Cattle grazing in Borena, Oromia, Ethiopia (photo credit: ILRI/Camille Hanotte).
‘It is fair to assume many private investors in Africa did not grow up milking a cow or shepherding cattle through the Sahara Desert.
‘But, with a growing number of firms gobbling up arable land in Africa—not solely for crop production but also for livestock and cattle—investment shops are slowly redirecting capital to this agricultural subsector.
Investing in this segment of African economies can be transformative, as a significant portion of African wealth and growth opportunity is walking on four legs on the African continent.
Africans are demanding an increased percentage of meat in their diet.
‘Livestock investment addresses other poverty in the agricultural value chain—manure, feed and milk—as well as providing economic protection against drought. Yet investors will have to overcome both institutional and physical constraints on the livestock sector—market information, diseases and available pasture—to achieve financial returns.
‘Market information (and market distortions) undercut profits as herders and farmers lack detailed information on prices and costs in the market. Diseases short-circuit productivity, especially highly contagious ones that wipe out flocks in weeks, and destroy wealth with no recoverable alternative other than assuming debt to purchase new baby livestock.
‘Lack of pasture is possibly the most important constraint on the subsector with most arable land ignored, underutilized, or devoted to agricultural crops—generally on an individual household level.
As private investors circle around the agricultural space, this article takes a look at Africa’s most promising markets for the livestock subsector.
Ethiopia is an investor favorite for three reasons: population, economic growth, and supply/demand. The population is approaching 100 million, with a government aspiring to become a middle-income country within the next decade.
Economic growth is expected to average 7 percent through 2020, with livestock accounting for about 25 percent of the country’s GDP and 40 percent of the agricultural GDP. . . .
‘Mixed crop-livestock farmers represent more than 80 percent of the rural population and generally provide most of the country’s food supply. Demand for animal-source foods, particularly meat and eggs, is outpacing the supply in the country and will continue to be a concern for the government in the long term as the population grows. . . .
‘Tanzanian economic growth is expected to average 7 percent through 2020. The country’s population is north of 50 million, with nearly two thirds of total households consuming animal-source foods. . . .
Individual households are estimated to own more than 95 percent of the country’s cattle and livestock. More than 60 percent of rural households own livestock. . . .
‘. . . [T]he population that is gradually approaching 200 million—that’s double Ethiopia’s.’
Data shows about 45 percent of rural households own livestock, compared to nearly 55 percent in Ghana and 80 percent in Niger. . . . Those owning livestock are more likely to consume animal-source foods. . . .
Read the whole article by Kurt Davis Jr in AFKInsider: Wealth opportunity walks on 4 legs in Africa: Top countries for livestock investment, 28 Mar 2017.