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January 09, 2008

Mavuno Capital Alliances, helping Africa create businesses out of farming

Africa has seen countless agricultural projects of all shapes and sizes over the decades. Many have been funded by bilateral or international donor agreements, often implemented by governments or non-governmental organizations.

The failure rate of these agricultural projects have been high for a variety of reasons that are increasingly being studied with a view to correcting them for the future. One recurring reason for the high failure rate of development projects, in agriculture in particular, is said to be the lack of a sense of "ownership" in the projects by participants.

The interventions have traditionally been conceived away from Africa, and presented as a pre-packaged "aid project." Local priorities, conditions and sensibilities have often not been central to either the conception or implementation of such projects, with rather predictable results.

Apart from the fledgling efforts to make the necessary corrections to the traditional model of agricultural projects in Africa, there are also quiet attempts to structure projects quite differently from the decades-old model that has had such poor results. Among these are the search for business agricultural models suitable to Africa, rather than the conventional approach of seeing the continent as a basket-case only suitable for charity projects.

As well meaning as such aid projects may be, there are increasing discussions in Africa about whether that charity approach to Africa is not part of the reason for the low success rate of many such projects. As the debate rages, there is more interest in approaches that are more oriented towards profit, and that require a deeper commitment from participants than just providing warm bodies for projects designed and funded from afar.

Mavuno Capital Alliances is an example of a company that has been spawned by the new thinking that is emerging out of the raging discussion about why so many agricultural projects in Africa have either failed out right, or do not continue to thrive after the "donor" pulls out.

Mavuno company representative Michael Swanich says, "Our philosophy is that Africans themselves should develop agriculture in Africa. More than 60% of all economically active people in Africa are employed in the agricultural sector and Africa will never be a successful continent unless people are empowered in agriculture."

Identifying one impediment to achieving this which his company hopes to address, Swanich says, "Many agricultural project promoters in Africa have very good business ideas, but they simply do not know how to put these projects together, raise capital and manage the businesses."

All of Mavuno's projects are based on the BOT (Build, Operate and Transfer) principle. The company has a clear exit strategy for all its projects to enable local people to become agricultural entrepreneurs in their own right. Mavuno's vision is to develop projects for food security and local markets, typically involving crops such as maize, sunflowers, soybeans and wheat. It also is involved in projects for export and bio-fuel production.

The company provides a comprehensive service covering all aspects, from feasibility study to actual operations on the farm. The feasibility studies include a proper technical study of intended farming operations as well as marketing and logistics.

Mavuno also assists project promoters with whom it works to raise a part of their financing requirements on international markets. Specialized mentors, usually from South Africa, are provided to assist with operations and training for a period.

In other cases, Mavuno identifies high value projects for future development. In these cases, the company takes up part of the equity and manages the business operations with the intention to nurture local entrepreneurs for training and management buy-out after a period.

Asked about the genesis of the idea of setting up Mavuno, Swanich replies, "In the 17 years of my involvement in agriculture in Africa, I have been thinking about how to get agriculture really going on the continent. One of the solutions is to mobilize the wealth of experience of commercial farmers in South Africa to assist with development elsewhere in Africa. This is why the company has particularly developed systems to bring commercial farming to the small-scale farmer."

Started in early 2007, Mavuno's first concrete development is close to a town called Oranjeville in the Free State in South Africa. "We are assisting an emerging farming community to establish an irrigation project producing wheat, maize and vegetables. The project will be fully operational in May 2008," Swanich says.

They are also at an advanced feasibility and business plan stage for self-promoted projects in Tanzania, DRC and Zimbabwe.

Swanich says, "In addition, we are assisting outside project promoters with feasibility studies and business plans in several countries. Among them are projects for biofuels from cassava in Kenya, as well as tea packaging and marketing. In Cameroon we are evaluating a project for the extraction of biofuels from palm oil and in Nigeria we are exploring the setting up of storage facilities for onions."

Mavuno Capital Alliances is in the process of establishing its own investment fund to participate in financing of agricultural projects in Africa. Plans are for the fund to be operational by early 2009.

Project promoters are welcome to contact the company at info@mavuno.biz



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