Mali evens the odds. From Turkey, he brought 50 investors who together filled a complete hall on the fair. In his speech, he said that Turkey regards Mali as a very important partner of West Africa and this fair creates an unprecedented opportunity to see on the spot the opportunities that Mali offers to traders and investors. And above that, he announced that Recep Erdoğan will visit the country to strengthen the relationship.
Cyril Askar, general manager of Groupe AMI and president of the industrial employers’ organization of Mali, was delighted about the event and the Turkish rapprochement. “This is exactly what Mali needs.” Not the kind of investments focused on import and export of raw materials, but evolving the industry with knowledge and development.”
Dumping and smuggling
Askar is the third generation of a family from Lebanese origin. His family company Group AMI is a big player in West-Africa, producing wheat flour, drinking water, animal feed, sweets, pasta, and oil. Next project will be a milk processing plant, he announces. “There is so much milk in this country, but it is not used, simply because people don’t have the knowledge and means for technology like pasteurizing or cheese making. And that’s exactly what we are going to do.”
Toure from the Investment Promotion Agency Main states that the main reason for the lack of milk processing in Mali is the cheap imports of milk powder from Europe. The price for milk from the farm is around 300 CFA Franc, which is around €0,45. And that’s too high compared with the price of imported milk powder, Toure utters. “Yes, you may call that dumping”, Toure says frankly.
But not only Europe is to blame, he admits. Corruption in his own country is also a big problem. “Of course we have import rules and -taxes. But it’s cheaper and faster to make a deal with someone beyond that official bureaucracy.”
It’s what Askar calls smuggling. “That’s the easy way of doing business. Establishing a decent business is very difficult. You need to be educated, follow the rules, pay taxes, etcetera.
The government is on the right track, assures Toure from the Investment Promotion Agency. “We (the governmental authorities, MvdS) take legal measures.” But smuggling is not something that can just be stopped, Ashkar presses. “There is a demand for those products. So they will come on the market anyway. You would create an emptiness. This emptiness needs to be filled.”
There is only one way to stop the smuggling, according to the entrepreneur. And that is to develop a decent sector to fill this demand. “This is what happened with wheat. We now have six mills, which is practically sufficient for the Malian consumption. Smuggling of wheat is something of the past.”
What goes for wheat or dairy, goes for everything that Mali needs, says Ashkar. And they need a lot. With 18 million citizens and growing, the business opportunities are enormous.
Toure recites: “Dairy, of course. But also meat. 52 percent of our meat goes to surrounding countries, but only alive. It’s cattle that is transported. What we need is someone to invest in a modern slaughterhouse.”
Another opportunity: Animal feed. The demand for animal products in West-Africa is huge and growing. “So we need more and more professional quality feed.” And there is a lot of fruit in Mali, which is not used. “70 percent of all mangoes in this country lie rotting beneath the trees. Just because of a lack of infrastructure and ways of processing and conserving.”
Someone who is not to blame for this is Aïssata Diakité. She is only 28 and runs a small juice factory. 35 woman deliver mangoes to her company Zabbaan. Besides that, she employs 30 workers who process the fruit into 5.000 to 10.000 bottles of juice per day. Seven days a week.
At this moment she is building a new location where she can, with the same number of employees, produce 40.000 bottles per hour. She aims to open it at the end of this year. The different kinds of fruit juices and mixes are not only for the local market but also for the export to Ivory Coast, Benin, Senegal and even to France. And with the new production plant, she hopes to seriously enter the European market.
Export to surrounding countries is not difficult since Mali is part of Ecowas. West-Africa is a massive market, also for European companies like Bavaria. According to insiders, this Dutch brewery is planning to invest in a local branch to produce for the West-African market, which is cheaper than importing beer from Europe. The Bavaria headquarters in The Netherlands will neither confirm nor deny this. They only admit they are investigating the opportunities in Mali.
Terrorism and extremism
From a Malian point of view, Europe, however, is a market with his own problems. The Dutch agricultural consultant Kees-Jan Van Til experienced this first hand. He already lives in Mali for eleven years. He used to have an organic farm. For his sesame seeds and -oil he had a customer in Germany. “Suddenly they did not want products from Mali anymore, because they wanted 100 percent reliability of supply.” They never had any trouble. Van Til emphasizes they had a good relationship, but because of the unsafety in the northern part of the country, the German company did not have enough trust.
Based on the regular news, the distrust in this region seems very reasonable. The few western reporters who are active in Mali, report that since the establishment of the UN peacekeeping mission Minusma the safety in the country is only going down. Until now, the capital Bamako is still a relatively safe place, but still many expats have decided to leave the country, correspondent Gerbert van der Aa reports.
Van Til is not thinking of leaving the country at all. The conflict zone may be expanding, the consultant is not afraid the violence will seriously affect the southern parts of Mali. “Terrorism and extremism flourishes on places without opportunities. In the deserted Sahara, there are no opportunities whatsoever.”
Local ethnicities and peculiarities
Peace cannot be established with peacekeeping missions only, it needs to go together with economic opportunities. Therefore he is glad that the country serious takes action with investing in agriculture and industry and establishing a better investment climate.
Mali is a developing country, in which almost everything needs to be improved. And every business needs to be established from scratch. It’s never just a business, most of the time you need to establish the complete production chain. “It’s not easy,” Van Til admits, but that’s what makes it interesting. “You need to deal with corruption and ridiculous rules. For example; a company is only allowed to buy from companies whit a proven social and fiscal track-record. But almost every business is informal. So this is simply not possible. So a fine of 40.000 euro is inevitable.”
Foreigners doing business in Mali, need to deal with the local ethnicities and peculiarities. For those challenges, they can ask assistance from consultants like Van Til. A fine is negotiable, he knows. “For negotiating, you need to know people. And you need to know the culture.”
With the right people, Mali can be a very profitable market. With a growing population of 18 million, the market is big. The traditional agricultural profits are low. Production in the country can easily double. “Maybe even more”, Toure tells. “What we need is the right partners. Thanks to foreign partners, some potato farmers produce three to five times more potatoes than with traditional varieties and farming methods.”
© Marc van der Sterren, Farming Africa
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