Commercial Agri-Developments for Agricultural Produce and Livestock

Vineyards and wine farm in rural landscape near Fish river Canyon, Namibia, Africa
Photo by ingehogenbijl / Shutterstock
Commercial Agri-Developments for Agricultural Produce and Livestock
SectorMost 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
Food and Beverage
Business Model Description

Establish "agricultural towns" through commercial agri-developments that first lead to mini economies within the developments and then scale with capacity for export of produce and livestock to international markets. The developments offer 10 hectares plot for sale and provide supporting infrastructure, including a hub offering training, mentorship and offtake.

Expected Impact

Create mini-economies and turn marginalised areas into productive agri-produce and livestock centers.

Indicative ReturnDescribes 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 TimeframeDescribes 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 SizeDescribes 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.
USD 50 million - USD 100 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Zero Hunger (SDG 2)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Responsible Consumption and Production (SDG 12) Life on Land (SDG 15)
Country
Regions
  • Namibia: Omusati Region
  • Namibia: Oshikoto Region
  • Namibia: Kavango East Region
  • Namibia: Kavango West Region
  • Namibia: Ohangwena Region
SectorMost 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
FB

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).

SubsectorMost 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
FB

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).

IndustriesMost 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.
Agricultural Products
FB-AG
Investment Opportunity Area

Commercial Agri-Developments for Agricultural Produce and Livestock

Business Model

Establish "agricultural towns" through commercial agri-developments that first lead to mini economies within the developments and then scale with capacity for export of produce and livestock to international markets. The developments offer 10 hectares plot for sale and provide supporting infrastructure, including a hub offering training, mentorship and offtake.

Market Size (USD)Describes the value in USD of a potential addressable market of the IOA.
USD 50 million - USD 100 million

For the 2019/20 season, Namibia exported 33,000 tonnes of table grapes, earning USD 60 million (7). As of 2019, the country exported 1,446 tonnes of dates to South Africa, the UK and the UAE with a total value of USD 5 million, and the worldwide date market is expected to grow with 2.3% CAGR between 2018 and 2025 (13).

Export markets in China, EU, United Kingdom, USA, Zambia, DRC, Angola and Sudan alone offtake 10,440 cattle from Rundu Abattoir and 28,710 cattle from Oshakati GRN abattoir (14).

IRRDescribes an expected annual rate of growth of the IOA investment.
15% - 20%

The IRR for small scale horticultural projects ranges from 15 to 21%. A benchmark project in the drier Kunene region recorded an IRR of 15%; the inclusion of dryland farming can increase the IRR (11).

TimeframeDescribes 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)

Existing agronomic production loans for small scale farmers and corporate projects or loans to acquire agricultural equipment extend over five to ten years dependent on the scale of investment (12).

Business - Supply Chain Constraints
Challenges to access key crop inputs due to limited availability and high production costs (which can be mitigated through the support infrastructure provided in the commercial agri-developments).
Capital - Limited Investor Interest
Lack of access to affordable finance for crop production.
Business - Supply Chain Constraints
Ineffective extension services and lack of storage (which can be mitigated through the support infrastructure provided in the commercial agri-developments).
Sustainable Development Need

Namibia produces only 40% of the food it consumes and is highly dependent on imports. This means that while food is available, price fluctuations can make it difficult for 28% of Namibian households to access food, especially for the 80% of Namibians who depend on markets to fulfil their needs (15).

Namibia’s annual demand for horticultural products is about 89,082 tons, of which only 31,501 tons or 35% is currently produced locally (7).

Gender & Marginalisation

Namibia's smallholder farmers have limited access to nutritious food due to recurrent droughts and floods, low productivity and limited access to land (15).

Most of Namibia's low earners spend 57% of their incomes on food (16), leaving little for productive activities.

Expected Development Outcome

Increased smallholder or communal farmers productivity of local horticulture products.

Reduced dependency on imported food from the region as well as increased food security and enhanced agricultural expertise in Namibia.

Reduced poverty through stabilisation of local food prices.

