July 23, 2021

Flooding brought on by climate change has the potential to have an increasing impact on agricultural yields in sub-Saharan Africa, a leading investor has said.

Mezuo Nwuneli (pictured), the managing partner of Sahel Capital, a private investment firm that targets West Africa’s food and agricultural sectors, described climate change as “a concern for many engaged in agricultural production”.

In an interview published by the African Private Equity and Venture Capital Association, Nwuneli described the potential impact of flooding on Coscharis Farms, a major Nigerian rice producer Sahel Capital has invested in.

“The climate-related risk topmost on our mind is flooding, given the location of the farm, and the resultant impact on paddy supply for our rice mill,” he said.

Multiple measures help mitigate flooding risks, including the tracking of daily rainfall data, and adjustments to cropping cycles so most of the crop is harvested before the peak period of flood risk from mid-September.

Extensive dikes, drainage canals and flood drain pumps are also in place to help manage water on the farmland and prevent flooding, he said.

More broadly for investors, in the interview Nwuneli highlighted three key areas of West Africa’s agricultural sector that could offer opportunities.

Among them is logistics and distribution to combat the “many bottlenecks in getting food products to end markets”.

He said that investments in this sector would be “top of our agenda” for the coming two years.

Another area is import substitution, namely investments in sectors where imported food could be replaced by locally grown produce.

He cited Coscharis Farms again as an example, because Nigeria consumes seven million tonnes of rice annually, of which one third is imported.

The third area that Sahel Capital is focused on, Nwuneli said, was packaged foods.

He said Africa would account for half of the world’s projected growth in food demand over the coming decade or so, and with its urban centres growing rapidly, demand for packaged food would spike.

“Around half of Africa’s population is already urban and with one of the highest projected urbanisation rates in the world, consumption patterns are rapidly changing,” he said.

“People now look for more convenience and seek out packaged foods, which is different from what they would eat in rural areas.”

Companies producing packaged food for price-sensitive customers offered “huge opportunity” for investors, according to Mr Nwuneli.

As an example, he said two years ago Sahel Capital invested in Polyfilm Packaging, a company that produces packaging for food and consumer products.

“The company has exceeded its business plan in the two years since we invested,” he said.

Technology is also a key draw for investors in Africa’s food system, with the food-delivery service Kune having recently attracted $1 million in pre-seed funding.

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