Eight Africa-based business initiatives worth considering in 2022: For many, the start of the year represents an opportunity to examine fresh possibilities. Naijonline has created a list of Eight Africa-based business initiatives worth considering in 2022, ranging from organic food exports to capitalizing on increased worldwide demand for African luxury brands. [Note: All of these require additional inquiry; our goal is not to present complete company strategies but to stimulate initial thought.]
Eight Africa-based business initiatives worth considering in 2022
1. The institutionalization and commercialization of indigenous foods
Throughout 2021, How We Made It in Africa conducted interviews with entrepreneurs who have commercialized and formalized traditional African foods. For example, Chichi Eriobu, founder and CEO of Phronesis Foods, identified a market opportunity to sell packaged African breadfruit products in Nigeria and beyond. African breadfruit – locally referred to as ukwa in Igbo – is an edible fruit that is mostly grown and consumed in southeastern Nigeria. The fruit’s seeds are consumed due to their great nutritional value. At the moment, Phronesis Foods sells four ukwa products: dried ukwa, roasted ukwa snacks, ukwa poundo, and ukwa flour.
Amaati Group has revitalized fonio, an ancient grain that is gaining appeal as a superfood among health-conscious customers in Ghana. “When I was a child, I learned about fonio since that was what our elders handed widows to help them survive. It was a staple crop in northern Ghana and was not commercialized. It was mainly used for specific cultural activities,” co-founder Salma Abdulai explains. The company currently turns fonio into packaged and branded cereal and flour.
Similarly, Kudzai Makaza, founder of Artisanal Foods in Zimbabwe, manufactures juice from the baobab tree’s fruit. Baobab juice – famed for its high vitamin C content – was once quite popular in Zimbabwe, where rural families harvested the fruit from the massive trees endemic to the country. Individuals used baobab juice as a dietary supplement. However, as consumers shifted to manufactured foods, baobab juice lost popularity. “My goal was to create highly nutritional, inexpensive, functional meals targeted at the Zimbabwean mass market looking for a healthy alternative to a preventative diet,” she explains.
2. Budget-friendly hotels
David Damiba, chief investment officer of Kasada Capital Management, an African hospitality investor, feels mid-range hotels have more potential than five-star establishments. “If you look at the present supply of hotels in Sub-Saharan Africa – and we’re talking about globally branded hotels – you’ll notice an excessively high percentage at the top end.
It’s quite counterintuitive in light of the population’s youth and the consumer’s money. While this makes little sense in some aspects, it reflects the mentality of a large number of owners. They are typically successful businesspeople or multi-sector families seeking an upscale hotel. They construct hotels not as economically viable assets, but as status symbols,” he explains.
Kasada owns hotels that operate under the brands of its strategic partner Accor, including Ibis, Pullman, Novotel, and Mövenpick. The corporation has made investments in Côte d’Ivoire, Senegal, Cameroon, and Namibia to date.
“Kasada sees a significant need for high-quality economy and mid-scale branded hotels across this vast continent to accommodate a sizable and youthful population, as well as lively entrepreneurs traveling between these diverse locations. These segments should not only have the highest supply, but also the most demand. From an economic standpoint, these types of hotels have an excellent return profile,” Damiba adds, adding that hotels catering to the middle class should nevertheless be appealing and provide a good experience for customers.
3. Export African organic products
According to a survey from Reportlinker, the worldwide organic food market is predicted to increase at a 14.59 percent annual rate to $368.94 billion by 2026.
Acquiring a share of this market creates enormous prospects for agricultural businesses that can implement the necessary systems and assistance to meet this expanding demand. Marck van Esch sees particular promise for Uganda in Africa. “It is the world’s fastest expanding industry of agriculture. The market remained robust throughout Covid-19,” he notes. Van Esch’s company, Shares Uganda Limited, employs local farmers to raise organic bird’s eye chilies, chia, and sesame for sale to Europe. Additionally, he identifies sunflower seeds, beans, and fruits as organic products in high demand in Uganda and well-suited for manufacturing.
Similarly, AfriFruta, a company established in Mozambique, delivers organic dried mango to Europe. Although the dried fruit industry is competitive, AfriFruta has an edge in that it is one of the few producers of organic dried mango in the southern hemisphere.
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The relevance is that when AfriFruta’s mangoes are ready to be sold, northern hemisphere growers are out of stock. “There are a few organic farmers in West Africa, but the season is around five to six months later,” explains Jaco le Roux, the company’s founder.
4. Construction materials
Several businesses and investors interviewed by Naijonline in 2021 recognized the building materials industry’s potential in their individual countries. Which makes construction materials rank on the list of Eight Africa-based business initiatives worth considering in 2022.
According to Thessa Bagu, general director of advice firm Naijalink, businesses in Nigeria can focus on either low-cost building materials for the mass market or supplies for high-end finishes. “The country need construction supplies and equipment ranging from cranes to tiles and everything in between, as the vast majority of these items are now imported. For instance, entrepreneurs can concentrate on the large mansions and flats currently under construction in Lagos, which require high-quality finishing such as faucets and door handles.”