Gender & Marginalisation

Emerging farmers in rural communities with enhanced empowerment opportunities.

Primary SDGs addressed
9 - Industry, Innovation and Infrastructure
Industry, Innovation and Infrastructure (SDG 9)

9.3.1 Proportion of small-scale industries in total industry value added

9.3.2 Proportion of small-scale industries with a loan or line of credit

2 - Zero Hunger
Zero Hunger (SDG 2)

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

2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.4.1 Proportion of agricultural area under productive and sustainable agriculture

Secondary SDGs addressed
1 - No Poverty
No Poverty (SDG 1)
12 - Responsible Consumption and Production
Responsible Consumption and Production (SDG 12)
15 - Life on Land
Life on Land (SDG 15)
Directly impacted stakeholders
People
Enhanced employment opportunities especially for low-skilled predominantly disadvantaged workers surrounding agri-developments.
Gender inequality and/or marginalization
Greater employment opportunities for women in the skilled agricultural sector, where currently only 16.9% of the employed population are female (26).
Planet
Farming system that is more drought resistant and places less pressure on the water system.
Corporates
Current emerging farmers in the skilled agricultural sector, which provides for the second most jobs in Namibia (26, 27).
Public sector
The Government and national economy through import substitution of horticulture crops and as foreign currency earner through exports.
Indirectly impacted stakeholders
People
Communities surrounding the developments through lower food prices due to ease of access.
Corporates
Local retailers benefitting from higher quality produce at lower prices.
Outcome Risks

The commercialisation of agriculture can negatively impact the environment, if not pursued with a sustainability approach, and lead for example to ground water depletion.

The concentration of economic activities in certain localities can lead to new migration streams and marginalisation of parts of Namibia.

Impact Risks

If the plots within the developments are not offered at affordable costs, the opportunity may benefit mostly established farmers and exclude those most in need, especially of its support services.

Unless the concept of the agri-developments is marketed, it is possible that small-scale farmers are hesitant to explore the opportunity due to unfamiliarity with the commercialisation aspect.

What

The outcome is likely to be positive, important and intended because commercial agri-developments create an ecosystem to effectively scale up agri-produce and livestock for small-scale farmers.

Who

Small-scale farmers in the agri-food sector benefitting from support services and new markets, and consumers in Namibia and abroad accessing high quality and affordable produce and livestock.

Risk

While the model of commercial agri-developments is well developed, the concept may require strategic marketing and planning to reach scale in Namibia.

Impact Thesis

Create mini-economies and turn marginalised areas into productive agri-produce and livestock centers.

Policy Environment

Agricultural Policy, 2015: Creates a conducive environment for increased and sustained agriculture production and productivity, accelerates the agriculture sector contribution to national Growth Domestic Product, and promotes development of national agriculture sector (22).

Agriculture Marketing and Trade Policy and Strategy, 2011: Contributes to the achievement of the agriculture sector’s objectives as reflected in Vision 2030, the NDPs and the National Agriculture Policy in concert with other policies and strategies across the agricultural value chain (20).

National Policy on Sub-Division and Consolidation of Agricultural Land, 2018: Serves as the safeguard for the sustainable existence of agriculture by preventing subdivision and fencing that leads to ecologically and economically non-viable farming units (21).

Financial Environment

Financial incentives: Agribank, as a state-owned financial institution and mandated by the Agribank Act (2003), advances money to persons or financial intermediaries to promote agriculture and activities related to agriculture (23).

Fiscal incentives: Farmers can deduct capital expenditure in full in the year in which the expenditure is incurred, limited to the farming taxable income for the year. This includes a deduction of capital expenditure relating to power supply (10).

Other incentives: FNB's Agri Medium-Term Loan product can be used for the establishment of production capacity, such as the purchase of livestock, establishing orchards and farm buildings, and other projects that take time to generate an income (24).

Regulatory Environment

Namibian Agronomic Board (NAB): Oversees development and implementation of the framework for a sustainable crop industry. It develops crop specific marketing quality standards, food safety, and traceability regulations in accordance with the Agronomic Industry Act (18).

