Africa attracts poultry investors’ interest

While much of the investment in the growing global poultry sector has gone to Europe, the Americas and Asia, it may soon be Africa’s turn to attract investors, according to a new report from RaboResearch, the research arm of Rabobank.

Yurii Bukhanovskyi, Bigstock
Yurii Bukhanovskyi, Bigstock

While much of the investment in the growing global poultry sector has gone to Europe, the Americas and Asia, it may soon be Africa’s turn to attract investors, according to a new report from RaboResearch, the research arm of Rabobank.

Annual growth in the global demand for poultry is well known to be growing rapidly – at a rate of more than 60 percent over the coming two decades. And the report, titled ‘Time for Africa: Capturing the African Poultry Investment Opportunity,’ indicates that the compound annual growth rate (CAGR) for poultry meat and eggs will be 5.5 percent and 5.1 percent, respectively, in African countries. These rates exceed those for the animal protein sector generally, and for other meats.

African poultry sector offers potential for good returns on investment

Rabobank Senior Animal Protein Analyst, Nan-Dirk Mulder, says the demand for poultry products is driven in Africa, as elsewhere, by the shift of the rural population to cities, and a growing middle class. Poultry and eggs are relatively affordable and available as people shift away for vegetable-only diets, and consumers in Africa prefer poultry to other meats.

From the farmer’s point of view, poultry enterprises are comparatively easy to start and to expand, thanks to the short payback times. And for feed producers that supply the poultry farmers, Mulder says that several countries in Sub-Saharan Africa have the potential to increase the cultivation of crops for animal feeds – an important consideration as 70 percent of total production costs for broilers and eggs are attributable to nutrition.

The poultry sector offers a wide range of areas for a potential investor from farm to fork – from the cultivation of feed crops, through feed manufacture, animal breeding, livestock equipment, slaughter and processing, to retail and restaurant opportunities.

Rabobank offers potential investors a warning, however, that investment risk in the African poultry sector may be high, and it recommends, among others, proper market and risk assessment, and competent local partners.

As in other parts of the world at this time, there have been a number of outbreaks of highly pathogenic avian influenza over recent months and years, including in Nigeria, Niger and Egypt in the last few weeks. The disease can lead to huge losses of poultry through mortality and culling over a prolonged period, and a risk of transmission of the infection to local people in contact with sick birds on farms or at markets.

Where to target investment

According to Rabobank, the poultry industry in South Africa represents a good sales platform, particularly as its poultry businesses stand to benefit from the rapid market development in Sub-Saharan Africa.

In East Africa, the best opportunities are in the fast-growing markets in Uganda, Kenya and Tanzania, while the bank considers that Nigeria and Senegal have good potential in West Africa as they take steps to reduce their reliance on imports. In the same area, Cote d’Ivoire and Ghana are showing the signs of strong economic growth.

Central African countries such as Angola and the Democratic Republic of Congo, are working to move away from a reliance on imported poultry, and there is potential for the development of their poultry industries if local feed supplies can be assured, according to Rabobank.

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