Investment Opportunities in sorghum, maize and cassava production
A promise made should be kept at all cost. I did promise in a post or two that I will share with you some possible investment opportunities in the economic disaster zones in Cameroon. Early this month, the Prime Minister of Cameroon declared the Far North, North West and South West Regions economic disaster areas.
This comes as a result of the on-going Boko Haram attacks and the crisis in the English-speaking NW and SW regions of the country. With the economies of these three regions highly volatile, it was however normal and timely for such a decision to be made. The insecurity in these regions have slowed down economic activities.
Guinness Cameroon SA plans to buy 50% of its raw materials locally
Guinness Cameroon SA since 2009 is in a process to reduce imports of some products used in the production of beer by encouraging local production. It actually plans to reduce its raw materials imports to 50% which in 2014 was at 80%. Farmers in Northern Cameroon has since 2009 supplied the company sorghum.
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Sorghum is used to substitute cereals like malt and Guinness has been getting between 250-400 tonnes per year. The company also invested 3 billion francs cfa to boost the production of sorghum in the northern parts of Cameroon. In a research work by EUCORD, Guinness can involve smallholder sorghum farmers into their supply chain.
SABC spends 21 billion francs on local raw material purchases
Meanwhile, one of the other leading brewery in Cameroon, SABC (société des brasseries du cameroun) has spent more than 21 billion francs cfa to purchase raw materials for beer production locally. This represent 29.6% of all raw materials needed during the period of review that was January to August 2019. The raw materials include sugar and corn grits.
MAISCAM (Maïserie du Cameroun), an agro company supplies all of its corn grits (a total of 10,000 tons) to SABC. The Managing Director of SOSUCAM (Société sucrière du Cameroun) declared that the companies turnover increased within the past 10 years by 60% due to the 58% rise in sugar bought by SABC from them.
Partnership between local producers and local food companies
With the establishment of partnerships between local companies and local production organizations, subsistence production of some farm produce have given place to commercially-driven and competitive value chains. Foodstuffs such as maize, cassava and sorghum are used as raw materials in these local food companies.
Through a public-private partnerships, farmers are provided improved seeds so as to increase quality as well as quantity of produce. Most of these produce are bought by bakeries and breweries. Citing SPORE, about 8,000 farmers now have access to reliable markets while local companies have reduced expenses on raw material imports.
Local companies are not only reducing costs
However, it should be noted that these local companies are not only going for cost reduction. They also get access to a preferential customs arrangement when they have to export to CEMAC and CEEAC member states. The two organizations allows for a duty-free export to companies if they use at least 40% of local raw materials in their production process.
Businesses that invests in such projects within the three conflict-ridden regions will not only benefit from the market, but will also benefit from the tax incentives that go along with an economic disaster area. With a market available, it is now for anyone who will want to invest (not only in these regions) to take advantage now.
That not withstanding, the incomes of smallholder farmers have increased. They have also got a steady market for their surplus product. Now what can you (entrepreneur, investor) benefit from all these? I will be sharing with you more insights on this in the coming days.
Are you willing to take advantage of these investment opportunities in Cameroon?
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Source(s): Business in Cameroon, SPORE, FAO. Agropaedia
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This content has been prepared for information purposes only. It is not intended to provide, and should not be relied on for, tax, accounting or legal advice. You need to consult your own tax, accounting or legal advisors before engaging in any transaction.