Horticulture Market Share Promotion: As an implementing vehicle for the National Horticulture Development Initiative, importers are obliged to ensure that a minimum of 44% of their horticultural produce sales consist of Namibian grown products, prior to qualifying for an import permit (21).

National Horticulture Development Initiative, 2002: A strategic intervention in the development of Namibia's horticulture produce which has led to fresh fruit and vegetables being gazetted as controlled products under section 2 of the Agronomic Industry Act (19).

Private Sector

Investors such as Agribank Namibia, Musa Capital Namibia (Mid-Cap Fund), EOS Capital (Euphrates Agriculture Fund), FNB Namibia and Spitz Capital. Businesses such as the existing Roots Agri-Village or the planned Fransforntein Green Scheme.

Government

Ministry of Agriculture, Water and Land Reform, Namibian Agronomic Board (NAB).

Multilaterals

The Environmental Investment Fund (EIF) is the local partner for the Green Climate Fund (GCF), which provides funding for the development and implementation of environmentally sustainable development projects, including commercial agriculture (25).

country static map
rural
Namibia: Omusati Region
The Namibian Government has identified five potential regions where investment opportunities exist for agriculture development, and one region specifically, namely Omusati, is being targeted for the development of the horticulture product sub-sector (3).
rural
Namibia: Oshikoto Region
Besides Omusati, Oshikoto is the region most heavily involved in horticulture in Namibia (2).
rural
Namibia: Kavango East Region
Besides Omusati (39.1%), the regions that rely most strongly on subsistence and commercial farming as their main sources of income are Kavango East and West (31.4%) and Ohangwena (22.9%) (4).
rural
Namibia: Kavango West Region
Besides Omusati (39.1%), the regions that rely most strongly on subsistence and commercial farming as their main sources of income are Kavango East and West (31.4%) and Ohangwena (22.9%) (4).
rural
Namibia: Ohangwena Region
Besides Omusati (39.1%), the regions that rely most strongly on subsistence and commercial farming as their main sources of income are Kavango East and West (31.4%) and Ohangwena (22.9%) (4).
Sector Sources
  • I) SDG Center for Africa and Sustainable Development Solutions Network, 2019, Africa SDG Index and Dashboards Report 2019, Kigali and New York: SDG Center for Africa and Sustainable Development Solutions Network, https://sdgcafrica.org/we-content/uploads/2019/06/SDGS_INDEX_REPORT_2019WEB.pdf. II) Republic of Namibia, National Planning Commission, 2017, Namibia's 5th National Development Plan (NDP5), https://www.npc.gov.na/?wpfb_dl=294. III) Martha Nangolo & Ndapwa Alweendo for Institute for Public Policy Research (IPPR), 2020, Democracy Report. Agriculture in Namibia: An Overview, https://ippr.org.na/wp-content/uploads/2020/02/Agriculture-in-Namibia-An-Overview.docx-10.pdf. IV) Republic of Namibia, National Planning Commission, 2018, Implementation of Sustainable Development Goals, Voluntary National Review, https://sustainabledevelopment.un.org/content/documents/19880New_Version_Full_Voluntary_National_Review_2018_single_1_Report.pdf. V) Republic of Namibia, National Planning Commission, 2018, Is Agricultural Productivity an engine for growth, https://www.npc.gov.na/?wpfb_dl=357. VI) DNA Economics, 2021, SAM Multiplier Analysis for the SDG study in Namibia, Six Capitals.
IOA Sources
