Investment Case for Agriculture

“There are too few places where entrepreneurs and businesses with ideas and an appetite for risk can bring value and find long-term growth…Africa is still such a place.” World Economic Forum, 2016

Demand in the agricultural sector continues to exceed supply, which means that institutional investors, such as pension funds, increasingly see farmland as a fertile investment opportunity.

Yet, it can be difficult to gain access to these investment streams with 90 percent of farms family owned and closed to capital markets. No wonder then that agricultural investment is nicknamed “gold with a coupon”.

Investors value asset appreciation and yields, with the bonus of portfolio diversification, as farmland is uncorrelated with stocks and bonds. Land is a tangible investment in the truest sense.

Investment in infrastructure in Sub-Saharan Africa, and particularly in Tanzania, is boosting agriculture in the region, providing connectors to local and export markets. According to the World Bank, Sub-Saharan Africa boasts nearly half of the world’s fertile, usable and uncultivated land, which gives some idea of the scope of opportunities in the region.

Meanwhile, trade barriers are falling and the industry is largely supported by far-reaching funding initiatives from NGOs and IGOs as well as the local government. Customers are also changing: Sub-Sahara’s middle class is forecast to expand from 32m in 2009 to 107m by 2030, bringing a whole new market, with more spending power and discerning needs.

While farming, like any other investment, is not without risk (weather, water access. commodity prices, political…), Mark Twain summed it up when he said: “Buy land, they’re not making it anymore.”

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