PHILAFRICA FOODS
PHILAFRICA FOODS
Empowering Africa PRODUCTION: Djamil Benmehidi
With its varied climates and vast tracts of rich arable land, perfect for growing almost every kind of produce imaginable, combined with the fact that 65% of all such land is as of yet unutilised, Africa’s agricultural growth potential is quite incredible. For this reason alone, it is easy to see why Philafrica Food’s CEO and founder-ofsorts, Roland Decorvet, is utterly determined to turn the company into a market leader. However, there is much more to the Philafrica story than this - Roland is not your average ex-Nestle CEO of 23-years, and Philafrica Food’s is by no means your average food processing company. We spoke to him to find out more, and to learn about how both man and company have succeeded in achieving a goal that many in the business community believe unachievable: creating a contemporary business with a primary commitment to social empowerment and ethical practice, that is yet dominant as a driver of growth in a traditional corporate capacity. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: FOOD & DRINK
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Just ask any investor worth their salt where the next region is that offers massive growth potential and opportunity, in terms of return on investment, and you will hear only one answer: Africa. More than any other developing region in the world today, increasingly stable and capable governance and soaring demand for commodities means that Africa has become a top-two global hotspot for foreign investment. And make no mistake about it – in spite of economic wobbles in some countries, the continent is booming. Across its length and breadth, all industries, from banking and telecommunications to IT and retail, are flourishing, thanks to the newly acquired wealth of hundreds of millions of Africans who have entered the consumer goods market. And yet as impressive as such industries are in terms of wealth generation and performance, agriculture undoubtedly remains the regions’ primary engine of growth. Accounting for 65% of employment across the continent, 75% of domestic trade, and 15% of total GDP, agriculture
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is at the vanguard of the continent’s development drive. This being so, it should come as little surprise that the industry is itself undergoing a radical transformation no less dramatic than that of the wider African economy. Modernisation is at the heart of this reformation, of course, but, more than this, companies like Philafrica Foods are emerging that are tearing up the traditional agri-business rulebook. And as the company’s CEO Roland Decorvet explains, they are not solely motivated by growth and profit, they are driven by a goal to create an Africa-centric company that will empower and enrich Africa and its people. “We like to believe we are different because we believe in the future of
replacement. We are only focused on Africa, on food processing, more specifically the food processing of African raw materials. We’re not interested in importing crude palm oils from locations like Indonesia, for example. He continues: “The mission of Philafrica Foods has a very strong social objective; it was this opportunity to create a positive social impact that inspired me to return to the corporate world after being Managing Director of NGO, Mercy Ships. I believe the only two industries that can truly rescue Africa, really help its people and transform the continent is indeed agriculture and food processing. It’s only these two industries that have the capability to impact
// WE LIKE TO BELIEVE WE ARE DIFFERENT BECAUSE WE BELIEVE IN THE FUTURE OF AFRICA// Africa. We are committed to developing, processing, and adding value to locally grown crops; on building up supply from smallholders and on import
millions upon millions of people. “Having built a relationship with the owners of AFGRI, one of the agriservice sector’s leaders in the region,
PHILAFRICA FOODS
and their backers and partner, Fairfax, a Canadian-financier, we realised after talking that we all shared the same vision: helping the continent, and more specifically the people and its farmers take control of their own destiny.” Headquartered in South Africa, Philafrica is a food-processing company that has very much made a statement of intent over the six months since it was established. As a US$350 million company with assets including seven feed factories, four grain mills, and an oil seed crushing and extraction plant spanning the continent, Philafrica is utilising the considerable resources and reach of AFGRI Group. However, whilst Philafrica Foods is a subsidiary member of the group, it was decided by Decorvet and AFGRI Group’s owners and Group CEO that the company would be a separate entity, so as to enable it to focus specifically on its long-term mission, “to unlock the potential of African agriculture in order for the continent to become a net food exporter.” Across Africa, a majority of countries are net importers of processed
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INDUSTRY FOCUS: FOOD & DRINK
Roland Decorvet