  • 1) Republic of Namibia, Namibian Agronomic Board, 2020, Presentation on Agronomy and Horticulture Industry Overview by Gilbert Mulonda General Manager: AHMD. 2) Republic of Namibia, Namibian Statistics Agency, 2011, Population and Housing Census Regional Tables based on 4th delimitation, https://nsa.org.na/page/publications/. 3) Embassy of Namibia, Investment Catalogue: Regional Profiles and Contact Details, https://www.embassyofnamibia.se/index.php/trade-and-investment/why-invest-in-namibia/fields-o,-investments/84-investment-catalogue-regional-profiles. 4) Republic of Namibia, Namibia Statistics Agency, Namibia Household Income and Expenditure Survey (NHIES) 2015/2016 Report, https://nsa.org.na/microdata1/index.php/catalog/28/pdf-documentation (Note: Data does not specify what type of farming). 5) UNDP, Subnational Human Development Index Database, Namibia, https://globaldatalab.org/shdi/shdi/NAM/?levels=1%2B4&interpolation=0&extrapolation=0&nearest_real=0. 6) The Research Department of the Bank of Namibia, 2017, 18th Annual Symposium: Feeding Namibia: Agricultural Productivity and Industrialisation, https://www.bon.com.na/CMSTemplates/Bon/Files/bon.com.na/52/52c35978-5912-4429-9052-3c8f5cc7971e.pdf. 7) Presentation on National experience on WATER STATISTICS, National Technical training workshop on Environmental Statistics 3-5 December 2019, https://unstats.un.org/unsd/envstats/meetings/2019-Namibia/documents/Session%205.1.1%20Water%20Statistics%20Namibia.pdf. 9) WFP, 2017, Namibia Country Strategic Plan (2017–2022), https://documents.wfp.org/stellent/groups/public/documents/eb/wfp291597.pdf?_ga=2.178426727.297177160.1621597913-166023273.1621597913. 10) PWC, 2021, Namibia Tax Reference and Rate card 2021, https://www.pwc.com/na/en/assets/pdf/namibia-tax-reference-and-rate-card-2021.pdf. 11) Planned Fransforntein Green Scheme Project, Ministry of Industrialisation and Trade, Available on Request from Ministry of Industrialisation and Trade. 12) Agribank Namibia, 2021, Horticulture Production Loan Facility, https://agribank.com.na/product/horticulture-production-loan-facility-92-16. 13) Global Trade Mag, 2019, Global Date Market 2019 – Egypt Continues to Dominate the Market, https://www.globaltrademag.com/global-date-market-2019-egypt-continues-to-dominate-the-marke. 14) Northern Communal Areas Livestock Strategy 2019-2020, available on request. 15) WFP, 2021, Namibia, https://www.wfp.org/operations/na01-namibia-country-strategic-plan-2017-2022. 16) WFP, 2017, Namibia Country Strategic Plan (2017–2022), https://documents.wfp.org/stellent/groups/public/documents/eb/wfp291597.pdf?_ga=2.178426727.297177160.1621597913-166023273.1621597913. 17) Namibia Agronomic Board, 2018, Annual Report, https://www.nab.com.na/wp-content/uploads/2019/09/Annual-Report-02.pdf. 18) Namibia Agronomic Board, https://www.nab.com.na. 19) Namibia Agronomic Board, Horticulture Market Share Promotion, https://www.nab.com.na/horticulture/market-share-price/ 20) Ministry of Agriculture, Water and Forestry, 2011, Namibian Agriculture Marketing and Trade Policy and Strategy, http://extwprlegs1.fao.org/docs/pdf/nam188595.pdf. 21) Ministry of Agriculture, Water and Forestry, 2018, National Policy on Sub-Division and Consolidation of Agricultural Land, http://extwprlegs1.fao.org/docs/pdf/nam181018.pdf. 22) Agricultural Policy, 2015, Republic of Namibia, https://www.atf.org.na/cms_documents/8f7-nationalagriculturalpolicy1995.pdf. 23) Agribank, Republic of Namibia, https://agribank.com.na. 24) FNB, Agri Medium Term Loan, https://www.fnbnamibia.com.na/for-my-business/industry-expertise/agriculture/lending-solutions/agriMediumTermLoan.html. 25) Environmental Investment Fund (EIF), https://www.greenclimate.fund/ae/eif. 26) Namibian Statistics Agency, 2018, Labour Force Survey 2018 Report, https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NLFS_2018_Report_Final_.pdf. 27) FAO, 2005, Bankable Investment Project Profile: Development of Infrastructure for Marketing Horticulture Produce, http://www.fao.org/3/af315e/af315e.pdf.