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Cold Storage Port Facilities for Agri-Produce

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Cold Storage Port Facilities for Agri-Produce

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
15% - 20% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Namibia requires 12,500 tonnes of additional cold storage capacity to serve market potential.
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Zero Hunger (SDG 2)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12) Life Below Water (SDG 14)

Business Model Description

Develop cold storage facilities at the port of Walvis Bay (and others, as emerging) for agri-produce to create a temperature controlled supply chain.

Expected Impact

Position Namibia as a transshipment gateway providing high quality and affordable produce for Southern African Development Community (SADC) markets.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Erongo Region
  • ǁKaras Region
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
25% of Namibia's population is food insecure (II), including due to persistent drought situations (IV) and the country's farmers facing challenges to access affordable financing (V). SDG 2 on Zero Hunger is "stagnating" and faces "major challenges" in Namibia (I).

Policy priority
As captured in Namibia's 5th National Development Plan (NDP5), the Government seeks to transition from a provider of live animals to exporting value-added agricultural goods, and increase food and livestock production by 30% and 10% in 2022 (II). Although the agriculture sector only contributes 3-5% to GDP, it is a Government priority as it employs 23% of its population (III).

Gender inequalities and marginalization issues
The majority of the 167,242 jobs in Namibia's agriculture sector are within rural areas of the country. Only 21.1% of the workforce is female (III), signaling a major opportunity to provide additional income generation opportunities for women.

Investment opportunities introduction
Agriculture, among others, generates significant multipliers: an increase in final demand of NAD 1 million (USD 72,000) for traditional agriculture is likely to generate an output twice that value as well as GDP and income for roughly the same value (VI). This is expected to lead to the development of Namibia's economy and result in poverty alleviation (V).

Sub Sector

Food and Agriculture

Policy priority
Namibia's Government focuses its efforts for greater food security on developing the agro-processing industries by utilizing local produce and strengthening regional value chains, as well as increasing the agricultural production for cereals, horticulture and livestock (II).

Gender inequalities and marginalization issues
An increase in final demand for traditional agriculture is expected to generate the highest impact among low-income households in Namibia, benefitting marginalised communities and women, among others (VI).

Industry

Agricultural Products

Pipeline Opportunity

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Investment Opportunity Area

Cold Storage Port Facilities for Agri-Produce

Business Model

Develop cold storage facilities at the port of Walvis Bay (and others, as emerging) for agri-produce to create a temperature controlled supply chain.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Namibia requires 12,500 tonnes of additional cold storage capacity to serve market potential.

Namibia currently has a cold storage capacity of 12,500 tonnes; the country's market potential necessitates ramping up the capacity to 25,000 tonnes (10).

The total container throughout capacity overall increased by 10%. In 2020 / 2021, the ports of Walvis Bay and Lüderitz handled 135,194 TEU’s (20-foot container boxes), which is a 10% increase in comparison to the 128,779 TEU’s handled in 2019 / 2020 (9).

Zambia, Angola, Democratic Republic of Congo, Botswana and Zimbabwe are the main markets for transit cargo by volume at the Walvis Bay port (9).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

15% - 20%

A benchmark project, the Meatco's Okahandja Abattoir, achieved an IRR of 15-20% as a major driver of its repurposing into a cold storage facility (11).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

While no agri-produce cold storage facilities (excluding for fish) exist at ports and no empirical data is available for investment timeframes (19), loans suitable for cold storage port facilities, offered by FNB, Bank Windhoek and the Development Bank of Namibia, have a tenure of 5-10 years (12).

Market Risks & Scale Obstacles

Market - Highly Regulated

The monopolistic situation of the port in Walvis Bay and of the Namibian operator can be a risk for private sector involvement, especially for long-term investments, given resultant uncertainties (5).

Impact Case

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Sustainable Development Need

Namibia lacks adequate storage facilities that allow for agricultural value addition. Cold storage facilities needed to maintain the lifespan of fresh produce are limited, which results in raw products being exported and re-imported into the country for value addition (5).

In order for Namibia to leverage AfCFTA opportunities, it needs to become a commercial gateway where refrigerated container trade involves the imports of food products for landlocked African markets. The level of refrigerated container activity is related to market size and economic development (1).

Gender & Marginalisation

Smallholder farmers are excluded from enhanced market opportunities when value addition takes place outside of Namibia.

