Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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The Africonomist: A Talk with Pat Devenish

The Africonomist: A Talk with Pat Devenish

Monday May 23, 2011, 16:37

by The Africonomist

Agro-industrial businesses in Africa are playing an increasingly important 
role in the global food supply chain as the cost and demand for commodities 
rise and as the world’s population expands.

Pat Devenish, the group CEO of AICO Africa Ltd., a Zimbabwe-based 
agro-industrial business that has been connecting small-scale African 
farmers to markets overseas for at least a decade, said the African-based 
agribusinesses not only provide a way for Africa to become self-sufficient 
but also offers investors sustainable profits, in an interview with the 
editor of Africonomist, David Dankwa.

Devenish, a member of the Frontier 100 initiative, which aims to increase 
investment in Africa by forging partnerships between CEOs in Africa and the 
United States, discussed with the Africonomist some of the opportunities he 
sees in agribusiness and why he thinks it is the most important sector in 

The following is an edited version of the interview.

What opportunities are there in agribusiness in Africa for foreign 

Devenish: I think agriculture is certainly the most important sector in many 
African countries. Getting towards food-sufficiency is very important to 
those countries that are not food self-sufficient, and so is moving toward 
exports or value-added beneficiation for those countries that are. The 
companies that I represent are very interested in small-scale farmers. We 
see them as a highly motivated and highly diligent group of people who are 
able to take advantage of opportunities when presented with them. AICO 
Africa owns three companies, one of which is a hybrid seed company. We sell 
seed in about a dozen African countries and have large operations in about 
half a dozen. In the countries we operate, you will find that it is not long 
after we get there that those countries become food self-sufficient. We also 
fund the production of cotton with 80,000 small-scale farmers. These are 
some of the investment opportunities that I can recommend directly. There 
are other agricultural opportunities in Zimbabwe, including a dairy business 
with great products and brands and a company focused on crushing cotton 
seeds and soybeans into oil. Ultimately, I think the big opportunity in our 
world is in the improved seed space. Genetically-manufactured organisms have 
not yet come to Africa outside South Africa, but we think it is not a 
question of if, it’s a question of when.

As an investor in this space, how do deal with the inherent volatility in 
commodity prices?

You deal with that like any business has to deal with it. There has been 
huge volatility in the minerals sector as well. You saw [the] copper price 
rise very high prior to 2008, and now it has recovered. We are seeing cotton 
prices at historical highs, and everyone in this business is enjoying that. 
We would rather see a more consistent price which is stable and good for 
everyone. There are ways to smooth out those peaks and troughs, but I just 
think it is one of the hazards of doing business. It requires good 
management to make sure you benefit in the good times and don’t get busted 
in the bad times.

What about the severe weather conditions. Is that also a part of doing 
business in Africa?

Weather, especially drought, is always an issue in Africa. We have been 
lucky in the last few years with drought, although Kenya had a terrible 
drought in 2009. I think that is part of life in the agricultural space and 
it depends on the length of the view you take and what part of the industry 
you are in. From an investment perspective, drought over time is not a huge 

What do you think are the biggest barriers to investing in Africa?

I am probably the most optimistic person about Africa so I don’t see that 
many barriers. That said, I think currency in some countries may be a 
barrier. The perception of corruption in some countries may be a barrier. 
Liquidity of investments and ability to exit on time may be barriers as 
well. However, I am very positive about Africa as an investment destination. 
The growth of the middle class amongst several other factors is going to 
lead to huge growth.

How do you promote liquidity in Africa when that’s an issue that even 
developed markets struggle with?

If you look at my country, Zimbabwe, where we have just come through a very 
tough 10 years, the decision by our government in February of 2009 to 
dollarize our economy has had an incredible impact on the way business is 
done. It has removed a lot of those barriers to both incoming and outgoing 
investment. So I think some kind of dollarization or quasi-dollarization 
would make a big difference to a number of African countries and could 
promote liquidity.

Do you think it is critical for Africans to invest in themselves in order to 
attract foreign investors?

The large African pension funds are very well-invested domestically. 
Certainly in southern and eastern Africa, I am not aware of pension funds 
investing massively overseas. If I look at the pension fund of Seed Co., for 
instance, it has recently come down from the high-90 percent in equity down 
to around 85-90 percent. Just about all their investment is in equity for 
very obvious reasons. The same applies in South Africa, East Africa, and 
those markets where currencies are most stable.

The Africonomist, launched in February 2009, is a financial newsletter 
focused on investments and economic development in Africa. Its primary goal 
is to inform our readers about the people and events shaping the economic 
landscape in Africa.


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