food products, even though this imported is largely African in origin. Using cashew nut exports as a key example, West Africa alone is estimated to have produced 1.5 million tons of unprocessed cashew nuts last year, 90% of which was exported to India where it was processed. Following this, the processed buts are exported back to the countries in Africa where they were grown, as well as markets in Europe, the Middle East, and so on. By adding value to crops at home in Africa, by for example buying a cashew nut processing company in Kenya – something which Philafrica Foods is currently looking at, the company can invest locally in order to add value locally to the benefit of local farmers and their communities. As can be seen by the company’s entry into a 50/50 joint venture with Novos Horizontes, a vertically integrated poultry company in north Mozambique, and its acquisition of DADTCO, an innovative Dutch company that has
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which has pioneered a mobile cassava processing facility, Philafrica Foods is fully committed to overturning such business practice that has long taken place to the detriment of African farmers. “We’re really interested in how to process local crops which could and should replace imported products. For example, wheat; most African countries import a lot of wheat, flour, and so on, so we just bought this interesting startup processing company called DADTCO, which has developed an interesting mobile factory container that goes from village to village and processes cassava grains into flour. In turn, this flour is able to replace wheat flour, not on a small scale but a large scale. “The same principle can be applied
to building a tomato-based plant in Zimbabwe. Almost 90% of tomatoes consumed in Africa are imported from China. So again, why not have growers work with the hundreds and hundreds of local farmers who can grow local tomatoes? We can build a factory to create a pull for these farmers, which once again would take place on a large scale. “I think the biggest issue in Africa is not to build a factory; rather, the biggest issue is to get your supply into your factory. Therefore, I strongly believe we need to, if not own our supply chain, certainly control our supply chain. By basically investing into the supply, investing into training small farmers, and uniquely focus on them, we have thousands upon thousands of
// WE’RE REALLY INTERESTED IN HOW TO PROCESS LOCAL CROPS WHICH COULD AND SHOULD REPLACE IMPORTED PRODUCTS //
PHILAFRICA FOODS
suppliers who are able to supply goods to the benefit of all. “The same goes for services where we work with some amazing partners to achieve great things. For example, local design agency Rokkitboy has been a fantastic collaborator with many of our design needs over the past 12 months and they have helped to significantly develop our brand.”
// I STRONGLY BELIEVE WE NEED TO, IF NOT OWN OUR SUPPLY CHAIN, CERTAINLY CONTROL OUR SUPPLY CHAIN // With the backing of the AFGRI board and Fairfax, who have absolute buy-in into Roland’s vision and belief in his ability to deliver it, not to mention the backing of Philafrica’s 1,300-strong team of employees – a professional workforce comprised of men and women from across Africa, and indeed the world, the pieces are in place for the company to change the face of agriculture and food processing continent-wide. In Roland’s words, Philafrica Food’s horizon is the difference. He elaborates on this, saying: “When you invest into Africa in food processing, you’ve got to have a very, very long-term horizon. We’re very glad to have the support of our friends from Fairfax who are investing, in this regard. “When we invest in a company, we don’t have an exit plan – it’s not like we have a long-term exit plan, we have no exit plan. We come in to invest and we come in to grow the business, and we’ll be there way after I retire. That’s the idea. So, when you’re not obsessed with yearly results and quarterly results, it changes the way that you can do business. Not that there’s no pressure, of course, but it means you
can take a more long-term approach to decision making which allows you to do things you couldn’t ordinarily do. “Ultimately, we believe that getting supply from small holders when we will be able to tell the story, hopefully soon, the story will be relayed to consumers about these hundreds, thousands, even, of villages and their farmers, and that things are being purchased differently, and that people are being treated differently. Being treated far better than before. You then have the case where you can argue for a higher margin. “Initially, there will be a higher cost to do this kind of work – again, there is a longer horizon. But long-term, you get better margins.” In spite of the challenges facing some of Africa’s economies
at present, not least South Africa, its macroeconomics give cause for optimism over both the short and longterm. Increasingly stable leadership is leading to economic development, and the steady growth of the middle class means the foundations are in place for the region to finally start to realise its immeasurable potential. These are exciting times for the region, and as the continent strives to transform, companies like Philafrica Foods will play an integral role in helping to create a better world for its people.
PHILAFRICA FOODS +27 11 063 2224 www.philafricafoods.com
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AFRICA
THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@cmb-multimedia.com Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-multimedia.com www.cmb-multimedia.com
Issue No.65
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ALEXANDER FORBES
CMB Multimedia does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Multimedia Ltd 2017
Journey of a
Lifetime
Exclusive interview with CEO Andrew Darfoor ALSO IN THIS ISSUE:
Buffalo Coal / Nautic Africa / Grindrod / SAOTA
AS FEAT UR ED IN
ENTERPRISE AFRICA
DECEMBER 2017