While Ascent Capital Africa, an East African investment business, avoids direct real estate investments, it will invest in companies that supply a portion of the real estate value chain. For example, it invested in Kisumu Concrete, a manufacturer of ready-mix concrete and concrete blocks. It is the dominant player in western Kenya and has minimal competition, owing to the difficulties and expense of transporting building blocks from Nairobi or other regions.
Additionally, it has invested in Kenya’s Metro Plastics, which manufactures PVC and PPR pipes, as well as gutters and wastewater disposal equipment. “These are not headline-grabbing things, but they are necessary if you are going to construct a building or collect rainwater, which is critical in this region of the world. These types of firms that satisfy consistent local demand and are regarded as somewhat’safe’ from prospective import threats are often appealing to us. For example, shipping pipes from China to Nairobi is not cost effective; they are lightweight but take up a lot of room,” explains David Owino, Ascent’s founding partner.
5. Middle-class healthcare
Fredd Kambo, a partner of Zoscales Partners, argues that there is a shortage of middle-class healthcare facilities in Kenya. “There are pricey but high-quality hospitals catering to upper-income people, and then there are public sector facilities. However, there is what we refer to as the missing middle, a dearth of facilities that provide affordable, high-quality care to the middle class.”
Maxwel Okoth, who founded what would become the RFH Healthcare business in a one-room apartment in 2011, is an entrepreneur who recognized this possibility. He expanded the business over the next decade to include eight hospitals and medical centers in Kenya. RFH Healthcare provided critical services to patients at a cheap price, filling a market vacuum. Although there were a few other providers, RFH Healthcare stood out due to its equipment and high-quality services, which increased community trust in the brand. Providing emergency care and remaining open 24 hours a day contributed to the establishment of trust in the firm. Additionally, RFH Healthcare first targeted distant peri-urban areas that competitors ignored.
6. Using Ethiopia as a regional hub
For many years, there has been dispute over which city is most suited to act as Africa’s hub or gateway. Johannesburg, Nairobi, and Accra have all been mentioned as possible candidates. In a previous interview with David Owino, founder of private equity firm Ascent Capital Africa, he mentioned that several business leaders feel Ethiopia’s capital Addis Ababa might fill this position. “For starters, the home market is huge, but these players intend to use Ethiopia as a hub for serving the rest of Africa… Having Ethiopian Airlines’ network is critical; as Africa’s largest and most successful airline, Addis Ababa is the gateway to practically anywhere on the continent.”
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To demonstrate how this would operate, Owino used the Ethiopian medical laboratory business ICL as an example. His firm holds an interest in the company. “While the Ethiopian market for medical diagnostics is small, the possibility beyond Ethiopia is enormous, especially when considering Djibouti, South Sudan, Burundi, Congo, and even the Central African Republic. Are any of these locations equipped to provide diagnostic services? All of these locations are within a few hours’ drive of Addis Ababa. There is a potential to collaborate with individuals in those markets to collect samples, fly them to Addis Ababa via Ethiopian Airlines, do the test, and email the results to the physician. The doctor can then provide the right diagnosis that same day or the following day, at the latest. This will take significantly less time than sending samples to South Africa or India. Using Ethiopia as an example, investing in the country provides immediate access to 110 million people and the potential for 400 million in the region. With such a distinct perspective, the market is yours to take.”
7. Capitalizing on African luxury brand demand
Laureen Kouassi-Olsson, an accomplished financial services and private equity executive, has witnessed a dramatic surge in international awareness and interest in African designs and brands over the last few years. In 2021, she founded the investment enterprise Birimian with the goal of promoting African fashion and luxury brands. “Numerous global trends are converging, indicating that now is an excellent time to invest in these companies. The worldwide market is evolving, and customers are showing a growing interest in transparency, sustainability, and, more broadly, African businesses. “Digitalisation enables African direct-to-consumer brands with a compelling story to reach a global audience,” she notes.
Michael Clements, who previously worked with the West Africa Trade & Investment Hub, emphasizes the possibility of exporting high-end fashion products to the United States. “We’re not talking about mass-market things here; rather, we’re talking about one-of-a-kind gowns produced from indigenous West African fabrics,” he explains.
Entrepreneurs such as Abai Schulze, creator of ZAAF Collection, who has built an international market for Ethiopian-made leather products, and Lilly Alfonso, founder of the eponymous Malawi-based fashion company with a global customer base, are capitalizing on this potential.
8. Solutions for local packaging
There is a shortage of high-quality, locally produced packaging material in various southern and eastern African countries, which forces businesses to rely on imports or settle for inferior options. One of the primary challenges facing food producers in Zambia is a shortage of packaging alternatives. There is a scarcity of high-quality packaging that fits the stringent standards of formal merchants for businesses targeting supermarkets.
Packaging suppliers in Malawi, too, are unable to match the expectations and specialized requirements of the country’s new and developing firms. According to Victoria Mwafulirwa, founder of Homes Industries, a processor of sunflower seeds, groundnuts, and rice, this implies that businesses are turning to imports for the materials necessary to package and market their products.
So far we have been able to stimulate our thought on Eight Africa-based business initiatives worth considering in 2022.