Between 2000 and 2016, agricultural production in sub-Saharan Africa grew more rapidly than any other region in the world. But the economic value and benefits to communities created by this activity are often limited by a lack of local agro-processing capacity.
Gagan Gupta, the co-founder and chief executive of pan-African industrial ecosystem developer Arise IIP, has made it his mission to change that. Since 2010, Mr Gupta and his colleagues have identified industrial gaps in Africa to develop, finance and manage free zones dedicated to local transformation of raw materials.
“When we look at developing an industrial platform, we look at every country very specifically,” says Mr Gupta, who also serves as an executive committee member of Olam International, the Singapore-based agricultural conglomerate with operations in 21 African countries. “We look at what each country can transform and where they can be competitive on a global scale.”
Togo’s cotton potential
Arise IIP signed an agreement with the Togolese government to develop the Adetikopé Industrial Platform (PIA) — a raw material and agro-processing hub located within 30km of the capital Lome’s deepwater container port due to open its doors in June 2021.
Set across a 400-hectare site, the PIA will be fully powered by 40MW of solar energy, with storage, and focus on transformation of cotton and Togo’s other agriproducts, such as soybean, shea nuts and teak.
“Togo produces roughly 56,000–66,000 tonnes of cotton per year, but all of this is exported raw,” explains Mr Gupta. “But if you transform this cotton into finished products, such as garments or home textiles, there could be anything from 40 to 50 times possible value addition. This could create a massive amount of jobs.”
Mr Gupta believes that, while small, Togo has a definite advantage over other textile-producing countries, such as Bangladesh, due to being cheaper, more sustainable and traceable. This, he says, is due to the availability of raw cotton, cost savings from local transformation and proximity to big markets in Europe and the US.
“Togo will be a drop in the ocean across the trillion-dollar textiles industry, but Africa as a whole has a significant chance to gain market share. The entire industrialisation process can be done very sustainably compared to other parts of the world,” he adds.
Africa’s diversification offer
Amid concerns over cotton and textile supply chains and the pandemic-induced push by companies to reduce their dependence on one particular geography, Mr Gupta believes that Africa has become an even more attractive investment destination.
“I think the pandemic will force manufacturing more and more into Africa,” he says, pointing to demographics, climate considerations and the African Continental Free Trade Area (AfCFTA) that came into being on January 1.
As AfCFTA begins to take shape, Mr Gupta views it “as a journey for another three to four years”, in which transformation of raw materials will be crucial.
“You will not trade bauxite or raw cotton among African countries — you need products to trade,” he says. “If [African] countries build the right infrastructure, with the right supply chain linkages and policy frameworks, there will be winners.”
Backed by Olam and the Africa Finance Corporation, Arise IIP developed the Gabon Special Economic Zone, central Africa’s largest timber-processing hub, in partnership with the Gabonese government. Beyond PIA in Togo, it is now building the Glo-Djigbé Industrial Zone, an agro-processing platform planned to open in December 2021, in Benin, as well as other free zones in Côte d’Ivoire and Chad.
But as Arise IIP builds dedicated industrial zones across the continent, Mr Gupta reiterates the need for co-operation and specialisation. “Rather than everybody trying to compete in all areas, countries will need to create regional hubs focused on products in which they have a competitive advantage.”
This article first appeared in the June/July print edition of fDi Intelligence. View a digital edition of the magazine here.