SA suppliers can gain from Mozambique agribusiness

Corvus Investments International CEO Mark Hassenkamp told I-Net Bridge/BusinessLIVE on the sidelines of the Cool Logistics conference on Thursday 26 April 2012, that there are no commercial forest plantations in Mozambique, so either the wood to make pallets has to be imported and made in Mozambique or the pallets need to be imported.

"The most logical place to source agricultural inputs for Mozambique is SA, but it depends on cost and quality, as ultimately input costs will help determine the profitability of our ventures," he said.

Corvus currently has more than US$200 million available to fund agribusiness ventures in East Africa. The normal size of their ventures is 300 hectares concentrating on tropical fruit with an initial investment between $4 million and $6 million.

"We do have geographical diversification across the region so that we do not put all our eggs into one basket. We have joint venture partners from Asia and Europe, as well as local partners. At this stage the projects are mostly equity-funded, so that our partners have skin in the game, but after 4 or 5 years we will gear up with debt funding and then look to exit around ten years down the line once the project has established a good track record," he added.

Hassenkamp said in his view the biggest bottleneck was not logistics, where there has been a tremendous improvement in the past few years, but skills.

"Skills are the true bottleneck in terms of execution of projects, so for the moment we are using expatriates, but part of their incentive package is the transfer of skills so that by the time they move onto the next project after two years, we have the local people who are competent in managing the project going forward," he added.

Corvus is currently active in Ethiopia, Mozambique, and Tanzania and Hassenkamp added that the governments in these countries at both national and local level were open to new ideas as they understood that the agribusiness would provide jobs and tax revenue.

"We also have excellent relations with non-government organisations, who are extremely capable and help to make markets in their home countries," he noted.

Hassenkamp said the McKinsey Global Institute estimated that Africa's agricultural output value would rise from $280 billion in 2010 to $500 billion in 2020 reaching $880 billion in 2030.

Export refrigerated containers from the Nacala port in northern Mozambique are due to quintuple to 15,000 per year in 2017 from the expected 3,000 in 2012 and none in 2007, illustrating the rapid growth in the export volumes forecast for the near future.