Expected Development Outcome

Reduced losses of perishable products thanks to increased access to storage facilities (3).

Enhanced port traffic and revenue, and improved strategic logistical significance of Walvis Bays port in the region, leading to generally greater economic activity in Namibia.

Gender & Marginalisation

Smallholder farmers, who tend to be marginalised and suffer most from limited economic opportunities, obtain access to national and international markets and operate with greater productivity.

Primary SDGs addressed

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.1.2 Passenger and freight volumes, by mode of transport

Zero Hunger (SDG 2)
2 - Zero Hunger

2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size

Secondary SDGs addressed

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production
Life Below Water (SDG 14)
14 - Life Below Water

Directly impacted stakeholders

Gender inequality and/or marginalization

Smallholder farmers, serving commercial entities, benefitting from greater economic activities.

Planet

Environment with reduced losses of perishable products.

Corporates

Commercial farmers and the port of Walvis Bays benefitting from reduced losses and additional regional market opportunities.

Indirectly impacted stakeholders

People

Communities benefit from high quality and affordable agricultural products, and generally from increased economic activities thanks to the strengthened supply chains.

Public sector

Government of Namibia positioned as strategic actor for agricultural produce within the African Continental Free Trade Area (AfCFTA).

Outcome Risks

Cold structure infrastructure requires significant energy, which can strain the already limited grid capacities and generate negative environmental impacts if not managed and sourced sustainably.

Impact Risks

Competitiveness depends on expansion and strategic direction of the Walvis Bays port, which is steered by the Namibian Ports Authority (NamPort) and may limit the impact of the opportunity.

Impact Classification

B—Benefit Stakeholders

What

The outcome is likely to be positive, important and intended because cold storage port facilities are a critical component of logistics hubs and can position Namibia as a transshipment gateway.

Who

Commercial farmers benefitting from integration into regional value chains, and regional importers, exporters and retailers benefitting from high quality and affordable produce.

Risk

While the cold storage technology is readily available, the model's viability depends on cargo volume and the strategic direction of the Walvis Bays port, which is beyond control.

Impact Thesis

Position Namibia as a transshipment gateway providing high quality and affordable produce for Southern African Development Community (SADC) markets.

Enabling Environment

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Policy Environment

Food and Nutrition Policy, 1995: Promotes the maintenance of strategic grain reserves by the private sector through a combination of storage alternatives at national, regional and farmer levels (13).

Food Safety Policy, 2014: Ensures food safety for all consumers, and provides sufficient food safety guarantees on all food products traded nationally or exported to other countries (14).

Financial Environment

Fiscal incentives: In 2020, the Ministry of Finance removed all fiscal incentives. The Ministry of Industrialization and Trade is negotiating for a new regime with the Ministry of Finance. The Investment Promotion and Development Board facilitates the conclusion of the incentives (20).

Regulatory Environment

Cold Storage Works and Abattoirs Proclamation, 1921: Guides the construction and operation of cold storage infrastructure and defines requirements also for export of produce (15).

Namibia Ports Authority Act, 1994: Provides for the establishment of the Namibian Ports Authority to undertake the management and control of ports (16).

Atmospheric Pollution Prevention Ordinance 11, 1976: Provides for the prevention of the pollution of the atmosphere, and for matters incidental thereto (17).

Marketplace Participants

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Private Sector

Investors such as the Development Bank of Namibia, the Namibian Industrial Development Agency (NIDA) and Agribank. Fund managers with a mandate in agribusiness and infrastructure, such as Musa Capital Namibia; Ino-Harith Capital; EOS Capital and Mergence Namibia Infrastructure Fund.

Government

Namibian Ports Authority (NPA), Namibian Ports Authority (NamPort), Ministry of Agriculture, Water and Land Reform, Namibian Agronomic Board (NAB).

Public-Private Partnership

Walvis Bay Corridor Group (WBCG) is a service and facilitation centre to promote the benefits of using the Walvis Bay corridors through the port of Walvis Bay to and from southern Africa (18).

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
semi-urban

Erongo Region

Walvis Bay is the biggest commercial port in Namibia, serving as a strategic point of exit and entry for cargo overall and especially agricultural produce.
semi-urban

ǁKaras Region

ǁKaras is a secondary priority region for cold storage port facilities, if the expansion of the port of Lüderitz goas ahead, which serves the mines in the southern regions of Namibia and north-western South Africa with imports and exports of mining commodities.

References

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