In Conversation With… A Ghanaian agribusiness innovator
In Accra, three months ago, we spoke with Injaro Investments Co-Founder and Managing Principal Jerry Parkes about impact investment and its nuances. Agriculture was a feature as one might expect given its developmental significance and Injaro’s focus on the sector. Please see the full article here.
Today, we sit down with serial entrepreneur Kwame Bekoe to tackle similar themes – this time from the perspective of someone on the ground, building businesses and raising capital.
The conversation is framed by the fact that agriculture accounts for 20% of Ghanaian GDP but is a source of income for more than 60% of households, and that it faces significant constraints despite its long history, strategic import and potential. Financing and infrastructure not least of them.
In 2018, agriculture received less than 5% of lending from the commercial banks. By way of explanation we note, the consumption rather than business-oriented production of smallholder farmers who account for the bulk of production, suboptimal production methods/inputs, the sector’s vulnerability to exogenous shocks, risk averse lenders that have had their fingers burnt in the past, all combining to frustrate investment historically.
The government has unveiled policies targeting primary production and processing such as Planting for Food and Jobs, and One District-One Factory, which provide inputs at subsidised rate and seek to organise financing for value added activity. On both fronts, there are hurdles around allocation and scale i.e. do they get to the right people at the right time and are they at sufficient scale to meet the desired ends.
At the same time, there have been important advances in the financial and technological context in Ghana, which present opportunities for efficiency, profitability, growth and sustainability. These were the focus of our discussion.
1. Songhai Advisory (SA): You run the pineapple producer Greenroots and the Restaurant N8tive bar, all alongside your profession in Aviation. Could you tell us a bit about your businesses and their underlying rationale?
Kwame Bekoe (KB): I’ve always had an interest in agriculture, food production and processing and believe that as the world population increases and deforestation continues this will be of greater importance over the coming decades and Africa will have to take its place on the worlds stage to meet global demands.
There’s also Grow for me [in addition to Greenroots and N8tive]. This is a digital platform linking accredited farmers to investors, often in the Diaspora, who can invest in farming. They see the activity on the beneficiary farms via drone imagery that is shared weekly, and then receive payment in kind or from the sale of produce. I believe in the future, everyone should have some food production responsibilities or be a net contributor to food production, and this creates a simple avenue to do so.
2. SA: Are these smallholder farmers?
KB: Not yet unfortunately. These are commercial farmers who have demonstrated success and the land and capability to easily scale with additional financial support.
The challenge we find with many smallholder farmers, is that they are in the majority unschooled and illiterate. Many would also fail to maintain adequate records of their production and finances, and are also unbanked, which makes it difficult to include them in this particular platform, where we are also assessing crop yield and tracking metrics each time to see what went right or wrong and how to optimise. We are working on a solution to address this given the rapid development of telecommunication and technology to bridge this gap and support smallholder farmers who are in the majority.
We like to study examples such as in the Netherlands. They are the best exporters in the world in terms of yield per hectare, and this is due to the constant research and analysis in partners with the universities.
Pineapples gestation takes 15months and everything has to happen at a particular stage. If something is done even a few days off, it can significantly affect the end result. With technology, you can pinpoint the right moment for action. You also reduce the labour demands.
3. SA: Right, in Ghana there’s an emphasis on research for the cocoa sector but less so otherwise
KB: Even in the cocoa sector, there is less than is needed. For example, we don’t see that much looking into the processing side of things.
4. SA: Processing, is that a point of focus for you?
KB: Yes, with pineapple. We now have 400 acres [for pineapple farming] at Greenroots, and have the capability to process 100 gallons of juice per week, which we sell to restaurants, hotels and so on. But there is also the potential to transform the residue from processing into a cleaning produce or animal feed and the residue from that into compost, so we are currently researching that. The goal is to extract value at every stage of production of the crops produced.
The agricultural market is hugely untapped. I don’t know if you saw the Dangote interview where he is asked what areas he would go into if he had his time all over. He said it would be agriculture and technology. The business of managing distribution chains, processing, technology, handling big data. Because the population is rising, we need more food to put it simply. Look at the amount that is being imported into Africa annually, approximately USD35billion, yet Africa can feed itself and even the world.
