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"If done well, resource-intensive agri-investments can generate new and higher paying jobs, upgrade the skills of the labour force, facilitate technology transfer, open new and better markets, and generate complementary infrastructure.”
Principles for Responsible Agricultural Investment that respects Rights, Livelihoods and Resources, World Bank Group, 25 January 2010
“Africa will be the economic lion of the 21st century.”
McKinsey: Lions on the Move: The Progress and Potential of African Economies
“South–South cooperation can contribute to the enhancement of Africa’s capacity to deal with development and economic challenges and emerging threats.”
Economic Development in Africa Report 2010 - United Nations Conference on Trade and Development
“Poverty, we are told, is mainly rooted in agriculture, and the productivity of that sector must be increased.”
UNCTAD Economic Development in Africa – 2011
“About half of all trade facilitation reforms in 2009/10 took place in Sub-Saharan Africa.”
Doing Business 2011 – International Finance Corporation
In the long term, Africa's best chance for prosperity and stability is not from dependency on foreign aid, but from sustained private investment and enterprise.
Currently, only about 1% of the private capital in the world is invested in sub-Saharan Africa.
“The continent [Africa] is now growing much more rapidly than the OECD nations. It [Africa] may well be on the cusp of a reversal of fortunes.”
McKinsey: The Case for Investing in Africa
Africa’s GDP has been rising steadily, at around 5 percent a year, for the past decade, reaching $1.6 trillion in 2008. In 2009, Africa was one of just two regions (the other was Asia) where GDP rose.
McKinsey
“The truth of the matter is that when you look at risk-adjusted returns on this continent [Africa], they are significantly better than in most parts of the world over the last decade.”
Maria Ramos – Absa Bank Limited Group Chief Executive
“... the idea of using profit-seeking investment to generate social and environmental good is moving from a periphery of activist investors to the core of mainstream financial institutions.”
Mointor Institute 2008

Article Index
IVORA AGRI-AFRICA FUND
WHY AGRI INVESTMENTS?
WHY AFRICA?
FUND ASSETS
REGIONAL INVESTMENT
OPERATING MODEL
OUTGROWER SCHEMES MODEL
CHALLENGES IN AFRICA
RISK MANAGEMENT
WHY THESE INVESTMENTS?

IVORA AGRI-AFRICA FUND

The Ivora Agri-Africa Fund (“IAAF”) is a diversified investment company providing superior returns from various agri-based projects in Africa.

The ethos of the company is that in order to provide true economic reform, every activity must be commercially viable, and it is only through adopting these type of projects, that Africa’s challenges of poverty and sustainable economic reform can be addressed.
The object of the fund is to diversify its risk profile through a regional and product spread across the agri-spectrum.
The Fund will identify existing, green- and brown-fields opportunities that can be established and operated on commercial terms, providing:

Suitable and sustainable investment returns
Upliftment to local and regional communities
Job creation and economic reform
Security of income and access to established skills

WHY AGRI INVESTMENTS?

By 2050, the world population is projected to exceed 9 billion (currently approximately 6 billion). In order to feed this population, as well as alleviate global poverty in line with the United Nations Millennium Development Goals for 2015, global food production will need to increase by at least 70%.
Climate change, environmental policies, urbanisation and development are all factors affecting the availability and value of arable land for agriculture.
The issue of food security and the very real need for improved output means that agricultural operations as an asset class is becoming a sought after, and lucrative investment as time progresses.

WHY AFRICA?

Population - 1 billion
30 323 million square kilometres of land
Annual real GDP growth of 5%+ per annum
Africa has the capacity to feed itself and the world
Africa has 30% of the world’s fresh surface water, most of which is non-industrialised and can be applied effectively to agri-business
Africa has the largest portion of land within the world rain-belt, improving suitability for agri-business
Lack of urbanisation in most of Africa means land is available and can be applied to address food security and supply issues without restricting other economic growth

FUND ASSETS

IAAF invests in opportunities across the spectrum of agricultural supply. The fund is not only focussed at grass roots industrial agricultural farming operations, but the entire value chain, and will adopt a vertical integration model to improve and enhance returns.

Arable land producing crops
Livestock and game ranching
Forestry and timber
Fisheries (aquaculture)
Product processing and value adding enterprises

REGIONAL INVESTMENT

IAAF invests in projects within the Southern African Development Community (SADC). IAAF is currently assessing opportunities located in Tanzania, Zambia, Malawi, Mozambique and South Africa.
Investments will be expanded up the African Development Corridors to include COMESA, West, East and Central Africa.

OPERATING MODEL

The fund is managed by managers based in Africa, and employs expert skills from established agri-businesses globally.
Agri-business operators are sourced locally and receive support and training from the expert agri-management team as commercial operators.
The key to success of this operating model is “on the ground” participation in fund investments. The management team is actively involved in the operational business and adds value to these processes in order to maximise returns.

OUTGROWER SCHEMES MODEL

Where IAAF is processing and enhancing produce from primary production, outgrower schemes will be used to upscale the capacity of the processing unit.
It is the view of the IAAF, that in order to deliver a sustainable model, all initiatives need to be economically viable. Where available, Outgrower and Community Based Projects will also be implemented together with relevant support organizations.
This philosophy is in keeping with global trends such as the TransFarm Africa initiative (operated by the Nepad Business Foundation), which is aimed at advancing sustainable and equitable agriculture along Africa’s “Development Corridors” by developing and integrating small farmers into a dynamic agricultural sector.
Benefits of the outgrower schemes linked to commercial operations include:

Enhancing critical mass for IAAF operation
Availability of current up to date seeds and genetic material for local producers
Establishing and/or providing access to decentralised markets and distribution networks for produce
Job creation and skills development
Creating a platform for other business and investment and government services
Promotion of organic agri-schemes

CHALLENGES IN AFRICA

The challenges of doing business in Africa are widely publicised, and IAAF is certainly not new to these. These risks are all addressed and mitigated before any investment is considered.

Political and legal framework (land ownership and security issues, tax jurisdiction, development incentives etc.)
Skills (development and retention of skills, availability of “on the ground” skills and supervision)
Finance (access to and repayment of funding)
Established transport routes and trade markets

RISK MANAGEMENT

Risk is diversified across different geographic locations, political frameworks and agri-product classes
All projects are adopted based on sound commercial principles including target threshold returns, land and market security and capital payback parameters.
Risk assessment is done for all projects, to guide in the developing strategies at an individual project level. Identification of risks requires experience, lateral thinking and common sense.
Risks should be identified by:

Identifying and understanding of all the aspects of the project requirements including its interaction with other developments; and
Making use of project-specific experts in their given discipline.

The interest of all parties, including the fund managers, are aligned with the performance of the fund.

WHY THESE INVESTMENTS?

Invested in non-traditional asset class providing diversification of risk
Investment aligned with global objectives and socially responsible benefits
Premium investment returns
Stable, long-term investment returns aligned with growth of the agri-business