As a Country Manager for the Facility in Malawi, I was keen to support the development of Afri-Nut. First of all I think its good on its own merits. But also because the Afri-Nut company structure reflects the importance of finding a business model appropriate to a country’s economy. In Malawi, one can identify 5 key factors influencing agriculture and agro-processing:
1) The legacy of past periods of food insecurity – and the strong subsequent policies implemented as a result. One component is a move towards farm-based livelihoods and crop pricing as a means of addressing food insecurity
2) A very wide base of smallholder farmers across Malawi
3) Relative underdevelopment in the investment landscape in Malawi due to lack of knowledge and risks on the part of investors. This knowledge of risks and opportunities is required to attract investment.
4) Generally there is a relatively low quality processing geared to local consumption and affordability
5) Poor infrastructure (roads in Malawi and in neighbouring countries, access to reliable and regular ports)
These 5 factors need to be understood for agri-business models to work in Malawi. DFID has contributed to overcome many constraints in this environment and long supported the development of nut production as a rural wealth-creating commodity in Malawi.
The Afri-Nut model is innovative in combining the need to improve the welfare of thousands of smallholder farmers (often in associations under NASFAM) with the need to provide investment from players who have adequate knowledge of Malawi, with its mix of opportunity and constraints. NASFAM seeks to break free of a donor-funded model of value addition, and it is doing so through taking a share in a business that has sufficient ‘business DNA’ through other investors such as Ex-Agris. TWIN Trading add considerable knowledge of export and local markets, quality assurance and business planning. The Business Innovation Facility supports this model as it is combines the necessary knowledge, welfare for farmers and business advice that is most likely to succeed in delivering development outcomes though core business practice.
The Afri-Nut business will build on existing local demand for groundnuts and existing export markets built by TWIN Trading. However, the initial investment seeks to address quality (aflatoxin control) issues: this will unlock far larger export markets and address the health risks of poor aflatoxin control in the local market. This business model is scaleable through the projection of access to new markets and new opportunities (and benefits) in the Malawi market.
The business model addresses constraints that are common to many commodities in Malawi. For example, there are similar constraints in kilombero rice, another NASFAM commodity, which span both local and export markets. The Afri-Nut model will demonstrate how fair, farmer association-led agri-businesses can attract investment that is complemented by targeted donor support and tested more rigorously through normal business metrics.
There is much to go over, and much more to explore in this model - but I believe Afri-Nut and its founding consortium of companies and organisations demonstrate where knowledge, policies focused at rural wealth creation, and good business sense can combine.
Hope this catches your interest! Let me know what you think -
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