With seasonal fruits, when it comes to the high season, there is a lot of supply and minimal means of preserving, and logistics can be complicated when you’re trying to move the goods from the north to the south of the country. The railways are not ready to bridge the gap in road transport. The government is looking to establish an air cargo centre in Tamale but for now most goods and commodities come to Accra by road but, and due in part to the conditions of roads and vehicles, a large percentage of perishable goods often arrive damaged or spoilt. There is so much wastage. The amount of oranges, tomatoes that goes to waste because farmers can’t get them to demand is of grave concern, and that’s one reason I support the 1D1F initiative to introduce a factory in every district primarily focused on local processing and preservation of commodities.
We want to leapfrog. When you speak to young people today, they view agricultural jobs as punishment... Weeding the farm was a form of punishment in many schools and this seems to have remained in the minds of people as they have grown. Rural Urban migration also affects the level of investment in the rural areas. We want to change this narrative. Establishing factories for storage, tinning and canning, so it can be stored and get where it needs to go.
5. SA: How do you view Ghana’s ability to compete with the imported goods at present?
KB: They are being subsidised and Ghanaian producers also need support in order to be able to compete. You see some of this coming through with policies like One District, One Factory (1D1F). The government is donating seedlings, fertilisers etc but of course the programme needs to be well structured, well managed, avoid political patronage and smuggling, ensuring the benefits get to the bottom line. Very recently the Nigerian government effectively banned the import of all food products into Nigeria to force the local farmers to step up to meet levels of demand.
6. SA: You’ve also got the restaurant N8tive Bar. Please tell us about this, as well some of the challenges.
KB: For N8tive bar, the rationale is that people want to eat well, they want to know where their food is coming from and they don’t want to pay extortionate prices. The growing middle class is increasingly health conscious, wishes to experience excellent food, and has an expectation for good customer service and presentation. So, this is what we do. We also act as a hub for the community by hosting e.g. fashion show, book launches, a space for artists to showcase their art and hub for budding entrepreneurs and so on.
It’s been a journey. I always say I thought I was getting into food and hospitality, only to find I was in infrastructure, labour law, land, electricity distribution and more.
One of the challenges we had was with electricity, we found that we were receiving inconsistent supply and were consistently overcharged to the extent nobody including the power company could justify, however we believed this to be as a result of illegal tapping by neighbouring businesses. Our response to this was to go solar. We’re now entirely reliant on a hybrid solar system, and have consistent power during working hours, and no problems with outages electrical surges or huge bills that can’t be explained. Just an example of a solution to a typical African problem that business owners have to deal with.
7. SA: How do you make it work?!
KB: People, you need the right people, everything is about people and how you lead these people. People that are naturally passionate and energetic a business, rather than what they can get out of it are an asset and it takes time and trial and error to end up with a team that is goal focused and works well together.
You also need people that you can trust to give you feedback. A community of people who can also be customers, stakeholders, suppliers, friends and family. I am fortunate to have established a broad network of people from locals, people from the Diaspora, the diplomatic community, my colleagues… Every now and then they’ll pop into the restaurant or try a product and then give me feedback. It is invaluable.
8. SA: You’ve mentioned Diaspora a couple of times. Has the year of return made any difference to you?
KB: We’ve really appreciated the emphasis placed on the year of return. I’ve had many friends from UK and the United States have returned to Ghana over the past 5 years and many who are talking about returning but are just looking for the right opportunity to come back to. The creation of the office of the Diaspora is a good avenue to support they needs of those who have returned and importantly in creating events to meet others with similar experiences and backgrounds.
9. SA: OK, so how would you describe the ideal investor or partner?
KB: They are bullish on Africa over the long-term – emphasis on long term. They already have links in the region, understand and are optimistic about agriculture and the social aspect of developing the region.
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Once again, sincere thanks to Kwame Bekoe for another enjoyable and enlightening conversation!
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If you are interested in learning more about the topics discussed here, please do get in touch: questions@songhaiadvisory.com